jakiro
author:Yueqi Yang
As a cryptocurrency market crash swept the world earlier this month, the spotlight fell on Hyperliquid, an exchange that handles more than $13 billion in daily trading volume and has only about 11 employees, mostly in Singapore.
The two-year-old exchange, while little known outside the cryptocurrency market, is extremely popular among traders because it offers anonymous trading, high leverage and airdrops a token that has soared in value.Hyperliquid has no outside investors and has annual revenue of more than $1 billion, based on its disclosed trading volume and fees.
The platform came under scrutiny for liquidating more than $10 billion in trades that day after the market crash, which may have exacerbated the sell-off.Hyperliquid also came under scrutiny for two user accounts that placed huge shorts on the market just minutes before President Trump announced a significant increase in tariffs on China.
“Hyperliquid is extremely unique,” said Ash Egan, founder of crypto venture fund Archetype.“It’s rare to see successful founders choose to completely self-fund” a startup and issue tokens, said Egan, whose fund holds Hyperliquid’s tokens.
Jeff Yan graduated from Harvard University in 2017 and grew up in Silicon Valley.He created Hyperliquid in response to collapses like FTX, a centralized exchange that held user assets.Hyperliquid is decentralized, meaning its algorithm matches buyers and sellers while customers keep their assets safe.Jeff Yan has big ambitions for Hyperliquid, hoping it will be able to trade a variety of assets.
The exchange, developed by a team from Singapore, does not allow U.S. traders to participate, but they can access it via a virtual private network (VPN).Still, Hyperliquid is growing rapidly, with trading volume now equivalent to 10% of similar products on Binance, the world’s largest cryptocurrency exchange.Its growing size and use of derivatives have raised concerns that it could hasten a market collapse.
The son of Chinese immigrants, Yan attended math summer camp as a child and attended Palo Alto High School in the heart of Silicon Valley.He won silver and gold medals at the International Physics Olympiad, the world’s most prestigious physics competition for high school students.After graduating from Harvard University, he joined New York high-frequency trading firm Hudson River Trading as an algorithm developer, but left within a year.
People who know Yan say he is skilled and ambitious, attracting many talented people to his projects.
His first startup, a prediction market, launched in 2018, failed.He then founded trading firm Chameleon Trading in Puerto Rico, hiring Denis Yarats, who later became co-founder of artificial intelligence search engine Perplexity AI, and Jacob Jackson, now a researcher at coding assistant Cursor.The company quickly developed into a major trading platform.Yan has previously stated that the company has never traded on FTX due to distrust of the FTX platform.
After FTX collapsed in late 2022, Yan began building Hyperliquid.Instead of raising money through venture capital, Hyperliquid bootstrapped itself by issuing its own token, HYPE.Major venture capital firms including Paradigm and Founders Fund have expressed interest in investing in Hyperliquid, but have been turned down, according to people familiar with the matter.Instead, Hyperliquid gives away 31% of the total token supply to users based on their trading volume.This giveaway, known as an “airdrop,” attracts more users.
“When Hyperliquid first started, the standard approach was to raise a large amount of money from VCs, then create buzz — and then just raise round after round,” Yan told the Wu Blockchain Podcast in August.”But it always felt a little false to me. That wasn’t real progress.”
The company makes HYPE more attractive by spending most of the fees generated by the trading platform to buy back the tokens in circulation, reducing the supply and driving up the price.HYPE’s price has jumped from $3.90 when it launched last November to $38 currently.The total value of HYPE tokens in circulation is approximately $10 billion, making it one of the most successful token offerings in history.
The 310 million tokens distributed by Hyperliquid were worth $1.2 billion immediately after the airdrop.“It’s so inspiring to see tens of thousands of community members gain life-changing wealth,” Yan tweeted the day after the token launch.According to disclosures and reports from The Information, nearly every major crypto fund — Paradigm, a16z, Pantera, Galaxy Digital, Hivemind, CoinFund — now holds HYPE tokens.
Additionally, Hyperliquid is attracting funds from U.S. stock market investors.Hyperliquid Strategies, a Nasdaq-listed U.S. company, announced plans in July to accumulate $888 million worth of HYPE tokens, which would allow investors to effectively buy the token like a stock.Former Barclays CEO Bob Diamond will serve as chairman of the company.However, the deal has not yet closed and the stock has fallen 64% since the announcement.Another Nasdaq-listed company, Hyperion DeFi, has purchased 1.7 million HYPE tokens, worth $59 million at the current token price.
Hyperliquid attracts traders by offering anonymity and high leverage.The majority of the platform’s trading volume comes from perpetual futures, a type of leveraged derivative with no expiration date that is not available on the US platform.
Since Hyperliquid only provides trading software and does not act as a broker, it is not responsible for verifying user identities.Trading by anonymous users sparked a firestorm of speculation on Oct. 10, when two accounts bet that the market would fall minutes before Trump suddenly announced 100% tariffs on Chinese goods.Traders speculated that whoever made these bets must have received inside information from someone in the White House.
“Hyperliquid benefits from the fact that many people want to trade anonymously,” said Matt Zhang, founder of crypto fund manager Hivemind.
Both bets paid off hugely as crypto markets plummeted following Trump’s announcement.High leverage accelerated the sell-off.Hyperliquid’s algorithm forces traders to close their positions to protect the exchange from significant losses.Hyperliquid liquidated more than $10 billion worth of trades that day, according to CoinGlass data, and the industry’s total liquidations were at least $19 billion, the largest in history, adding to the market selloff.
Traders who use leverage always face the risk of potential liquidation when the market declines.Like other crypto exchanges, Hyperliquid forced liquidation of trades during the market turmoil, which surprised many traders and disrupted their hedging strategies.Hyperliquid is not globally regulated, which means users have few avenues for redress if something goes wrong.
Hyperliquid has disclosed very little information about its core team.With the exception of Yan, most members remain anonymous or use pseudonyms, including another co-founder, “iliensinc,” who is also a Harvard graduate.A core contributor who goes by the pseudonym Xulian is responsible for the marketing strategy.According to Hyperliquid’s website, the employee hails from Caltech and MIT and previously worked at Citadel, Hudson River Trading and productivity app maker Airtable.
Yan spends much of his time improving Hyperliquid’s blockchain and encouraging companies to launch products on it.He usually responds to developer questions on Telegram within 24 hours.
“He doesn’t have a board of directors. He doesn’t have investors calling him and yelling at him to tell him what he has to do or not do,” said David Schamis, a founding partner at private equity firm Atlas Merchant Capital who will serve as CEO of Hyperliquid Strategies, a publicly traded company that plans to hold Hyperliquid tokens.”It’s great because he can completely focus on the mission.”
Hyperliquid’s mission goes far beyond cryptocurrencies.It said it hopes to “cover all finances” by allowing people to launch a range of investment products on its blockchain.“The idea is that currently on Hyperliquid you can really only trade cryptocurrency perpetual contracts, but eventually you could trade public stocks, indices, private companies, commodities, and even interest rates,” said Alvin Hsia, co-founder of Ventuals, which is developing a way for investors to bet on the valuations of private companies like OpenAI and Anthropic.This, he said, “embodies their vision to be the exchange for all things.”
For example, another company, Trade.XYZ, recently launched perpetual trading of stock indices on Hyperliquid, which allows traders to bet on stock prices using leverage without actually owning shares.
For Yan, Hyperliquid will only be successful if it breaks away from cryptocurrencies and reinvents the way people interact with finance.“If Hyperliquid fails, I think a lot of it will be because we as a community didn’t create something of real value for the world,” Yan said during a panel discussion at a conference in Singapore this month.
It also means Hyperliquid will push regulatory boundaries.Although it operates overseas, Hyperliquid has shown some interest in U.S. encryption policymaking.In May, it advocated for the role of decentralized exchanges in a letter submitted to the Commodity Futures Trading Commission.The letter was written in response to a request for comment from the agency regarding perpetual derivatives.
If Hyperliquid wishes to enter the U.S. market, it could consider acquiring a licensed entity or building one of its own, although this would likely require reducing the level of leverage it offers.
Hivemind’s Zhang said much of what Hyperliquid does will eventually be allowed in the United States.“I think people are still experiencing the hangover of the Biden administration — people haven’t really realized how much has changed in the last 10 months,” he said.
