Author | Wu says blockchain

Hyperliquid is one of the most successful projects of this cycle. With a team of just 11 people, it has already captured over 75% of the decentralized perpetual asset market. At the time of publication, Hyperliquid's user assets reached approximately $6.2 billion, while HYPE's market capitalization reached nearly $16 billion and FDV's market capitalization reached nearly $46 billion, ranking 13th. Hyperliquid is even considered by the community to be the next Binance.

In this episode, Hyperliquid founder Jeff Yan shared his journey and reflections on building a decentralized trading protocol with Colin Wu, editor-in-chief. He discussed the importance of self-funding, his reasons for rejecting venture capital, and his commitment to user-driven growth. Jeff also elaborated on Hyperliquid's vision for the future of decentralized finance, the rationale behind not listing its tokens on centralized exchanges, and the team's commitment to maintaining a lean and efficient team. He also shared his perspectives on crypto entrepreneurship and industry leadership, as well as how Chinese and Western cultural values influence his business approach.

Jeff's background and journey into crypto

Colin: Thanks for your time, Jeff. As we all know, Hyperliquid has been one of the most influential crypto protocols of the past year. My first question is, could you tell us about your journey before founding Hyperliquid and how that shaped your path into the crypto industry?

Jeff: Absolutely. I grew up in the US and graduated from Harvard in 2017 with a degree in mathematics and computer science. It wasn't that long ago, but it felt like a very different era. Back then, everyone who studied mathematics wanted to pursue a career in mathematics or computer science, but the options were limited. The startup world was relatively mature, large-scale social media was becoming obsolete, and AI wasn't as hot yet.

So most of us faced a choice: stay in academia and do research, or switch to quantitative trading. I chose Hudson River Trading, which at the time was (and I believe still is) one of the largest market makers in the US stock market and other sectors. The work environment there was fantastic—like a startup, but with trading experience. I was able to think deeply about many interesting mathematical problems, understand how markets work, and learn how to apply quantitative thinking to the market.

Around 2018, I discovered Ethereum and thought it was incredibly cool. I essentially read the white paper, learned a little bit about it, and immediately felt like it was the future of finance. So, since leaving HRT, I've been pretty much stuck in crypto. Starting around 2022, we were doing quantitative trading in crypto, looking at both centralized and decentralized exchanges. That's when FTX collapsed, and we definitely saw its impact.

At that time, we realized that people were beginning to understand the value of self-custody and were ready to trade cryptocurrencies in a decentralized manner. At the same time, we also saw a lack of an exchange that prioritized both decentralization and user experience. So, we thought, why not build a trading platform that adheres to the principles of decentralization while also providing a superior user experience? This has been the DNA of Hyperliquid from the beginning.

Colin: When you first started, did you ever think Hyperliquid would be as successful as it is today?

Jeff: I certainly didn't expect it to be this big. I've always been a visionary, and it's easy to do well by working harder than others, keeping the faith, and having a long-term vision and commitment. It's important to recognize that things don't happen overnight, and you have to be willing to bounce back from failure, which I think is definitely true.

So I think we've always had this vision. Even now, I think we still have even bigger goals. But of course, we would have been foolish to say we knew it would be this big back then. It was mainly due to the hard work of the team, the community's support for this important concept at a crucial moment, and of course, some luck. You can never say these things are inevitable.

Why Hyperliquid chose to self-fund

Colin: Did you initially build Hyperliquid entirely with your own money? Why did you choose to reject venture capital or other investment? What was the philosophy behind this?

Jeff: Yes, Hyperliquid is completely self-funded. I don't think I've ever been in this for the money. Actually, before Hyperliquid, trading taught me that money is just a number. I don't place a lot of value on material possessions; I don't really care about money. What matters to me is doing something interesting and having value in the world. So I'm happy to do it, even if I fail, as long as I'm prepared to succeed.

I do think Hyperliquid is very unique because part of the vision — really, the entire vision — is to redefine how people interact with finance and value and what that means to them. It’s hard to get people to try something very new and potentially unfamiliar.

One point that resonated with a lot of people was that ownership should be community-driven. When Hyperliquid started, the standard approach was to raise a large amount of money from venture capitalists and create a lot of excitement—round after round, thinking, "Oh, we're making progress because last time we raised $1 million, this time $10 million, and now $100 million." But I always felt that approach felt a bit fake, and that it wasn't real progress.

Real progress is when users get actual value from what you do, not when a group of investors who put in some money early on benefit from it. So that's our vision, and I think it really resonated with a lot of people. We're very fortunate that everyone supports this vision.

Why not list on a centralized exchange?

Colin: Many people noticed that when Hyperliquid launched its token, it didn’t list it on any centralized exchanges. Why did you choose to do that?

Jeff: They could have launched anywhere (HYPE). Our framework has always been focused on building and creating something that users want, rather than worrying too much about what others are doing. We're just completely focused on what we're doing. We're a very small team, and we don't have a business development (BD) team. We have a few people working with the community and ecosystem, but we don't have a full-time institutional-focused team like other companies.

As a result, we don't have the resources to help with listings. We believe that ultimately each platform will make its own decision about whether to list, and we're open to any outcome. If a platform wants to list our token, that's great, because it means their users will be exposed to our product. If other platforms don't, that's fine too, because over time, they might — as long as we do our work and build the technology well. It also means that people who truly care about Hyperliquid will reach out to us.

If there's a passionate user who really cares about Hyperliquid but can't find us, they might try it themselves. We don't think that's a bad outcome. But the root cause of all this is simply that we don't have enough capabilities to do things beyond our core functions.

Advice for Crypto Startups

Colin: From your perspective, if you were to give some advice to entrepreneurs who have funds or resources, would you still advise them to pay less attention to coin listing or venture capital?

Jeff: Not necessarily. I think if you need funding to start something, venture capital is probably a good option. Venture capital can make a lot of investments, and they have a lot of capital. This way, startups don't have to worry about short-term funding and can focus on building and scaling. So, I think it has its value.

However, I think if you have the capital and the ability to do something, and you truly believe in it, I personally think it's better to avoid diluting overall ownership — because the ownership stake is fixed — rather than diluting it just for short-term gain. Perhaps it would be better if the community owned a larger stake. It's better and more fair in the long run. These people are the most important part of the network, right?

The role of market makers in Hyperliquid’s development

Colin: Did you initially partner with any market makers to build Hyperliquid? Will they provide tokens or airdrops? I heard a rumor that some major market makers are helping Hyperliquid compete with Binance. Is this true?

Jeff: Basically, the answer is no. We didn't have any private arrangements like profit-sharing agreements or investments. We did get approached by some market makers, as that was a common practice at the time.

Many decentralized exchanges raise funds and receive funding from market makers. Market makers are also investors, providing liquidity and support. However, we have no investors and do not have such an arrangement. Our thinking has always been that while this may cause some short-term difficulties, it is the right approach in the long run.

Many centralized exchanges have been criticized for their internal pools or designated market makers (DMMs). I believe it's especially important for decentralized exchanges to avoid these practices from the outset. The only exception is HLP, but that's a completely different matter because HLP is protocol-owned and any user can deposit into it; it's not owned by any single entity.

Hyperliquid Core Team and Recruitment Strategy

Colin: How big is the core team at Hyperliquid right now? What’s the atmosphere like within the team?

Jeff: We currently have 11 people, roughly half engineers and half non-engineers. It's a small team, but the overall atmosphere is great. We've been through a lot together, and I really enjoy working with the team.

I think there's a lot we do well, but there's also a lot we could do better. We're constantly trying to hire the best people. So, we don't want to stay small forever, but we're very selective about who we partner with. I've always believed, or learned quickly, that hiring the wrong person is far worse than not hiring at all.

Colin: So, will you be hiring more people in the future? What kind of people are you looking to hire?

Jeff: We're kind of trying to do it all. It's hard to predict because the future is so uncertain, and Hyperliquid itself is still young, but a lot has changed. Initially, our focus was entirely on being a user-friendly, high-performance decentralized perpetual exchange. But now our vision is much bigger. With so many teams now building on the platform, the vision has become even more ambitious, and the technical complexity has increased.

So, during this transition, what people need to do has changed significantly. It's hard to predict what kind of people we'll need on the team. All I can say is that we need people who are incredibly smart, highly motivated, have high integrity, and most importantly, are truly passionate about what we're building.

Ecosystem Projects

Colin: Will your team or foundation invest in ecosystem projects built on Hyperliquid?

Jeff: Well, I can't speak for the foundation, but so far, it hasn't invested in any projects. I think it's important to remain neutral. Investment is possible, but it would require us or the foundation to spend a lot of time identifying all the truly valuable projects, ensuring they are treated fairly, and deciding how to allocate resources. Ultimately, that should be the job of venture capitalists. Venture capital firms are investing in Hyperliquid ecosystem projects, which I think is great because it allows different people and capital to independently decide where to invest their money.

Hyperliquid's Development Roadmap

Colin: What is Hyperliquid’s future roadmap?

Jeff: We don't focus too much on specific milestones. We generally have some important things we're actively working on that I think should be released as soon as possible, even though they can end up being quite complex. The system itself is complex, so we need to be very careful about how we release these features. We don't do a lot of milestone planning, except for some of the long-term visionary things we're working on. So, we don't make specific predictions like, "We'll do this by this quarter."

Our current focus is on implementing HIP-3 and making spot and perpetual swaps more accessible. We are also working on improving system performance to handle the increasing load.

These things have been keeping us very busy. I don't think knowing what we're going to do next is particularly helpful. It's more important to stay flexible because this field is changing so quickly, and finance is evolving so rapidly. Being able to quickly understand what's happening and adapt is crucial. If we had a very detailed roadmap, it would probably be harder to do the right thing at the right time.

Hyperliquid’s role in the future of decentralized finance

Colin: Will Hyperliquid issue a stablecoin in the future? Will Hyperliquid enter the tokenized stock market?

Jeff: Hyperliquid likely won't do any of these things, as it has already transitioned from being primarily an application project to being more of a protocol. What people think of as an application is actually just a front-end that anyone can create, essentially interacting with the blockchain through an API. The focus now is on making the blockchain as efficient and scalable as possible and ensuring it has all the necessary features to support all financial transactions. Then, others can build projects like stablecoins, tokenization, or whatever else.

I think this approach has a lot of advantages, because there's a limit to what a single team can accomplish. We don't want to build a very large, centralized team with many departments and top-down management. That doesn't align with my view of cryptocurrency, or indeed, with the vision Satoshi Nakamoto or others in the crypto community had for the technology. Having one company build everything leads to a lack of resilience and strength. Instead, if the core is a decentralized protocol that anyone can interact with, runs itself, remains objective and neutral, then others can build on it, collaborate, compete, and combine. That's a very powerful system, and I believe that's how finance should work.

Hyperliquid's success compared to large teams

Colin: You mentioned earlier that Hyperliquid's core team is only 11 people. Companies like Binance or OKX might have three to four thousand people. Why has Hyperliquid been so successful while many other decentralized exchanges have struggled? What do you think is the reason?

Jeff: Well, I don’t really know much about other teams, so it’s hard to compare.

But I think a key reason is Hyperliquid's exceptional focus. If you look at centralized exchanges, they actually operate multiple businesses. They may appear to have a core team, but they may also have a staking team, a marketing team, or even an institutional team. To me, each of these teams resembles a company.

Each of these companies probably has, uh, ten times more people than Hyperliquid. But the key is that they're also trying to do more in-house. I think it's just a different perspective. If you look at Hyperliquid more broadly, as something anyone can do on a blockchain, then there are a lot more people involved. Any team working on Hyperliquid is probably larger than the team working on the core protocol. So, perhaps that's a more appropriate comparison.

Jeff's Management Style and Leadership

Colin: What is your management style? How do you lead a team in the crypto industry?

Jeff: I'm not entirely sure what my management style is; you'd be better off asking the people I work with. However, I do think I have high expectations of people. Our team is very small, and the workload is high. So, yes, I might push people to do more than they're comfortable with, but that's probably true for every CEO or CTO.

I'm still pretty hands-on. I try not to micromanage—I just give people challenging tasks that the stronger people are, the better they'll be at doing them. I like to hold them fully accountable.

On the other hand, I don't think it's feasible to just completely walk away. I've always been actively involved in the technical side of things and have been keeping up with nearly everything that's going on. While that's becoming increasingly difficult, I think it's important to maintain that involvement because what Hyperliquid does is so important.

Everything is interconnected—it's a blockchain, and the node software ensures the security of the entire system. If that part gets messy, or if different people are working from different perspectives and conflicts arise, it's very dangerous. Correctness and performance are critical to the scaling of the system.

Leadership philosophy and the importance of teamwork

Colin: Nowadays, many young people and startups are choosing to enter the AI field. Do you still think there are many entrepreneurial opportunities in the crypto industry? What advice would you give to these startups?

Jeff: Yes, I think there are a lot of opportunities. If you're very smart, young, and ambitious, AI and crypto are definitely two of the most obvious areas. But I do agree with what you said about some people not being the perfect fit. AI has definitely taken the spotlight, and probably for good reason. There are a lot of things in crypto that aren't very popular. A lot of unorthodox things have happened in the past, and they still happen today, so I don't blame people for being cautious about it.

Despite this, I think there's still a lot worth building in crypto. It all comes down to perspective. So far, most of the money that's been made in crypto has been predatory, not enriching. A lot of it involves scams that create demand for a token and then easily sell it. I think that's unfortunate. It gives a lot of power to some, but it also attracts those who want to abuse the system. If you look at it from that perspective, there's really nothing worth building.

But if you look at it from another perspective, that finance is outdated, the infrastructure that supports finance is outdated, and the only sustainable and effective way to upgrade it is to rewrite it from the ground up with decentralized ownership and control, then there are a lot of things that can be done.

The financial industry itself is enormous, and the fintech industry is also enormous. They are currently larger and more valuable than the crypto industry. Furthermore, I believe crypto offers the best solutions to these problems. So, hopefully, over the next few years, we'll see more real-world use cases. It seems like a prime time, with policy changes and general optimism in the tech sector.

I think the industry has a second chance to make a good impression and build something valuable. Once that happens, it will become a self-reinforcing cycle where more people will be inspired to build and create more examples. I think that's what the industry really needs.

Jeff's cultural background and its impact on Hyperliquid

Colin: Next question, maybe a little more personal. It's okay if you don't want to answer. Are your parents Chinese immigrants? Do you speak Chinese?

Jeff: Yes, both my parents immigrated from China. So I'm a first-generation American, born and raised in the United States. I'm a mix of Chinese and Western cultures.

I believe many Eastern and Western values complement each other. Looking back, this may be a key reason for Hyperliquid's success. We combine the best of both worlds. I believe American and Western values are crucial to startup success, which is why most of the largest startups are based in the US. I suspect this will continue to be true as long as the world remains the way it is.

These values include believing that a small team can achieve great things, dreaming big but also thinking independently, not taking the status quo for granted, and believing that one can change the world. This is a very quintessentially American mindset, and as someone who grew up in the US, I strongly identify with this philosophy.

I don't really care about politics; I just want to get things done, but I think these entrepreneurial values align very well with me. As for the Eastern side, I don't know much about Chinese history or anything like that. I think one drawback of my generation is that after immigrating to a new country, we can lose some connection with our roots.

So, I feel a little guilty about this, but I do have a certain understanding of these principles. Traditionally, Chinese values emphasize humility, action over words, and a strong work ethic. These have influenced the way I approach and build. I see both Eastern and Western worldviews as valuable and complementary, and that's how I see myself. Well, I speak some Chinese, but it's definitely deteriorating because I don't use it much.

Jeff's gratitude to the Chinese community and his thoughts on the crypto market

Colin: My last question is, could you please say a few words to the Chinese community or Chinese fans who have been so supportive of Hyperliquid? And a more interesting question is — do you think we're still in a bull market? What are your predictions for Bitcoin in this cycle?

Jeff: Thank you for your support, it's really appreciated. I haven't been to China in a while, and I feel both close and distant.

It's been amazing to see them become such a huge and supportive community. Ultimately, Hyperliquid shouldn't be constrained by any boundaries, whether political, national, or otherwise. I truly believe in free markets and capitalism, and I think it's the best way to foster prosperity and advance human progress.

Yes, boom is the perfect word. I think Hyperliquid is an extension of that philosophy. It's been really cool to see people around the world support it and build success with it, and I hope to continue supporting everyone in this journey. As for the bull market, I'm not an expert on that; I have no idea.

I have been focusing on automated trading, and my focus has been on understanding the detailed time frames of the market. My mental model is that it is difficult to make confident forecasts on long time frames.

If you think you know, you're probably wrong. I believe the smartest people who can make long-term predictions must do so with a great deal of uncertainty. For example, if you asked Warren Buffett where Coca-Cola's stock would be in five years, he wouldn't say with any certainty that it would be a lot. He'd probably just give some vague answer about fundamentals, or something like that.

So, this isn't my area of expertise, but I think it's actually not that important. If your primary focus is buying and selling tokens, then bull and bear markets do matter. But if you're focused on building, they don't matter as much. In a sense, building when the market is calmer is better because there are fewer distractions. That's always been my approach.

Read more, and here are two past articles about Jeff for your reference:

https://www.wublock123.com/index.php?m=content&c=index&a=show&catid=47&id=45857

https://www.wublock123.com/index.php?m=content&c=index&a=show&catid=47&id=34811