Hyperliquid Founder: How to Win in Crypto (by Building for Users, Not VCs)

SUMMARY

Jeff Yan, co-founder of Hyperliquid Labs, discusses building Hyperliquid as a user-centric decentralized perpetual exchange and Layer 1 blockchain, emphasizing trustless DeFi innovation over VC funding and speculation in a podcast interview.

STATEMENTS

Hyperliquid is a decentralized perpetual exchange achieving over $1.5 billion in daily trading volume, aspiring to be the AWS of liquidity.
The FTX collapse highlighted the risks of centralized exchanges, serving as a catalyst for the world to embrace DeFi.
Crypto markets are inefficient compared to traditional finance, presenting opportunities for innovation and rebuilding financial systems.
Hyperliquid focuses on user experience, offering cheap, instant, trustless settlements rivaling Web2 finance.
Building Hyperliquid required suffering through technical challenges without a playbook, avoiding larger existential dread.
Jeff Yan's background in quant trading involved scaling high-frequency market-making systems from simple scripts.
DeFi often suffers from poor user experience because it's built by non-finance experts, creating arbitrage for quantitative strategies.
Traditional VC funding can scar networks by giving early investors disproportionate control, diluting user focus.
Hyperliquid rejects VC funding to prioritize community and users, self-funding with over $25 million in revenue returned to the community.
Quant trading is a meritocratic, intellectually stimulating game that creates deep liquidity as an emergent property.
Jeff Yan transitioned from profitable quant trading to Hyperliquid for greater direct impact on people's lives.
Hyperliquid embeds sustainable liquidity provision into the protocol, contrasting FTX's extractive model.
Early retirement via crypto trading scripts led to boredom, as Jeff Yan prefers building over aimless travel.
Human fulfillment requires daily suffering on meaningful challenges to counter existential dissatisfaction.
Crypto's beauty lies in its potential to revolutionize legacy financial rails through programmable money.
Scam tokens and VC-driven projects extract value from retail, tarnishing crypto's reputation.
Hyperliquid builds three integrated businesses: a Layer 1, on-chain exchange, and optimized user experience.
Builder Codes allow developers to build user-facing apps on Hyperliquid's neutral liquidity backend.
Regional, localized DeFi apps will drive mass adoption by addressing specific currency instability issues.
Crypto's future involves finance migrating on-chain, with Hyperliquid as a foundational platform.
First-principles thinking rejects conventional scaling advice, leading to DeFi innovations.
Non-consensus beliefs, like not raising funds, initially faced skepticism but proved successful.
Taking criticism less personally involves limiting social media exposure and delegating handling.
Amazon's long-term, customer-centric model inspires Hyperliquid's infrastructure openness.
Hyperliquid's volume growth correlates with broad market trends, indicating organic flow.

IDEAS

Inefficiency in early crypto markets allowed simple scripts to generate profits, revealing untapped potential for systematic rebuilding.
The FTX implosion wasn't just a failure but a pivotal "light bulb moment" proving DeFi readiness despite quick user amnesia.
Rejecting VC funding preserves network purity, treating it as a scar that undermines user sovereignty in finance.
Quant trading's brutality fosters intellectual depth, mirroring Ender's Game where competition yields emergent market beauty.
Daily suffering in hard projects combats existential dread, akin to workouts building resilience against human dissatisfaction.
Crypto as "Humanity's Only Hope" for financial reinvention overlooks how software revolutionized everything except legacy finance.
Scams evolve from blatant ICOs to sophisticated VC pumps, exploiting programmable money's double-edged freedom.
Builder Codes democratize exchange-building, letting specialized apps tap neutral liquidity without backend hassles.
Regional DeFi apps, tailored to local currencies and UIs, bypass global hype for grassroots adoption in unstable economies.
Go-like strategic thinking in crypto favors intuitive, vibe-based execution over chess-like exhaustive planning.
Memecoins dominate attention not due to superior value but because hard, lasting products demand overlooked innovation.
Hyperliquid merges L1 and exchange in a composable way, creating multiplicative effects beyond additive successes like Ethereum or Binance.
First-principles autism drives contrarian moves, like no-fee protocols, proving markets reward unconventional paths.
Travel's novelty stresses without routine, highlighting building's fulfillment over transient experiences.
Extractive crypto schemes make regulators view the industry as a scam cesspool, hindering widespread trust.
Sustainable liquidity via protocol-embedded rewards contrasts extractive models, fostering long-term user loyalty.
User's first-class status blurs lines between retail and market makers, reviving peer-to-peer crypto ethos.
Infrastructure epiphanies, like AWS, arise from product needs spilling into broader, bet-on-growth abstractions.
Organic volume's market correlation debunks farming narratives, signaling genuine DeFi maturation.
Disillusioned builders gain traction when value-capturing protocols emerge, countering short-termism's dominance.
Non-reading of social media preserves focus, turning personal projects into resilient "babies" against criticism.
Finance's abstraction of value enabled all human progress; crypto updates it without centralized gatekeepers.
Specialization in DeFi unlocks joy-derived UIs and programmatic integrations on shared liquidity foundations.
Long-term value capture incentivizes moral building over gimmicks, as scams become harder in repeated games.
Hyperliquid's self-funded burn model echoes Bezos' decade-long reinvestment, prioritizing growth over immediate profits.

INSIGHTS

True DeFi innovation stems from user obsession, rendering VC scars irrelevant by embedding community sovereignty into protocol design.
Inefficiency breeds opportunity; crypto's chaos invites first-principles rebuilds, transforming speculation into systemic reinvention.
Suffering on hard paths yields meaning, countering evolutionary dissatisfaction with tangible legacies over fleeting comforts.
Extractive evolutions in scams highlight programmable money's peril, demanding anti-establishment models to restore ethos.
Merging infrastructure with products multiplicatively amplifies value, as seen in AWS parallels for liquidity abstraction.
Organic growth's market alignment reveals DeFi's maturation, outpacing inorganic hype through superior execution.
Regional tailoring accelerates adoption, proving localized pain points trump global narratives in mass migration.
Contrarian non-consensus, like no-funding, validates through results, fostering innovation in playbook-less terrains.
Quant roots inform sustainable liquidity, evolving personal edges into communal alphas without centralized betrayal.
Vibe-based strategy suits crypto's vast possibilities, prioritizing foundational steps over endgame predictions.
Criticism detachment preserves builder focus, delegating noise to enable pure, user-listening iteration.
Memecoin distractions underscore hard work's underreward, yet efficient markets eventually crown lasting value.
Builder empowerment via neutral backends bridges Web2 usability with Web3 trust, unlocking specialized empires.
Finance's revolutionary potential lies untapped in legacy rails; crypto enshrines it peer-to-peer.
Moral alignment in building sustains repeated games, where gimmicks fade against 10x improvements.

QUOTES

"Crypto is like beautiful how inefficient the markets are."
"It really is Humanity's Only Hope at Reinventing the financial system."
"Hyperliquid is building it in a way that it meets your expectations of web 2 Finance it's cheap you can transfer it it's instantly settled."
"Working on something super hard is like suffering day to day but I think you need to suffer otherwise you have this much larger existential dread."
"Quant trading and Market making is actually one of the highest impact things that someone who's able to do that can do."
"The crypto at every level is just a machine to extract value from retail."
"It's the only time it's really been done in DeFi for sure maybe in crypto but if you look at Amazon Jeff Bezos famously didn't profit didn't take profits when he could have um for at least a decade."
"Builder Codes is letting anyone who builds a financial application on the hyper liquid order book side which is just one part of the hyper liquid L1 as a whole."
"Crypto is going to change how Finance works and like Finance is going to move onto crypto."
"I just kind of like don't really read social media and that helps."
"Scams are a repeated game and get harder and harder as people get smarter."
"The main product in crypto is to this day and age this is relatively controversial but I think the main product that people have found product Market fit with is uh launching scam tokens basically."
"There's nothing wrong with coming in to make money uh I think by and large the nice thing about markets is that they they let a bunch of selfish people or entities come together act selfishly but within the rules of the system and create value for everyone else."
"Throughout the course of human history there's been a trend towards individualism and every iteration towards individualism human rights Etc has been positive by and large."

HABITS

Dedicate time to first-principles thinking, questioning conventional business advice to innovate independently.
Limit social media exposure to avoid taking criticism personally, focusing instead on core building tasks.
Iterate products based on real user feedback rather than expert opinions or growth marketing tactics.
Embrace daily suffering on challenging projects as a routine to build resilience and meaning.
Conduct quarterly podcasts sparingly to avoid repetition and preserve time for execution.
Learn coding through necessity, scaling from simple scripts to production systems via hands-on practice.
Maintain a tight-knit team of doers, prioritizing execution over armchair expertise.
Read crypto Twitter occasionally for insights but avoid active tweeting to minimize distractions.
Transition from profitable ventures to higher-impact builds by evaluating direct life improvements.
Build routines at home for efficiency, avoiding stressful travel in favor of consistent productivity.

FACTS

Hyperliquid achieves over $1.5 billion in daily trading volume as a decentralized perpetual exchange.
The protocol has generated more than $25 million in revenue, all returned to the community via burns without private investors.
FTX's collapse in 2022 exposed centralized exchange risks, yet users returned to them within a month.
Quant trading in crypto was highly inefficient in early 2020, allowing solo operators to scale to major market shares.
DeFi protocols often stem from non-finance builders, leaving quantitative arbitrage opportunities.
Amazon's AWS originated from internal infrastructure needs for e-commerce scaling in the 2000s.
Hyperliquid's volume growth correlates strongly with broad market trends, unlike inorganic farming schemes.
Builder Codes enable fee-charging on neutral liquidity, bridging DeFi with regional user-facing apps.
Crypto's scam evolution began with 2017 ICOs, progressing to VC-funded token dumps.
No major DeFi project had previously operated without trading fees or VC funding until Hyperliquid.

REFERENCES

Hyperliquid Labs and its decentralized perpetual exchange protocol.
Amazon Web Services (AWS) as a model for liquidity infrastructure.
FTX collapse as a cautionary tale in centralized exchanges.
Jeff Bezos' long-term reinvestment principles from Amazon.
Ender's Game by Orson Scott Card, analogized to quant trading's intellectual arena.
Go board game for strategic, intuitive decision-making in uncertain futures.
Chess as a contrast to Go, emphasizing exhaustive planning.
Bitcoin and Ethereum as foundational blockchain implementations.
dYdX V3 and V4 for on-chain exchange comparisons.
Cosmos, Ethereum Layer 2s, Solana, and Avalanche as evaluated chains.
DVIN Labs as a partner in luxury wine blockchain (uncork-to-earn).
Jupiter decentralized trading platform on Solana.
Mentor's fBTC for Bitcoin borrowing/lending in DeFi.
MEV or METH liquid staking protocol with COOK token launch.
Alliance DAO and Kiao Wong's founder traits discussion.
ICO craze of 2017 as early scam example.
Binance and Coinbase as successful centralized exchange benchmarks.
Robinhood as a model for user-facing finance apps.
Hyperliquid HLP token launch facing initial skepticism.
Crypto Twitter as a source of community discourse.

HOW TO APPLY

Evaluate market inefficiencies by writing simple scripts to identify arbitrage, then scale to full systems.
Transition from centralized trading by building trustless on-chain alternatives post-major failures like FTX.
Prioritize user experience in DeFi products to compete with centralized UX, focusing on speed and cost.
Reject VC funding if team background allows self-funding, preserving community control from the start.
Embed sustainable incentives in protocols, like liquidity rewards, to avoid extractive models.
Learn production coding through high-stakes projects, bridging analysis scripts to latency-sensitive systems.
Build integrated stacks: Layer 1, exchange, and UX optimizations for multiplicative DeFi impact.
Implement Builder Codes to enable app developers, charging trusted fees on shared liquidity.
Develop regional apps addressing local currency issues, using neutral backends for seamless fiat onramps.
Adopt first-principles iteration with real users, ignoring growth hacks for organic validation.

ONE-SENTENCE TAKEAWAY

Build user-centric DeFi protocols without VCs to reinvent finance through trustless innovation and community focus.

RECOMMENDATIONS

Focus on building products users love organically, attracting market makers as a byproduct rather than initial incentives.
Avoid VC funding in core networks to eliminate early investor scars and maintain user sovereignty.
Embrace first-principles thinking to reject conventional playbooks, innovating in playbook-less DeFi spaces.
Return all generated revenue to the community via burns, fostering long-term trust over short-term extraction.
Develop sustainable liquidity models embedded in protocols, contrasting centralized misuses like FTX.
Limit social media engagement to preserve focus, delegating criticism handling to team members.
Prioritize regional, localized apps to drive mass adoption in unstable economies with tailored UIs.
Merge L1 infrastructure with native financial primitives for composable, performant DeFi foundations.
Use Builder Codes to specialize in user-facing experiences, monetizing via trusted protocol fees.
Pursue hard, suffering-inducing projects for fulfillment, countering existential dread with meaningful legacies.
Correlate growth metrics with broad markets to validate organic flow against farming suspicions.
Draw AWS inspiration by abstracting infrastructure from product needs, enabling broader builder ecosystems.
Think Go-like: execute intuitively on next steps without overplanning crypto's uncertain trajectory.
Address scam evolutions by centering users as first-class citizens in peer-to-peer designs.
Transition quant edges into communal value, scaling personal strategies to protocol-wide benefits.

MEMO

In the volatile world of cryptocurrency, where scams and speculation often overshadow substance, Jeff Yan stands out as a builder driven by a singular vision: reinventing finance for users, not venture capitalists. As co-founder of Hyperliquid Labs, Yan has engineered Hyperliquid, a decentralized perpetual exchange and Layer 1 blockchain that processes over $1.5 billion in daily volume without collecting fees or courting investors. Launched amid the 2022 FTX collapse—a stark reminder of centralized exchange perils—Hyperliquid emerged as a trustless alternative, offering Web2-like speed and liquidity on-chain. Yan's journey began in quant trading, where he scaled simple scripts into high-frequency systems dominating crypto markets, only to pivot when inefficiencies revealed DeFi's untapped potential.

What sets Hyperliquid apart is its rejection of crypto's extractive norms. Traditional projects chase VC rounds and token pumps, lining insiders' pockets while retail bears the losses—a evolution from 2017's blatant ICOs to subtler dumps. Yan views this as a machine siphoning value, tarnishing the industry's ethos of programmable, peer-to-peer money. Instead, Hyperliquid self-funds, burning over $25 million in revenue back to the community, echoing Jeff Bezos' decade-long Amazon reinvestment. This user-first model treats market makers as equals to retail traders, embedding sustainable liquidity rewards into the protocol to prove viability without centralized betrayal.

Yan's background underscores his approach: a self-taught coder thrust into production systems by trading necessities, he found quant work intellectually thrilling yet marginally impactful. Bored by early retirement's aimless travel—too stressful without routine—he channeled that energy into building. "Working on something super hard is like suffering day to day," he says, but it's preferable to existential dread. This mindset fuels Hyperliquid's innovations: a custom L1 blending general-purpose chains with performant financial primitives, outperforming rivals like Solana or Ethereum Layer 2s for on-chain exchanges.

Central to Hyperliquid's ambition is Builder Codes, a framework abstracting liquidity like AWS did for cloud hardware. Developers can now craft specialized apps—regional exchanges for hyperinflating currencies, social trading wallets, or fiat onramps—charging trusted fees on a neutral backend rivaling Binance's depth but Ethereum's impartiality. Yan envisions thousands of such "exchange-sized empires," tailored to local pains, driving mass adoption beyond crypto's niche. "Crypto is Humanity's Only Hope at Reinventing the financial system," he asserts, updating legacy rails that software revolutionized everywhere except finance.

Yet Yan remains pragmatic about crypto's pitfalls. Memecoins dominate attention through hype, disillusioning earnest builders whose value goes unrewarded. He counters that markets eventually efficientize: hard work in lasting products, like Hyperliquid's merger of L1 and exchange, captures multiplicative gains. Organic volume surges, correlated to broad trends, debunk inorganic farming claims. Non-consensus bets—like no VCs or fees—faced Discord battles but validated through results, proving first-principles over armchair expertise.

Looking ahead, Yan avoids chess-like endgames for Go's intuitive plays: confident in finance's on-chain migration, Hyperliquid builds foundations—EVM integrations, liquidity layers—agnostic to trajectories. Regional apps will proliferate, converting destabilized users one locale at a time. He advises limiting Twitter noise to focus on users, not critics, turning projects into resilient legacies.

Critics once dismissed Hyperliquid's HLP token as unworkable; now, it symbolizes anti-establishment success. Yan's fire stems from independent thinking—a touch of "autism," he jokes—rejecting growth hacks for real iteration. In an industry rife with short-termism, his long-game refreshingly aligns incentives: build 10x better, capture value sustainably, and watch users flock.

Ultimately, Hyperliquid embodies crypto's promise: individualism's next step, securing money cryptographically for seamless, sovereign use. As Yan pitches to his hypothetical mother, it's cheap transfers, instant settlements, and boundless integrations—free from gatekeepers ripping off exchange rates. In a scam-laden space, this user-centric beacon offers hope for DeFi's maturation.