Earlier this month, a cryptocurrency market crash gripped the world, focusing attention on Hyperliquid, an exchange that handles over $13 billion in daily trading volume and employs only about 11 people, primarily based in Singapore. The two-year-old exchange, though little known outside the cryptocurrency market, is incredibly popular among traders for offering anonymous trading, high leverage, and an airdrop of a token that has soared in value. Hyperliquid has no outside investors and generates over $1 billion in annual revenue, based on disclosed trading volume and fees. Following the market crash, the platform drew attention for liquidating over $10 billion in trades that day, potentially exacerbating the sell-off. Hyperliquid also faced scrutiny after two user accounts placed significant short positions against the market just minutes before President Trump announced a significant tariff hike on China. "Hyperliquid is incredibly unique," said Ash Egan, founder of the crypto venture fund Archetype. "It's rare to see successful founders choose to completely self-fund" a startup and issue a token, said Egan, whose fund holds Hyperliquid's tokens. Jeff Yan, who graduated from Harvard in 2017 and grew up in Silicon Valley, founded Hyperliquid in response to the collapse of centralized exchanges like FTX, which held user assets. Hyperliquid is decentralized, meaning its algorithms match buyers and sellers, while customers maintain custody of their own assets. Jeff Yan had big ambitions for Hyperliquid, hoping it would be able to trade a wide range of assets. The exchange, developed by a team in Singapore, didn't allow US traders to participate, but they could access it through a virtual private network (VPN). Despite this, Hyperliquid was 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 products sparked concerns that it could accelerate a market crash. 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 in the International Physics Olympiad, the world's most prestigious high school physics competition. After graduating from Harvard, he joined Hudson River Trading, a New York-based high-frequency trading firm, as an algorithm developer but left after less than a year. People who know Yan describe him as highly skilled and ambitious, attracting talented individuals to his projects. His first startup, a prediction market, launched in 2018, failed. He then founded Chameleon Trading, a Puerto Rico-based trading firm, hiring Denis Yarats, who later co-founded the AI search engine Perplexity AI, and Jacob Jackson, now a researcher at the coding assistant Cursor. The company quickly grew into a major trading platform. Yan previously stated that the company had never traded on FTX due to a lack of trust in the platform. After the FTX collapse in late 2022, Yan began building Hyperliquid. Hyperliquid, rather than raising venture capital, became bootstrapped by issuing its own token, HYPE. According to people familiar with the matter, major venture capital firms including Paradigm and Founders Fund expressed interest in investing in Hyperliquid, but were rejected. Instead, Hyperliquid gave away 31% of its token supply based on user trading volume. This giveaway, known as an "airdrop," attracted more users. "When Hyperliquid was first starting out, the standard approach was to raise a big round from venture capital firms, then create a buzz—and then raise round after round," Yan said in an August interview on the Wu Blockchain podcast. "But that always felt a bit fake to me. That wasn't real progress." The company made HYPE more attractive by using most of the fees generated by the trading platform to buy back circulating tokens, reducing the supply and driving up the price. HYPE's price has jumped from $3.90 at its launch last November to $38 today. The total value of HYPE tokens in circulation is approximately $10 billion, making it one of the most successful token launches in history.
The 310 million tokens distributed by Hyperliquid were immediately worth $1.2 billion after the airdrop. "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 reporting by The Information, nearly every major crypto fund—Paradigm, a16z, Pantera, Galaxy Digital, Hivemind, CoinFund—now holds HYPE tokens.
In addition, Hyperliquid is attracting capital from US stock market investors. Hyperliquid Strategies, a US company listed on the Nasdaq, announced plans in July to accumulate $888 million worth of HYPE tokens, allowing investors to effectively buy the tokens like stocks. 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, leveraged derivatives with no expiration date that are not available on US platforms. Because 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 storm of speculation on October 10th, when two accounts placed bets on a market decline just minutes before Trump abruptly announced 100% tariffs on Chinese goods. Traders speculated that the individuals placing these bets must have received insider information from someone in the White House. "Hyperliquid benefited from the fact that many people wanted to trade anonymously," said Matt Zhang, founder of crypto fund manager Hivemind. These two bets paid off dramatically as crypto markets plummeted following Trump's announcement. High leverage accelerated the sell-off. Hyperliquid's algorithms forced traders to close their positions to protect the exchange from significant losses. According to CoinGlass data, Hyperliquid liquidated over $10 billion worth of trades that day, out of a total industry liquidation of at least $19 billion, the largest in history and exacerbating the market sell-off. Traders using leverage are always exposed to the potential risk of liquidation during market declines. Like other crypto exchanges, Hyperliquid forced liquidations during periods of market turmoil, surprising many traders and disrupting their hedging strategies. Hyperliquid's lack of global regulation meant that users had few recourse if problems arose. Hyperliquid has disclosed little information about its core team. Aside from Yan, most members remain anonymous or use pseudonyms, including co-founder "iliensinc," also a Harvard graduate. A core contributor, known as Xulian, is responsible for marketing strategy. According to Hyperliquid's website, this employee holds degrees from Caltech and MIT and previously worked at Citadel, Hudson River Trading, and productivity app maker Airtable. Yan spends most of his time improving Hyperliquid's blockchain and encouraging companies to launch products on it. He typically responds to developer inquiries on Telegram within 24 hours. "He doesn't have a board of directors. He doesn't have investors calling him and yelling at him about what he must or must not do," said David Schamis, founding partner of private equity firm Atlas Merchant Capital, who will serve as CEO of Hyperliquid Strategies, the publicly traded company that plans to hold Hyperliquid tokens. “It’s great because he’s completely focused on the mission.”
Hyperliquid’s mission goes far beyond cryptocurrencies. It says it wants to “cover all of finance” by allowing people to launch a range of investment products on its blockchain. “The idea is that right now on Hyperliquid you can really only trade perpetual contracts on cryptocurrencies, but eventually you might be able to trade public stocks, indices, private companies, commodities, even interest rates,” says Alvin Hsia, co-founder of Ventuals. Ventuals is developing a way for investors to bet on the valuations of private companies like OpenAI and Anthropic. This, he says, “embodies their vision of being the exchange for everything.”
For example, another company, Trade.XYZ, recently launched perpetual trading of stock indices on Hyperliquid, allowing traders to use leverage to bet on stock prices without actually owning the shares. For Yan, Hyperliquid will only be successful if it moves beyond cryptocurrency and reinvents how people interact with finance. "If Hyperliquid fails, I think it will be largely because we as a community haven't created something truly valuable for the world," Yan said during a panel discussion at a conference in Singapore this month. This also means Hyperliquid will push regulatory boundaries. While operating overseas, Hyperliquid has shown some interest in U.S. crypto policymaking. In May, it advocated for a role for decentralized exchanges in a letter to the Commodity Futures Trading Commission. The letter was written in response to the agency's request for comment on perpetual derivatives. If Hyperliquid wanted to enter the U.S. market, it could consider acquiring a licensed entity or building one itself, although this would likely require reducing the level of leverage it offers. Hivemind’s Zhang said most of what Hyperliquid does will eventually be allowed in the U.S. “I think people are still experiencing the aftereffects of the Biden administration — people haven’t really realized how much has changed in the past 10 months,” he said.
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