Written by: Yueqi Yang
Translated by: Block unicorn
Earlier this month, a cryptocurrency market crash swept across the globe, with a spotlight on Hyperliquid, an exchange that processes over $13 billion in transactions daily, with only about 11 employees, primarily based in Singapore.
Although this exchange, established just two years ago, is relatively unknown outside the cryptocurrency market, it is extremely popular among traders due to its provision of anonymous trading, high leverage, and the airdrop of a token whose value has skyrocketed. Hyperliquid has no external investors, and according to its disclosed trading volume and fees, its annual revenue exceeds $1 billion.
After the market crash, the platform gained attention for liquidating over $10 billion in trades that day, which may have exacerbated the sell-off. Hyperliquid also came under scrutiny after two user accounts made massive short bets on the market just minutes before President Trump announced significant tariff increases on China.
"Hyperliquid is extremely unique," said Ash Egan, founder of the crypto hedge fund Archetype. "It's rare to see successful founders choose to self-fund" to start a startup and issue tokens, Egan noted, adding that his fund holds Hyperliquid's tokens.
Jeff Yan graduated from Harvard University in 2017 and grew up in Silicon Valley. In response to the collapse of FTX (a centralized exchange that held user assets), he created Hyperliquid. Hyperliquid is decentralized, meaning its algorithms match buyers and sellers, while customers hold their own assets. Jeff Yan has grand ambitions for Hyperliquid, hoping it can trade a variety of assets.
The exchange, developed by a team in Singapore, does not allow U.S. traders to participate, but they can access it via virtual private networks (VPNs). Nevertheless, Hyperliquid is rapidly growing, with its trading volume now equivalent to 10% of similar products on the world's largest cryptocurrency exchange, Binance. Its increasing scale and use of derivatives have raised concerns about its potential to accelerate market crashes.
Yan is the son of Chinese immigrants and attended math summer camps as a child, going to Palo Alto High School in the heart of Silicon Valley. He won silver and gold medals at the International Physics Olympiad, the most prestigious high school physics competition in the world. After graduating from Harvard, he joined the New York high-frequency trading firm Hudson River Trading as an algorithm developer but left after less than a year.
Those who know Yan describe him as technically skilled and ambitious, attracting many talented individuals to join his project.
His first startup, founded in 2018, was a prediction market but failed. He then established a trading company, Chameleon Trading, in Puerto Rico, hiring Denis Yarats, who later became a co-founder of the AI search engine Perplexity AI, and Jacob Jackson, now a researcher at coding assistant Cursor. The company quickly grew into a significant trading platform. Yan previously stated that the company never traded on FTX due to a lack of trust in the platform.
After the collapse of FTX at the end of 2022, Yan began building Hyperliquid. Hyperliquid did not raise funds through venture capital but became self-sufficient by issuing its own token, HYPE. According to insiders, large venture capital firms, including Paradigm and Founders Fund, expressed interest in investing in Hyperliquid but were turned down. Instead, Hyperliquid distributed 31% of its total token supply based on user trading volume. This distribution, known as an "airdrop," attracted more users.
"When Hyperliquid started, the standard practice was to raise large amounts of money from venture capital firms, then create a buzz—followed by round after round of financing," Yan said in an August interview with the Wu Blockchain podcast. "But that always felt a bit false to me. That’s not 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 supply and driving up prices. The price of HYPE surged from $3.90 at its issuance last November to $38 currently. The total value of circulating HYPE tokens is approximately $10 billion, making it one of the most successful token launches in history.
The 310 million tokens distributed by Hyperliquid were immediately valued at $1.2 billion after the airdrop. "It’s exciting 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 all mainstream crypto funds—Paradigm, a16z, Pantera, Galaxy Digital, Hivemind, CoinFund—now hold HYPE tokens.
Additionally, Hyperliquid is attracting funds from investors in the U.S. stock market. A Nasdaq-listed American company, Hyperliquid Strategies, announced in July plans to accumulate $888 million worth of HYPE tokens, allowing investors to effectively buy the token as if purchasing stock. Former Barclays CEO Bob Diamond will serve as the company's chairman. However, the deal has not yet been completed, and since the announcement, the stock has dropped 64%. Another Nasdaq-listed company, Hyperion DeFi, has purchased 1.7 million HYPE tokens, valued at $59 million at current token prices.
Hyperliquid attracts traders by offering anonymity and high leverage. Most of the platform's trading volume comes from perpetual futures, a type of leveraged derivative that is not available on U.S. platforms.
Since Hyperliquid only provides trading software and does not act as a broker, it is not responsible for verifying user identities. Anonymous trading on October 10 sparked a storm of speculation when two accounts bet heavily on the market falling just minutes before Trump suddenly announced a 100% tariff on Chinese goods. Traders speculated that those placing the bets must have insider information from someone in the White House.
"Hyperliquid benefits from the fact that many people want to trade anonymously," said Matt Zhang, founder of the crypto fund Hivemind.
After Trump's announcement, the crypto market plummeted, and these two bets yielded massive returns. High leverage accelerated the sell-off. Hyperliquid's algorithms forced traders to liquidate positions to protect the exchange from significant losses. According to CoinGlass data, Hyperliquid liquidated over $10 billion in trades that day, while the total industry liquidation was at least $19 billion, marking the largest liquidation in history, which exacerbated the market sell-off.
Traders using leverage always face potential liquidation risks when the market declines. Like other crypto exchanges, Hyperliquid forcibly liquidated trades during market turmoil, surprising many traders and disrupting their hedging strategies. Hyperliquid is not subject to global regulation, meaning users have almost no recourse if issues arise.
Hyperliquid has disclosed little information about its core team. Aside from Yan, most members are anonymous or use pseudonyms, including another co-founder "iliensinc," who also graduated from Harvard. A core contributor known as Xulian is responsible for marketing strategies. According to Hyperliquid's website, this employee comes 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 the company to launch products on it. He typically responds to developer inquiries on Telegram within 24 hours.
"He has no board. No investors calling him, 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 the publicly listed company Hyperliquid Strategies, which plans to hold Hyperliquid tokens. "That’s great because he can focus entirely on the mission."
Hyperliquid's mission goes far beyond cryptocurrency. It states that it hopes to achieve "covering all finance" by allowing people to launch a range of investment products on its blockchain. Alvin Hsia, co-founder of Ventuals, said, "Our idea is that currently on Hyperliquid, you can only trade crypto perpetual contracts, but eventually you might trade public stocks, indices, private companies, commodities, and even interest rates." Ventuals is developing a way for investors to bet on the valuations of private companies like OpenAI and Anthropic. He stated that this "embodies their vision of becoming 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 holding shares.
For Yan, Hyperliquid will only be considered successful if it breaks away from cryptocurrency and reinvents how people interact with finance. "If Hyperliquid fails, I think it will largely be because we as a community did not create 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 it operates overseas, Hyperliquid has shown some interest in U.S. crypto policy-making. 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 the agency's request for comments on perpetual derivatives.
If Hyperliquid wishes to enter the U.S. market, it may consider acquiring a licensed entity or building one, although this would likely require lowering the level of leverage it offers.
Zhang of Hivemind stated that much of what Hyperliquid is doing will ultimately be allowed in the U.S. "I think people are still experiencing the aftershocks of the Biden administration—people haven't really realized how much has changed in the last 10 months," he said.
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