Interview: When Shift Happens

Translation: Yuliya, PANews

"When Shift Happens" previously invited Jeff, the founder of Hyperliquid Labs, for an interview. Hyperliquid is a decentralized perpetual contract trading platform and also a Layer 1 project. In a one-hour conversation, Jeff shared his entrepreneurial journey, project vision, and observations on the DeFi industry. PANews compiled the interview content, covering aspects such as the project's technological innovations, operational models, and user experience improvements, while also discussing the development trends and challenges in the cryptocurrency industry.

Entrepreneurial Journey

Host: Jeff, can you tell us how you got started on your entrepreneurial path?

Jeff: It all started in early 2020. At that time, I began researching some simple trading scripts, mainly focusing on centralized cryptocurrency exchanges (CEX). Although many large market makers had already entered the space, sometimes "ignorance is bliss," and I thought I would give it a try to see if I could make some money.

The initial research results were promising, so I decided to take it seriously. To be honest, I wasn't very good at coding before, but to achieve my goals, I started self-learning programming. By 2022, we had grown to become one of the largest traders in many trading venues, possibly the best in high-frequency market making.

Host: What prompted you to shift from successful quantitative trading to creating Hyperliquid?

Jeff: There are mainly two reasons:

First, we started focusing on the DeFi space and discovered many interesting protocol designs. There is an interesting phenomenon in DeFi: many people who don't understand finance are trying to build financial systems, which has actually created many opportunities for quantitative strategies.

Second, the collapse of FTX was a significant turning point. This event made people realize that they cannot blindly trust centralized exchanges. This is not an abstract theoretical discussion but a real loss of funds. For us, it was an important revelation— the world is finally ready to embrace true DeFi.

Product Philosophy

Host: Can you explain in simple terms what Hyperliquid does?

Jeff: From the perspective of human history, society has always been moving towards individualism. Every advancement towards individualism and human rights has been positive, whether measured by GDP or happiness.

Hyperliquid continues to push in this direction: from the earliest need to protect one's farm with weapons, to being able to store money in banks, and now to Hyperliquid— where you can fully control your funds through cryptographic technology.

Specifically, we are building a system that can:

• Meet all user expectations for Web2 finance

• Provide low fees

• Support fast transfers

• Achieve instant settlement

• Offer liquidity comparable to centralized exchanges

• Allow trustless integration with other applications

• Support collateralized lending

• Enable users to truly use their funds freely

Financing Strategy

Host: Why choose not to accept any investments? This is rare in the industry.

Jeff: This is indeed not a traditional business project. This might be the first time in DeFi or even the entire cryptocurrency space that this has been done, but if you look at Amazon, Bezos also didn't profit for a long time in the early days.

We have several deep reasons for this:

1. The cryptocurrency industry places too much emphasis on short-term gains

2. If we want to create a new financial model, having VCs hold 50% of the network share early on would be a permanent stain

3. Our team has the capability to operate without external financing, which allows us to stick to this decision

Industry Perspective

Host: Do you have any criticisms of the current cryptocurrency industry?

Jeff: To be honest, the most "successful" products in the industry right now often involve issuing fraudulent tokens. Very few projects truly follow a user-centric model because acquiring real users is indeed very difficult. Most projects take shortcuts: they first secure investments from large market makers and then attract trading through incentive programs. This model is unsustainable in the long run.

Host: How do you view the current state of the cryptocurrency industry?

Jeff: While many people see cryptocurrency as a failed experiment, I believe it is humanity's only hope for reinventing the financial system. Finance is one of humanity's greatest inventions; it allows us to:

• Represent value in a more abstract way

• Achieve better capital allocation

• Establish a complete economic system

Without these, all other advancements may not be possible. Human society might still be stuck in the agricultural or even hunting-gathering stage.

Software should be able to fundamentally change finance, but the reality is that finance (and possibly healthcare) is one of the few large industries that has not undergone substantial innovation.

Technological Innovation

Host: Can you elaborate on the concept of Builder Codes?

Jeff: This is a simple yet powerful concept. It allows anyone to build financial applications on top of Hyperliquid, such as:

• Innovative mobile wallets

• Social trading platforms

• Regional exchanges

• Fiat deposit channels

Developers can:

• Build their own exchange business

• Use our neutral backend

• Charge fees in a user-trusted manner

• Earn revenue directly at the protocol level, rather than relying on private agreements with centralized exchanges

This will open up a new way to build businesses in DeFi, making specialization possible. Those who understand the needs of specific regional users can focus on serving them, while Hyperliquid provides support in the background.

Future Outlook

Host: How do you view the long-term development of the project?

Jeff: I like to use Go and Chess as metaphors. You don't need to be completely certain about where you want to end up, but you need to ensure that every step is in the right direction. It's important to execute each step well rather than being overly fixated on a distant endpoint. That's why we focus more on building infrastructure rather than short-term market performance.

Host: What is Hyperliquid's long-term vision?

Jeff: Our core belief is:

1. Cryptocurrency will change the way finance operates

2. Traditional finance will eventually migrate to cryptocurrency

3. Hyperliquid will become the foundational platform for these financial activities

The specific path to realization is hard to predict, but that's not the most important thing. We focus on building infrastructure that will play a crucial role regardless of how the future develops:

• Builder Codes system

• EVM integrated with on-chain native components

• Sustainable high-quality liquidity

These are essential infrastructures that are difficult to get right, but I believe that no matter how cryptocurrency evolves in 10 years, they will be indispensable cornerstones.

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