Hyperliquid Founder: How to Win in Crypto (by Building for Users, Not VCs) | E95
Jeff Yan explains how Hyperliquid builds user‑first DeFi infrastructure, avoids VC funding, and aims to become the AWS of liquidity.
1h 8m·Guest Jeff Yan·Host Host·
DeFi's Lightbulb Moment: Centralized Exchange Failures Sparked Demand
The collapse of centralized exchanges gave users a concrete reason to distrust custodial platforms, creating a surge of interest in decentralized alternatives. Jeff describes how the FTX fallout and earlier hacks served as activation energy for Hyperliquid, turning a moment of panic into a lasting shift toward on-chain finance.
Centralized exchange hacks created a real reason for users to distrust them, lighting a demand for decentralized alternatives
- When major exchanges lost users’ funds, confidence in custodial solutions evaporated.
- Jeff notes that the sudden loss of money acted as a “light‑bulb moment” for the market, proving that the world was finally ready for DeFi.
- This event shifted the narrative from speculative hype to a genuine need for trustless, on‑chain trading.
- The timing aligned with broader market disillusionment, giving Hyperliquid a clear problem to solve.
Quote
00:09:00“all of a sudden people had a real reason to not trust centralized exchanges” — Jeff Yan
Describing the catalyst for DeFi interest
Quote
00:09:07“people literally lost all this money ... it was kind of a light bulb moment that the world was ready for defi finally” — Jeff Yan
Emphasizing the shift in user sentiment
The FTX collapse highlighted the extractive nature of centralized exchanges and pushed users toward on‑chain liquidity
- Jeff cites the FTX debacle as an “important lesson and impetus” for building Hyperliquid.
- He observes that users who had bad experiences on centralized platforms were eager to try a decentralized alternative.
- Hyperliquid’s on‑chain order‑book attracted these users, converting distrust into active participation.
- The episode frames the collapse as both a cautionary tale and a recruitment tool for DeFi.
Quote
00:53:48“FTX was an important lesson and impetus for us to start” — Jeff Yan
Reflecting on the impact of the FTX failure
Quote
01:00:01“hyper liquid has literally brought new users into defi just to use hyper liquid ... users who were on a centralized exchange probably just had a bad experience ... I'm G to try this defi thing for a spin” — Jeff Yan
Describing the influx of users after centralized exchange failures
Centralized exchange failures provide activation energy that can be leveraged to accelerate DeFi adoption
- Jeff explains that the loss of trust acted like a catalyst, giving Hyperliquid the “activation energy” needed to go all‑in.
- The rapid shift in user sentiment created a short window where early adopters could capture market share.
- By positioning Hyperliquid as a trustworthy alternative, the team turned a crisis into a growth opportunity.
- This insight underscores the importance of timing and user pain points in product‑market fit.
Quote
00:09:44“it did push us over like gave us the activation energy we needed to be like let's go all in and build this thing” — Jeff Yan
Motivation to launch Hyperliquid
Quote
00:53:48“the whole process of FTX was an important lesson and impetus for us to start” — Jeff Yan
Linking the collapse to Hyperliquid’s mission
User-First Product Design Over VC-Driven Growth
Hyperliquid deliberately avoids large VC rounds to keep the protocol aligned with end-users rather than investors. Jeff stresses building a product that feels like Web 2 finance--cheap, instant, and trustless--while keeping market makers as regular users, not privileged insiders.
Hyperliquid deliberately avoids raising large VC funds to keep the protocol aligned with users, not investors
- Jeff argues that raising capital can create a permanent governance scar if VCs own a large share of the network.
- The team chose to bootstrap, using existing expertise to fund development without diluting user value.
- This contrarian stance allowed Hyperliquid to stay focused on long‑term utility rather than short‑term fundraising milestones.
- The approach also signals to the community that the protocol’s incentives are user‑centric, not profit‑centric.
Quote
04:00:12“I don't think raising money ... if you can't pay the bills then probably raising some money is reasonable” — Jeff Yan
Discussing when external funding makes sense
Quote
04:24:00“if a bunch of VCs come and let's say they own 50% of the network ... that is forever a bit of a scar on the network” — Jeff Yan
Explaining the governance risk of VC ownership
Hyperliquid builds to Web2 expectations: cheap, instant settlement, and trustless integration
- The protocol is designed to feel like a traditional finance product: low fees, fast transfers, and instant finality.
- Jeff emphasizes that users should be able to plug Hyperliquid into existing apps without friction.
- By matching Web2 usability standards, Hyperliquid lowers the barrier for mainstream adoption.
- This focus differentiates it from many DeFi projects that prioritize novelty over user experience.
Quote
00:48:00“hyper liquid is building it in a way that it meets your expectations of web2 finance ... it's cheap you can transfer it it's instantly settled” — Jeff Yan
Describing the product’s Web2‑like qualities
Quote
00:56:00“I can integrate this with apps that other people are building in a trustless way” — Jeff Yan
Emphasizing composability
Hyperliquid treats users as first‑class citizens, relegating market makers to regular users rather than privileged insiders
- Traditional DeFi incentives often reward market makers at the expense of everyday traders.
- Jeff argues that true liquidity should be a public good, with all participants sharing equally.
- By removing special caps on market makers, Hyperliquid aims to democratize order‑book access.
- This philosophy aligns with the broader “community‑first” ethos of the protocol.
Quote
02:33:00“the big market makers on the cap table ... they start quoting you have some incentive program then they trade a bunch to gain that incentive program and real users come at the end get the short end of the stick” — Jeff Yan
Critiquing traditional DeFi incentive structures
Quote
41:41:00“users are the first class citizens and everyone else ... market makers are just big users” — Jeff Yan
Stating Hyperliquid’s user‑first stance
Infrastructure as a Platform: The AWS of Liquidity
Hyperliquid positions itself as the "AWS of liquidity", abstracting away exchange complexity so developers can focus on building applications. By creating a general-purpose L1 with native order-book primitives and a Builder-code SDK, the protocol enables anyone to launch regional exchanges or novel financial products.
Hyperliquid abstracts away exchange complexity, letting builders focus on product rather than infrastructure
- Jeff likens Hyperliquid to AWS, providing a managed liquidity layer that developers can plug into.
- The platform removes the need to build order‑book logic from scratch, accelerating time‑to‑market.
- By handling the “messy details” of exchange mechanics, Hyperliquid enables rapid experimentation.
- This abstraction mirrors how cloud services transformed software development in Web2.
Quote
55:55:00“hyper liquid is transforming liquidity, abstracting away the messy details of the exchange platform to let builders focus on product” — Jeff Yan
Explaining the benefit to developers
A general‑purpose L1 with native order‑book primitives is essential for composable DeFi applications
- Existing chains treat infrastructure as generic smart‑contract platforms, lacking high‑performance order‑book support.
- Hyperliquid built its own L1 to embed performant, native financial primitives.
- This design enables low‑latency, high‑throughput trading directly on‑chain.
- The approach creates a foundation for future composability, allowing other protocols to leverage the same liquidity layer.
Quote
55:11:00“general purpose infrastructure plus some performant native implementations of financial primitives” — Jeff Yan
Describing the technical stack
Quote
54:55:00“most chains treat infrastructure as a general purpose smart contract platform, but we need native order‑book liquidity” — Jeff Yan
Critiquing other blockchains
Builder‑code enables anyone to launch regional exchanges or novel financial apps on top of Hyperliquid’s order‑book
- The Builder‑code SDK exposes the order‑book as a simple API for developers.
- With a few lines of code, teams can create mobile wallets, social trading platforms, or localized exchanges.
- This lowers the barrier to entry, fostering a diverse ecosystem of region‑specific solutions.
- By standardizing the liquidity layer, Hyperliquid encourages rapid, low‑cost innovation across geographies.
Quote
56:30:00“it's letting anyone who builds a financial application on the hyper liquid order book side ... you can build a mobile app, a social trading experience, or a regional exchange” — Jeff Yan
Explaining Builder‑code capabilities
Quote
56:06:00“builder code supports a new wave of builders who are excited about lasting proportional upside like AWS” — Jeff Yan
Positioning Builder‑code as a growth engine
Funding Philosophy: Contrarian Decision to Not Raise
Jeff explains why Hyperliquid chose to stay bootstrapped, arguing that VC ownership can scar a network and that self-funded revenue aligns incentives with users. The decision was initially controversial but later proved prescient as the model gained traction across DeFi.
Choosing not to raise capital was controversial but proved right as others later copied the model
- Jeff admits the decision was unpopular at the time, with many peers pushing for VC money.
- Within months, similar “no‑raise” strategies appeared across DeFi, validating Hyperliquid’s stance.
- The early contrarian move gave the team credibility and demonstrated confidence in product‑market fit.
- It also avoided the dilution and governance complications associated with large VC stakes.
Quote
05:27:00“when we decided not to raise ... no one agreed with that but it was controversial” — Jeff Yan
Recalling the internal debate
Raising money can create a permanent scar on governance if VCs own a large share of the network
- Jeff warns that a 50 % VC ownership would embed a lasting influence over protocol decisions.
- This “scar” could undermine decentralization and user trust.
- By staying bootstrapped, Hyperliquid keeps governance open and community‑driven.
- The argument highlights the trade‑off between capital efficiency and network sovereignty.
Quote
04:24:00“if a bunch of VCs own 50% of the network ... that is a scar on the network forever” — Jeff Yan
Discussing governance risk
Quote
04:12:00“I don't think raising money ... if you can't pay the bills then probably raising some money is reasonable” — Jeff Yan
Balancing necessity vs risk
Self‑funded protocol revenue aligns incentives with users and returns value to the community
- Hyperliquid does not collect traditional trading fees; instead, revenue is funneled back to token holders.
- Over $25 million in revenue has already been redistributed, demonstrating a sustainable, user‑aligned model.
- This structure removes the profit‑extraction motive, fostering long‑term trust.
- It also showcases a viable business model that does not rely on external capital.
Quote
36:03:00“hyper liquid does not profit from increased activity ... it is entirely self‑funded” — Jeff Yan
Explaining revenue model
Quote
36:27:00“more than $25 million in revenue has gone back to the community” — Jeff Yan
Quantifying community returns
Long-Term Vision: Crypto as the Next Financial Layer
Hyperliquid aspires to become the foundational liquidity layer for all finance, akin to AWS for cloud services. Jeff sees regional adoption driven by unstable local currencies and believes volume-based monetization will power sustainable growth.
Hyperliquid aims to become the AWS of liquidity, a foundational layer for all finance
- The protocol’s ambition is to be the “Amazon Web Service of liquidity,” providing a universal, on‑chain liquidity fabric.
- Jeff envisions Hyperliquid as the backbone on which every future DeFi application will run.
- This mirrors how AWS abstracted compute resources, allowing developers to focus on business logic.
- Positioning as infrastructure rather than a single product gives Hyperliquid a long‑term strategic moat.
Quote
00:20:00“includes a decentralized perpetual exchange ... that aspires to become the Amazon web service of liquidity” — Host
Episode intro description
Quote
04:15:00“the platform on which all of finance will happen” — Jeff Yan
Stating the long‑term goal
Regional adoption will drive crypto’s replacement of legacy financial rails
- Jeff argues that users in economies with unstable fiat will gravitate toward crypto solutions.
- By offering tools to convert debasing currencies into on‑chain value, Hyperliquid meets a concrete need.
- This localized demand is expected to precede broader, global adoption.
- The narrative frames crypto not as a speculative asset but as a practical alternative for everyday financial needs.
Quote
01:01:07“instead of trying to just say hey if you use finance you should consider using crypto ... you have the misfortune of living in somewhere where your currency is destabilizing ... here's a way to convert your debasing currency into onchain store value” — Jeff Yan
Explaining regional use‑cases
Quote
01:01:45“crypto is finance, not this alt scammy finance” — Jeff Yan
Distinguishing genuine finance from speculation
Monetizing on‑chain volume will reward builders who bring real users to the protocol
- Hyperliquid captures value by taking a share of transaction volume, which can be allocated to builders.
- Jeff highlights that the most profitable strategy is to attract users and then monetize that traffic.
- This creates a virtuous cycle: better UX → more volume → higher builder rewards → more investment in UX.
- The model aligns incentives across protocol, developers, and end‑users.
Quote
01:00:45“hyper liquid has literally brought new users into defi ... you can monetize on the volume you bring onto the platform” — Jeff Yan
Discussing revenue opportunities for builders
Quote
01:01:44“the right way to get that story to happen is not for us but for anyone to do it” — Jeff Yan
Encouraging open ecosystem
Game Analogy: Go vs Chess for Strategic Execution
Jeff uses the contrast between Go and Chess to illustrate short-term optimization versus long-term, adaptable strategy. He argues that Hyperliquid's approach mirrors Go: building flexible infrastructure that can evolve with countless future use-cases.
Go represents a long‑term, intuition‑driven strategy, whereas Chess focuses on short‑term, deterministic planning
- Jeff describes Chess as reading ahead many moves, akin to optimizing for immediate gains.
- Go, with its massive branching factor, forces players to develop intuition and adapt on the fly.
- He maps this to crypto: short‑term hype (Chess) vs building adaptable, foundational infrastructure (Go).
- The analogy underscores the importance of flexible design over narrow optimization.
Quote
01:03:11“it's kind of like the difference between playing go and playing chess ... go has way too many possibilities” — Jeff Yan
Introducing the analogy
Quote
01:03:52“in go you focus on intuition, in chess you read ahead” — Jeff Yan
Contrasting the two mindsets
Chess rewards incremental improvement, while Go rewards building deep, adaptable intuition
- In Chess, mastery is measured by how many moves you can calculate ahead.
- In Go, the sheer number of possibilities makes exhaustive calculation impossible; success comes from pattern recognition and intuition.
- Jeff suggests that DeFi builders should emulate Go’s approach: create systems that can handle unforeseen scenarios.
- This mindset encourages modularity and composability over rigid, single‑purpose designs.
Quote
01:03:31“in chess the better you get at chess the more moves you read ahead” — Jeff Yan
Describing Chess mindset
Quote
01:03:54“in go there are too many possibilities, focus on intuition” — Jeff Yan
Describing Go mindset
Hyperliquid’s development philosophy mirrors Go: building flexible infrastructure that can serve countless future applications
- Jeff emphasizes focusing on core liquidity and a robust foundation rather than chasing short‑term trends.
- By prioritizing a solid, adaptable L1, Hyperliquid prepares for any future financial product.
- This Go‑like approach accepts uncertainty and builds for resilience.
- The result is a platform that can evolve as the crypto ecosystem matures, much like a Go player adapts to new board states.
Quote
01:04:46“we're just focusing on building the stuff that will be important no matter what the trajectory is” — Jeff Yan
Stating long‑term focus
Quote
01:05:00“having a good liquidity period is necessary in a sustainable way” — Jeff Yan
Emphasizing sustainable design
Community-First, Anti-Extractive Ethos
Hyperliquid returns all protocol revenue to its community, rejects conventional growth-marketing tactics, and embraces daily suffering as a catalyst for meaningful creation. Jeff frames the project as a collective effort rather than a profit-driven venture.
Hyperliquid returns all protocol revenue to the community, rejecting profit extraction
- The protocol is self‑funded and does not charge traditional trading fees.
- Over $25 million in generated revenue has been redistributed to token holders.
- This model aligns the incentives of developers, users, and investors.
- It demonstrates that a sustainable business can exist without extracting value from participants.
Quote
36:03:00“hyper liquid does not profit from increased activity ... it is entirely self‑funded” — Jeff Yan
Explaining the revenue model
Quote
36:27:00“more than $25 million in revenue has gone back to the community” — Jeff Yan
Quantifying community returns
Hyperliquid rejects conventional growth‑marketing and iterates based on real user feedback
- The team deliberately avoids hiring growth‑marketing agencies or following generic scaling playbooks.
- They prioritize listening to actual users rather than speculative market research.
- This approach reduces wasteful spend and ensures product‑market fit.
- It reflects a broader philosophy of building for people, not for hype.
Quote
15:30:00“we don't do growth marketing ... we listen to real users not people who talk about what users might want” — Jeff Yan
Rejecting growth‑marketing
Quote
15:45:00“we reject all of that categorically and say we should build a product” — Jeff Yan
Emphasizing product‑first mindset
Daily suffering and existential dread are embraced as necessary drivers for building meaningful products
- Jeff describes working on hard problems as “suffering day‑to‑day” that fuels purpose.
- He argues that without this struggle, creators experience larger existential dread.
- The narrative frames pain as a workout that builds resilience and deeper achievement.
- This mindset helps the team stay motivated through long‑term, difficult development cycles.
Quote
01:01:23“working on something super hard is like suffering day‑to‑day ... you need to suffer otherwise you have this much larger existential dread” — Jeff Yan
Describing the role of suffering
Quote
01:01:24“I think you need to suffer otherwise you have this much larger existential dread” — Jeff Yan
Reiterating the point
First-Principles Engineering: Questioning Conventional Wisdom
Jeff emphasizes building from first principles, rejecting standard scaling playbooks, and constructing a bespoke L1 because existing chains lack the required performance. This mindset drives Hyperliquid's unique infrastructure and its focus on the right primitives for finance.
Jeff emphasizes building from first principles, rejecting standard scaling playbooks
- The team routinely questions every recommended scaling method, treating conventional advice as a hypothesis to test.
- This disciplined skepticism ensures that Hyperliquid’s architecture serves its unique goals rather than inherited patterns.
- By default, they challenge the status quo, leading to innovative solutions.
- The approach mirrors Jeff’s broader philosophy of independent thinking and long‑term focus.
Quote
15:01:00“questioning every recommended way of scaling something because at the end of the day hyper liquid is not a conventional business” — Jeff Yan
Stating the first‑principles stance
Quote
15:04:00“we default to questioning all the recommended ways of scaling” — Jeff Yan
Reinforcing the mindset
Hyperliquid built its own L1 because existing chains lacked high‑performance order‑book support
- Existing smart‑contract platforms provide generic compute but not the low‑latency order‑book needed for a perpetual exchange.
- The team engineered a bespoke L1 with native financial primitives to meet these performance demands.
- This decision avoided the compromises of building on top of sub‑optimal infrastructure.
- It also positions Hyperliquid as a foundational layer rather than a layer‑2 on an existing chain.
Quote
53:55:00“we built our own L1 because existing chains didn't provide the needed order‑book performance” — Jeff Yan
Explaining why a new chain was necessary
Quote
53:53:00“none of them really did it in a way that lets you build and change on top” — Jeff Yan
Critiquing other blockchains
Infrastructure should be abstracted like AWS, focusing on the right primitives for finance
- Jeff draws a parallel between cloud infrastructure (AWS) and DeFi infrastructure (Hyperliquid).
- By abstracting away low‑level details, developers can concentrate on business logic.
- The platform combines general‑purpose capabilities with performant native financial primitives.
- This design philosophy enables rapid, composable innovation across the ecosystem.
Quote
55:55:00“we're building the AWS of liquidity ... abstracting away the messy details of the exchange platform to let builders focus on product” — Jeff Yan
Summarizing the infrastructure vision
Quote
55:11:00“general purpose infrastructure plus performant native implementations of financial primitives” — Jeff Yan
Detailing the technical stack
⚙ Agent-readable JSON index — click to expand
{ "memcast_version": "0.1", "episode": { "id": "WeRh589I76o", "title": "Hyperliquid Founder: How to Win in Crypto (by Building for Users, Not VCs) | E95", "podcast": "When Shift Happens", "guest": "Jeff Yan", "host": "Host", "source_url": "https://www.youtube.com/watch?v=WeRh589I76o", "duration_minutes": 69 }, "concepts": [ { "id": "defi-s-lightbulb-moment-centralized-exchange-failures-sparked-demand", "title": "DeFi's Lightbulb Moment: Centralized Exchange Failures Sparked Demand", "tags": [ "ai-adoption", "decentralization" ] }, { "id": "user-first-product-design-over-vc-driven-growth", "title": "User-First Product Design Over VC-Driven Growth", "tags": [ "user-experience", "modular-design" ] }, { "id": "infrastructure-as-a-platform-the-aws-of-liquidity", "title": "Infrastructure as a Platform: The AWS of Liquidity", "tags": [ "liquidity", "court-infrastructure" ] }, { "id": "funding-philosophy-contrarian-decision-to-not-raise", "title": "Funding Philosophy: Contrarian Decision to Not Raise", "tags": [ "global-governance", "bootstrapping", "fundraising" ] }, { "id": "long-term-vision-crypto-as-the-next-financial-layer", "title": "Long-Term Vision: Crypto as the Next Financial Layer", "tags": [ "future-of-finance", "onchain-volume" ] }, { "id": "game-analogy-go-vs-chess-for-strategic-execution", "title": "Game Analogy: Go vs Chess for Strategic Execution", "tags": [ "marketing‑strategy", "long‑term-success" ] }, { "id": "community-first-anti-extractive-ethos", "title": "Community-First, Anti-Extractive Ethos", "tags": [ "brand-community" ] }, { "id": "first-principles-engineering-questioning-conventional-wisdom", "title": "First-Principles Engineering: Questioning Conventional Wisdom", "tags": [ "infrastructure-commoditization", "custom‑L1" ] } ] }