Hyperliquid’s Unique Approach to a Better Perp DEX | Jeff Yan

Transcript

yeah so the the L1 will need a native token it's not even necessarily to pay gas I think people often focus on gas but the the main reason L1 needs a native token is is like you said for the the staking there's there's just no way to run proof of stake without um a native token and that is like in my view that is sort of like the only thing you really need in L1 token for um but it's a super important one like uh there's no way around it whing up with the Wormhole Foundation Steward of the wormhole protal the leading interoperability platform powering Crossing transfers for 200 plus multi-chain teams came unique Wormhole NFD just for zerox research listeners today pair is an Innovative pair trading exchange built on top of

Simo users can trade trending narratives with one click from Blue Chip narratives such as long BTC short e right through the whiff versus Bonk the Hat stays on simus intense Centric architecture enables deep liquidity source offchain and Broad onchain and combined with pair has democratized access to complex trading strategies typically reserved for institutional Traders before we get into today's episode just a quick disclaimer the views expressed on this podcast by either myself or any guests are their personal views and do not represent the views of any Associated organization nothing in this episode should be construed or relied upon as Financial technical tax legal or other advice all right let's jump into the episode what's

up everyone and welcome back to another episode of ZX research today we're joining joed by Jeff co-founder of hyper liquid and order book based decentralized exchange thank you for joining us Jeff thanks for having me on um before we get started do you want to give a brief overview of hyper liquid and how you guys see it fit into the space both as a DEX and an L1 sure um hyper liquid is is most well known as an onchain pers deck uh it really took off around six months ago um at this point I think it has a lot of captured a lot of the Mind share of um decentralized perpetrators and has really pushed the boundary on what can be done and what it

sort of table stakes in terms of ux for decentralized trading um to the point where most users uh who trade there uh use it as their primary venue even over centralized exchanges that that they also have the option to use um so it's been really fulfilling to to sort of like see that through and and push the push the boundaries on like what's possible there um these days though uh hyper liquid has also expanded uh into being more than just a venue to trade perss um in the process of building out the decentralized exchange uh the the the dev team really had to invest a lot into infrastructure so that included building our own L1 and then um innovating a lot on the VM on

top of it as well and at this point a lot of the work has been done to where we want to have this infr support more than just pers trading uh it's a very unique opportunity um hyid um unlike most other L1 has a lot of the key ingredients to a financial ecosystem has a bunch of users who love the product and stick around and and use it um has a lot of liquidity uh one of the I would say like top 20 tvl l1s despite being only one application really um until very recently uh and yeah and I think liquidity and users are are the hardest things to get for a for an ecosystem and

so given that that's in place and then a lot of the infrastructure is as well uh we're excited to sort of build out this next chapter U of hyper liquid yeah I'm also I'm looking forward to the L1 I feel like it's one thing that a lot of per dexes are trying to do but I don't think it's been done very well so far and I'm excited like your perex is fantastic so I'm excited to see how you guys are approaching that um and I want to talk about the L1 more later later on but first I kind of you guys came into the per space let's say like over the past year and you've been very successful what do you think is like the space is obviously very competitive what do you think sets you guys apart like what's some things that you think you

did well compared to other decks is that uh led to you guys getting getting a lot of Mind share um yeah I think on on the surface building in exchange or or a deck is a very simple it's a very simple problem like everyone knows how it's supposed to work it's not order books are not rocket science uh but the devil is in the details and I think it really takes uh a team with with heavy background in quantitative trading at least um to even EXT stand a chance to building a good um exchange whether even if it's a centralized exchange and then when you make it decentralized you have to really have a strong background in in um understanding like lower level

infrastructure and like how to how to scale scale out uh a fully onchain solution to this problem so I'd say like it's it's not one specific thing um it's you like building exchange is like at least a hundred different check boxes you need to check and if you're missing any one of them like if your UI is bad the Traders don't understand it if your API sucks like market makers can't trade through it if your liquidity sucks uh like no one no one can everyone experiences very high slippage like if any of these things fail then then no one going to use your product and so I I think really it's like our team um came from Quant trading background uh so checked a lot of the the harder boxes to

check and then we really pushed ourselves to to figure out what what we were missing and to check those boxes um and and yeah it's really like a lot of hard work in grinding like listening to users uh there's there's no shortcut and there's no there's no one secret recipe um it's just like it's just like marathon of of building this endlessly like iterating and building this this product like not being satisfied with with any shortcomings and on that what do you think is required for dexes to reach parity or at least increase their market share um when compared to centralized exchanges in terms of Perpetual dexes yeah I think that's sort of a

mystery to everyone um in my perspect from my perspective I think every exchange kind of needs to do something new whether centralized or centralized so if you're if you're binance and you were looking at bitmax and just thinking like how how can I how can I be bitmax like back in 2016 or 2017 or whenever they were thinking about this uh I I don't think they could have like I think they really needed they really needed to come and innovate and offer users something that's 10x better uh and I think for binance the big thing was like they really they really took over this spot market and like had longtail listings and then by that time by the time they they came into the perss um the pers competition on centralized exchange side uh they had

a lot of the users and and sort of like you know spot sort of incumbency advantage and so I think like deck's coming in kind of needs to ask the same questions like what can we do better than binance it's not just like uh you know like build something that's like close enough and then like users R switch over um so with with Hyper liquid we we innovated uh on just about everything we could and I think like in many regards it is it is actually better uh than than any Central you can trade on um and then in other regards it's like it is like kind of reaching parody and I think there's like for things like liquidity and just like throughput and responsiveness for market makers like that that stuff is it's not it's really important and there's no easy way around

it you just kind of have to like build good Tech and so that's that's another thing that we focus on day in and day out I want to kind of talk about the Vault system because you guys don't only have The hlp Vault but you also have individual vaults like I can create a vault and tell people look I'm going to be let's say pair trading over the next six months and I can encourage people to deposit I feel like this isn't a vault system that's been tried very often and I thought it was a like talked about this on a earlier podcast as well I thought it was a great marketing tool as well because people obviously want to post about their vault I um I kind of want to understand if you thought that this approach was successful like as a product and why you

guys decided to launch this because as far as I can tell it's I think there's only like two more products that are like this and they're not very popular uh yeah this is a pretty funny story because we actually built the Vault primitive it really is a primitive in the L1 so people think it's a product but it really is um just like an L1 op it's it's like a signing primitive so like when on hyper liquid uh the nice thing about building an L1 is that you you get to customize like the ins and outs of it and people think we're just like making excuse to make an L1 but like it's actually very essential to building a good product and so the Vault primitive is like it's like if I want to sign on behalf of an address um I have like many choices I could I could have

the private key to that address and sign using it and that's what that's what all the general purpose um l1s use um and that's cool like you know if you're an API user you're probably gonna use that but like the Vault primitive is is like pretty cool because you can you can create this address and then you can sign on behalf of it but like not have permission to like move the funds in that address and this address ends up being this sort of like copy trading primitive um and really the only reason it was built was was to release hlp um but there was a bit of an afterthought of like well like why not just you know like we have this whole thing Bill like why not just like let people use this primitive like as permissionless anyway and who knows like maybe people will

like come up with cool strategies um I was thinking initially things things like Unis swap pools could be like V2 pools especially could be replicated as like a very simple Vault strategy um and it would it would just perform better because it wouldn't have this um I guess like it wouldn't be it would be like it could actively get out of the way of toxic flow unlike Unis swap which gets arbed um but turns out nobody really cared about that but they like took it in their own directions and and had a lot of cool innovative ideas and honestly it kind of exceeded All my expectations and it took it took many months before people like realized they could do these things and so it was kind of this like sort of exception to the rule where um seems like usually you need to really think about a product but

sometimes when you build the right Primitives and uh nobody else you can't do this anywhere else else then people will just like naturally uh kind of use it and and like Market it so yeah that that's really the whole story like not not really some like uh deeper thinking behind it cool and um your bridging experience is probably one of the most seamless I've seen in terms of uik it almost doesn't feel like bridging and so I was wondering how did you guys approach this what were some choices you had to make maybe in terms of trust assumptions and also if there are plans to add bridging from other chains and how how this will look like in the

future yeah the bridging we've thought a lot about I think we actually have probably spent too much time thinking about it like I sort of regret how much time we spent um but uh the end products like people people can see the bridge and at least at least it's open source and we got audited twice um people can read it's it's just like you know 2,000 lines of solidity um but it it's just a custom Bridge so the the trust assumptions are that the bridge is secured by um a quarum of the L1 validators uh and there's a system by which um if there's some exploit uh there's a wider set of of sort of like monitors it's just sort of like the

dispute idea behind the arbitrum bridge where where the bridge can be locked and then it requires a quorum of um cold wallet signatures by the same you know state stake weighted validator set um to unlock it um I think that's like basically the whole thing uh but there's like a lot of details there and then like integrating it seamlessly with L1 like you said which which makes the ux actually good um I think this is this is probably like at least a quarter if not half a year um of iteration and work uh and and yeah I think we we consider many Alternatives like like IBC or um maybe some other like more bespoke solutions But realize that like the the bridge is

really like the first thing that someone interacts with and uh if if you sort of Outsource that to another project or protocol then you risk like that thing not being optimized for what you're trying to do um and our experience with like other Bridges was was generally that it's like they generally leave leave some ux to be desired and so we kind of just you know to took the took the work of like building the whole thing ourselves um and then yeah as for your other question uh the the ultimate plan actually like with the hyper liquid evm coming out um a big reason is is to be able to support um a a more diverse and more sort of like institutional set of bridges so um one particular thing we're

super excited about is is uh supporting native usdc uh and so right now like this custom bridge is is somewhat of a bottleneck to getting like institutional Capital onto hyper liquid because maybe an institution like doesn't want to use arbitrum and like you know it's just like sort of the single point of entry for the for the arbitrum bridge onto the hyper liquid L1 um but once the evm is there uh cctp will let anyone uh sort of like trustless as trustly as you can like burn usdc on One Source chain and like M hyper and so those things like that um you know other also for other spot assets uh we want to solve this like whole problem uh in in a relatively General way and that that's actually a big motivation behind um putting the work into this hyper liquid EPM as well

yeah that um makes a good segue to the next question I had regarding the the hyper liquid L1 it feels like a few months ago there was this shift towards extending U dl1 and not be only a perex and was this always the plan or what was your rationale behind it is it something that that you noticed made made sense along the way uh it definitely wasn't uh our plan all along um initially we were just we just wanted to do anything that that would be helpful for the for sort of like crypto Community as a whole so I I guess I back came a bit this was 2022 and we were trading pretty heavily on a lot of centralized exchanges and in defi

as well um and kind of had just like a pretty good view of everything was going on and and we're kind of using a lot of these protocols that were coming out and realizing that they were basically all um not very good uh and so when the FTX thing happened we we felt very strongly that like we should the the SP the space sort of like lacks Builders like FTX was sort of like this big icon and like you know they were like built four Traders and they kind of like betrayed a lot of trust and then like but you know like people like oh like this is def's moment to shine but then like we were just like trading on Def all the time and we were just like there's no way like any of this stuff can can can match what FTX um

had going for it and so it it just felt like what could we do best like we could just like we could just build an actually good decentralized exchange that you know it's like fully onchain um can sort of scale to actually like just scale to the scale of Finance uh as a whole but also uh you know start kind of humbly and like actually get users like start with a market that like we we knew in and out and so that was that was always the initial plan was just like what can we do like what can we contribute and um but slowly like as we as we sort of do things and then users users sort of give us positive feedback I guess like the sort of ambition kind of just grows and and there's a bit of just like you you initially assume that everything is good

and you just need to build this one thing that you're really good at like like potentially really well suited to building but you soon realize like I don't know like you maybe just need to keep going down the stack to build it more and more and then at some point you're like okay like I should just we should just like know also release this this like all this other work we're doing and let other people benefit from it and so the L1 kind of came from a lot of users a lot of lot of our our users are actually like really good developers as well like uh want to make these dashboards like want to um want to build these products on hyper liquid like want to launch things and we've always just been like okay yeah it's like mostly a per deck though like but let's see how

we can support you um and at some point it just like it just clicked like yeah we have all these like really talented Builders and community members and why not just like actually give them the tools to do everything they want to do one thing um you mentioned in there was that you guys are fully onchain um I think like a lot of people assume that most order book Protocols are fully onchain but they're not like a lot of them move their order book and matching engine offchain um or at least parts of it how are you guys managing to keep everything on chain like what is your approach that you would say that doesn't have or face bottlenecks and you can put everything on chain fully yeah um initially we used

tendermint because it was the most battle tested um consensus mechanism that was easily like modified uh so uh and with with some modification it wasn't too hard to get it to do around 20,000 transactions per second um so that was the initial thing and and like initially just there just like wasn't that there just like weren't that many orders so it was just it was fine um but but yeah at this point uh hyper the hyper L1 has fully migrated to uh I guess what we call hyper bft but really it's I want to say like we didn't actually invent this consensus stuff like there have been a lot of like really good research and almost all the

l1s use this sort of like consensus research uh from the last five or six years so you know credit where credits you like we're not we're not consensus researchers we just like read these papers we're very impressed by the metrics spent half a year reproducing them and you know going from academic paper to production implementation is is not that easy but like the core ideas are are out there and we basically just did the hard work of implementing it um by hand and I think just paying very close attention to all the low-level details to make sure that the throughput doesn't like doesn't degrade as you actually implement it um and so at this point um the consensus is not even the bottleneck like I think if if execution gets faster that consensus will just

keep up I think the bottleneck is is first execution and second the like Hardware like Network bandwidth Etc and then at some point it's like um I'm sure that the Bott neck will be the consensus again but but like I really think that at that scale it's like you're you're basically you can basically run bance on like fully onchain and um still on that can you describe a little bit how the new the hyper um hyper fbt um is different from tender yeah um the the the core difference is just that tender is based on older research so at the time it was written this like hot stuff had not been

written and I and I assumed that hot stuff was heavily inspired by tendermint and other algorithms like basically the whole like standing on shoulders of giants thing is definitely true in research and so I would just say that it's uh it's like an iterative improvement so um like one key difference is is tender uh has like sort of some like built-in waiting um so just just like just like how the algorithm Works they like time scales whereas with uh with Hyper bft the the algorithm itself is like more asynchronous so like you don't have to say how long do I need to wait before I do something in this in this like

multi-step process you just the the the steps look more like uh once I have enough votes which in this case is like more than two-thirds of the stake um I'm happy to like vote on this block and progress to the next step and like no one no one anywhere no EV validator anywhere in this network is uh in the happy path of of algorithm is is waiting for a designated amount of time so like when the network is is Flowing smoothly and people are not timing out an algorithm it progresses as quickly as um information can be transmitted between the validators I think that's like that is like one big core difference um that that that's what basically lets the block times like not

really have a lower bound um and I guess another big difference is that tender tender was implemented earlier and is a result of I think a lot of trial and error and began as an academic implementation um was more research Focus so there there are just like a lot of small things um in the code that are like not that interesting when you look at them one by one but when you add them all together um do just like make a huge difference in in production performance woro is the leading interoperability platform for multi-chain Bridges and applications with over 1 billion messages sent and 40 billion in value transferred wormo leads the industry and cross chain message volume and total value transferred if you're a builder woro has an extensive sued of tools and

infrastructure to securely build multi-chain applications you can use Wormhole to power D5 nfts governance and so much more and Wormhole supports over 30 blockchains and six different run times came unique Wormhole NF just for zerox research listeners today F out a form prove that youve list today's episode to receive a PO app and you'll get an email over the coming weeks to claim your limited edition nft pair is an Innovative pair trading exchange built on top of Simo users can trade trending narratives with one click from Blue Chip narratives such as long BTC short e right through the whiff versus Bonk the Hat stays on Sim's intense Centric architecture enables deep liquidity source offchain and Broad on chain and combined with pair has

democratized access to complex trading strategies typically reserved for institutional Traders you mentioned earlier that you guys have a lot of people building uh on top of you or you had and then that's how you guys kind of evolve the product I feel like that's the dream of most um like developers but I kind of want to ask you guys are I assume you're allowing permissionless smart contract deployment eventually on the hyper liquid L1 or maybe day one is there um are there any products that you're looking forward to for people to launch like a new Vault system or uh any of the sorts like GMX in its early days gained a lot of attention just by people building new products on top of them so I'm wondering how you're thinking about

that yeah we're pretty happy to let the community do whatever they see fit so we we're trying I think that the nice thing about general purpose platforms I think I mostly say bad thing bad things about them because it's always in the context of like well you can't use this to build a purpose de I think I've like just tweeted this like over and over again and um and I still believe that but the but there are really cool things about permissionless smart contract systems um which is just that like you don't need to say what you want people to build you give them the tools and they build it I think that's like very powerful um our vision though is like how the two fit together um I think this is a quite unique to hyper liquid and I think potentially we should be we should be

explaining this more to people because people assume that we're this evm is just coming because like evm is cool like people can build on it and like maybe maybe we think people want to build on it but that's the the the real reason is it's like this sort of like like it's it's gonna it will be the thing that takes the hyper liquid L1 from a very focused like application chain um it will let it kind of grow fully into the application which which is you know at this point like trading like spot and pers trading um you like in order to get in order to do perose trading like like a big thing is we want to make it easy to on board and so like the evm solves that because they're all these like bridging protocols and they

they love to integrate with evm that's like the first thing that like any any one of the big bridging protocols like makes sure to integrate it's it's like okay that check that box um spot trading you need bridging of like canonical Spa assets from other chains like you know eth BTC Soul um the these these things like you know also solved by the bridge um and even more importantly like you you really want native assets on your chain like why has salana done so well it's it's because that it's because like there's this new wave of Builders who who Cho salana and like build on it and when your native application is on salana um you're like obviously like the most natural place to trade the native asset is to not Bridge it somewhere else but to like just trade it on the Chain

if it's possible to do on your chain and like hyper liquid is the best place to do that and so it there's like there's natural Synergy there with with building as well so there are all these reasons that like really like ANM in some sense is like is like a generalization solution of this like already scaled out system so instead of like starting with the general thing and then like scaling it out we're like starting with a with a scaled solution um which which we we pretty confident can can scale to be binance and and and bigger on chain and then like building the generalization automically into that um that that's kind of like the vision so um concretely I guess it's like we're not s we don't expect there to be like rep replicating things that are like

what hyper liquid L1 has natively right now um on the evm like people are welcome to do that I don't expect that to gain that much traction given that users of hyper liquid probably are using it because they like order books and like GMX Sal all like not sure that's that interesting yeah but something like there's a huge long tale of finance that is that could be built natively but I think is better suited for these permissions things so things I I I think would would be really cool would be like U like a borrow lending protocol um there are a lot of there's a lot of work been done there on on the evm there a lot of like really big projects a lot of tvl and um these kinds of things you know it's not super like gas constrained it's not super high throughput but it's

like super valuable like if you can if you like one of their biggest requests is like can I deposit eth as a collateral and and then trade like you know either do the funding ARB with eth itself or like trade some other coins that are usdc margined and this suddenly like you know it becomes like like we don't have to build that into the L1 itself which is quite a big undertaking there can just be this like borrow end protocol automically built into the evm that's compos posable with the burp snacks so things like that I think are like really cool and um and people have already expressed interest in building these kinds of things so I'm really excited for for that kind of stuff are you worried about congestion or block space at all if you're allowing other Primitives to build on the L1 um I

mean from what it sounds like the l1's very performant and it should be fine uh likely but I'm just wondering how you guys are planning on approaching that yeah so we're not I think another big misconception is we're not like pivoting to building a performing evm or anything like that so the I I believe on hyper liquid the the evm will just have less demand and and I kind of hope it is like that um because if you look at like I I don't know I haven't run these numbers maybe you know but if you look at ethereum and you look at end user transactions that go through that like do something that is already done a hyper liquid so like that includes like Unis swap like usdc transfers um it also includes like L2

blocks uh that are actually on the L2 side like end users being doing these like simple Financial operations like if you added all those up like I don't actually know how much of um ethereum's block space that is but I would I would guess it's a very high percentage um and so like when you move all that to like some native application I do think the like genuine demand for the evm space um decreases so it's sort of like an an alternative way to scale an evm which like no one really talks about is like is like you take the things that really shouldn't be built on an evm or like any virtual machine for that matter um things that really like really ought to be built natively into a protocol do that and like that does just alleviate all the congestion um and so that that's

like our hypothesis going in I think like if there is just like act actually like immense demand for this evm then um you know I'm not saying that it can't be scaled but uh I think we would we would want to see we want to like see evidence that that's going to happen um before before sort of like formulating a plan around it yeah that that makes sense and I'm really excited about some features uh now with the the native evm just maybe for a little bit of context so just this Monday you announced that the the hyper liquid L1 will um support a a a native FM and as I understand it a really exciting feature brought by this integration is that the hiip one out

assets will feature the atomic transfer with the corresponding erc20 contract and so what can users expect from from this upgrade how how do you think it will change the way they interact with the product yeah so the the thing you mentioned is is the is the example we gave I think it's the most obvious one for for why this evm is not just some isolated new feature um so the the idea is like uh like right now very very soon people people will be able to permissionless um deploy hip1 and hip2 on Main net which we're super excited about uh and we think we will will already be really cool for a lot of Builders um but with the evm I think

this gives you this gives Builders confidence that um soon they will literally be able to do whatever they want um so you you can right now you can you can launch a uh hip1 asset with with a corresponding hip to like hyper liquidity which is this like on ch um order book liquidity provision strategy uh and you can do this today and then when the evm launches um The Hip one and two deployers will be able to like specify a um a corresponding erc20 contract on the evm state and the evm state and the other L1 state are are composable there are like atomically one

state that is agreed upon by consensus and so there will be a mechanism by which uh hip1 token balances and erc20 token balances um are fungible in some sense so it's like it's not a bridge it's like it's like an atomic transfer basically um and so this lets you uh if you're if you're a builder and you're thinking about using evm which I think many Builders are um and you're looking for someone to build I think it's like a really strong pitch to The Builder because um because like for a builder the important the two important things are like which chain you're building on and how can I get how can I decentralize the supply of the the governance token or or

the gas token or whatever whatever you're issuing issuing for your um for your project and the first one you know it's like yeah pick evm pick svm whatever um second one is like okay like probably gonna have to go to binance buy bit coinbase whatever and like I kind of asked them to list your token and they kind of the exchange has a lot of leverage in that discussion and um I just think it's like not a very good system and so hyper liquid being this completely open platform to trade on chain um and to have and and to have that be automically happening on the same chain you're building on I think is like really powerful um and so yeah if if you had binance and ethereum or or

whatever scalable solution you wanted um atomically composed into one unit then like that is sort of the the vision for the hyper liquid um evm perfect um last question on the L1 current Traders uh they don't pay gas to use the L1 um how will decentralization and like introducing a native token affect costs and what challenges do you guys think you'll have as you introduce this and try to decentralize the validator set yeah so the the L1 will need a native token it's not even necessarily to pay gas I think people often focus on gas but the the main reason L1 needs a native token is is like you said for the

the staking um you can't there's there's just no way to run proof of stake without um a native token and that is like in my view that is sort of like the only thing you really need in L1 token for um but it's a super important one like uh there's no way around it and um you on hyper liquid there's no plan to require the L1 token to trade um obviously things can change like maybe some maybe there's some like novel new mechanism by which like trading like makes more sense and involves L1 token but um there's there's no reason to think that that will have to happen um so the the thing you mentioned with with with trading being gas free is actually

not it's not like a it's not like a Band-Aid solution it's not like it's it should be costing gas but it's not it's rather like the L1 itself is um is is so custom that we that we can actually have the same properties as having gas like a native gas token charge per transaction but rather have it be through this other mechanism um when when the transactions of like when the transaction been considered are trading um you can basically use a combination of fill rate and trading fees to make guarantees about how much is paid per I guess like per throughput or per uh you know State per like State bloat um

and that really is the purpose of gas and so like as long as as long as the protocol is charging for what could be dos whether it's state or throughput based um it's fine and so the the system hyper liquid like at first glance sort of seems like we're just like brushing this under the the covers but it's actually been thought through very carefully there may still be issues with it but I think the fundamental idea is sound um and I think there's like a lot of write up in the doc about how this stuff works um it does let it does force people to kind of modify their strategies a bit if they're market makers but people usually have at this point it's kind of well known how to adapt to it and I think it's quite a scalable solution and gives the nice

property like you said is like if you're if I'm a user first time using hyper liquid I don't need to go buy some like random token I don't want to hold just to use it yeah that makes sense and um I was thinking the points program ended at the beginning of this month um but hyper liquid actually managed to maintain its position in the top three verb texes in terms of daily volume at least and compared with other points programs I noticed that you didn't draw much attention for it for example with boosts multipliers or other Partnerships explicit rules do you find like that this helped attract the the right type of users or what do you think was your

secret here besides it being a good product um yeah it's it's a good question I think we didn't think too much about how we could Market the points I mean there there are just like like we're pretty big Believers in simplicity so it is just you know it's it's a number it doesn't have any value it's meant to it's meant to um like it's meant to signify to a user like how much they've contributed to the protocol and we we kind of like just feel like it's like simple it's self-explanatory and really we don't want people thinking too much about like that number like he said we want this product to kind of speak for itself but it's a little bit of like something for people to talk about

something people like maybe like catch their attention someone else talking about their points like oh let me check this product out and and I think it by and large like worked um to that effect and people generally like the product and we're pretty happy with with that outcome um I I think a big I think like one big thing that we took a gamble on and that I think has paid off is um is just making the points completely opaque um I think a lot of protocols launch points with the intention of inflating metrics um I don't yeah I guess no comment on whether that's like a good or bad idea but if you're doing that you kind of want it to be explicit otherwise

you're really not getting the value you want like if you would rather tell someone like you will get one point for every $1 in fees you pay and then people know exactly how to calculate like they may they may just have like some formula in their mind and they can calculate and do exactly what like what inflates the metrics more um we felt very strongly this is like not a good idea like we don't care about short-term metrics um and so taking that gamble I think was was good because uh these there's like a large set of users who I strongly believe like you can just kind of look at the numbers like they make up a very large fraction of the volume on most uh other per Dees

and and dexes in general and chains in general um there's just like large set of users and they're very like I don't know they're they're like very fleeting and mercenary and um not that they don't provide any value to a protocol but I think we just decided that uh not super valuable to hyper liquid long-term Vision I feel like those um the points programs that you mentioned where they're very explicit are and they inflate the volume or activity or what whatever they're usually as far as what I've read they're usually to entice um funding or like VCS Etc and this is actually one thing that I wanted to ask you about is that you guys chose to bootstrap the protocol instead of

raising external funds what was the choice behind this and like how did you guys end up actually doing that and boost strapping the protocol because your fees are reasonable it's not like what GMX fees were a year ago it's like on open and close you pay something double of what other protocols asked for yeah um I guess F first I'd like to clarify the last point which is that um we actually the dev team does not collect any fees from the protocol so all the fees um go to a mix of the Insurance Fund and the uh and mostly to hlp uh and and so like yes the fees the Fe are low I think we very very strongly it's like so early in Defi and there's

so many ways in which defi is harder to use than CI still that that the fees that fees being low is like sort of uh a bare minimum to getting some new users so that's a product decision that being said the protocol has collected a lot of fees and so if if it were a business it would be very profitable um but that being said it is not a business and I think we could potentially be more clear about this we we try to say it like every so often but like the yeah the team has never taken um even a scent of of the fees and this is because we just like we believe so strongly longterm in the project that uh we just don't we don't need the

short-term uh money and we don't we don't we want we don't want to people ever to be like have anything to say about like oh this like Insider teams like you know making so much money off these fees like uh I don't know there like a lot of negative things you can say um in that line and I think like a lot of a lot of protocols do make this choice and and kind of have to suffer those criticisms and so um yeah that's how that's just how we operate and um as far as fundraising I think it's like a similar similar story um I think there's a lot of interest in investing uh but but ultimately hyper liquid is is is very like long-term oriented so um if

the goal is to is to really be the platform on which all Finance happens uh this is like a very a very long-term vision and um there's a lot there's a lot of hurdles there and I think I think one very important thing will be like what decides the like ultimate Financial platform of the future uh will be that there are no Insiders on the base layer I don't think V I think VC's provide a lot of value I think it's like I I think a lot of the economy you know like has VCS to think for that and and um I don't want to on VCS in general it's just um there's a very unique opportunity with Hyper liquid to be something more like Bitcoin

where like I think if B if Satoshi took you know a pre-sale and or like or or or like VC invested in like satoshi's initial mining setup or something like I don't know like I think Bitcoin just wouldn't be Bitcoin um and not not saying not like not like literally comparing hyper liqued Bitcoin but I think that is like one prerequisite to being um a neutral platform and uh and that that is like the Ambitions are just that big and so uh we are like check that box and I think it will be important yeah and maybe zooming out now a little bit more um I wanted to ask how do you see the longer term future of the

space in terms of multi-chain dedicated chains one winning chain because it seems like there are highly contrasting approaches even within the per space for example vertex Edge and Hyper liquid we could say that vertex Edge accepts the premise that there will be always a lot of users on different chains and so tries to aggregate this liquidity through offchain matching so that deployment on more chains brings more liquidity to every chain and Hyper liquid maybe takes the opposite approach of growing its chain with more use cases and more protocols kind of consolidating users in one chain how do you see this yeah just how do you think about this yeah um so I'll copat this by saying that I don't actually think I don't have too

much time to philosophize on like super large scale stuff so I'm probably not the best person to ask for for this question but my but my personal view is that it's somewhere in between like um I I think there should be I think Finance should happen on one composable chain but I don't think everything should um so like if you have a game where the you know like the items are tradable and there are millions of users using it and like doing things like I really don't think that ought to be competing with like you know like derivatives on bitcoin where where Bitcoin is like The the Reserve asset of the world it's like

just like completely different scales of sort of like importance and um I think it's like totally fine for those to just like not compose at all because like there's no reason for them them to compose um but I think Finance happening on a bunch of different chains is just bad like um bridges are super risky I think right now it's fine because crypto's so early and like generally I think teams are well intentioned and um even centralized exchanges like I think broadly like they they're like mean well and like are trying to trying to do good things and um but but it's just like it's just not the like it can't possibly be the ultimate solution um and so if you don't think centralized exchanges are good I think I think you should have a similar skepticism towards Bridges because they're just it's just like

layer removed it's still like a lot of trust assumptions going in and just like not um not I guess like automically uh composable with other things and so yeah I think the I think with Hyper liquid we've always at least thus far we've always just thought of ourselves as like we're trying to build what's good for defi because that's obviously the product Market fit that crypto has found and it's it's very clear like even if even if crypto is good for nothing else I think um it's it's very clear that it's like a better Financial system it's more it's more accessible it's more equalitarian than like as the world you know as inequality grows in the world I think it's like more and more important for like for for finance to happen um on chain and so um in that narrower scope uh I I'm I guess I'm a huge proponent of

uh like a single chain yeah I agree with you I um I think anybody who's used um defi enough knows that fragmentation like is just horrible horrible ux and not in just in the sense of like you're not having fun it also like diminishes efficiency and just actually trying to get benefit off of defi um I have two more questions for you Jeff one is what are you guys going to be doing for with Hyper liquid over the six to next six to 12 months like what are the plans and the second one which I'm going to ask now because I feel like you're going to answer it uh and I want to ask it how do you see the competition landscape um for hyper but

now versus in a year mhm um yeah so we're a super small team uh think people often pretty surprised we actually uh we're five engineers and we're um fewer than 10 people total um and so we're we're not like those teams that you know like pretty common in crypto where it's like you you have a very very long-term Vision like raise a lot of money and sort of like have this like manye road map um I think that's cool it's just like that's just like not our strength we're very much focused on like the next thing to build I think it's like we're very we very confidently are stepping in the right direction but we don't plan

out like a 100 steps um so six to 12 months I think um I think by then the evm should be live uh the network should be decentralized um and I think those two things were very bullish on but I think they're also very uncertain so depending on what happens there like there might just be like a ton of issues that come up and we just need like that just ends up being the highest priority um to the extent that there aren't I think uh it will be whatever it takes to continue pushing hyper the hyper L1 and the and

the ecosystem around it um to being the place that like Financial applications start to flock and like start to build around um so whatever you know whatever kind of pain points developers come up with whatever you know if like users market makers Etc like start to face issues um as it scales um you know me whatever comes up there I have a lot of thoughts there but probably not the right question to answer right now um whatever comes up basically um that that will be that will be our focus and at at the end of the day it's it's always it's always the users and the definition of user is like always changing so initially it was Traders and it's like you know Traders market makers now it's like Traders

market makers Builders um yeah whatever like whatever they need uh and we can help with um that that'll be our priority and as far as the competition question goes there's I probably don't have anything super insightful there either we don't really think that much about competitors it's not really clear who our competitors are either I think it's there's like not there aren't really any projects trying to do the same thing which I think usually is a bad sign like if you're if you have a startup and nobody's competing then it probably means your idea is bad but I think we're just I think hyid at this point is just like trying to do such a general thing while still having a laser focus on the

core product it's it's very unique there um I mean the the chart that I always look at the number I always look at is like bance pers volume in the denominator and like hyper liquid pers volume in the numerator and like uh so um looking at that like yeah I mean I'm I'm always extremely impressed by by binance and I guess like the top Central exchanges in general they've they they do such a good job at um you know they they like do one thing very very well and um you know put their users first and uh yeah and like and manage to like

maintain those users like it's like binance in particular like they've gone through so much and users still trust them and use them and like that I think like I you know I look at it a lot I'm like I'm always impressed by the volume numbers um but from our perspective it's you know we're building something different like defi is just you know earlier it's it's more nent it's like for for a lot of people it's it's not it's not time to switch yet and we recognize that and um yeah so we like we think our we think about our competitors we're like yeah you know whatever we can learn from them we try to do but we're also trying to pay our own way and I I think uh everything that hyper liquid has done well so far I think has largely just been like not from studying competitors

and like trying to emulate something but but from just like like thinking about first principles and coming up with something entirely new so whether it's like you know like the vaults primitive or this like um I guess like even how permissionless spot listings work or like having gas list on per order books which no one thought was possible um like this liquidity Vault that like does Market making in an accessible way that anyone can posit into I think these are all like firsts and these are the things that hyper liquid are are known for now so I think our goal is always just like continue continue like inventing new things and that and I think that's also like what really adds value to the world like if you if you like find see something comparators doing well and like do it like just slightly better and

like get some of their market share I don't think that actually um that doesn't really move the needle much on on ADV dancing defi as a whole perfect thank you so much for coming on Jeff this was like one of the most interesting conversations I've had so far and I'm I feel like hyper liquid uh is something that I just like can't get enough of kind of it's because you guys are kind of how do I put this uh not secretive but I guess not as public as I would assume uh with interviews and everything so I'm actually really happy to have a for example I wasn't expecting you to be such a onchain maxi it was kind of surprise it's good to hear yeah we're we're often just busy coding like I I

spend most of my time writing reviewing code and then thinking about product and so yeah my like Twitter game and interview game is definitely like pretty pretty bad as far as Founders go but um glad yeah thanks for having having me on and it's always good to you know to chat in long form with with people and I think yeah you had you had really good questions hopefully my answers were not too confusing your answers were perfect thank you thanks thank you so much we have teamed up with the wormo foundation stewards of the wormo protocol the leading interoperability platform powering Crossing transfers for over 200 plus multi-chain dabs Wormhole isn't just a bridge it's the leading interoperability platform for multi-chain applications so go and claim

your unique wormo nfts just for zerox research listeners today hit the link in the description to fill out a form and to prove that you've listened to today's episode and receive a PO app you get an email over the coming weeks to claim your limited edition nft [Music]