The alarm jolted Jeff Yan awake at around 5:00 a.m. It was a ringtone designed to\u2014among other scenarios\u2014blare out when something abnormal occurs on Hyperliquid, the decentralized crypto exchange he had cofounded. And on this morning in early October, things were very abnormal indeed.\u00a0<\/p>\n
That day, crypto traders saw more than $19 billion in leveraged positions\u2014or bets where investors wager more capital than they have on hand\u2014evaporate after President Donald Trump threatened China with another round of tariffs, according to data from the crypto analytics site CoinGlass. \u201cI\u2019m just looking at it and praying that it\u2019s good,\u201d Yan said, referring to his exchange\u2019s systems. Within one hour, using his \u201cevery brain cell\u201d to analyze the data, he was confident that the platform had worked as intended\u2014surviving a stress test where thousands of traders lost money and others who were shorting the market cashed in.\u00a0<\/p>\n
In coming weeks, the crypto industry would come to refer to the wipe-out of Oct. 10 as a flash crash, one that was the largest liquidation event ever tracked by CoinGlass and an episode whose fallout<\/a> still reverberates throughout the industry two months later. It was also one of the clearest signs yet that Hyperliquid had grown to become a crypto juggernaut.<\/p>\n According to CoinGlass, the platform liquidated more than $10 billion worth of positions that day, a figure that far outstripped the $4.6 billion and $2.4 billion liquidations that took place on longtime crypto exchanges Bybit and Binance, respectively. (The $10 billion figure refers to the total amount of the leveraged positions liquidated; the actual funds traders lost on their bets was lower). <\/p>\n Big exchanges like Binance and Coinbase have thousands of employees. By contrast, Hyperliquid Labs\u2014the company that supports the associated crypto exchange and blockchain of the same name\u2014had just 11. Yet, in just over two years, Hyperliquid is competing with the industry\u2019s very biggest names, posting about $140 billion in derivatives volume in the past month, according to data from the analytics site DefiLlama. This has translated into more than $616 million in annualized revenue, while the cryptocurrency linked to its blockchain (known as HYPE) has grown to one of the largest in the industry with a market capitalization of almost $5.9 billion, according to data from the crypto analytics site DefiLlama<\/a>.<\/p>\n But Yan wants Hyperliquid to become even bigger. \u201cIt\u2019s something that no one else is really trying to build exactly at this point in time,\u201d he said, \u201cwhich is something that can really upgrade the financial system.\u201d<\/p>\n The crypto world has long been defined by flamboyant and outspoken figures. Yan doesn\u2019t fit that mold. Sporting black-rimmed glasses, trim black hair, and usually wearing crisp shorts, he said he is uneasy in the limelight. \u201cThis sort of celebrity is foreign to me,\u201d he said, referring to how it felt to be mobbed at a recent crypto conference in South Korea. While willing to chat about his background, he stressed repeatedly that Hyperliquid is an ecosystem, not a one-man operation.<\/p>\n Despite his professed modesty, it\u2019s clear Yan has been integral to the crypto protocol\u2019s rise. Born in the Bay Area, he\u2019s your prototypical whiz kid. In high school, he won<\/a> gold and silver medals at the International Physics Olympiad and then attended Harvard University, where he studied mathematics and computer science.\u00a0<\/p>\n \u201cHe was always just very calm and very thoughtful,\u201d said Vladimir Novakovski, a fellow Harvard graduate who interviewed Yan for an internship at Addepar, a wealth management software company. (Novakovski would later go on to create a competing exchange to Hyperliquid. Yan doesn\u2019t recall interviewing with Novakovski, a Hyperliquid Labs spokesperson told Fortune<\/em>.)\u00a0<\/p>\n Around the time Yan graduated from Harvard, the notorious crypto conman Sam Bankman-Fried was making a name for himself. Bankman-Fried had spun up his own crypto trading firm Alameda Research and was simultaneously growing FTX, his own crypto exchange that specialized in perpetuals, or derivatives that let traders bet on the future price of assets without holding the assets themselves. These contracts allow for leverage, which lets traders magnify gains and losses.<\/p>\n Even as Bankman-Fried was captivating the crypto industry with spiels about his alleged genius, Yan and his team stayed away, preferring to trade on platforms like Coinbase. \u201cAlameda and FTX, their relationship was not clear to me,\u201d he said. \u201cAnd it felt like it wasn\u2019t worth the risk of exposing any part of our funds or strategies to that kind of unclear relationship.\u201d<\/p>\n FTX was a black box. Bankman-Fried plowed billions of dollars in customer funds into ostentatious real estate purchases, risky venture investments, and political lobbying campaigns. Only after FTX declared bankruptcy did customers see how much of their capital Bankman-Fried had gambled away.\u00a0<\/p>\n Yan wanted to create a more transparent trading platform for crypto perpetuals, or \u201cperps.\u201d He and his team had thought about building their own decentralized exchange prior to the collapse of FTX, but the \u201cFTX thing solidified my conviction that it was the right time to build this thing,\u201d he said.\u00a0<\/p>\n He was far from the first founder to dream up a decentralized crypto trading platform. There are a handful of of others, like dYdX, that offer crypto derivatives to risk-hungry traders who don\u2019t want to venture onto centralized exchanges like Coinbase. But these decentralized platforms were often clunky, hard to use, and slow. \u201cCentralized exchanges had a really great UX [user experience], and almost all the volume was happening on centralized exchanges, but no one in DeFi was, I think, really trying to match that,\u201d said Yan, referring to the term decentralized finance.<\/p>\n Yan, though, was a trader, and he and his team decided to build a platform they <\/em>would want to use. \u201cI think it is good when the people building the product are very familiar with who the customer is,\u201d said Novakovski, the crypto founder who interviewed Yan for an internship.<\/p>\n Unlike Bankman-Fried, Yan cut an image that was more polished, professional, and sincere, according to a longtime crypto executive who\u2019s met both founders. \u201cJeff has cut his hair. SBF did not,\u201d they said, asking for anonymity to speak more candidly. \u201cSBF\u2019s shorts were too long and didn\u2019t fit. Jeff\u2019s look crisp and together.\u201d\u00a0<\/p>\n And, as opposed to Bankman-Fried and countless other crypto founders, Yan and his team decided to eschew raising money from venture capitalists. They were already making a sizable amount from their crypto trading operation, and Yan decided to front the cost himself. \u201cIf we\u2019re going to build something that\u2019s really going to be a credibly neutral platform on which everyone else can build, then a really important principle is to sort of not have insiders,\u201d he said.<\/p>\n In 2023, Yan and his team launched Hyperliquid and the blockchain on which the decentralized exchange is built. For months, volume grew steadily, but interest in the exchange exploded in early 2025, according to data from DefiLlama.<\/p>\n Hyperliquid is optimized for speed. For many traders, seconds mean the difference between profit or loss. \u201cI\u2019m the one user who keeps bugging the team to add more features, and they keep rejecting every feature that I ask for because they want to keep it extremely fast and extremely nimble,\u201d said Thanos Alpha, a pseudonymous Hyperliquid user who said he\u2019s a power user on the platform.<\/p>\n This speed, combined with engineering solutions that allowed Hyperliquid to accommodate larger trades than competitors, set it up for success, added the pseudonymous trader, who said he\u2019s an avid DeFi user but declined to give his real name\u2014a common request from crypto diehards.<\/p>\n Now, the ecosystem is attracting interest beyond anonymous crypto traders. Large venture capital firms like Paradigm and Andreessen Horowitz have taken positions in Hyperliquid\u2019s HYPE cryptocurrency, reported<\/a> The Information<\/em>. And even Wall Street and large companies are taking notice. The fintech giant PayPal posted<\/a> about Hyperliquid on social media as a crop of companies vied to launch a Hyperliquid-branded stablecoin on the blockchain. And David Schamis, founding partner at the private equity firm Atlas Merchant Capital, is steering a public company that is stockpiling HYPE. \u201cIt\u2019s not only about trading crypto,\u201d Schamis said, referring to blockchain technology.\u00a0<\/p>\n Yan, himself, views Hyperliquid as the Amazon Web Services of financial infrastructure, referring to the cloud computing giant that powers much of the internet. Developers are independently deploying different assets other than cryptocurrencies to trade on the blockchain, including listings tied to the prices of stocks of major corporations like NVIDIA and Google. And some validators, or the people who own the servers that actually process the transactions, earn revenue through supporting the ecosystem.<\/p>\n Still, there\u2019s no guarantee that Hyperliquid will continue to expand, especially as competitors look to challenge Hyperliquid\u2019s newfound dominance. That includes Novakovski, who has since launched Lighter, his own competing crypto derivatives platform backed by Founders Fund, Ribbit Capital, and David Sacks\u2019 Craft Ventures. And then there\u2019s Aster, a Hyperliquid copycat that\u2019s closely aligned with the crypto exchange Binance.\u00a0<\/p>\n Moreover, Hyperliquid\u2014like many crypto projects in the world of DeFi\u2014operates in ambiguous legal territory. Its users are all anonymous, and no one has to submit documentation to verify their identity, as opposed to traders who access more traditional financial products like Robinhood. In fact, users linked to North Korea, which has an infamous crypto hacking operation, have traded on Hyperliquid, alleges<\/a> Taylor Monahan, lead security researcher at the crypto wallet MetaMask. DeFi protocols are part of North Korea\u2019s money laundering operation, according<\/a> to the crypto analytics firm Chainalysis.<\/p>\n A spokesperson for Hyperliquid Labs said that the website for Hyperliquid screens traders for risky behavior and enforces sanctions compliance, adding that \u201dany confirmed high risk activity on the application is immediately flagged and the addresses blocked.\u201d<\/p>\n And, if Hyperliquid continues to grow, the ecosystem may attract more regulatory scrutiny. \u201cIt\u2019s a big question about how long they [Hyperliquid] will be allowed to operate in this non-KYC way,\u201d said a crypto market maker, referring to know-your-customer laws, which require financial institutions to collect user identification. The market maker asked for anonymity to talk more candidly.\u00a0<\/p>\n \u201cThe bigger they are, the bigger the question usually becomes,\u201d added the market maker.<\/p>\n \u201cWe are proactively engaging with regulators and policy stakeholders to support greater clarity for decentralized finance,\u201d a Hyperliquid spokesperson said in response.<\/p>\nCrypto whiz kids<\/h2>\n
FTX aftermath<\/h2>\n
AWS of finance<\/h2>\n