Hyperliquid Co-founder Jeff Yan: The Platform Aims to Become Underlying Trading Technology for Traditional Financial Institutions
Hyperliquid Labs co-founder Jeff Yan stated in Bloomberg's "Odd Lots" podcast that Hyperliquid is not yet open to U.S. customers and aims to become the underlying trading technology used by traditional financial institutions, rather than replacing existing market participants.
He likened Hyperliquid to Amazon Web Services (AWS) providing computing infrastructure for businesses, noting that blockchain is more suitable as an underlying facility for order books, clearing, global distribution, and liquidity aggregation, allowing existing institutions to directly connect and enhance their service capabilities without having to rebuild entire systems.
Jeff Yan emphasized that regulatory obligations should fall on the financial institutions operating markets based on the Hyperliquid blockchain, rather than on the blockchain network itself. This arrangement would allow the platform to further expand into Wall Street while avoiding the full compliance burden of traditional exchanges. U.S. regulators are cautious about new technologies but willing to quickly advance innovation.
He clearly stated, "We are not trying to replace anything; in fact, I believe this technology can benefit institutions that currently operate markets in a more traditional manner," and mentioned that the team is serious about Hyperliquid becoming a "home for all financial assets," with the protocol's goal being to support various financial markets rather than just cryptocurrency trading.
There are already specific signs of progress along this path, including licensed institutions planning to deploy markets for U.S. customers on Hyperliquid through compliant entities, with relevant institutions responsible for customer access, market operations, and clearing. The plan is still pending regulatory approval, and the platform itself maintains a neutral infrastructure role.
In terms of market mechanisms, funds primarily flow to traditional financial institutions and market makers using this underlying technology, with event-driven expectations stemming from regulatory framework adjustments. Institutions reduce self-built costs and gain global liquidity by accessing the order book and clearing layer. The Hyperliquid protocol and licensed operators benefit from increased fees and usage, while traditional closed exchanges face pressure from 24/7 borderless competition and the risk of liquidity outflow.
Supplementary data shows that Hyperliquid has supported trading in perpetual contracts for commodities like crude oil and achieved significant growth, with the HYPE token ecosystem continuing to expand. Verification nodes and deployment mechanisms (such as staking thresholds and Dutch auctions) support market expansion, while on-chain clearing and state management remain decentralized.
Source: Public Information
ABAB AI Insight
Jeff Yan entered the crypto market with a background in high-frequency trading, and Hyperliquid emerged from the vacuum after the FTX incident. The team built a high-performance perpetual contract protocol with minimal scale and zero venture capital funding, directly competing with centralized exchanges' order book and clearing experience while retaining on-chain settlement. Previously, he has emphasized the infrastructure aspect rather than a single exchange positioning by frequently drawing parallels to AWS.
In terms of capital pathways, resources are concentrated on the protocol layer and the HYPE token ecosystem, including ongoing buybacks, staking of verification nodes, and market deployment mechanisms. Funds are attracted back through fees and liquidity aggregation, enticing market makers and institutions to connect. The strategic motive is to avoid direct competition with traditional licensed entities and instead become a neutral layer that licensed institutions can call upon, thus obtaining Wall Street order flow without bearing the full compliance costs.
Similar cases include AWS's alternative path to traditional IT and Ethereum being called upon as a settlement layer by numerous applications. Currently, Hyperliquid is in the stage of expanding from a single perpetual contract platform to a multi-asset financial infrastructure, akin to the early CME electronic trading system evolving from an internal tool to an industry-shared facility, but with decentralized verification and global distribution accelerating the process.
The structural judgment belongs to the reconstruction of the industrial chain: after the underlying blockchain provides a shared layer for order books, clearing, and liquidity aggregation, the pricing power and compliance responsibility shift to the licensed institutions operating the actual markets. The necessity for traditional exchanges to build their own infrastructure decreases, with event-driven recognition from regulators that "the network itself does not bear all obligations" making capital more inclined to connect rather than rebuild, accelerating liquidity concentration from closed systems to neutral protocol layers.
ABAB News · Cognitive Laws
- Underlying facilities consume traffic, surface applications consume licenses.
- Not replacing competitors' platforms makes it easier to absorb them.
- Regulation falls on users, allowing technology to enter core markets.