Hyperliquid Co-founder Jeff Yan: Self-Custody is the On-Chain Advantage
Hyperliquid co-founder Jeff Yan stated during a fireside chat at the Korea Blockchain Week that 24-hour trading is not the true advantage of on-chain finance compared to traditional exchanges; the core advantage is that users retain control and custody of their funds.
He pointed out that crypto assets are inherently globally circulated and do not need to adhere to traditional opening and closing times; traditional exchanges are also extending their hours, making it increasingly difficult to maintain a competitive edge. Yan said, "The core of on-chain finance is that users still have control and custody of their funds, and that is the first thing." Self-custody can reduce common single points of failure when counterparties, intermediaries, or custodians encounter issues.
The second advantage is transparency. He acknowledged that this does not have mass appeal for everyday users, but users should theoretically be able to see everything happening within the system; this trust and neutrality cannot be provided by a system controlled by a single private entity. The event took place at the Walkerhill Hotel in the Gwangjin District of Seoul, with speakers including Arthur Hayes and Tom Lee; Hyperliquid held a separate seminar for Korean financial institutions the day before the main conference.
He did not deny the value of continuous trading entirely: commodities, stocks, and Pre-IPO assets still lack publicly available prices when traditional markets are closed, and such transactions have already occurred on Hyperliquid. He specifically mentioned the private equity market, stating that even without malicious exclusivity, wealth opportunities are still blocked by access restrictions; global price discovery could allow more people to participate earlier, rather than being confined to a single jurisdiction. The technical foundation points to HIP-3, which allows independent teams to build perpetual markets without core permission and has already contributed to transactions in non-crypto assets.
The platform is built and funded by a team of about 11 people, without venture capital investment, and will airdrop 310 million HYPE tokens to real users on November 29, 2024, accounting for 31% of the total supply, with no discounted shares reserved for private investors or centralized exchanges. Yan, who has a background in mathematics and computer science from Harvard, previously worked in quantitative trading at Hudson River Trading and later as a market maker at Chameleon Trading. The team built a layer chain specifically for the order book using Rust, rather than placing the order book on centralized servers or general public chains.
Funds remain in users' self-custody accounts and on-chain perpetual order books, rather than being handed over to a single custodian. Buyers are traders who need to price commodities, stocks, Pre-IPO, and private placements when traditional markets are closed; sellers are exchanges and private channels that still rely on time periods and licenses to control access. The event is a positioning battle, not a product launch. Beneficiaries are those who can list non-crypto perpetuals as HIP-3 deployers and market makers already in the game; those under pressure are traditional extended trading platforms that use "we can also trade at night" as a selling point, and centralized platforms that place user assets in a single custodial account.
Source: Public Information
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After transitioning from high-frequency market making to crypto, Jeff Yan determined that existing public chains cannot support professional derivatives, leading him to avoid financing, not hire market makers, and not outsource the order book, instead building a layer chain with 11 people using Rust. The 2024 airdrop will directly give 31% of the supply to users, with the team holding about 24% and approximately 70% reserved for the community. This ownership structure influenced his remarks in Seoul: advantages cannot be framed as opening hours, or else once Nasdaq opens its night trading, the narrative will be immediately replicated.
The capital path is through trading fees and on-chain perpetual liquidity, rather than VC checks. Money flows from user margins into self-custody accounts, then prices assets without white paper quotes in the HIP-3 market. The motivation is to capture the night price differences of commodities, stocks, Pre-IPO, and private placements into the on-chain order book, while using a visible ledger to counter "the decision of a single private entity." Resource mobilization relies on permissioned market modules, rather than raising another round to buy licenses. Self-custody only becomes apparent when counterparties encounter issues; otherwise, it is merely friction; Yan frames this friction as a first principle, effectively pricing in the next custodial crisis in advance.
In contrast to the influx of funds into on-chain perpetuals after the FTX collapse, executives from the NYSE parent company claim that their platform's transactions have surpassed Nasdaq's public evaluations, and traditional brokerages have extended US stock pre-market and after-hours trading to nearly all day. Binance and OKX use centralized matching combined with their own chains; Hyperliquid takes the opposite approach: matching on-chain, with assets not entering the company wallet. The industry has shifted from "who can open for 24 hours first" to "who can create a neutral order book for assets without public prices," with expansion targets being private equity and Pre-IPO, and control mechanisms being self-custody and verifiable ledgers.
The essence is the transfer of pricing power. Traditional markets create information asymmetry through time periods and custody, while on-chain uses continuous order books to expose the price differences during market closures, and then uses transparent ledgers to take away the intermediary's explanatory power. The mechanism is: the more global the asset and the less it has an official closing price, the more a matching layer that does not rely on a single custodian is needed; 24-hour trading is merely a byproduct of this matching layer. Once private equity can be continuously quoted with perpetual contracts, access prices will be thinned out by global order books in advance. Time periods can be learned by traditional exchanges, but key and ledger structures cannot be learned.