Jeff Yan Breaks Silence: Hyperliquid Chooses Traders Over Profit in a DeFi Power Move

 

Hyperliquid Defends Risk Model Amid Surging Competition in Decentralized Derivatives Market

The decentralized exchange Hyperliquid has once again found itself in the spotlight — but this time, for reasons that go far beyond trading volume or token performance. Its founder, Jeff Yan, has stepped forward to address growing speculation surrounding the platform’s focus on profit generation, firmly denying claims that Hyperliquid prioritizes protocol revenue over user protection.

In a detailed post shared across social media this week, Yan dismissed rumors about “profit-first” motives as nonsense, emphasizing that the exchange’s design philosophy has always centered on risk management, user safety, and market integrity. “Our systems are not built to enrich the protocol,” Yan stated. “They are built to protect traders and ensure fair execution, even in extreme conditions.”

A Defense Built on Data

To support his case, Yan cited a series of recent automatic deleveraging (ADL) events as proof that the exchange’s risk controls operate as intended. On October 10, several traders reportedly earned “hundreds of millions” in realized gains after the platform’s ADL system automatically closed short positions at favorable prices.

According to Yan, the event demonstrated how Hyperliquid’s risk engine prioritizes user benefit over protocol profits. “If we had used backstop liquidations, the platform could have generated much higher revenue,” he said. “But that would have meant amplifying risk across the system, which is unacceptable.”

The ADL system, which redistributes positions to maintain market balance, plays a crucial role in preventing cascading liquidations. Hyperliquid’s approach, Yan explained, mirrors the queue-based mechanisms of leading centralized exchanges but is kept intentionally simpler to avoid complexity-driven failure. “The ADL system lets profits stay with users while keeping exposure under control,” he said.

Simplicity as the Foundation of Stability

As debates over DeFi risk management intensify, Yan hinted that the platform is open to community-led discussions on potential improvements to its ADL algorithm. However, he pushed back strongly against calls to add complex correlation checks or secondary queues — proposals that, while innovative, could make the system more fragile.

“The more moving parts you add, the more fragile the system becomes,” Yan warned. “We’ve learned from traditional finance and early DeFi experiments that simplicity and transparency are what actually make systems stable in volatile markets.”

That philosophy appears to resonate with traders. Hyperliquid has rapidly gained a reputation for reliability during high-stress trading events — a quality that distinguishes it from competitors struggling with outages, delayed liquidations, or oracle manipulation during volatile market periods.

Gaining Attention Beyond Crypto Circles

Hyperliquid’s growing influence has caught the attention of traditional financial observers. During a recent podcast interview, Cathie Wood, CEO of ARK Invest, described the project as “the new kid on the block” — noting its rapid development and disciplined risk structure.

While Wood did not confirm any direct investment or partnership, she compared Hyperliquid’s trajectory to the early days of Solana, suggesting it could emerge as a defining force in the decentralized derivatives space.

Market analysts have echoed similar sentiments, describing Hyperliquid as part of a broader wave of “DeFi 2.0 infrastructure” — decentralized systems that combine institutional-grade design with community-driven governance.

Competition Heats Up in the Perpetuals Market

Hyperliquid’s success has not gone unnoticed. Its dominance in perpetual futures trading, one of DeFi’s fastest-growing sectors, has inspired a new wave of competitors seeking to carve out market share.

Earlier this month, Aster, a recently launched perpetual DEX, briefly overtook Hyperliquid in both trading volume and open interest, signaling just how competitive the landscape has become. Analysts view Aster’s rapid rise as a healthy sign for the ecosystem, illustrating the growing investor appetite for decentralized trading alternatives.

Meanwhile, StandX, a project founded by former Binance derivatives engineers, has made headlines by surpassing $200 million in total value locked (TVL) barely a month after launch. The StandX team celebrated the milestone by introducing StandX Alpha, a rewards program designed to incentivize early participants and deepen user engagement.

Together, these developments signal that the decentralized perpetuals market — once considered a niche — is now one of the most contested arenas in global crypto finance.

Hyperliquid’s Expanding Ecosystem and the USDH Stablecoin

Even as competition intensifies, Hyperliquid is broadening its footprint across DeFi. One of its most ambitious initiatives to date is the launch of USDH, a native stablecoin introduced in late September.

Backed by cash reserves and U.S. government securities, USDH aims to serve as the backbone of Hyperliquid’s on-chain financial infrastructure. During its first few days in operation, the stablecoin facilitated nearly $2 million in transactions, demonstrating strong early adoption.

Reserve management for USDH is handled via Stripe’s Bridge platform, ensuring regulatory-grade compliance and custodial security. The launch followed a governance-driven bidding process, which attracted participation from major institutions including Curve, Paxos, Frax Finance, and BitGo.

Ultimately, Native Markets secured the mandate to manage USDH reserves, committing to channel a portion of yield income into HYPE token buybacks and broader ecosystem development initiatives.

In preparation for the stablecoin’s rollout, Hyperliquid slashed its spot trading fees by 80%, a move intended to attract additional liquidity and reinforce its competitive standing within decentralized finance.

A New Power Center in Decentralized Derivatives

Despite its smaller scale compared to centralized titans like Binance or Coinbase, Hyperliquid has consistently outperformed expectations. In certain metrics, it has even surpassed Coinbase, underscoring the potential of decentralized infrastructure to challenge established industry leaders.

Across the perpetuals sector, monthly trading volume has exceeded $6 trillion, reflecting the extraordinary scale of activity within on-chain derivatives. Hyperliquid’s growth trajectory suggests that the decentralized model — once dismissed as experimental — is rapidly becoming a viable alternative for professional traders.

Market experts argue that this shift represents a deeper structural transformation within crypto. Tarun Chitra, founder of Gauntlet, recently noted that “the biggest opportunities in finance are often born in the youngest markets — where innovation moves faster than understanding.”

For Hyperliquid, that sentiment rings true. By maintaining a disciplined focus on transparency, user safety, and measured risk, the exchange appears to be carving out a new center of gravity in the decentralized trading world.

The Road Ahead

Looking forward, analysts believe Hyperliquid’s greatest challenge will be balancing growth with resilience. As regulatory scrutiny of decentralized derivatives intensifies, exchanges that can demonstrate responsible governance, verifiable risk management, and consistent performance will be best positioned to thrive.

Hyperliquid’s approach — merging simplicity with sophistication — may prove decisive. By resisting the temptation to chase revenue at the expense of reliability, the platform has cultivated trust among professional traders and institutional observers alike.

In an era when much of crypto remains driven by speculation, Hyperliquid’s commitment to measured innovation could serve as a blueprint for how decentralized exchanges evolve into enduring financial institutions.

Source

Writer @Ellena

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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