All of a sudden people had a real reason to not trust centralized exchanges people literally lost all this money did the thing that everyone said they would do take it and spend it on stuff that they weren supposed to but for us it was kind of a light bulb moment that the world was ready for defi finally Jeff Yan is the co-founder of hyper liquid Labs the company behind hyper liquid one of the most hyped layer ones in crypto That includes a decentralized Perpetual exchange with more than $1.5 billion in trading volume per day and
that aspires to become the Amazon web service of liquidity how did you get so fascinated by the world of crypto crypto is like beautiful how inefficient the markets are a lot of people view it as like pessimistically as a failed experiment but I think there is like a light at the end of the tunnel which is what we're going for with Hyper liquid it really is Humanity's Only Hope at Reinventing the financial system what is hyper liquid if you have to explain it to your mother hyper liquid is building it in a way that it
meets your expectations of web 2 Finance it's cheap you can transfer it it's instantly settled I can integrate this with apps that other people are building in a trustless way do whatever I want to do with my money basically and as harder it's a lot scarier because there's no Playbook but for me working On something super hard is like suffering dayto day but I think you need to suffer otherwise you have this much larger existential dread as I said before your name is Jeff so it's sort of in your destiny to have to apply the
Jeff Bezos principles into crypto how are you concretely doing this um I think ultimately it comes down to actually 75% of you that watch this channel frequently do not subscribe if you like this show and think it provides Value to you in your Crypton investing Journey can you please please please do me a favor and subscribe to this channel hit the like button and leave a comment below it helps this channel more than you can imagine the bigger channel the bigger the guests and the better the conversation thank you this conversation is supported by Jupiter
the most used decentralized trading platform on Solana and the largest Dao in the world three a scalable layer one blockchain that's Fast secure and affordable built by previous Facebook developers and that delivers the benefits of web 3 with the ease of web 2 and Mentor an ethereum layer to that build two products I particularly like fbtc which enables you to borrow and lend Bitcoin in Defi and me e or meth one of the largest eth liquid saking protocols that by the way just launched its token called cook equally here which is you know build build
a good product that users Love and market makers come to where there's where where they can make money and and that's the best it's the best incentive for anyone and in defi it's uh it's been the same playbook for over all these years right it's you get the big market makers on the cap table uh they start quoting you have some incentive program then they trade a bunch to gain that incentive program and real users come at the end uh get the short end of the stick Basically don't benefit much from being early to the
platform you said something that is so simple but in crypto I mean it's such a startup kind of um kind of sentence right you said we're just trying to build a product that people use and love MH which py penguin there's multiple projects right that kind of prove that the less money the better what do you think about that I really Think hyper liquid is in a category of its own um what we're trying to do I don't think any other project is even attempting um but with regards to whether more or less money raised
correlates with success I just don't think raising money I don't think it's a negative signal I just don't think it matters that much like if you can't pay the bills then probably Raising some money is is reasonable um but if I think in the case of hyper liquid I think the the goal here is is to create a platform on which all of finance will happen it's a very big goal and it's one of the only goals where the it is a bit path dependent so if a bunch of VCS come and let's say they
own 50% % of the network got in super early I do think that is forever a bit of a scar on the network Itself and I think with almost other all other businesses this doesn't matter but if you're trying to create something and the value you're trying to produce like part of the value you're trying to produce is is that it's a new way of doing finance and it's it's a lot more focused on the end user than yeah then then I think not raising helps here uh and I think we had the luxury uh
based on what our team's Previous background that we didn't need to raise and so the decision ended up being pretty easy um but yeah I think at the end of the day that the product is is a function of the hard work of the team and the community and that's what we we really focus on who are you in terms of background you choose the question is open yeah well I'll start with what we were doing before Hyper liquid because I think that's pretty relevant um ties into what you were just asking about um so
around 2020 early 20 20 um i' had been playing around a bit with some simple scripts and just looking at centralized exchanges in crypto and and by then most of the big Market making firms had pretty big presences and I'm told it was actually a lot less Competitive before these these big guys came in um but sometimes ignorance can be a powerful weapon and so I was like let's just see if there's any any money to be made here and um turns out there was and the the initial the initial studies were super promising so
um decided I was going to just sit down and and really build out a system and and trade at scale uh on your own yeah on my own I I work initially I worked with a few People here and there but it was pretty tough to find a co-founder that you know checked all the boxes and in r was really good because it forced me to learn how to code um so you didn't know how to code I think by some standards in you to code but I didn't know how to write a real system
I didn't know how to really code um and this is a bit of a distinction I think that really matters for building something like hyper liquid that's that's really like a very large Scale technical system um so I think like building a trading system was a really good step I think if all you know is how to write know short Python scripts and do some analysis um there's a very big step from that to writing a production ready latency sensive system that you know is is handling real money and and trading very large market share
in a very like high-risk setup right like the strategy itself should be Low risk but you have all this technical risk of like things breaking your code not doing what it's supposed to do so learned a lot there um and and yeah by 20 22 we were we were still super big had basically scaled up to be one of the biggest on a lot of these venues and and running I think for the strategies we were running we were probably like the best in some sense like you know the Market's a lot of different players
coming together and um interacting and there's money to be made on many different time scales but yeah just in terms of like pure high frequency Market making um we had basically capped out and we were looking at Defi and a lot of a lot of really interesting interestingly designed protocols uh like I think a big theme in defi is that it's like people who don't really know about Finance trying to build Financial Systems and so leads leave leaves a lot for uh quantitative strategies to sort of you know make money on then FTX also blew
up and so um it really just felt like the stars were aligning it just it was very obvious that there was something for our team team to do and the the two things were one that well all of a sudden people had a real reason to not trust centralized exchanges and it's not some like mumbo jumbo intellectual stuff It was uh people literally lost all this money and it was because a centralized exchange did the thing that everyone said they would do just like take it and spend it on stuff that they weren't supposed to
but for us it was like it was kind of a light bulb moment that uh I think the world was ready for defi finally um and I think I was actually wrong in that like probably a month later everyone was back to trading on Caliz exchanges and it was okay but but the but the but the good thing is that it did push us over like gave us the activation energy we needed to be like let's let's like go all in and build this thing yeah how do we move these people who forgot within a
month how dangerous a Central Central exchange can be how do we push them to use crypto the right way and follow Crypto ethos I think it's a slow process um I think ultimately it comes down to actually improving the product where the product here is is kind of vaguely defined it's like money and the financial system itself is kind of the product of defi um I think it really is improving that because at the end of the day like most people just care about ux and doing what they want to do and then there are
these catastrophes people are Like oh that was really bad but a new user coming is is not going to be like oh I remember this catastrophe that didn't affect me let let let me use that to inform like whether I use this like decentralized protocol that's actually shittier than the centralized version that uh you know that's really pushing in advertising and getting me like there's just there's no way to compete purely from a from a like values perspective There so it's like you got to build something that that is better and and I think that
will come how far from that are we do you think um what needs to happen pretty close I think we're pretty close uh I I spend basically all my time thinking about hyper liquid so I don't actually keep as closed tabs I'm sure there are other exciting things going on D5 but from what we're building on hyper liquid and and what I'm seeing in the Community and just sort of like the rate of growth uh it's basically the first time that uh I think real flow is moving off of centralized platforms onto a purely onchain
Financial system there's a lot to build a lot to improve for sure and I'm not going to say anything it's even close to to being done but I see that energy that like oh hyper liquid is represents something that is not possible and is sort of make centralized Exchanges look sort of like I don't know right now looks kind of like brick and mortar store and iy liid like Amazon coming in or something um I see that energy I'm I'm not saying we're there and I don't you know I don't want to like over promise
or anything but um yeah we'll talk about Amazon later there's an Amazon part obviously how much of these flows that you're talking about do you think Are crypto is a very speculative industry right mhm there is speculation on Token Lounge all that stuff right how much of that do you think is a product is better versus speculation it's it's hard to say for sure um the my answer to that mainly is like let's see and people would say it's all you know it's all Farmers or some sort of inorganic stuff uh I think they're wrong
but I can't prove it uh one thing I can say is the volume has just grown so much right and I think usually if it's an organic it's very uncorrelated to anything else that's going on it's just like oh this team has some very explicit way where they're basically selling the token by having this translation from volume or fees paid to rewards and uh Market make us with the math and and uh figure that out and is it's very easy to see if if you look at the data uh whereas hyper Liquid the flow is
very it's very correlated with the broad Market volumes uh what whatever whatever you look at whether it's total whether it's you know volume over open interest whether it's volume growth day day on day or open interest day on day distribution across symbols like basically everything points to there being a solid uh organic Baseline of flow um that being said it is relative to a centralized exchange Benchmark it Is also just growing uh very quickly so I'm I'm very optimistic about that I reced a podcast with kiao Wong from Alliance Dao couple of weeks ago and
he told me that he looks for two main traits to identify a crypto founder with a huge potential the first one is a certain degree of autism to help you think independently the second one is a childhood trauma because it gives you a chip on the shoulder can you relate to any of these Traits What was the second one childhood trauma childhood trauma gives you a chip on the shoulder makes you want to prove something uh where does the fire in the belly come from no I don't I don't relate to the second one um
I relate to the first one though that I think you really need to think about things from first principles and for hyper lquid that you know we touched on not raising But I think generally the thing we do from first principles is by default kind of like questioning every all the recommended ways of scaling something because at the end of the day hyper liquid is not a conventional business that we're building so whether that's not paying market makers not getting investors um the the company itself it's like not even a company it like doesn't Take
fees it's it's it's onchain in that sense um you know we don't do growth marketing any of those things uh I think just things like if you talk to anyone it seems it seems there a lot of people who claim to be experts in in growth or I don't know like AR armchair business stuff and we just kind of reject all of that categorically and say like we should the we we are building This thing like we're a very small tight-knit team of doers and uh we're going to we're going to do what we think
is best and we're going to listen to users like real users not people who talk about what users might want and um we're going to iterate that way and it's a lot harder it's a lot scarier because there's no Playbook but I think time and time again over the over the you know admittedly Short history of hyper leg I think we've made many Innovations like Many firsts in in Defi and so I I think the Market's sort of proving that right and so I I do I do identify a lot with the first point about
I don't know if it's autism but it's certainly first principles thinking you said you're previous qu Trader right and you were doing really well but it wasn't enough you told me that uh the Silicon valet crowd often makes fun of the Quan trading crowd have you had this existential Crisis where you realize that just having a business for the sake of making money was not enough I don't know that it's not enough but so I guess taking a step back I think doing Quant trading and Market making is actually one of the highest impact things
that someone who's able to do that can do uh like if you have the skills to succeed in Quant trading then that's probably what you should be doing It's one of the most meritocratic Industries because there's really no [ __ ] it's like it's like a system and you're just playing a game against everyone it's it's the purest game and it's sort of the deepest in some sense like the deepest real life quantitative game that you can play it's very hard because all a lot of the smartest people in the world are are sort of
like literally pvping you uh on this Arena um and in the process of Playing this game it's a bit like Enders Game I like in the process of playing this like very intellectually stimulating game that's kind of brutal and like cut throat yeah you're you're making this beautiful thing happen which is like this emerging property of deep liquidity on on order books uh I think it's actually very beautiful and and the and the market itself is very beautiful like there's so many interesting patterns Just like an endless endless dynamic system of like patterns and uh
and there's so much you can find there um there's the reason that like aot a lot of the best you know physics and math phds go into Quant Finance when they realize I like they want to think about interesting things and they want to not starve um but I guess yeah was it not enough I mean I think the main thing is that for me I always had the mindset like if if There's something that I could build that would really improve people's lives in a way that is less it's like more direct and sort
of like less marginal in the sense that no one else could do it then I would definitely just go do that um so yeah it wasn't that hard for me to leave the Quant trading stuff behind because I think I get almost all of the Intellectual stimulation and more uh from trying to scale hyper liquid uh while still having the benefit of you know being able to contribute something that's a lot bigger than just this game that that our small team is playing what did you concretely leave behind to build a hyper liquid that is
not much for you um it's just basically it's the it's kind of like the Holy Grail of the financial sector which Is a high sharp strategy that sort of consistently makes money like that's kind of like what everyone's kind of after um but it's not much guys it's not much all right but I mean there's a reason like none of the funds take outside Capital as far as I know or they take it and then they return it because they just like the the the strategy is like if you have like a 30 sharp Strategy
or whatever you just you don't you just you just run it you know and then uh just kind of sit there and improve it um I didn't really leave that behind either because I think hyper liquid was probably the only time in history that there's this like democratic I mean but like broadly available right like accessible way to participate in upside that is of this characteristic which is Like purely Alpha based and this is a very conscious decision from RN because while FTX was the collapse of FTX was an important lesson and impetus for us
to start it was also a cautionary tale of what people probably view as the worst part of crypto and we want to almost like draw the as Stark of a contrast as possible and so to the extent that Alam was taking everyone's money and doing God knows what with it And eventually destroying all of it um hyper liquid you we're like we actually understand how markets work and how liquidity can be provided in a sustainable way and to prove that we're not going to take these profits run it through some Alam style thing rather we're
going to have this be built into the protocol and this was very very early days and and at this point it's like not that important but back then it was like the thing that got hyper liquid Off the ground and so in some sense we didn't leave it behind we just grew it into uh something that provides value to users directly you told me you tried retiring and traveling the world when was that um this was around when I started looking at crypto markets so basically it was like the markets were like surprisingly inefficient so
it was pretty easy you Could probably just like write some Python scripts and then retire back then um that that's how inefficient it was and so I like I basically did that and then was pretty bored I think I'm also like really bad at traveling so I think some people know how to enjoy traveling but for me it's it's very stressful like you need to kind of like go to this new place and figure out what to do and kind of like sleeping in somewhere unfamiliar like eating unfamiliar Foods uh it's Like not that enjoyable
and then very inefficient if you think about it because everything is new all the time right have a routine and it's cool it's cool to see some new stuff but if like if your life is about seeing new stuff then every day you like you know if you like eat some new food and it doesn't sit well with you you're like man I kind of failed at my mission today and I it's it's it's a very silly thing and uh I think some people can like derive some Sort of deep enjoyment of understanding the world
in different cultures and things like that but for me it was just like day to-day I'm not happy and if I look back on my week it's like what have I actually done I've just kind of like seen these things that are like kind of interesting but I'd rather I'd rather be at home building something you told me I can get very obsessed and have a very large tolerance for doing what very hard if not it feels super meaningless why is Doing something very hard necessary for you to be fulfilled yeah I think for me
it's there's sort of no free lunch terms of the human condition of generally getting used to your state of life and wanting more I think this is like an evolutionary thing that that allowed humans to really take over the world and and Achieve what they have but it's it's just like inherent Thing in human nature which is that you're not satisfied with with what you have and I know some people who who have this rare trait to be able to be content and I I do envy that but for me I think I'm just like
the rest of us and for me the working on something super hard is is like suffering dayto day but I think you need to suffer otherwise you have this much larger existential dread about like why am I here and what is the Meaning of all this and I I personally would just for me suffering every day feels a bit like working out you know it's like you can get used to the pain and then that can let you push yourself to new levels of pain and like accomplish more and then the nice thing about this
this choice between the you know the ways you suffer is that you you look back and at least you say wow like we've we actually like left something behind that uh that's meaningful and Hopefully we will'll be a foundation for many years to come and many projects build building upon it to come and I think there's like nothing nothing quite like that feeling absolutely that's a very com like it's a misconception for from a lot of people mid late 20s early 30s I need to retire then I'll be happy I need to reach a million
dollar then I'll be happy blah blah blah it just doesn't happen I mean for most people as You said right doesn't happen it's actually if anything is just meaningless and depressing after maybe the initial I don't know one two month honeymoon honeymoon phase of I can do whatever I want whenever I want it's all about suffering and um I mean not so pain but just for me I see it more as are you do you feel like you're wasting your potential if you feel like you're wasting your potential probably not going to be happy that's
That's where the this kind of unhappiness feeling comes from if you feel like you're giving your best even if it's not working out what you're trying you're going to feel great because you know I'm trying my best well fa failure does suck too so it's yeah but failure sucks in a way that you can it gives you an action item which is like let me get better so but yeah I agree with that I love That how did you get so fascinated by the world of crypto I think I was very lucky to be introduced
to crypto in the way I was which is here's this very inefficient Market let's let's just like look at the patterns and um coming from Wall Street where it's so so efficient at least us equities uh crypto is just it's like it's like beautiful how inefficient the markets are and I think being introduced That way is is like you see it as a positive for like all the things that it's missing and then going going to say okay like now that they understand everything that's going on it's not so hard to build any particular thing
and maybe we can just rethink Finance defi as a whole and and build it from the ground up like build the L1 build the decks build everything and I think it's very I was very fortunate to like have that trajectory I think if you just come In as like I want to build and you don't really know what's going on I think you're going to I think I think it can be a very depressing place like full of scams and very shortterm oriented people um but yeah I think at this point crypto is a lot
of people view it as like like pessimistically as a failed experiment maybe like just just an iteration on on scammers Learning a new way to scam and I think by and large it is pretty sad that that is what has happened to date but I think there is like a light at the end of the tunnel which is what we're going for with Hyper liquid which is that it really is Humanity's Only Hope at Reinventing the financial system and finance I think is one of the greatest inventions of humanity uh money s like representing value
in this more abstract way Capital Allocation the economy as a whole I think is one of Humanity's greatest achievements because if we never figure that out all other achievements would not have been possible because people would be farming or whatever they were or they wouldn't even be farming they'd be like Gathering hunting right and I think that's often forgotten because it happened so long ago and it wasn't like one discreet invention um and there have been many iterations But I think the latest iteration that should have happened was that software should have revolutionized finance and
it didn't I think software revolutionized basically everything in the world uh and maybe Finance maybe Healthcare a few a few big Industries left that have not had meaningful Innovation I think fintech sort of does some stuff like you can now use an instead of calling your broker or Something but at the end of the day the rails are the are the Legacy rails from decades ago and crypto is is a great hope at at revolutionizing this these Legacy rails because the the the builders in fintech web 2 fintech are very smart people and they're doing
very good things and they're coming out with great companies that are worth you know billions of dollars and doing good things but They're they're all working within the confines of what the Legacy fin cial system allows them to do and even starting with Bitcoin and and then moving on to exchanges that that people exchange this like new new way of sort of enshrining value on chain in a way that no Central party controls and then the applications built on top of that like the promise of ethereum uh to let Builders really Program money I think
all these are like very beautiful things it's just it just hasn't quite gotten into the the place where it needs to be which is uh widespread adoption and that that's what's beautiful about crypto to me hey when shift happens family time to toast our partner divin they're taking luxury wine to the blockchain with their super fun concept called uncork to earn buy your favorite wines enjoy unique experiences and get an airdrop each time You open a bottle with your friends cheers to div for bringing transparency authenticity and exclusivity to the find one's industry high frequency
Traders and TR five people which is what you wear right might be seen as guys who come into crypto just to make money which is totally fine and which is what you did why do you care about crypto so much I don't think there's yeah it's basically what I said with the previous Answer I think it's coming in I think I think there's nothing wrong with coming in to make money uh I think by and large the nice thing about markets is that they they let a bunch of selfish people or entities come together act
selfishly but within the rules of the system and create value for everyone else in the system uh I mean that's kind of economics in a nutshell as well um so I think there's nothing wrong with that and yeah that that's that's what That's what we came in that's that's how a lot of people got introduced to crypto it's very raw form of converting your quantitative Talent into some Financial Edge um but yeah I think just being in the space you know for probably for years I had no idea what was what these things even were
like I knew how Bitcoin and ethereum roughly worked but all these all these other tickers like there were Just there were just numbers on a screen um but then at some point you start you start to just become more invested in this thing that you've been interacting with uh on a Day-Day basis and um yeah and kind of get invested in it like you you start to meet people in the space I think once you know people like you start hearing about real problems and it becomes a lot more personal than when you're just looking
at numbers behind the Screen um yeah I like I actually didn't know about crypto Twitter for super for a long time like I just didn't know about oh I knew about Twitter but I like had never B bothered to make an account and um you actually don't tweet much I checked yeah but now I know about Twitter so I like read it sometimes uh yeah I don't I don't tweet much um don't do many podcasts I think it's just I think there's like very diminishing returns there I think some Founders Probably over index on on
the value of like the follower account or I don't really know what metrics they optimizing it means like hey man I'm doing my thing like all this stuff is cool but I don't really care about it there one podcast a quarter isn't that what I said yeah you said once every now and then right quarter yeah I think now it's I think it's good because if you do too many podcasts you're saying the same thing on like Multiple podcasts that's that feels like a waste of time absolutely what is hyper liquid if you had to
explain it to your mother never tried that's good idea she never asked um if I were to explain to my mother like throughout the course of human history there's been a trend towards individualism and every iteration towards individualism human rights Etc has been positive by and large in terms of results however you measure results GDP Whatever happiness and I think this is just kind of another step in that direction which is like you know going from I need to protect my farm with weapons to like oh I can put my money in a bank to
hyper liquid which is you know you can I control my money it's crypto cryptographically secured um that's just crypto broadly but hyper liquid is building it in a way that people can use this System it meets your expectations of web 2 Finance or Legacy finance and does more it's cheap you can transfer it it's instant instantly settled I can exchange value with the liquidity with liquidity that Rivals that on a centralized exchange Rivals definitely Rivals that on you know a traditional crypto exchange I can integrate this with apps that other people are building in a
trustless Way borrow money against my collateral do whatever I want to do with my money basically and that that that that would be the pitch to to my mom so you know you want to right now if you want to transfer money to another country it's very very painful process even even in the best case you got to get on the phone and call someone or they just rip you off on the exchange rate the whole thing is owned by these People whose job it is to make as much money as they can owning the
system that they've been privileged to inherit so um yeah let's get rid of that you launch hyper liquid and did so without taking a single scent as you already mentioned before right you tweeted I the hyper liquid de team does not profit from increase activity as it does not collect trading fees on the contrary it is entirely self-funded with exponentially increasing burn there is Not a single private investor more than $25 million in Revenue has gone back to the community another project could have easily pocketed some or all of these profits and this was like
half a year ago yeah exactly it was a couple of months ago yeah why are you doing this it's so contrary to popular belief it's not a it's not it's not literally like a charity um it it's but it's not a Business either in the conventional sense so it's not it's but but it's it's not that revolutionary I think it's the only time it's really been done in in D5 for sure maybe in crypto but uh but if you look at Amazon uh Jeff Asos famously didn't profit didn't take profits when when he could have
um for at least a decade um and it's just long-term thinking for for Amazon it was you know it's like your margins my My opportunity right and it was is growing growing Revenue over at all costs and growing market share at all costs um and so there's there's that mindset for hyper liquid uh but there's but there's more to it for hyper liquid in that I think crypto is just so extractive as an industry that it's like at every the crypto at every level is just a machine to extract value from retail and like by
and large and and so like We're trying very much to to to to make a statement almost it's like this is not what what's happening here and because if you look at these these very extractive schemes and they get more and more clever um do you want to give some example like the whole process where money is extracted maybe an example and then maybe explain how did we get here when crypto ethos is supposed to be very different yeah so examples initially was Very obvious right like this is before my time but in 2017 Ico
initial Ico craze it's let's just let's just put out some hype and people buy the token and we have a bunch of token we dump it and then we we leave right like very very simple scam and in some sense that's almost like let more excusable because no trickery there people bought it like you didn't maybe you didn't know them anything um Obviously that people quickly wisened up to that and securities laws Etc like formed around this it was like a very it was very blatant fraud um then people I think the like VC thing
is an evolution of the same thing in a way that is much harder to pin down from a uh like it's hard to say that any specific person is doing something wrong but um a project will you know instead of just doing an Ico because that's very illegal They will go raise multiple rounds from VCS get a bunch of people on Twitter talking about it um you know under the table deals like basically get as many influential people in at a low price as you can and then get as many suckers as you can at
at a launch on you know all the big centralized exchanges to come and buy in at this high price and then uh but it's the same thing it plays out the same way right like dump it and uh there's no obligation to continue Building after that and yeah like no one no one really no one's going to jail as far as I know but like I think it's quite unethical and it's definitely net you're definitely like destroying value in the world when you do that like you're lining the pocket of a few people but you're
completely tarnishing the name of crypto and what good it can be used for and then when when a regulator now looks at the industry they they can point to these examples and say like Clearly clearly doesn't work clearly it's just this Cesspool of of scams and and I think I think like some to some extent they're right and uh and and it's sad and the reason the reason we get here despite the ethos you're talking about is that it's sort of a double-edged sword like having the freedom and power and flexibility of a programmable money
I think can be used for great good it can really revolutionize how people do Things with Finance because it just it tears down these walls that really don't need to be there in most cases but it also makes it much easier to create these scams and and sort of take advantage of um of less informed participants so so yeah the motivation behind building hyper liquid the way the way we've chosen to do it which is very like Community First and um anti- establishment I guess like anti- VCS anti- market makers maybe like we're not anti-
Mark makers which it's like not it's not like it's like users are the first class citizens and everyone else you know if you're a user great like Market maker like you're like a very big user that's great like you're not in a class of your own like some like enshrined entity in the protocol it's just you it's just a bunch of users and it's a bunch of users coming together in a peer-to-peer way to do Things uh according to the original vision of crypto uh and that's and that's a very big reason we're doing it
the way we are uh and I think that sort of that narrative really clicked with a bunch of users I think clicked with a bunch of people who are disillusioned by other projects going down the standard route um yeah and at at the end end of the day though it's like not it's not that different from anyone Else in the world just trying to build a long-term project that creates real value you mentioned Amazon a couple of times your name is Jeff coincidence so we have to talk about Amazon obviously and Hyper liquid Bezos emphasizes
a lot about aligning the business with customers and being customer Centric and in crypto would mean aligning the business or the protocol with users and Community why is almost no one following the Bezos and user Centric model in crypto I think it's because it's super hard to get users in crypto because the main product in crypto is to this day and age this is relatively controversial but I I think the main product that people have found product Market fit with is uh launching scam tokens basically um and yeah it's hard to find users if that's
what that's what You're doing I think it's becoming more and more you say it's controversial less and less controversial this opinion I even hear I mean Jord is talking about that uh he actually he was talking the other day about understanding the game very different fashion and there was another dude uh mcoin dude Murad Mamud was talking about crypto is an nasset is a token production industry you create a Token and then you sell it right that's the whole game yeah so it's it's becoming more and more accepted is not it doesn't mean it's the
right thing right but that it's your view is basically correct right yeah and then faster model than in some sense people have really optimized this like the users are like I think the users are like the VCS the K's and the team maybe and the the other like who they might think are Their users are just the exit liquidity and so yeah like why has no one else done the right thing or like what what I think is the right thing I'm not you know the the conventional thing which is the thing that we're doing
and building something that as a lasting kind of product um is that it's really hard and I think with Hyper liquid at least that we had to inovate so much on the tech we had to Bas you know build the whole L1 we basically built like three businesses In one in in hard mode because it's like onchain and um that's so that's the L1 that's you know it's like general purpose chain and then it's uh like an exchange element kind of like a binance or b it but like fully onchain and forant and then like
optimizing the full stack of user experience like this is like super hard stuff and unless you do this stuff users will try your product and just not not stick and so like when you don't have that when you can't do That the hard way then I guess you have to resort to these more gimmicky short-term plays but you like the hard stuff yeah I mean I think the all the gimmicky stuff is I don't think producing any real value it's is extracting value from the world and yeah I mean hopefully I think I think once
there are good products good protocols like that actually do things That are 10x improvement over what people can do outside of crypto then I think the users will move over and then I think people optimistically I think people will have some moral compass at the end of the day and and build build these things I need to get built to add real value on this new system um I think the finances will also like align there like scams are a repeated Game and get harder and harder as people get smarter and um where's building things
there's no catch you build a good product and you did great and you should make a lot of money and people should be super happy and um I think we're moving in that direction I have to ask something about you know you said before I kind of just I mean I discovered crypto Twitter I didn't really know it we kind of talked about the meme coins which are at one extreme And then we talk about hyper liquid which is sort of The Other Extreme right we're trying to build long-term value and what's happening there's a
lot of builders in the space I mean it's very hard you said right but there's a lot of crypto builders in the space who are trying to the right thing but are so disillusioned or basically they're not able to get any attention and because they're not able to get any attention the value of what's Being created is not reflected properly versus a mem coin or another protocol that would just have more attention how do you think we get to a word or a place where protocols that are are creating the most value for the users
actually have that value reflected in the value of the protocol or is that not even the goal I think it should be a goal I think if you put do a lot of hard Work don't capture any of the value I think the incentives are wrong like people will stop doing the hard work and they will just go launch me coins so I think it's I think it's important but I think the problem is not that crypto doesn't reward hardwork in real products it's that people just kind of suck like they haven't built these things
and I think hyper liquid like Kind of an exception here not to toot my own horn too much but like I think that the like it's hard to imagine a world in which Hy liquid doesn't capture a lot of value like hyper liquid as a protocol right um I mean it is kind of like the only two things that have proven long-term value in crypto thus far which is like you know in exchange and in L1 um I do think sort of like no one has really successfully merge those two in a Composable way and
I do think that is a multiplicative effect not an additive effect effect but um but yeah even taking either of those two things uh like ethereum viewed as through the lens of a cash flow business is a very successful business a lot of eth is burned every year um not saying from a legal perspective just just like just if you look at the economics of the token I think it's very successful and then you look at coinbase binance it's like very Successful business and Hyper is not a business in that sense but it's uh it's
doing these things that just like inherent ly must capture value and I think I think people kind of yeah I don't I don't think I don't think people need to overthink it that much it's like yeah you can look at all these mem coins around you and be kind of upset that like they don't deserve the success that they've gotten but I mean the Market's kind of efficient Right like if you try to launch a meme coin it's actually pretty hard to get it to the state maybe they got lucky maybe they're early whatever but
like I think people should be free to do whatever they want and if you're trying to build something good and you succeed then yeah I think you will capture the value whether it's in crypto or not as I said before your name is Jeff so it's sort of in your destiny to have to apply the Jeff basos principles into Crypto how are you concretely doing this I I don't actually think that much about Amazon I think it's kind of a meme um but it's a good one but but yeah I think the long term I
obviously they did a lot of things super well um I think like like I have a lot of respect for AWS um I obviously wasn't in the room when those decisions were made back in 2000s um but I imagine it when something like Jeff Bezos was like hey guys I had an epiphany like we're using this we're using us infrastructure to scale our online retail business like no one's is we're like pushing the frontier on product and to do that the infrastructure kind of needs to catch up and no one can do this infrastructure for
us so we're building ourselves like this clearly doesn't only apply to our business this applies like much more broadly and um there's a bet that Tech Itself will continue eating the world let's commit now and Orient abstract engineer AWS in a way that people can build on it and yeah I think it's like obvious in retrospect probably not as obvious back then but probably obvious to Jeff Bezos because he's like thinking about this day in day out and um clearly he was right and it wasn't really the idea it was execution um and I see
like a sort of parallel With Hyper liquid which is like we set out very much with the mindset of we see this thing that's broken in the space which is exchanges particular order book derivative exchanges which users love and there's none out there that they can really trust at this moment um onchain decentralized the way to go let's go build that and then while doing that we're like oh the infrastructure sucks we looked at a bunch of chains looked at Running it in a dydx V3 style kind of looked at V4 you know looked at
Cosmos looked at eal 2s looked at salana um there nothing even remotely comes close to providing what you need to actually build this very simple product and the Epiphany there is like like yeah we let's focus on the product but but there's Al so much infrastructure being built it would be Such a shame If This Were Like somehow pigeon hold into being the infrastructure for this product whereas it's actually quite it's quite a general problem it's like why can't the world just agree on some State like that is the whole that's like literally all an
L1 is doing it's very simple when you think about it that way and like why can't we just you know build it from G we know how computers work we know how the internet works like why can't we Just solve this problem and um it's definitely standing on the shoulders of giants in terms of all the research has gone to it all the production implementations Bitcoin ethereum but yeah none of them really like I think did it in a way that lets you build an change on on top so um now that we're building this
like why not you know I guess going back to the Amazon thing it's like when they were talking about AWS I Assumed the internet was a lot smaller and to be able to to be able to see that the internet was going to grow and make a bet on that I think the analogy here is like uh crypto will grow and like yeah we're kind of in like a valley like maybe like a 10year valley or whatever but it is going to grow and it's going to overtake how Finance currently happens and um the way
to make a bet on that is to say like open up the infrastructure on Which the flagship product is built so that everything can be um built on top and maybe the slight difference here is like maybe for AWS it was like kind of obvious what the infrastructure was but I think for hyper liquid we're also kind of redefining what infrastructure means so um a lot of other chains sort of take for granted that infrastructure should be a general purpose smart contract platform and just make that really efficient but in Building hyper liquid we very
much realize that uh that that's not the right abstraction and that the thing that will unlock through defi applications to be built is is that general purpose infrastructure plus some performant native implementations of financial Primitives and once you I think once you have the right umbrella around infrastructure uh it makes a lot of sense To abstract it and Orient it in a way that people can build and yeah that's I think that's the long- winded answer to how we're sort of inspired by AWS so one of the things you are building is what we would
call the AWS of liquidity MH AWS transformed the cloud abstracting away the messy details of Hardware to let Builders focus on software and business logic hyper liquid is transforming liquid liquidity abstracting away the messy details of The exchange platform to let Builders focus on product and user acquisition with the launch of Builder codes hoer liquid supports a new wave of Builders who are excited about lasting proportional upside like AWS the hyper liquid L1 is a solid foundation that stays out of your way what is Builder codes and why does it matter it's a very simple
idea in Principle it's letting anyone who builds a financial application on the hyper liquid order book side which is just one part of the hyper liquid L1 as a whole but just focusing on the order book which is like let's just say I want to build a mobile app like I have a cool new wallet experience or I have a social social trading experience or I have a regional exchange you know it's GS um Fiat onramp Uh and some local currency lets you seamlessly trade pers all these ideas um it lets you basically build an
exchange style business uh while using a backend that is neutral and what I mean there is you can charge users fees in a way that they trustly approve you to do to do so uh and the fees are built into the protocol instead of some like behind the scenes deal between you and like a centralized Exchange where you might be doing this and at the end of the day this just Bridges the gap between all of these user facing applications like finance and like sort of like Robin hoods of of the world and giving them
uh a way to plug directly into uh what is simultaneously like a binance level of liquidity but also like an ethereum level of neutrality and uh I think this will unlock just an entire just new way of Building businesses in defi where I think specialization is super good and people who know their users in a region very well I think they should go do that and Hyper would just like yeah like like stays out of your way and um I think another another like sort of set of users uh would be people building D5 protocols
and these Protocols are built in a general purpose way on the hyper liquid chain but they too can tap into the liquidity on the L1 sort of enshrine native L1 order book liquidity and and in some sense it doesn't really matter right like are you a smart contract are you building smart contracts where people can plug and play these like more automated uh programmatic Integrations or you literally just the front end but a very smooth fun end that users derive Joy from using it almost doesn't matter and like hyper liquid uh sort of supports both
you refer to um exchange size Empires right that could be built on the top of the AWS of liquidity MH you mentioned sort of like Robin Hood can you give me two examples exles of exchange size Empires that can be built using Builder code that you would have in mind yeah I Think I think there are just thousands of examples in the form of regional exchanges so right now defi it does a lot of volume like hyper liquid does more volume than most tier three and probably comp volume to many tier 2 exchanges centralized exchanges
and yet defi itself is still so nent I think hyper liquid has literally brought new users into defi just to use hyper liquid uh users who were on a centralized exchange Probably just had a bad experience with something there say you know what like I'm G to try this defi thing for a spin and just like loving that it's like they can then build on top of it you know i' I've seen like people trading and then transition to building and uh like creating all these like cool apps uh tapping into the liquidity I think
it's like so it's so interesting to see but we're still so early because this set of users in the grand scheme of humanity is Is minuscule and um and I think to unlock to really get it to the masses so that like we're talking about earlier like crypto is is finance it's not this like alt scammy Finance uh I think a large part will be more Regional focused uh applications so instead of trying to just say hey if you use Finance you should consider using crypto that clearly hasn't worked should be like hey are you
like are you are you are you do do You have the Mis fortun of living in somewhere where your currency is destabilizing and hyperin lating and maybe you want an alternative there are many localized reasons like here's an application that speaks your language both literally and sort of like in terms of the the UI you expect uh here's a way to convert your debasing um currency into into this like onchain store value here's how you can transact uh I think that story will just like happen over And over again uh and the right way to
get that story to happen is not for us to do it but it's for anyone to do it uh and whoever does it best makes the most money doing it uh in the most direct way possible which is like you can monetize on the volume you you bring onto the platform um I think that's a very powerful idea and I think it incentivizes the right kind of Builders who basically see that exchanges are the Best business in crypto at least what's your long-term view for crypto and what role does hyper liquid play in that future
talked about the long-term game before yeah we don't at least I personally I find it hard to be super confident on how things will look like in the super long term but I think I've always kind of live life with the principle that you can be very confident that You're going in the right direction and execute very well on the one step you are taking at this moment without knowing exactly where you're going uh it's kind of like the difference between playing go and playing chess which like I sort of when I found go I
was like super happy because it was like finally game that like actually clicked with my like what I like to think about and and so in chess I think the better you get at Chess the like more moves you read ahead as as far as I know about Chess because the boorder is super small and like yeah so maybe that's question is like how's the game gon to end in 20 moves is kind of like yeah I see the Checkmate it's like i' I've read out the entire like tree and all the branches and this
is what it's going to be like uh and and that's kind of the answer that people often want with questions like this but but in go there just like as a human Plan go there just like way too many possibilities the the ing factor is like way larger and so in go the focus is on building intuition around maybe the next one move you're going to play or maybe like like some moves after that but um unless you're like really focused on a local situation you need to resolve and like read everything out uh it's
very much more like Vibes based and uh I really like like resonate with that and so with Hyper good it's like Yeah crypto is going to change how Finance works and like Finance is going to move onto crypto and like the thesis is like hyp is going to be the platform onto which all of Finance moves uh but how exactly that's going to happen like what are the apps people are going to build like which regions will come first uh super hard to say and it doesn't really matter because um for us it's we're just
focus on building the the stuff that will be Important no matter what the trajectory is so things like the Builder code or having an evm that integrates with onchain ative components uh so having like uh just having a good liquidity period these are all things that are necessary super hard to do well in a sustainable way and will be foundational no matter how crypto looks uh in 10 years what's something you believing that most people would not agree with um Well like when I think when we decided not to raise certainly no one agreed with
that but I was it's also a bit of a skewed sample because I was talking to the people who were trying to throw money at the thing so maybe it's a bit of a skew sample but um there also tends to be this thing where like we do something that's controversial and then I look back in a few months and it's Like everyone's kind of doing it in defi at least it's like a super small space and um I guess it's promising it means that we're like doing the right things but it makes it hard
to have these like really long-term contrarian takes because it almost seems like as far as like the narrow niche of uh def like onchain performance defi or whatever um if hyper does something and then everyone kind of just like copies it um so kind of hard to think about Um yeah people I mean like when when hlp launched everyone's like oh there's like no way this thing works like like every single other project was fighting it in in the Discord and in Twitter and um yeah like it was it was pretty early so I was
still taking a lot of things very personally you know like what do you mean it's not going to work and just like argue with them like here's how it's going to work and then um I mean I guess ultim like the the Results kind of speak for themselves um how did you learn to take things less personally oh I just I actually just read the stuff less um I think I think I'm just like naturally not I think I do take I think I care so much about what we're doing that if someone's like this
thing sucks I will my like instinct is to like argue with them is like you know here's why it doesn't suck and like so so I think I do take it personally because it's like a manifest is the Manifestation of of like what we're trying to do in this world and like um it's it's like our baby you know um but yeah I just I just kind of like don't really read social media and that helps have a good like people on the team are much better at handling this stuff anyway so it's it's a
good it's a good uh good thing to disassociate myself from thank you so much Jeff for doing this thank you for getting out of your basement I feel very privileged once a Quarter right listen to some of your other podcast little Snippets and I thought they were they were good so thanks for having me on and thank you for I would say like giving hope to the builders in the crypto space and to I think everyone is kind of like tired of what's happening right now seeing people who are too short-term minded so it's very
refreshing to see someone called Jeff there's a lot to do who Yeah who is trying to do something uh with a long-term approach which is so rare in this industry so thank you so much for doing that man that was awesome thank you [Music]
