Jeff Yan's Plan to Bring the Entire Financial Industry Onto Hyperliquid

Traders and market watchers around the world started talking about a crypto platform called Hyperliquid earlier this year, when speculators used markets built on top of it to trade crude oil after war broke out in Iran. What Hyperliquid allowed for was a 24/7 market on the blockchain. Then in August, President Trump said the CFTC was working on bringing “Hyperliquid into the United States in a fully compliant and legal fashion.” Hyperliquid currently operates outside the US, but that hasn't stopped it from growing prodigiously in the last year. Jeff Yan, CEO and co-founder of Hyperliquid Labs, joins us today to explain how exactly the platform works: He walks us through the protocol he and his co-founders built, the ecology of actors and assets that are tied to Hyperliquid (like the platform's cryptocurrency HYPE), how perps are bought and sold on the platform, he explains what a blockchain oracle is, and he discusses what has to happen for Hyperliquid to start operating in the US. Read more: Strategy’s Saylor Sees Bitcoin Moving Back Up Beyond $100,000 https://www.bloomberg.com/news/articles/2026-10-13/strategy-s-saylor-sees-bitcoin-moving-back-up-beyond-100-000?utm_medium=referral&utm_source=podcast&utm_campaign=odd_lots&utm_content=article A $90 Million Spyware Hack Sparks Review of Crypto Wallet Sales https://www.bloomberg.com/news/articles/2026-10-13/ledger-to-review-sale-policies-after-crypto-spyware-attack?utm_medium=referral&utm_source=podcast&utm_campaign=odd_lots&utm_content=article Only http://Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots https://www.bloomberg.com/subscriptions/oddlots?in_source=oddlotspodcast Subscribe to the Odd Lots Newsletter http://bloomberg.com/subscriptions/oddlots Join the conversation: discord.gg/oddlots https://discord.gg/oddlots See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee. So, search Barclays Brief wherever you get your podcasts.

• 0:24Speaker 01

  Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So, all the source materials, briefs and scattered information that you have to grind through to turn into something useful, can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting Work Mode, available on Plus and Pro Plans.

• 1:06Speaker 02

  The world of business is constantly evolving and Comcast Business keeps you totally in step with secure AI-backed networking in more than 100 countries. They're powering over 90% of the Fortune 500 and millions of small businesses. That's a lot of muscle. And behind it all, thousands of experts answering your call at 2:00 AM like it's 2:00 PM. One partner powering how business gets done for companies around the globe. When you add it all up, no one does business like Comcast Business.

• 1:38Speaker 03

  Bloomberg Audio Studios, podcasts, radio, news.

• 1:54Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:00Tracy Alloway?

  And I'm Tracy Alloway.

• 2:01Joe Weisenthal?

  Tracy, we're recording this.

• 2:03Tracy Alloway?

  Tradie.

• 2:04Joe Weisenthal?

  Yeah.

• 2:05Tracy Alloway?

  That's appropriate for this episode.

• 2:07Joe Weisenthal?

  Slip already, tradie. Tracy, we're recording this October 13th. In a couple of days, we're going to be in Chicago and we're gonna, as we do when we go to Chicago, talk to some legends of the trading industry.

• 2:19Tracy Alloway?

  Yeah, it's great to go to Chicago. We've never done a floor tour of any of the actual trading places in Chicago. We should do that.

• 2:27Joe Weisenthal?

  Yeah, we should do that. But of course, it's always an exciting time to sort of like talk to the trader community because there are just so many interesting things happening like in the world of trading per se. One of them is of course the rise of prediction markets, et cetera. Essentially, I kind of think like we're in this moment where so many different instruments can be expressed as other instruments in various ways. So, you could have stocks that are like tokenized. You can have tokens that are ETF-ized, like crypto tokens that are put in ETFs. You can have prediction markets that actually are sort of like functionally predicting a stock and then they become a stock essentially. You can replicate the economics of a stock.

• 3:10Joe Weisenthal?

  So, all different types of things where like people are like rejiggering the way you can express a view with this incredible basket of like new instruments and platforms to do it on.

• 3:20Tracy Alloway?

  Financialization on steroids. Can I go on a slight tangent for a second? So, I have this media theory that I call the inverse pyramid.

• 3:28Joe Weisenthal?

  Yeah.

• 3:28Tracy Alloway?

  And so, the way I think about traditional media, it was sort of like a food pyramid, right? And you had original reporting was the layer at the bottom. So, you had sort of old school reporters who were making phone calls, making scoops. And then maybe you had in the next rung, you had some people writing editorials or opinion columns on them, maybe a little bit of like video eventually on top. Nowadays, the pyramid is completely inverse where the smallest layer is the original reporting. And then there's so much content built on top of that. I often think about finance today in those terms in the sense that the underlying is kind of the smallest part of the market now. And there are so many new instruments built on top of it, whether it's derivatives,

• 4:11Tracy Alloway?

  like futures and options, or now it's, you know, prediction markets and things like that. It just feels like, you know, derivatives have been a bigger market than the underlying for a while, but it feels like the inversion of that pyramid is just getting bigger and bigger.

• 4:24Joe Weisenthal?

  That's a great take, right? And I didn't know where you were going with that until.

• 4:28Tracy Alloway?

  I did. I got there eventually.

• 4:30Joe Weisenthal?

  But right, you think of something like a SK Hynix or something like that. And okay, there is some company and there is a stock that trades. Then there's ADRs. And then there's 3X Leverage ADRs. And there's tokenized versions of it and so forth. And then there's prediction markets on where will SK Hynix close in the next 10 minutes? I don't know if that exists. If it doesn't, it will exist at some point, et cetera. But like, there is so much to do on this topic. And of course, you know, we did that episode not that long, a few years ago with Austin Campbell, talking about the potential for sort of blockchain to sort of unify and bring together a lot of different markets. I think was one of the more compelling quote crypto unquote conversations that we've had, et cetera.

• 5:11Joe Weisenthal?

  And one of the things that's getting a lot of attention that combines all these things is this entity called Hyperliquid, which people who know it are obsessed with it, but not, it's not a household name yet. But the people who do know it are very into it.

• 5:25Tracy Alloway?

  It's not a household name, even though it's been growing incredibly fast.

• 5:28Joe Weisenthal?

  Yeah.

• 5:29Tracy Alloway?

  The one thing I know about it before starting prep for this episode was the mascot, which we have here, who's called Hyper. And I always approve of a company with a good mascot. So, here we are.

• 5:41Joe Weisenthal?

  Well, you know, the company is a little bit sort of known for being a bit secretive. There's not like, they don't do a ton of press. And so, we're actually going to have to interview the mascot today because we weren't able. No, that's not true. Amazingly, we really do have.

• 5:52Tracy Alloway?

  That'd be fun though.

• 5:53Joe Weisenthal?

  Yeah. Amazingly, we really do have the perfect guest on the podcast, someone we've gone to talk to for a long time. Jeff Yan, the co-founder and CEO of Hyperliquid Labs is here in studio with us. So, Jeff, thank you so much for coming on Odd Lots.

• 6:07Speaker 05

  Thanks for having me.

• 6:08Joe Weisenthal?

  Why don't you give us the sort of basic view of like what Hyperliquid is today? I mean, this is, we're going to go into this, but just big picture, like someone says, what's Hyperliquid? What do you answer them?

• 6:18Speaker 05

  Yeah. So, Hyperliquid is a protocol.

• 6:21Joe Weisenthal?

  Okay.

• 6:22Speaker 05

  The tagline or aspirational goal is housing all the finance. And I think the community is serious about that. So, we can go into what that means. But the short of it is a neutral layer on which finance can ultimately happen. It's the same way that electronic trading was a step function improvement over pit trading only a couple of decades ago. We view Hyperliquid, the protocol, as a sort of step function improvement over electronic but fragmented markets.

• 6:58Tracy Alloway?

  So, I know Joe said Hyperliquid is not necessarily a household name just yet, but it might be on its way to becoming one because just a couple of months ago, Donald Trump was talking about Hyperliquid and talking about US regulators working to bring Hyperliquid to the US. At the moment, if you're in the US, you quote unquote are not allowed to use Hyperliquid, although my understanding is a lot of people get around it using a VPN. When Trump said that, feel free to refute me on that. That's just what I read on Reddit, okay? But when Trump said that, were you aware that he was going to be talking about Hyperliquid at that point?

• 7:38Speaker 05

  I was not aware. So, that was a huge surprise to me. Hyperliquid Labs, you know, works on the protocol. I suppose it may be good to give a bit of a a breakdown of the various pieces. There's the protocol. It's a neutral blockchain. It's a collection of permissionless set of validators who operate a network collectively, which is sort of a global view of a single consistent state. Hyperliquid Labs is a team that builds technology for this blockchain and we are a super small team. And there's sort of like, I think what the CFTC is referring to when they say they want to bring the protocol

• 8:20Speaker 05

  to the United States is that it is in fact against the terms of service of Hyperliquid XYZ and many other interfaces for US users to use the derivatives trading on the protocol. But the CFTC, I think the current administration wants to kind of take a proactive approach towards on-chain rails for finance. I think it's a kind of technological view that markets can be improved and that the US should not play a sort of. Extremely restrictive. We should not have an extremely restrictive view on this, but rather should find ways where can incorporate this technology into the existing financial system.

• 9:02Joe Weisenthal?

  So let's talk more about, I guess, what maybe the ecology or the ecosystem of hyperliquid in the players, because you mentioned the word protocol. And I have to say, it's like, at various times, the Bitcoiners would say, no, this is the new protocol, the internet of money. And Ethereum people talked about, oh, it's a protocol. This word gets used a lot. So why don't you just talk a little bit about, okay, it's a blockchain, but it's obviously has higher aspirations than sort of like a typical crypto project. But like, I understand there's validators, deployers, et cetera. Maybe like, give us the landscape of who does stuff on hyperliquid and like, what their roles are.

• 9:44Speaker 05

  Yeah, it's a good question. It's a, this is a very deep question.

• 9:47Joe Weisenthal?

  Yeah, I know, maybe it's a little.

• 9:48Speaker 05

  Yeah, it's a lot of stuff, but at a high level, a protocol is basically, it's kind of what it sounds like, you know, like there's like an HTTP protocol, like a TCP protocol. It's a, it's a messaging framework by which different validators, in this case, agree to communicate by these rules.

• 10:08Joe Weisenthal?

  Okay.

• 10:08Speaker 05

  And the interesting thing about a sort of a blockchain protocol as compared to a purely informational format protocol.

• 10:17Joe Weisenthal?

  Yeah.

• 10:17Speaker 05

  Is that the rules under certain assumptions, in this case, in the case of hyperliquid, that two thirds of the stake of the network is what we call non-Bizantine, which is to say that they operate under the normal rules of the protocol, that you get all these great properties, which is that these validators can operate independently. And basically, that's all, you don't really need to assume much more. The network will come to a consistent view of the world. And this is really important for finance, right? Because it's sort of a, it is kind of the first layer, if you're talking about the pyramid of like, things that need to happen for a global financial system. If you think about it, the very, very base layer of the sort of information in the system is that everyone needs to agree.

• 11:01Speaker 05

  If we don't agree on what the ledger of balances is, for example, then all bets are off.

• 11:05Joe Weisenthal?

  So at a minimum, we all need to agree, like, there's this much in your account, this much in Tracy's account, this much in my account, and also like, what the prices are of the, like, there's some basic things that like, every participant needs to agree on. And in a regulated exchange, that's pretty simple. We trust this company, they're going to market. But in a decentralized one, you need some trick to get, not a trick, but you need some like mechanism to get independent validators to all agree.

• 11:33Speaker 05

  Yes, and there can, I would draw the distinction, it's kind of an orthogonal question of whether there is a regulated entity deploying the markets. And in fact, I think there very much will be. And it's not an either or. I think you can kind of benefit from the resiliency of an on-chain network, even if a single registered entity has permissions over the markets that they deploy. The benefits of the technology are that if you want to run a 24/7, 365 exchange, it's not a simple task. And any sort of mistakes that you may make, whether it's with the matching engine, with the clearing, any of the vendors in the stack, ultimately, that is a single point of failure

• 12:18Speaker 05

  for a very critical piece of infrastructure for the financial system. If the rails on which it is built consists of a diverse distributed set of validators, where one or even many can go down at any moment in time, and the network still maintains its important properties, which is that everyone agrees on the state and that it continues progressing forward at the usual throughput, then all of a sudden, you have a much more stable foundation on which to build your regulated exchange.

• 12:45Tracy Alloway?

  Maybe just to hammer this point home, could you walk us through an example of, say, you know, I buy a million dollars worth of a certain perpetual futures contract. What's your most popular perpetual futures at the moment?

• 13:00Speaker 05

  It actually varies, so the, between real world assets or things like Bitcoin. I think right now, it is the perpetuals on Bitcoin's price.

• 13:08Tracy Alloway?

  Okay, well, let's say I buy a million worth of perps on Bitcoin. Who is actually taking the other side? Is there collateral involved? Where is the collateral kept? Who determines the liquidation price when the trade like ultimately unwinds? And who loses money if, for whatever reason, I can't actually pay?

• 13:27Joe Weisenthal?

  I was gonna say, if for some, by some miracle Tracy makes money, who is on the losing end? But anyway, yeah, walk us through how that works.

• 13:33Speaker 05

  Well, first of all, just want to reiterate that, as an American, you probably are not open to this position.

• 13:38Tracy Alloway?

  Okay, okay. Pretend that I live in Singapore.

• 13:40Speaker 05

  Okay, if you're Singaporean, living in Singapore, or a, you know, European, living in Europe.

• 13:44Joe Weisenthal?

  For anyone who lives in a free country, no.

• 13:46Tracy Alloway?

  Can I trade on my Austrian passport? This is an interesting question.

• 13:50Joe Weisenthal?

  Probably in Austria.

• 13:50Tracy Alloway?

  Yeah, all right.

• 13:51Speaker 05

  The mechanisms, all of which you mentioned, I believe, are not so different from futures contracts on the futures exchange. Perhaps the one that is interesting here is the, so that, you know, there's a counterparty in the order book, the liquidation is set by the system. So it's not a, it's not a subjective, it's not like someone actively is setting a liquidation price.

• 14:12Tracy Alloway?

  It's rules based.

• 14:13Speaker 05

  Property, yeah, it's a property of the clearing system. The unique thing here is that the clearing system's on-chain. So the threshold at which it happens and the mechanism by which the liquidation happens, which we can get into, it's analogous to the, what is a traditional default waterfall in a US-regulated futures exchange, for example. Analogous, different names. That happens in an on-chain implementation. So the execution of the, what is called hypercore, it's kind of like, you can view it as like a sub-module of the blockchain state itself, autonomously carries out the mechanisms of these things like clearing and liquidation.

• 15:06Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis. But sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 15:33Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. There's probably nothing so closely associated with an MBA as the case study. As Bloomberg's Rob Mandelbaum reports, developed at Harvard Business School over a century ago, the case study invites students to wrestle with a complex problem faced by a real company and its people. That is, until AI, which has kicked off a movement that's now spread to business schools worldwide. According to a Bloomberg Businessweek survey of global business schools, half of the 56 that responded have either implemented more interactive AI-simulated cases or are developing or piloting them. The founder of the AI integration consulting firm Inspire Higher Ed and the author of

• 16:16Speaker 01

  a report tracking AI at these schools, says the argument for interactive cases is largely about extending opportunities for students to practice and hone their skills at negotiation, directing teams, crisis management, and more. Some professors argue that using AI to generate cases can create problems, such as assuming outcomes or undermining credibility, while others see it as a way to elevate understanding, drive learning, and scale their mission. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at chatgpt.com/work. Available with all paid ChatGPT plans.

• 16:55Speaker 06

  Most meeting note takers get the easy words right and the important ones wrong. The client's name, the acronym. Whisperflow Note Taker is built to get the hard words right. It takes notes on any meeting platform, Zoom, Google Meet, Teams, even WhatsApp calls. Keeps every meeting searchable and connects to Claude or ChatGPT, so you can ask, what did we agree to last Tuesday? Free to try on Mac and Windows at whisperflow.ai. That's W I S P R flow dot AI.

• 17:25Speaker 07

  Running a small business takes everything you've got, but with Chase for Business, you're not alone. They bring together local support and a broad range of resources to more than 7 million customers. With a deep understanding of your day-to-day needs, they provide products and guidance built to help you thrive. Right now, earn $500 when you open a new Chase Business Complete Checking account for new business checking customers with qualifying activities. Offer expires January 21st, 2027. Chase Business Complete Checking has the flexible tools you need to accept payments, make deposits, and manage your finances with confidence. Learn more at chase.com/podcastbizoffer. Chase, make more of what's yours. Fees may apply to Chase Business Complete Checking accounts.

• 18:07Speaker 07

  The $500 offer is available for new business checking accounts with qualifying activities through 1/21/2027. Eligibility and qualification requirements must be met. Additional restrictions may apply. Please speak with a business banker for more information. JP Morgan Chase Bank, N.A., member FDIC.

• 18:25Joe Weisenthal?

  A classic sign that something is going to be a big deal, in my opinion, is when like Bloomberg starts listing it. So for example, like years ago, I don't know, I think it was like 2012 or 2013 was the first time that on the terminal, you could look up the Bitcoin price. And it's like, that's probably a sign, it's like, maybe something is going to happen here. Recently, there is now a hype page, and you can look at 24/7 things, like, they trade Brent there, and they trade WTI, and they trade S and P 500, and Circle, and SanDisk, and Micron, and a bunch of other stuff, and of course.

• 18:57Speaker 05

  Yeah, and it's got a lot of engagement, I saw. It was super cool.

• 18:59Joe Weisenthal?

  No, it's a big, it's a big deal.

• 19:00Speaker 05

  Kudos to you all for integrating the technology.

• 19:03Joe Weisenthal?

  Yeah, there you go. Okay, now here's a key thing. So I'm looking at, let's say Nvidia, an Nvidia perp that trades on hyperliquid. And I believe it is issued by an entity called Trade XYZ. So let's bring in, who is Trade XYZ? And how do they get in a position where they can issue an Nvidia perp? Like, walk through like, how this emerged on hyperliquid?

• 19:26Speaker 05

  Yeah, so we use the word deploy, because I think issue has many connotations. This is a technical process by which anyone can use the network in different ways, you know, on the Bitcoin network. Same kind of foundational idea of globally consistent state distributed set of participants. But on Bitcoin, you can move Bitcoin around. That's all you can do. On hyperliquid, it's a lot more complex as a system that ultimately can power the financial system needs to be. And so one of these functionalities is that deployers can come. They stake some amount of the native token.

• 20:03Joe Weisenthal?

  How many hype do they have to buy to become a staker? Or how many do they have to accumulate?

• 20:09Speaker 05

  Yeah, they have to stake 500,000 currently.

• 20:11Joe Weisenthal?

  Hype, not $500,000 worth of hype, but 500,000 hype content. Okay, keep going.

• 20:16Speaker 05

  And the stake is basically a way for them to unlock these deployment functionalities that are implemented on the blockchain itself. And they can effectively define an oracle. More of an oracle system, I suppose. It is a mechanism by which a perpetual contract tracks the one number that is exogenous to the system, which is the index price. That's kind of the beauty of a perpetual, right? It's so powerful, so expressive, and yet it really is kind of ultimately boils down to one number.

• 20:51Joe Weisenthal?

  And this is really important, right? Because like a physical settled future, the future ends and you get the oil at the end. A cash settled future, there's some entity and it's like, okay, the future expires. With a perp, it never really ends, but there needs to be a price oracle that it's always going to be, I guess, tethered.

• 21:09Tracy Alloway?

  Why is it called an oracle as opposed to just like the underlying price?

• 21:14Speaker 05

  Well, oracle here has a, has a specific, the, the, the meaning of the word oracle in a blockchain context is something that is published by a, you know, a single or multiple publishers that tracks something that is off-chain. So it is not knowable from purely on-chain characteristics. This will change in the future because I think as spot markets move onto hyperliquid, you can imagine a system where the oracle is actually no longer published, but rather derived from on-chain properties.

• 21:41Joe Weisenthal?

  Okay, well, then just to finish the question about how the Hynek's or the Nvidia perp got there. So, okay, Trade XYZ, they're a deployer. They accumulate the hype so that they're allowed to deploy. How do they get the right or the ability to actually, okay, issue the Nvidia perp or the Hynek's perp?

• 22:03Speaker 05

  It's a simple matter of sending a transaction to do the deployment. And the thing here is they're inheriting the technology of the order book, the clearing.

• 22:14Joe Weisenthal?

  Yeah.

• 22:16Speaker 05

  In, in the sort of like the existence of USDC itself in a way that's kind of well-connected to the sort of entire circle infrastructure is, is another example of something that a deployer inherits. And they simply send the transaction designating the specifications of the contract. And they, as deployers, push this, they or their system. In, in the Trade XYZ case, I believe there is a system of publishers of the oracle price.

• 22:45Joe Weisenthal?

  Okay.

• 22:45Speaker 05

  And then the, the magic of it is that it is truly a distinct set of responsibilities between the protocol and the deployer. But together, they kind of form this incredibly compelling ultimate product for the end user. And this is kind of this like idea of modularity that I think is, is unique to on-chain financial systems.

• 23:04Tracy Alloway?

  Where does the liquidity come from? Because this is a classic issue for new exchanges and new markets. How do you actually make sure that there's enough money floating around to take the other side of a trade?

• 23:15Speaker 05

  The liquidity is just, it's a free market, so it's an order book. Of course, whoever places an order must have the collateral necessary to back the order. But other than that, it is, it is not really the, the protocol is simply a mechanism by which buyers and sellers come together.

• 23:30Joe Weisenthal?

  It feels to me like to some extent, the deployers like a Trade XYZ, but there are others, we keep mentioning them, there's others, the Trade Paragon, there's some others I don't know all the names of. They're a little bit like an ETF issuer, right? Like in a, in a traditional stock market, like they're a little bit like their response.

• 23:50Tracy Alloway?

  ETF deployer.

• 23:51Joe Weisenthal?

  And yeah, but like, okay, like I'm good, let's, because some companies have like, you know, single stock ETFs, et cetera. They are responsible for this instrument maintaining a price to some underlying thing. In the case of ETF, there's usually a basket of conversion, et cetera. But like, the thing I'm still trying to understand is like, can 10 people issue an Nvidia perp? Like, how do they get this particular slot in the thing as opposed to someone else?

• 24:22Speaker 05

  Yeah, so anyone can do it. So there's no protocol level semantics about what the perpetual is. The protocol, you can view it as a kind of basket of tools. And like a deployer can come and use it.

• 24:35Joe Weisenthal?

  Okay.

• 24:36Speaker 05

  As they see fit. And, but you're, I guess the second part of your question is like, well, what is kind of the mechanism by which this kind of scarce resource might be limited?

• 24:46Joe Weisenthal?

  Yeah, that's it. How did it emerge? Yeah.

• 24:47Speaker 05

  So that that is governed by an on-chain mechanism. It's, it's a Dutch auction.

• 24:51Joe Weisenthal?

  Yeah, explain that.

• 24:53Speaker 05

  I guess in short, it's basically, it's, it's a way to kind of allocate the square, the scarce resource of deployment slots. This is scarce because on-chain, each order book, each kind of clearing system for a specific market takes computational resources of the network. So as the network scales, I think these resources become less scarce. But ultimately, they, they will always be a limiting factor of, of anyone that wants to deploy on the system. And the Dutch auction is a way where, whereby in every 31-hour interval, currently 31 is simply chosen so that the, the time at which the auction resets is, or changes time zones. As, as it's relatively primed to the number 24.

• 25:37Joe Weisenthal?

  That's nice.

• 25:38Speaker 05

  But you know, approximately once a day, there's an opportunity for any deployer to deploy something. And the auction, the Dutch auction is nice because normal auctions have a few undesirable properties. The incentives are a bit odd, so you're kind of incentivized to penny the other bidders. You're, you're incentivized to withhold information and then spam it at the very end. It has all these kind of like interesting, I would say, suboptimal game theory properties. Dutch auctions are nice, especially in on-chain systems because they go in reverse. So the, the price starts at a value and it decreases linearly. And then it is kind of spam resistant because the first person who bids gets it. The, the price decreases, in this case linearly, but I suppose it doesn't have to be linear.

• 26:22Speaker 05

  And it resets to twice the last clearing price. So there's a kind of natural, there's a natural correction mechanism by which it approaches the fair market value of the scarce resource.

• 26:33Tracy Alloway?

  Do you get excited to see who wins those auctions? And do you have any idea of like, oh, well, they plan to do this or issue or deploy whatever with, if they win this auction? Or do you have an idea of like this particular deployer has come up with interesting ideas before?

• 26:50Speaker 05

  I don't know. So it is a permissionless system. I actually don't personally track the auctions. I know there are tools that people have built where you can see, they're pretty cool stats. This is another nice thing about on-chain systems, that the, the data is transparent and verifiable and auditable. So anyone can build these really cool analytic, analytical tools about, oh, like these deployers, like you said, like, you know, tend to bid in these ways and they tend to use their, use the tool in the specific way. But I personally am honestly just too busy to really look into this stuff in, in depth. But I do think it is very cool broadly to see what is being done, which is taking these markets that are traditionally sort of confined in various ways

• 27:31Speaker 05

  and extending them, making them more broadly accessible, whether that's temporally, 24/7, whether that's sort of just giving retail or just everyone around the world a more equal access to the same financial opportunities. I'm, I'm a really big believer in that. And I think many people, whether they're building on-chain or even in traditional settings, I think many people work in finance sort of towards the same end goal. We're really just taking different routes, but kind of all trying to make incremental progress. Ultimately, the thinking is that the financial system is there to better serve as many people on this planet as possible. And that is, I think that is. You know, many layers are moved, but this sort of permissionless employment system ultimately is accomplishing that goal.

• 28:16Speaker 05

  Like, one example here is the IPOs, especially this year, if you look at them. They're a really great example of how wealth is being created and tremendous amounts of wealth are being created, but it's being created in a way where it's gate-kept. I don't think this is done intentionally. I think it's just a byproduct of how the markets work right now. But if you have trillion-dollar, two-trillion, three-trillion-dollar companies IPO-ing, you can pretty confidently say that most of the wealth creation has happened at that point. And so I think it is a failing or a sort of limitation of the existing system if, up until that point, very few people have been able to trade these opportunities.

• 28:55Tracy Alloway?

  But I guess one question that I always have with this type of stuff is, okay, if you're buying shares in Anthropic or whatever, when they IPO, like, you're getting a claim on the company's dividend, right? Like, there's gonna be some, assuming they have a dividend, there's gonna be some...

• 29:13Speaker 05

  Free cash flow.

• 29:14Tracy Alloway?

  Right, there we go. The net present value of all future cash flow. Whereas if I'm an unaccredited investor purchasing something that's tracking Anthropic shares on a platform such as Hyperliquid, I'm not getting that cash flow.

• 29:28Speaker 05

  Well, you're not getting the cash flow if you're trading futures on something as well, right? So I'm not saying that it's a strict improvement over the system, and I'm not saying that everyone... It doesn't actually make sense for everyone to trade these things. It's more that there are a non-zero number. There's like, I think, an order of magnitude more people who benefit, who could benefit from something. And of course, there's a, there's a parallel track of work, which is like, we should all be kind of working hard to educate as many people as possible so that, you know, the kind of like financial opportunity is just that, it's an opportunity. I think the, you know, whether it fits someone's specific risk profile, I think, is more of a question of education. But I think if the opportunity itself is completely gated off, then that's a non-starter.

• 30:11Speaker 05

  There's, there's no way, no amount of education is gonna get you out of that. So I think you kind of need both. And I think right now, it's just, it is, there is just so much work to be done. But I think the first step is taking the system itself and making it fair and democratized.

• 30:25Joe Weisenthal?

  You know, we've been talking a lot about just sort of like market structure of Hyperliquid, and I do, I would like to get back to that, et cetera. But like, maybe people would be interested in a little bit about you and your background. You used to be at Hudson River Trading. You started Hyperliquid a few years ago, kind of after like the insane 2021 year that crypto had, et cetera. What were you, you're looking out into the world? And it must have been kind of a, people might have thought it was a contrarian bet, like, hey, crypto, that was just a bunch of like meme coins and stuff that was over, that was 2021, we've moved on to AI. Why don't you talk to us a little bit about like this choice? Also, you didn't raise any VC money?

• 31:07Joe Weisenthal?

  Talk to us about this choice to like pivot your career and take this big shot at building something new. And what did you see out in the financial system such that you thought there was this big missing piece that was lacking?

• 31:19Speaker 05

  To your first point, Hudson River Trading, I worked there right out of college. Had an amazing experience and only positive things to say about, about them. They're obviously a wildly successful company, but when I was there, it felt like, you didn't, you didn't feel that day-to-day, like, it felt a lot like a startup, like a tech startup. And I think, I think they worked hard to kind of have that culture and so, you know, learned a lot about markets, met great people. The idea with building an on-chain, in 2023, the vision was a bit more laser-focused and narrow. It was to build something on-chain that people actually need. And when we looked, like I said, when we looked around and, you know, just looked at what people were doing in the world and like, where could on-chain technology really improve things?

• 32:03Speaker 05

  You know, we didn't, we actually didn't see it as, oh, like crypto is only about meme coins, whatever, right? Like, there are these exchanges that were offering perpetual futures in a centralized context, and they were very clearly offering something that users benefited from and wanted. And there was amazing product-market fit. And I think now you see this in traditional contexts where I think perps have kind of like crossed that threshold of acceptance, which is, which is really, really cool. But even 2023, there were many venues in crypto offering these. But they were all doing it in a centralized manner. And so it was very clear to us, at least, that there was an opportunity to bridge the

• 32:44Speaker 05

  gap between the user experience and product experience on the one hand of a centralized perpetuals venue and the on-chain technology and the properties such as self-custodianship of your own capital, which is very important. I think the, the kind of counterparty risk of using exchange is always going to be there, whether it's in a crypto or non-crypto context. And so if you could have your cake and eat it with those two properties, the idea was that this would be something that would be a step function improvement over what people had access to at that point.

• 33:36Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. There's probably nothing so closely associated with an MBA as the case study. As Bloomberg's Rob Mandelbaum reports, "Developed at Harvard Business School over a century ago, the case study invites students to wrestle with a complex problem faced by a real company and its people." That is, until AI, which has kicked off a movement that's now spread to business schools worldwide. According to a Bloomberg Businessweek survey of global business schools, half of the 56 that responded have either implemented more interactive AI-simulated cases or are developing or piloting them. The founder of the AI integration consulting firm Inspire Higher Ed and the author of

• 34:20Speaker 01

  a report "Tracking AI at B-Schools" says the argument for interactive cases is largely about extending opportunities for students to practice and hone their skills at negotiation, directing teams, crisis management, and more. Some professors argue that using AI to generate cases can create problems, such as assuming outcomes are undermining credibility, while others see it as a way to elevate understanding, drive learning, and scale their mission. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at chatgpt.com/work. Available with all paid ChatGPT plans.

• 34:58Speaker 06

  Most meeting note-takers get the easy words right and the important ones wrong. The client's name, the acronym. Whisperflow Note Taker is built to get the hard words right. It takes notes on any meeting platform, Zoom, Google Meet, Teams, even WhatsApp calls. Keeps every meeting searchable and connects to Claude or ChatGPT, so you can ask, "What did we agree to last Tuesday?" Free to try on Mac and Windows at whisperflow.ai. That's W-I-S-P-R-flow.ai.

• 35:28Speaker 07

  Running a small business takes everything you've got, but with Chase for Business, you're not alone. They bring together local support and a broad range of resources to more than 7 million customers. With a deep understanding of your day-to-day needs, they provide products and guidance built to help you thrive. Right now, earn $500 when you open a new Chase Business Complete Checking account for new business checking customers with qualifying activities. Offer expires January 21, 2027. Chase Business Complete Checking has the flexible tools you need to accept payments, make deposits, and manage your finances with confidence. Learn more at chase.com/podcastbizoffer. Chase, make more of what's yours. Fees may apply to Chase Business Complete Checking accounts.

• 36:11Speaker 07

  The $500 offer is available for new business checking accounts with qualifying activities through 1/21/2027. Eligibility and qualification requirements must be met. Additional restrictions may apply. Please speak with a business banker for more information. J.P. Morgan Chase Bank, N.A., member FDIC.

• 36:28Speaker 02

  For big business, AI opened up a world of promise, but that world of promise turned into a world of pain. Costs spiraling, data scattered across disconnected systems, security and governance increasingly complex, AI initiatives struggling to scale, and ROI that remains frustratingly out of reach. The challenge isn't AI itself, it's having the infrastructure AI needs to succeed, which is right where Boomi says, "We got you." Tens of thousands of enterprises trust Boomi to connect data, applications, processes, and AI. With Boomi, businesses can eliminate silos, automate workflows, strengthen governance, and create the foundation AI needs to perform at scale. The result?

• 37:10Speaker 02

  Faster innovation, more efficiency, better business outcomes. Boomi turns a world of AI pain into a world of AI gain. As Boomi says, "We got you." Head to boomi.com to learn more. That's B-O-O-M-I.com.

• 37:27Tracy Alloway?

  How serious are you when you say you want to house all of finance? And what are you looking at next, you know, other than perps? Can we go old school and have physically settled like commodities futures or something? Is that possible for you?

• 37:39Speaker 05

  I think we're very serious about the idea. Of course, it is. It is aspirational. Like, I think even 90% of all of finance would be a huge success. And we're a long way, ways away. I think physical settlement is, well, one is it's always going to have a very important place in society. I think this is kind of like a misconception about perps and honestly, just about our general vision. Like, we're not trying to displace anything. Yeah, in fact, I think the technology can benefit everyone who currently operates markets in a, in a kind of a more traditional setting.

• 38:19Speaker 05

  And whether these markets are perpetual markets or settled dated futures is irrelevant. Because ultimately, what you really need is an order book clearing system and, you know, global distribution, concentration of liquidity. All these properties kind of doesn't really matter what the underlying is. And I personally am not very opinionated about, you know, what ought to exist. I think the system to house all of finance should be a collection of tools. We call these things primitives because I think they're kind of, it evokes a lot more kind of interesting, you know, how these things can compose with each other. But anyway, tools, effectively tools for people to do what they need to do.

• 38:59Joe Weisenthal?

  It's funny, there's no Hyperliquid Wikipedia page.

• 39:02Tracy Alloway?

  Really?

• 39:03Speaker 05

  I did not know that.

• 39:03Joe Weisenthal?

  I looked, because I was trying to see and it was, or maybe there was and it was deleted. And one of the moderators said, typical crypto spam, very doubtful this is a notable topic. And the, the page was deleted, but if you guys house 90% of finance one day.

• 39:18Tracy Alloway?

  That sounds like my bio, which got deleted because I was a journalist of little notability.

• 39:24Joe Weisenthal?

  If this person.

• 39:25Speaker 05

  Gotta stay humble.

• 39:26Joe Weisenthal?

  I'm not gonna call this person out by name, but this moderator is gonna feel pretty dumb one day. If you guys hold 90% to 100% of finance. And he's like, very doubtful this is a notable topic. Anyway, we'll, we'll be revisiting this page in the future. So you decide to build it and you code it yourself. And this was when coding was still hard, because now anyone can code. Can you talk a little bit about like what that was like? Like, building an exchange at your computer and like how that all worked? How long that took?

• 39:56Speaker 05

  Well, we don't view it as building an exchange.

• 39:58Joe Weisenthal?

  Okay, you're right.

• 39:59Speaker 05

  Building kind of like a network.

• 40:01Joe Weisenthal?

  Yeah, you're right, sorry.

• 40:02Speaker 05

  The important thing here was that we kind of looked around and tried to find something existing at that moment in time that could effectively, with an incremental improvement, house all of finance. And the conclusion unfortunately was that there were many technological gaps. And it's a bit like, probably if you were building consumer tech, something like that in, in the early 2000s, maybe you realize, you kind of go down this rabbit hole of like, oh, wait, no, we are, we gotta do, oh, we gotta buy computers. Like, oh, maybe the internet doesn't actually work that well. Like, maybe we should kind of work on some networking things. And this is where kind of the vision of, you know, like an AWS kind of analogy did come up.

• 40:44Speaker 05

  I really think that the thought process and realizations and ultimate generalization of the infrastructure probably has some parallels between these two stories. I'll, I'll be at, of course, Hyperliquid at a much earlier stage and a smaller scale. But that was effectively the, the realization, like, okay, I guess this thing is a lot bigger of a project. To do it well, it's a very big project. And maybe a bit of just blind optimism or, I think the fact that it was hard was almost more inspiring to me. Like, it felt, made it seem more worth doing. And it felt more like, well, if, if we don't at least give it a shot, like, who will?

• 41:24Speaker 05

  And so, yeah, it kind of involved digging down way deep into the consensus layer of like, just how do these different nodes talk to each other? Questioning all the assumptions about how networks were built at that time to kind of come up with a solution that ultimately can house all of finance. Because I think if you look around at even blockchains today, they're very admirable and they all have their own selling points. But I don't think any of them, other than Hyperliquid, you know, has this precise vision of a global financial system can actually just have one global state.

• 41:56Tracy Alloway?

  You know, you mentioned computational resources as a constraint on, not listings, deployments earlier, deployment auctions.

• 42:07Tracy Alloway?

  What's been the evolution, I guess, of like your data needs? I'm really curious how big you guys are now. Are you running like 18 data centers that are all the size of three footballs or whatever cliche people like to use now? What's your token spend like now? And how much of a constraint is this really?

• 42:26Speaker 05

  Yeah, that's a good question. It's, I think this is also misconception about, a few there. The, first of all, like, we actually don't run these things. The foundation runs some validators, but ultimately, it's currently the set of validators is 30 something. And the top 27 of them by stake at any moment in time operate the network. The specifications for running a node are actually very minimal, which I think is quite cool and counterintuitive. Like, I remember a validator at some point, I think tweeted something and was like, wow, my mind is blown. I just realized that on this machine, this like very, this kind of humble rudimentary machine that anyone can procure,

• 43:08Speaker 05

  there's no three-year line or exclusive contract needed with Nvidia or anything like that. Like, anyone can procure one of these, this is basically consumer hardware. You can run the global financial system on it. Of course, you know, not there yet, but that is the vision of like, it doesn't matter how many things are built. The network should not be prohibitively expensive to operate. That being said, you can't run it on your cell phone. So there is like some sort of trade off here. I think a reasonable approach to take here is like, it should not be, like you said, data centers the size of football stadiums to run this thing. Like, right now, you need 128 gigs of RAM. Like, that's not, you know, that's not like the cheapest laptop you can buy anywhere. But also you can buy a laptop with that spec.

• 43:52Speaker 05

  So, um, yeah, that's kind of the, the sweet spot, I think.

• 43:55Joe Weisenthal?

  So you have this vision, maybe get to 100% or swallow all of finance, which pretty cool, very ambitious. Hyperliquid itself, like, you don't do a lot of media, which is why we're thrilled to have you on. I believe you have a completely pseudonymous co-founder. There is not much known about your team in general. I think like.

• 44:18Tracy Alloway?

  People know more about the mascot than the team members.

• 44:21Joe Weisenthal?

  People like, don't know, like, if there's like a specific address or whatever that they could call. Do you envision eventually that changing? Like, do you think there is going to be a demand for like, look, we're running a lot of the financial system through this platform? We sort of want to know the people who are running this? Or do you envision it where it's like, kind of like this sort of supreme neutrality? Like, we don't know who's running the internet? We don't know who is running Bitcoin? Do you see, or do you see it that way? Or eventually like you and your team truly can like fade out and it's just a protocol like TCP IP is?

• 44:58Speaker 05

  Well, the team, I actually view the team as much bigger than labs. So who runs the thing? Well, it's really, it's really a collection, a constellation of different teams. So we mentioned PER earlier, right? The NASDAQ traded ETF or digital asset treasury company. They're part of the team, right? They're, they're the team going to investors and, you know, explaining what this technology is, right? And they're, you know, Dave is very well known. And so I don't, I don't, I think this is miscon, this is kind of like a miscategorization of who runs the thing. Because like you said, the who deploys a market, it's the deployer. Well, the deployers, there are many of them and there will continue to be more. And I think, you know, Kraken announced earlier.

• 45:40Joe Weisenthal?

  But like you, for example, set the rules for each, so HIP3, you set the rules, you set the 31 hours, you set the thing about 500,000 hype tokens to be, you are a governing entity.

• 45:53Speaker 05

  Well, this is no different from the Ethereum blockchain where the developers of the.

• 45:56Joe Weisenthal?

  90% of the world's finance either. Like, what I'm saying is, if you want to get like, if the world is gonna eventually have all finance beyond this chain, like, yeah, it is, like, the Ethereum blockchain, they've like gone sideways for several years. If the world is gonna like be on this thing, do you think people are gonna expect to want to be able to know more about the?

• 46:17Speaker 05

  But it's also, yeah. I guess what I wanted to say there was that the Ethereum blockchain is a, you know, it's a kind of collection of developers.

• 46:25Joe Weisenthal?

  Okay.

• 46:26Speaker 05

  Taking community feedback, but ultimately to, you know, it has to be kind of written by developers, right? Like, unfortunately, maybe you're right, like, maybe at some point, software will, will no longer require developers to kind of oversee the conversion of thought and ideas, which is a very democratic process into code. Like, maybe there will, maybe there will be no human intermediary of that process in the future. But for now, there is. And so there's this kind of like role that developers play. But I would not say that the core ideas behind the network are kind of owned by the developers. I would say it's kind of a, it's a manifestation of what a system should be. It should be fair, it should be transparent and like, it should have, it should support these kinds of, these tools.

• 47:08Tracy Alloway?

  Maybe a slightly different way of asking this question is like, okay, so with HIP3, a builder can deploy a market and they set the oracle for pricing and they set the leverage limits and settlement or whatever. And I trust the builder to do all of that. And it's all laid out very clearly and transparently. What exactly am I trusting Hyperliquid to do in that scenario? Like, what is the provision that Hyperliquid is, is doing for me? And what am I hope trusting you will do?

• 47:43Speaker 05

  Well, if the question's for Hyperliquid Labs, then the, I think the trust assumption is that, well, it really isn't the, the output of the soft, the kind of like node software that exists, right? And so there would be an assumption that it works. It kind of like adheres to the specification. And I think this is kind of true of any blockchain, right? Like Ethereum has a specification, it has multiple client implementations. When you run a node, you pick an implementation and you run it. And I suppose you are trusting that, that implementation or you can read it. But you're generally trusting this very complex, you know, I want to say like millions of lines of code ultimately adhere to the rules of the blockchain.

• 48:28Speaker 05

  But like you said, all of the kind of quote unquote, running of markets is done by a combination of the deployer specifying the specifications of the contract and publishing this oracle price, which is a tethered to some real world thing. And then the. Kind of technology itself is sort of a reflection of the deployer's intention. And when a user, I don't think there is like an inherent trust going the other way from the protocol to the deployer, because really users who use the a deployer's market trade, a deployer's markets, that's where the the trust is, right?

• 49:06Speaker 05

  Like if you're trusting a contract to track the price of gold, then the you are trusting implicitly that the deployer is pushing something that represents what they said it would.

• 49:36Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. There's probably nothing so closely associated with an MBA as the case study. As Bloomberg's Rob Mandelbaum reports, developed at Harvard Business School over a century ago, the case study invites students to wrestle with a complex problem faced by a real company and its people. That is, until AI, which has kicked off a movement that's now spread to business schools worldwide. According to a Bloomberg Business Week survey of global business schools, half of the fifty six that responded have either implemented more interactive AI simulated cases or are developing or piloting them. The founder of the AI integration consulting firm Inspire Hire Ed and the author of a

• 50:20Speaker 01

  report, Tracking AI at B schools, says the argument for interactive cases is largely about extending opportunities for students to practice and hone their skills at negotiation, directing teams, crisis management, and more. Some professors argue that using AI to generate cases can create problems, such as assuming outcomes are undermining credibility, while others see it as a way to elevate understanding, drive learning, and scale their mission. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com/work. Available with all paid ChatGPT plans.

• 50:58Speaker 06

  Quick question for you. How much of your day is spent typing? Email, Slack, notes, prompts to ChatGPT? Whisperflow is a voice to text app. Instead of typing, you talk and it types for you in any app on your Mac, Windows, iPhone, or Android. It takes out the ums, fixes the typos, and the result sounds like you wrote it, four times faster than typing. So the email that used to take two minutes now takes thirty seconds. Whisperflow is free. Download it at whisperflow.ai. That's W I S P R flow dot AI.

• 51:28Speaker 07

  Running a small business takes everything you've got, but with Chase for Business, you're not alone. They bring together local support and a broad range of resources to more than seven million customers. With a deep understanding of your day to day needs, they provide products and guidance built to help you thrive. Right now, earn five hundred dollars when you open a new Chase Business Complete Checking account for new business checking customers with qualifying activities. Offer expires January twenty first, twenty twenty seven. Chase Business Complete Checking has the flexible tools you need to accept payments, make deposits, and manage your finances with confidence. Learn more at chase.com/podcastbizoffer. Chase, make more of what's yours. Fees may apply to Chase Business Complete Checking accounts.

• 52:11Speaker 07

  The five hundred dollar offer is available for new business checking accounts with qualifying activities through one twenty one, twenty twenty seven. Eligibility and qualification requirements must be met. Additional restrictions may apply. Please speak with a business banker for more information. J P Morgan Chase Bank, N A, Member, F D I C.

• 52:28Speaker 02

  For big business, AI opened up a world of promise, but that world of promise turned into a world of pain. Costs spiraling, data scattered across disconnected systems, security and governance increasingly complex, AI initiatives struggling to scale, and ROI that remains frustratingly out of reach. The challenge isn't AI itself, it's having the infrastructure AI needs to succeed, which is right where Boomi says, we got you. Tens of thousands of enterprises trust Boomi to connect data, applications, processes, and AI. With Boomi, businesses can eliminate silos, automate workflows, strengthen governance, and create the foundation AI needs to perform at scale. The result?

• 53:10Speaker 02

  Faster innovation, more efficiency, better business outcomes. Boomi turns a world of AI pain into a world of AI gain. As Boomi says, we got you. Head to boomi.com to learn more. That's B O O M I dot com.

• 53:27Joe Weisenthal?

  I don't know if this is like a great analogy or not, but you know, like with the rise of ETFs and passive investing, there's all these questions about like, well, how far can that go? Don't we need some people like trade the underlying? Yeah. Thing, right? And I'm curious if like there's some sort of analogy with the concept of like oracles and how much like, you know, for example, several years ago, there was an incident with a Solana based thing called Mango Markets where someone was accused of, it was something, I forget the token, but the size of the perp trading relative to the underlying token, it got so extreme that it was very easy to manipulate the underlying price that transmitted

• 54:09Joe Weisenthal?

  through the oracle and then you make a lot of money because then the thing moves price. Like, what are the constraints on how like volume of perps relative to the underlying trading? And does that create a constraint for hyper liquid? There was also an incident, I think earlier this year, like there was a bad quote from Hynek's and the oracle price deviated very dramatically, causing some losses. But like, talk about the oracle constraint.

• 54:36Speaker 05

  Yeah, so I'll take those in reverse order. The Hynek's thing.

• 54:39Joe Weisenthal?

  Yeah.

• 54:39Speaker 05

  This is, you know, Trade XYZ, I think, published a very detailed postmortem, so I'm just quoting here, but that falls in the category of implementation issue. Like their, you know, the their system kind of worked as intended, but their system perhaps was not intuitive. And I think they indeed found it was not intuitive. I think there was there were refunds and ultimately they sorted it out. And I think these things happen, but this is kind of, this is not unique to hyper liquid nor Trade XYZ, nor even blockchain. This is just a software property that, you know, Apple ships operating systems with bugs and they patch it. So the first question I think is interesting. I think a priori, you might assume that the volume ratio needs is kind of capped. Like maybe you would say, oh, if there's more volume in purpose, then it doesn't work because the underlying trades less.

• 55:23Speaker 05

  But I don't actually think that's true. I think you can, I think it's healthy. And if you look at, for example, you know, futures tracking the S and P five hundred versus the underlying components or even ETFs, right? Like there is a big volume differential there. I think the important thing is that the underlying can, needs to have smart people, smart people with the ability to provide liquidity into price moves that do not reflect the underlying value of the thing. And so this is, this is where the market design, the mechanism is really important. But you can imagine in a world where it is just perfect information about the underlying companies and someone trades a bunch of the perps because, you know, there's a lot more volume going on there or the futures, right?

• 56:07Speaker 05

  For the S and P five hundred and then the underlying is traded very thinly and then the the price moves one percent. Well, the fact that it's traded thinly does not really matter. What matters is someone needs to be like, that one percent move is not correct. Whatever size you want, I'm here to trade against you. And I think they are very, like, if you look at the S and P five hundred, I'm very confident that there are market makers who would happily trade at far less of a dislocation. And so you get this effect where the price discovery can happen on a derivative and the underlying can still be, you know, a reflection of some, you know, some real value in the world.

• 56:40Tracy Alloway?

  Can deployers ever get rejected for having an oracle that, you know, you just think wouldn't work because the underlying isn't liquid enough or like it's too hard to trace a price or something like that?

• 56:53Speaker 05

  The protocol does not even understand what that means. There's kind of like no semantic encoding.

• 56:58Tracy Alloway?

  Yeah.

• 56:58Speaker 05

  In the protocol. What the protocol does know about is, well, if the, for example, there's a constraint at the protocol level where between two oracle price updates, the relative difference between those two prices cannot be more than one percent. But this is like a hard enforced rule. And in fact, when you try to push an oracle price that's say two percent away, what happens is the protocol clamps it to be one percent away so that then you can push it again. It's also, it's actually relatively user friendly, but this, you know, this constraint you might think is important because given the sort of like set of leverage in the system, if you move it too quickly, then perhaps the system cannot mutate its state machine in a, in an orderly way. But if you break it down into a composition of something that's more like a continuous price movement, then it's fine. So these kinds of like mathematical constraints, the protocol very much has a lot of intentional

• 57:42Speaker 05

  sort of design, mechanism design around. But whether it's like, well, like this thing doesn't make sense, I just don't think that question can be answered.

• 57:48Tracy Alloway?

  It can't do subjective liquidity judgments.

• 57:52Speaker 05

  It's the same way that like, if you have, if you're running a traditional exchange, futures exchange, and you have a, some vendor that provides the order book software, like that vendor surely does not, cannot know whether you are used, you, the order book represents something appropriate. They say, well, here's the thing, here's the technology. Like it allows people to place buy orders and sell orders. You can specify a price and a size and like this is how it works.

• 58:12Joe Weisenthal?

  So we mentioned at the beginning, hyper liquid, not a household name yet, but it is getting there and it did get some attention this spring after the war in Iran broke out because here is a venue that had twenty four seven W T I and Brent futures trading out it. So people are sickos and they want to know, or maybe they're not sick, but they really want, you know, unfortunately, the nature of war is it does, you know, it's like all the time, people want to see, okay, what's happening with the price of Brent at one AM on a Sunday morning, et cetera? Where's the price coming from? There's no oracle, right? That's like transmitting, there's no actual live spot cash trading or anything. So talk to us about like what's happening at one AM on a Sunday such that there is a price of a W T I perp.

• 58:57Speaker 05

  Yeah, so this is up to the deployer, kind of like the previous question, the kind of semantics of what it means is a bit, it's kind of like up to deployer to define. This is part of the specification of the contract, not in the protocol. But I do think an interesting thing to point out here is that the fact that perpetuals by and large today have an oracle source that is based on an underlying price twenty four seven is interesting, but is not necessary. You could actually have funding. So the mechanism of funding is basically is to kind of make the derivative trading no matter, sort of like over time converge to whatever the underlying price is. You can get that effect with periods of free floating derivative price and then periods of funding payments based on the discrepancy between the derivative and underlying.

• 59:42Speaker 05

  Like if you work out the math for funding, you can relax that. Constraint and just I think it will converge slower if there are periods with less funding, but I think the mechanism itself still accomplishes the goal.

• 59:54Tracy Alloway?

  Do you have any institutional traders on the platform now?

• 59:58Speaker 05

  I think many of the larger, larger traders are institutions. It just requires significant sophistication to, for example, market make in any setting.

• 1:00:08Joe Weisenthal?

  So you're thinking, okay, look, you're here in the US and so presume and you want to get a lot more finance. So presumably at some point that's going to happen. There are a lot of quote legacy institutions that may be interested in figuring out how their business can work on with hyper liquid beyond just the sort of trading shops, which are probably active. Like, can you talk about like, what is the sort of like, the volume today? Who do you see in five years? Like, could you see the Van X of the world or the round hills or the state streets becoming deployers issuing stuff? Like, when you think about where hyper liquid could become, could you imagine some of these household names like slotting into some of the part of the ecosystem here?

• 1:00:52Speaker 05

  Yeah, I think I would push back on them being quote unquote legacy. I think that's very much not the vision of, of hyper liquid, at least, at least not how we are sort of seeing an ideal future. You know, legacy implies that they will be disrupted, right? Or displaced. And I think the, the vision here is that, you know, the institutions you mentioned have great relationships with a bunch of their users, right? Like the users want to use them. They trust the brand.

• 1:01:17Joe Weisenthal?

  Yeah.

• 1:01:17Speaker 05

  They provide a valuable service. I don't think any of that should change. But, but I think to your latter point, I think they should. It's in their interest to adopt new technology that improves their offering. There's a bit of like the analogy here with the cloud, you know, in AWS.

• 1:01:32Joe Weisenthal?

  Yeah.

• 1:01:32Speaker 05

  I think, I don't know if back then, when, when AWS first came out and went around kind of telling people this is a great, great technology. Like, why don't you consider using the cloud? I don't know. I don't know if the companies were like, wait, no, we built our own servers. Like, are you trying to like disrupt us? I think there could have been that pushback, right? But then now, if you, you know, fast forward to today and you say like-

• 1:01:51Joe Weisenthal?

  But basically, you could see the Van X of various, like eventually becoming deploy.

• 1:01:56Speaker 05

  But like that, it, I don't even think that's, I think it's remarkable, and I think it's an important development, but I don't think it's a remarkable fact that that could happen.

• 1:02:04Joe Weisenthal?

  Okay.

• 1:02:05Tracy Alloway?

  This is a slightly weird question, but if you were to be regulated by the CFTC or the CME, could you see a world where the deployers are the ones who get regulated versus like the protocol?

• 1:02:17Speaker 05

  I can very much see that world. I think that's, that's an astute way to kind of frame it. I think that's a, it's a good kind of understanding of how the, like we said, there are different like roles and kind of like in, in the, in the setup. And I think in the same way that internet technology, TCP IP, for example, is a technology, it is used to kind of build financial stacks, but it is not regulated, right? The, the regulation sits at the, at the layer where there are controls. And indeed, the, the deployers are the ones that have these, exercise these controls. And so it's a very natural way for the protocol to play, continue playing its role as a, as a networking liquidity infrastructure layer.

• 1:02:57Joe Weisenthal?

  So just, you know, as Tracy mentioned, President Trump called out hyper liquid and said, come here. But what actually would have to happen so that an American could trade on hyper liquid in the good way without having to use a VPN? Like, what needs to happen from a regulatory standpoint such that that actually could happen?

• 1:03:16Speaker 05

  Well, again, you know, if you're using, if you're an American using a VPN, you're breaking in terms of the service. So I think that's-

• 1:03:21Joe Weisenthal?

  Don't do that, Ken.

• 1:03:21Speaker 05

  That's, yeah, I mean, it is, again, it's strictly, it's not, it's not a laughing matter. I think this is like, you know, it's, you're breaking the rules. But, you know, for it to happen, there needs to be, the CFTC in this case needs to, it's a, it's a good question, like what they need to do, right? Like the, in some sense, the core principles of the CFTC are agnostic of the underlying technology, right? That's why, that's why they're called core principles, not like technological rules or something. But on the other hand, I think there is a certain gap in kind of just understanding of like, what is this? It's kind of like hot off the presses in some sense, right? And then the kind of regulators, obviously, I think are to everyone's benefit. They're conservative. I think they kind of want to move quickly. They want to embrace innovation, but there's

• 1:04:05Speaker 05

  a very heavy responsibility with that because there's an existing system that by and large works well, serves many people and has protections built in place. So I think there's very naturally this gap of wanting to understand, like, is this technology truly compatible with our core principles? And I think that's the kind of gap because ultimately I think the technology has a lot of benefits. And I think many people are beginning to see this. I think deployers see this because they are day in, day out using the technology. I think regulators, you know, more conservative, slower to see it, but beginning to see it that maybe if actually you can provably, anyone in the world can provably audit that the sum of user balances equals the amount of USCC sitting at this address. Like, that is actually

• 1:04:47Speaker 05

  really good property because even in traditional settings, there are a lot of regulations in place, but there's kind of a trust there, right? Like, if someone asks, you have to tell them, right? Like, okay, like here's a, show, show, show them the bank account, show them the ledger of user balances. But like, that is a sort of process. Whereas if this is a property rather than a process, all of a sudden, I, I just think this kind of like aha moment is, is quite beneficial. So it's not like, it's not like compliance or new tech. It's kind of, yeah.

• 1:05:14Joe Weisenthal?

  I hope you feel a little bit guilty about making everyone pay attention 24/7.

• 1:05:18Tracy Alloway?

  Yeah.

• 1:05:19Joe Weisenthal?

  We need a break.

• 1:05:19Speaker 05

  I think it should be an option. You can take a break.

• 1:05:21Joe Weisenthal?

  Yeah.

• 1:05:21Tracy Alloway?

  All these poor financial journalists working on weekends now.

• 1:05:24Joe Weisenthal?

  I like being able to check votes on the weekend. Jeff Yan, thank you so much for coming on the podcast. Many more questions and things to dive into, but that was a fascinating introduction and please come back sometime.

• 1:05:38Speaker 05

  Thank you for having me.

• 1:05:51Joe Weisenthal?

  Tracy, that was a lot of fun. You know, I feel like we threw a lot at the listeners there, some of these terms. And I would recommend people who are listening to like, do a little more research on what these things are, particularly the, how perps work.

• 1:06:07Tracy Alloway?

  Yeah.

• 1:06:07Joe Weisenthal?

  Like, if you're in markets, if you're, care about futures, et cetera, I think it's very much worth knowing a little bit about the market structure and perps and how they fund, et cetera. Because regardless of what happens with hyper liquid specifically, et cetera, this quote primitive, unquote of perps has been growing for a long time. And I think it's very good a reason to believe like, they're going to be with us for a long time as a popular trading instrument.

• 1:06:33Tracy Alloway?

  It feels very inevitable, as does 24/7 trading at this point. Do you have a take on why so many of these crypto things end up inventing their own language to go along with it?

• 1:06:47Joe Weisenthal?

  So like deployer?

• 1:06:49Tracy Alloway?

  Deployer, oracle.

• 1:06:52Joe Weisenthal?

  I don't totally know. Like, I would imagine that like the idea of like a price oracle is probably one of these things that maybe even existed in computer stuff prior to trading where it, I don't, I don't know. It'd be interesting to know. But I, the structure of hyper liquid to me clearly feels distinct in many ways. One thing that we didn't get into, although we did, so for example, you know, okay, so Ethereum exists. There are different exchanges that exist on Ethereum, right? So Uniswap exists on Ethereum. One thing that's interesting and distinct about hyper liquid from Ethereum is that in the protocol itself, it sets the rules for the exchanges. So this idea that like, okay,

• 1:07:37Joe Weisenthal?

  there's this 31 hour interval via which a deployer can bid to list an item of their choosing. The fact that that's like baked into the HIP3 version of the protocol is very interesting and distinct of the fact that the, the lab takes active governance in how these exchanges are run. I mean, look, you know, like we know, for example, that like on Solana or Ethereum, each probably has 10,000 dog coins, right? Those don't exist on hyper liquid because there's this auction process.

• 1:08:11Tracy Alloway?

  Yeah.

• 1:08:11Joe Weisenthal?

  You don't, you can't just like spam the network where it's like, oh, dog coins are hot and we enlist 100 dog coins. I think one other thing we didn't get into, but I think it's interesting. Let's say you and I assembled 500,000 hype tokens such that we could then be a deployer and bid into these auctions.

• 1:08:28Tracy Alloway?

  Yeah.

• 1:08:29Joe Weisenthal?

  Now, there's already Nvidia perps. There's already SK Hynix perps. For us to have a successful thing, part of our strategy is like, well, what's going to be the next big thing such that maybe like, you know, Central Asian ETFs, like the Kazakhstan index is, we think it's going to be hot. So maybe our strategy is like, oh, let's build those. But there's probably this whole other meta game. And maybe at some point we should do an episode with one of the deployers, how you think about, look, what am I going to bid on such that my instrument becomes the thing that everyone wants to use? Lots of interesting questions.

• 1:09:01Tracy Alloway?

  Oh, totally. Lots of game theory.

• 1:09:03Joe Weisenthal?

  Yeah, totally.

• 1:09:04Tracy Alloway?

  For deploying those new markets. But shall we leave it there for now?

• 1:09:07Joe Weisenthal?

  Sure, let's leave it there.

• 1:09:08Tracy Alloway?

  This has been another episode of the Odd Thoughts Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 1:09:13Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at TheStalwart. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashil Bennett at Dashbot, Cale Brooks at Cale Brooks, and Kevin Lozano at Kevin Lloyd Lozano. And you can chat about all of these topics 24/7, including markets and crypto in our Discord, discord.gg/oddlots. And for even more Odd Thoughts content, check out our daily newsletter, which you can find at Bloomberg.com/oddlots.

• 1:09:38Tracy Alloway?

  And if you enjoyed this conversation, if you like it when we talk about the new rails of finance, then please leave us a positive review on your favorite podcast platform. And if you watched the video and you enjoyed the show, then please hit the like button or leave a comment or better yet, subscribe.

• 1:09:54Joe Weisenthal?

  And remember, if you're a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. Just find the Bloomberg channel on Apple Podcasts and follow the instructions there.

• 1:10:04Tracy Alloway?

  Thanks for joining.

• 1:10:37Speaker 08

  Wise is the smart way to manage the currencies you need around the globe. When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google with no unwelcome surprises. Plus, most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. It's simple and free to sign up when you download the Wise app. Be smart. Get wise. Ts and Cs apply.

• 1:11:07Speaker 09

  If you're a business owner, you need a card that can keep up. With the Delta Sky Miles Reserve Business American Express Card, everyday purchases transform into miles you can use towards future travel. So business as usual can lead to a well deserved getaway. And for a limited time, card members can earn 200,000 bonus miles, the highest miles offered this year. Whether you're traveling for business or planning your next adventure, now's a great time to make every purchase go further. Apply today at www.deltacom/podcast. Offer ends November 4th. Minimum spending requirements and terms apply.

• 1:11:42Speaker 10

  This is Robert Smith from Business History. If you're listening to this, there's a good chance you're a small business owner. And like every small business owner, you started with a dream to do what you love and watch it grow. What you probably didn't dream about? Keeping up with cyber threats. That's where Mastercard can help with access to tools that help identify cyber threats to better protect your business. Building your dream business? Priceless. For cybersecurity in a changing world, there's Mastercard.

• 1:12:09Speaker 10

  Learn more at mastercard.com/smallbusiness.

• 1:12:12Speaker 11

  This is Alexis Christofres for Bloomberg Surveillance. Most companies have tried AI. Most aren't seeing results. Not because AI doesn't work. It's because AI hasn't reached the workflows yet. That's the gap Asana is built to close. Asana is the operating system for human agent teams, ready to go AI teammates pre-built for marketing, ops and IT. No prompt engineering, no setup. They show up where the work is happening, already on boarded in your workflows, ready to deliver. Asana, where humans and agents workflow together. Try it at asana.com. That's A-S-A-N-A.com.