The Exchanges

Q So you didn't, you, you, you learned, uh, the things not to do from FTX. Uh, you learned, you were inspired by Satoshi. Was there any company, uh, off chain, uh, that, that was particularly inspiring?

A Yeah, a bunch. I mean, I think every big company, every big tech company, I think is like a very inspirational to me. Uh, I, I grew up in the Bay area, so it's, it's, it's hard to not kind of be sort of motivated by that. Uh, I think Amazon was a really big one that what inspired me was that They, they basically like, they're the very first principles and like driven, but also, and also very practical. And I think when sort of, I assume it was Bezos, but maybe someone else in the org realized that they had built so much of the internet stack that they, it would be a shame if they, if that just went to this like retail business, like why not sort of abstracted a bit and create the right API so that anyone can leverage this like amazing infrastructure they've built. And you know, that kind of being the birth of AWS and cloud computing, I think that's like, Such an amazing story. And that's inspired. I think like, that's kind of like how we think of hyperliquid was that like it started as, you know, a blockchain optimized just to be able to do on train for purpose trading because no other infrastructure could do that.

AI assessment note: “I think Amazon was a really big one that what inspired me”

Q What do you think is most misunderstood about Hyperliquid today?

A Oh man, there's so many things. Uh, most misunderstood. One thing I would say is that it's, well, the, it is a network. I think people think it's like a purpose exchange. Some people think it's like a centralized thing. It's really not. It's a blockchain. The validator sets permissionless. They're currently 24 validators. You know, anyone can spin one up. It's like top, top 24 by stake. Uh, the, the validator set, you know, every validator executes every transaction, including all the orders. So like this kind of like base layer of like, just like what it is, I think is kind of lost because people are so They're focused on the product basically, which, which maybe is good. Maybe it's nice that the tech is abstracted from users.

AI assessment note: “I think people think it's like a purpose exchange... It's a blockchain.”

Q How much did you know exactly what you wanted to build and then just execute it against that plan versus iterate to get where you are today?

A Um, I would say very little. So, so the story there is we, we just wanted to come and do something that we could do well. And even doing one thing well is very, very hard. So we were, we were laser focused at first. We just kind of looked around and thought like, we kind of, we weren't afraid to dream big, but we were kind of practical about it. We just thought like, okay, like what's one really, really big thing in crypto that we think could benefit from a fully permissionless platform. And purpose trading was the obvious one I think it was probably doing. More than 50% of the revenue in all of crypto back then, sort of back of the envelope calculations. And so we tackled that initially. And I think we, we, one big thing is like, we weren't willing to compromise even at the very beginning on How the thing ought to work.

AI assessment note: “I would say very little.”

Q to get all this oil and stuff. Um, but obviously in, in a purely financial context, uh, that's not. That's not the outcome, but, uh, has this just unlocked higher frequency trading, more leverage, uh, a different shape of trader, something more quantitative, something more, uh, algorithmic driven? Like, who are the, who are the customers, or who are the traders, and, and why are they excited about the product?

A Yeah. So they're excited because, so, so basically like futures, like you said, like futures kind of sucked because of all these like random things. They kind of settle. Sometimes you don't want to get delivery. They're like all these weird things. You have to keep rolling your position if you want it open. Um, so like if you look at Robinhood, for example, like that's actually much more popular with retail users than futures are. Um, and they, they, they primarily trade options on Robinhood when, you know, when leverage is concerned and options are super cool because it's kind of like a lottery ticket. You can, like as retail, you can buy a lottery ticket and feel really good about it. You're downsized limited. Um, but the, the trade off there is like, it's actually really hard to price an option, especially if you're retail and especially if you're using like an app that doesn't give you the information that you need. And so you're, you're kind of getting fleeced because there was like very complicated, um, structures. It sounds simple. It's like a strike price expiry, but, uh, in practice it's very hard to price. And so herbs are basically like marrying these two assets into one thing. So there's, you want to trade something you want, you want to trade something that's just like the price of the underlying. You want there to be leverage and you want there to be like one thin…

AI assessment note: “So they're excited because... you want there to be leverage and... never expires.”

Q It's, it's fascinating here. You saying like it, Most founders that come on say like, we, but it's clear that you see yourself as more of like a custodian of this thing that you're building and releasing is, is that the correct frame of mind? Is that how you think about this?

A Yeah. So I think we, we took a lot of inspiration from Satoshi. I think he, or, you know, whoever built Bitcoin, they, uh, not sure, but Satoshi, we'll just say Satoshi, uh, was very unique. I think Bitcoin Was the first in so many ways, but one of, one of the main ways in which it was first was that it was, it's not a, it's not a product. Like you said, it's not, it's not a top down company. It's a product. And I think defying crypto in general, like a lot of it's kind of, it was inspired, obviously everything comes from Bitcoin and there will never be another Bitcoin, but I think. There's been a lot of kind of like top down, like web to totally sort of standard tech approaches in crypto. Like if you look at centralized exchanges, that's a great example. They're very good businesses, but they're like mega corporations. They're, they're not very like crypto native in that sense. And so we, we take a lot of inspiration from, from Satoshi. And so we hyper liquid really is, uh, what we think like credibly neutral protocol, which will ultimately be the rails that kind of all the finance kind of upgrades their tech stack.

AI assessment note: “Yeah. So I think we, we took a lot of inspiration from Satoshi.”

Q with kind of the, how Bitcoin went, where people were just mining it on their laptop, and then it turned into a data center, and then it turned, like, hunt for the cheapest energy possible with the ASIC, uh, because the algorithm was so stable, um, Like, what, ah, what does it actually take to scale a network like this over time, and where are you in that scaling curve?

A Yeah, so Bitcoin's a bit unique in that I think it's the only major network left that does proof of work. So basic stuff you're mentioning, you know, like all the crazy things like volcanoes, mining bitcoins and stuff like that's all really just participating in the consensus mechanism. All the other high performance blockchains today that I know of at least are probably proof of stake, which is a much more energy efficient way to do things. And it's economic security, not Like computational security. So on hyper liquid, there's not much innovation being done on how the networks stay secure. It's the, it's a relatively solved problem economically, which is that basically people, people put up the native token. Like it's very important for the network to have its own token, which on hyper liquid is called hype and people put it up and they basically say, I'm like vouching for the Usually it's kind of like delegated. It's kind of like, um, you know, you vote for your congressman kind of thing. So it's like you delegate it to a validator and the validator says anything I do, the stake that is staked to me is at risk. Um, and. You can do some math and then the, basically the economics work out such that if like most of the stake in the network is honest, then it's fine. And if you want to acquire enough stake to do something bad on the network, where bad here is like the canonical …

AI assessment note: “the security is in the economics, not in like, you know, create creating crazy ASICs”