Hyperliquid Founder Defends Protocol’s Trader-Centric Approach Amid Market Volatility

Hyperliquid founder Jeff Yan has forcefully countered criticism that the decentralized perpetual exchange prioritizes protocol revenue over trader interests. The rebuttal comes amid heightened scrutiny of liquidation mechanisms across DeFi platforms during turbulent market conditions.

Yan revealed that Hyperliquid's auto-deleveraging (ADL) system saved traders hundreds of millions during the October 10 market crash by closing profitable short positions at favorable prices. The protocol's liquidity pool deliberately passed on potential windfall profits to users rather than maximizing its own balance sheet—a stark contrast to traditional exchange behavior.

The founder emphasized the transparency advantage of onchain protocols versus centralized exchanges, where liquidation processes often occur in opaque conditions. "ADL created a win-win," Yan stated, noting the mechanism simultaneously protected traders and reduced systemic risk exposure for the platform.