One of the many remarkable features of crypto is how often upstarts appear out of nowhere and, in a year or less, become one of the industry’s top dogs. This happened in 2017 when Binance exploded on the scene, and in 2023 when Blur gobbled up the NFT market (RIP) from OpenSea. Now, the same thing is happening in DeFi where Hyperliquid—and its 11 or so employees—is doing more than $100 billion in trading volume while going toe-to-toe with long-established giants like Binance and Bybit.
It was only after reading this smart
Hyperliquid profile, by
Fortune Crypto’s Ben Weiss and Leo Schwartz, that I came to appreciate what a big deal the platform has become. This is in part thanks to its no-nonsense cofounder Jeff Yan, whose credentials include a Harvard degree and a gold in the International Physics Olympiad. But it is also due to Hyperliquid’s being a decentralized platform that is winning market share from centralized exchanges.
The market Hyperliquid is winning is admittedly an esoteric one, consisting of pro traders who leverage up to sling a popular derivative called “perps” (for perpetual futures). Most of us, including those well versed in crypto, will get rekt going anywhere near these things. But, though they are not mainstream, the sheer volume of money involved in perps trading means that sites that offer it can make out very well indeed. In Hyperliquid’s case, it is pulling in roughly $600 million of annual revenue, and its token is worth more than Uniswap’s.
On top of this, Hyperliquid mostly walks the walk when it comes to decentralization. While some complain the project has too few validators—which can give rise to centralized control—it does have some decidedly DeFi elements like non-custodial wallets and an on-chain order book. Hyperliquid also lacks Know-Your-Customer policies.
This last part is reassuring for old-school Bitcoiners and crypto purists, who are wary of governments meddling in people’s personal finances. But the lack of KYC could also put CEO Yan in an uncomfortable position—especially given his influence over Hyperliquid’s validator network and the code that governs its smart contracts.
This tension between decentralized ideals and the influence of founders is playing out in other corners of DeFi, including with Aave and Ethereum. Bloomberg’s Muyao Shen recently picked up on these tensions:
“[DeFi projects] have been hailed by backers as democratized corporations, while critics suggest the real purpose is to make them difficult to regulate. The downside to decentralization in regards to actual control is apparent when legal disputes arise,” she
wrote.
In coming years, Hyperliquid and other big DeFi players are going to be increasingly entwined with the world of mainstream finance. This means that legal disputes over issues like KYC and tokenholders’ right to profits are likely to become more common. Meanwhile, DeFi projects could find it harder to carry out big governance and policy decisions deep within obscure foundations or DAOs—which is how many of them prefer to operate.
While the DeFi sector is likely to encounter legal bumps in the coming years, that’s not a bad thing if it results in more transparency. At the same time, the rapid ascension of Hyperliquid is just the latest example that DeFi is here, and that the sector is only going to grow bigger and more influential.
Jeff John Roberts jeff.roberts@fortune.com@jeffjohnroberts 
