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Hyperliquid boss defends transparency: Traders profit millions!
Jeff Yan, founder of Hyperliquid, comments on the criticism of the platform and emphasizes the focus on trader interests and transparency.
Hyperliquid boss defends transparency: Traders profit millions!
Jeff Yan, the founder of Hyperliquid, according to a report by Crypto News recently addressed criticism of its platform in a statement. These prophecies of doom say that Hyperliquid ignores the interests of traders in prioritizing protocol sales. Yan firmly rejected these allegations and emphasized how important user interests are for the company.
Yan explained that the platform's auto-deleveraging (ADL) saved traders millions during the market crash on October 10. Instead of prioritizing protocol revenue, Hyperliquid passed profits on to users. This took the form of cheap closing prices to profitable short positions, benefiting users “hundreds of millions of dollars.”
Transparency in the DeFi world
Yan particularly emphasized the transparency of DeFi compared to centralized exchanges (CEX). While central exchanges often share little about their liquidation practices, Hyperliquid promotes open and transparent handling. He pointed out that by using backstop liquidations, the platform could have potentially made hundreds of millions more in profit, but this would have involved irresponsible risks.
Hyperliquid’s ADL approach has been described as a “win-win” that not only reduces the platform’s exposure but also makes it safer for traders to use. The ADL formula prioritizes simplicity and understanding, which has some support in the community.
Criticism of centralized exchanges
Yan also raised concerns about liquidation reporting on centralized platforms. He criticized how some major exchanges like Binance process thousands of liquidation orders in a single second, often only reporting one. This can lead to 100x under-reporting and is in direct contrast to Hyperliquid's fully on-chain mode of operation.
The founder encouraged other platforms to show more transparency and follow Hyperliquid's model to reduce the brutality of liquidations and the uncertainties in this area. Yan hopes that the industry will recognize transparency and neutrality as fundamental features of the new financial system.
Responding to the complex needs of the community, Yan mentioned that while consideration could be given to introducing more complex ADL mechanisms, he also questioned whether the benefits of more complexity would justify the additional challenges. For now, Hyperliquid remains of the opinion that other major platforms are not using a more advanced approach to ADL queues.