Hyperliquid founder Jeff Yan has addressed criticism, suggesting the platform prioritizes protocol income over dealer pursuits.
Abstract
- Jeff Yan says ADL saved merchants tens of millions throughout October 10 market crash.
- Hyperliquid handed earnings to customers as an alternative of maximizing protocol income.
- Founder contrasts DeFi onchain transparency with CEX liquidation secrecy.
He additionally defended the alternate’s auto-deleveraging mechanism through the October 10 market crash.
Yan acknowledged that ADL actions made customers “lots of of tens of millions of {dollars}” by closing worthwhile brief positions at favorable costs, whereas the platform’s liquidity pool handed on potential earnings to customers somewhat than maximizing its personal returns.
The protection comes amid scrutiny of how decentralized perpetual exchanges deal with liquidations throughout risky market situations.
Yan emphasised that if extra positions had been backstop liquidated, HLP may have made lots of of tens of millions extra in revenue, however would have confronted irresponsible danger publicity.
He additionally known as the ADL method a “win-win” that decreased platform publicity.
ADL components prioritizes simplicity and consumer understanding
Yan defined that Hyperliquid’s ADL queue follows an analogous components to most centralized exchanges and incorporates each leverage used and unrealized revenue on open positions.
Neighborhood suggestions prompt extra subtle ADL mechanisms, resembling partially offsetting lengthy and brief positions in traditionally correlated property.
Yan famous that elevated complexity may enhance efficiency however questioned whether or not the advantages benefit the added issues.
The founder acknowledged that analysis is ongoing into whether or not substantial enhancements justify extra complicated formulation. Nonetheless, he emphasised that no different main venues use extra superior logic for ADL queues.
Onchain transparency distinguishes DeFi from CEX practices
On October 13, Yan addressed the general issues about liquidation reporting by contrasting Hyperliquid’s absolutely on-chain operations with centralized alternate practices.
Yan known as out centralized exchanges for underreporting consumer liquidations and cited Binance documentation displaying that even when hundreds of liquidation orders happen in the identical second, just one will get reported.
This might be a 100x underreporting beneath sure situations when liquidations occur in bursts.
Yan expressed hope that the trade will acknowledge transparency and neutrality as vital options of the brand new monetary system. He additionally inspired different platforms to observe Hyperliquid’s method to verifiable on-chain operations.
