Last week, Jeff Yan, the founder of Hyperliquid was a guest on the When Shift Happens podcast.
While you should listen to the episode yourself and you can probably find a bunch of “summaries” online, we want to dive into a few key takeaways we have from it on some topics we think are important for how Hyperliquid's progress and performance should be viewed.
Hyperliquid’s buybacks
A lot of people around social media say Hyperliquid should use protocol fees to “invest in growth.”
We think that’s a ridiculously naive take from people who haven’t had to show ROI of marketing activities.
More importantly, it changes the nature of HYPE’s tokenomics. And this was one of the questions Jeff answered in the podcast: “Hyperliquid does not have a discretionary buyback program. It burns protocol fees.”
Others have argued that they should be discretionary and should try to “buy low” and avoid buying when price goes up “too much.”
Our take: The current way is the best. It’s a pure, non-negotiable and perpetual transfer of value to HYPE holders based on protocol fees.
The more the protocol is used, the stronger this burn.
Why we disagree with changes: Discretionary buybacks go in the wrong direction of the Howey test.
Furthermore, who decides what is “low” and what is “high” for HYPE price?
Buybacks baked into the execution of the chain are best both for value accrual and for regulatory reasons.
Is the HyperEVM a failure
Every week we see someone say something like “The HyperEVM bombed” or “I’m a fan of HyperCore, not HyperEVM” or a variation of the two.
The reasons they usually say this:
HyperEVM is not the same kind of general-purpose EVM that VCs pitch as the next best thing since sliced bread.
HyperCore is where the main value proposition of Hyperliquid is, thus most of its activity.
HyperEVM airdrops have been “disappointing” when compared to the HYPE airdrop… Which is ridiculous because at its ATH, HYPE was the undisputed biggest aidrop ever.
HyperEVM is “slow”
Our opinion was that the HyperEVM was launched to add programmability and compatibility to Hyperliquid. And while growing pains like being “slow” can happen, those are easily addressed later on, just like we’ve seen improvements over the last 12 months since mainnet launch.
Jeff’s take: It’s misunderstood that it has not succeeded, and its main purpose is to be a way for smart contracts that developers are familiar with from other ecosystems to tap into native primitives on HyperCore. And perhaps this was not understood well enough.
Our take: The mix of slow rollout (without read or write precompiles), and without a big grant program for projects like other chain has, made people miss the forrest from the trees.
Some examples of a good use of HyperEVM:
USDC being natively minted on Hyperliquid.
Kinetiq’s usage of precompiles for LSTs and related products.
Lending protocols like HyperLend, Hyperbeat, HypurrFi, each with unique value propositions.
Felix, a CDP + lending protocol which also deployed an HIP-3 DEX, and is deploying spot equities through Ondo from Ethereum mainnet.
And we’re sure there will be more over time.
“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
That rings true for how people talk about Hyperliquid.
The core team size
Lastly, a common critique is that the core team is too small and Hyperliquid should use its core contributors' HYPE allocation to hire like crazy.
Two things that surfaced on this topic from the interview:
The core team is actually a small part of the Hyperliquid ecosystem by now, where other builders use the infrastructure the core team provides, so actual contributors are way more than just the core team.
Trust is non-negotiable, and if during a test day a candidate isn’t a definite “yes” from all other core team members, they are a “no”.
We’d add that people don’t know how much more effective and productive one great software engineer is compared to 20 mediocre code writers.
Hiring too many people too quickly creates chaos and erodes culture.
It’s still the path chosen by “high-growth VC startups” because, for some reason, headcount is viewed by some investors as a key growth metric.
Hyperliquid is not a high-growth VC startup ,and it doesn’t need to follow flawed metrics like that.
