Jeff Yan's Plan to Bring the Entire Financial Industry Onto Hyperliquid

Jeff Yan (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:23)

And I'm Tracy Alloway.

Joe Weisenthal (0:25)

Tracy, we're recording this.

Jeff Yan (0:27)

Trady. That's appropriate for this episode.

Joe Weisenthal (0:31)

Slip already, Trady. Tracy, we're recording this October 13th. In a couple days, we're going to be in Chicago. And we're going to, as we do when we go to Chicago, talk to some legends of the trading industries.

Tracy Alloway (0:43)

Yeah, it's great to go to Chicago. We've never done a floor tour of any of the actual trading places in Chicago. We should do that.

Joe Weisenthal (0:50)

Yeah, we should do that. But of course, it's always an exciting time to sort of like talk to the trader community, because there are just so many interesting things happening in the world of trading, per se.

One of them is, of course, the rise of prediction markets, et cetera. Essentially, I kind of think we're in this moment where so many different instruments can be expressed as other instruments in various ways. So you could have stocks that are like tokenized. You can have tokens that are ETFized, like crypto tokens that are put in ETFs. You can have prediction markets that actually are functionally predicting a stock, and then they become a stock. Essentially, you can replicate the economics of a stock. So all different types of things where people are rejiggering the way you can express a view with this incredible basket of new instruments and platforms to do it on.

Tracy Alloway (1:44)

Financialization on steroids. Can I go on a slight tangent for a second? Yeah, sure. I have this media theory that I call the inverse pyramid.

Joe Weisenthal (1:52)

Yeah.

Tracy Alloway (1:52)

And so the way I think about traditional media, it was sort of like a food pyramid, right? And you had original reporting was the layer at the bottom. So you had sort of old school reporters who were making phone calls, making scoops. And then maybe you had in the next rung, you had some people writing editorials or opinion columns on them, maybe a little bit of like video eventually on top. Nowadays, the pyramid is completely inverse where the smallest layer is the original reporting. And there's so much content built on top of that.

I often think about finance today in those terms, in the sense that the underlying is kind of the smallest part of the market now. And there are so many new instruments built on top of it, whether it's derivatives, futures and options, or now it's prediction markets and things like that. It just feels like derivatives have been a bigger market than the underlying for a while, but it feels like the inversion of that pyramid is just getting bigger and bigger.

Joe Weisenthal (2:48)

That's a great take, right? And I didn't know where you were going with that until...

Tracy Alloway (2:52)

I did. I got there, eventually.

Joe Weisenthal (2:54)

But right, you think of something like SK Hynex or something like that, and okay, there is some company and there is a stock, the trades, then there's ADRs, and then there's 3X leveraged ADRs, and there's tokenized versions of it and so forth. And there's prediction markets on where will SK Hynex close in the next 10 minutes? I don't know if that exists. If it doesn't, it will exist at some point, etc.

But there is so much to do on this topic. And of course, we did that episode a few years ago with Austin Campbell talking about the potential for sort of blockchain to sort of unify and bring together a lot of different markets. I think was one of the more compelling, quote, crypto, unquote, conversations that we've had, etc. And one of the things that's getting a lot of attention that combines all these things is this entity called Hyperliquid, which people who know it are obsessed with it, but it's not a household name yet. But the people who do know it are very into it.

Tracy Alloway (3:48)

It's not a household name even though it's been growing incredibly fast. The one thing I know about it before starting prep for this episode was the mascot, which we have here, who's called Hyper. And I always approve of a company with a good mascot, so here we are.

Joe Weisenthal (4:04)

Well, the company is a little bit known for being a bit secretive. They don't do a ton of press, so we're actually going to have to interview the mascot today because we weren't able. No, that's not true. Amazingly, we really do have the perfect guest on the podcast. Someone to move on to talk to for a long time. Jeff Yan, the co-founder and CEO of Hyperliquid Labs is here in studio with us. So Jeff, thank you so much for coming on Odd Lots.