Jeff Yan pushed back against criticism of Hyperliquid’s liquidation system, insisting it benefits traders and not the protocol, amid scrutiny over its recent ADL event.
Posted October 20, 2025 at 9:50 am EST.
Hyperliquid founder Jeff Yan has publicly refuted claims that the platform prioritizes protocol revenue, calling such allegations “FUD.”
Jeff explained that the automatic deleveraging (ADL) mechanism used by Hyperliquid is designed to benefit traders, not the platform.
He pointed to the Oct. 10 ADL event as an example, saying users collectively earned hundreds of millions of dollars in profits from favorable liquidations, contrary to claims that the platform was capturing these profits for protocol revenue.
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Jeff also clarified that while a backstop liquidation approach could have made Hyperliquid significantly more profitable, it would have exposed the system to much higher financial risk.
Analysis of the Oct. 10 liquidation event from AltLayer co-founder YQ found that the Hyperliquid vault earned $40 million in single-day profits.
“The real damage came from market structure failures that made ADL necessary,” said YQ.
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