Jeff Yan, co-founder of Hyperliquid, has stepped into the center of an ongoing debate surrounding the transparency of order books in high-volume crypto markets.
In a detailed article on X, Yan championed the design of Hyperliquid’s Layer 4 (L4) transparent order book architecture, calling it both “controversial and forward-looking.”
He outlined four key principles driving his vision: rejecting the belief that privacy inherently leads to better execution, stressing the value of market-wide competition.
He highlighted the positive effects of repeated trading behavior, and promoting universal transparency to ensure balanced access to information.
Together, these principles form the foundation of Yan’s thesis that transparency, not opacity, is the future of fair and high-performing decentralized exchanges.
Hyperliquid’s Cancellation Model and Institutional-Grade Execution
Hyperliquid’s system incorporates a distinctive feature, protocol-level cancellation prioritization, which has started to gain traction across other decentralized exchanges despite initial skepticism.
The mechanism, coupled with a fully visible order book, aims to improve price discovery and liquidity access across all participant tiers.
Yan contrasts this model with traditional finance’s reliance on dark pools and over-the-counter (OTC) desks, describing those as workarounds to the failures of opacity.
He argues that Hyperliquid’s infrastructure enables traders, especially those placing time-weighted average price (TWAP) orders, to engage every market maker simultaneously, democratizing access to competitive order execution.
As a result, the platform aspires to deliver OTC-level trade quality in a decentralized and scalable format, accessible to both institutional and retail traders alike.
Balancing Transparency with Strategic Integrity Through ZK Potential
While acknowledging the benefits of transparency, Yan did not ignore its critics. Common concerns such as front-running, liquidation hunting, and strategic information leakage were directly addressed.
He admitted that certain forms of data, particularly margin and liquidation-related metrics, might require selective confidentiality and hinted at upcoming use of zero-knowledge (ZK) technologies to balance transparency with strategic privacy.
However, Yan stood firm in his belief that systemic transparency discourages abusive behavior, fosters long-term equilibrium, and minimizes reliance on selective insider advantages.
He argued that by eliminating hidden channels for data exploitation, Hyperliquid could neutralize predatory high-frequency trading while allowing honest participants to thrive.
The trade-off, according to Yan, would disadvantage only a small group of “toxic” actors while improving conditions for the majority of market users.
Also Read: Hyperliquid Hits Record $548M Weekly Inflow From May 5–11; $HYPE Surges Past 20%
CZ’s Philosophical Divide in DeFi Market Design
Yan’s pro-transparency stance sharply contrasts with rising calls for privacy-centric models, particularly from influential voices like Binance co-founder Changpeng “CZ” Zhao.
After James Wynn’s $100 million liquidation triggered scrutiny of visible order books.
CZ proposed a system that hides orders until execution to protect traders from front-running.
While such models may offer immediate relief from specific vulnerabilities in perpetual DEXs, Yan argues that they fail to address the root causes of market inefficiencies.
Instead, Hyperliquid seeks to solve those same problems through architectural design, not concealment.
The ideological split, between structural transparency and defensive opacity, has come to symbolize a deeper debate within DeFi about how to balance risk, fairness, and innovation.
By taking a bold position, Hyperliquid is not just offering a new platform model but proposing a long-term vision for how decentralized markets can evolve with integrity and scalability at their core.
Also Read: Hyperliquid Sets Record $4.9B Open Interest Amid Derivatives Boom