Jeff Yan - High Frequency Crypto Market Making & the Hyperliquid Exchange (S6E2)

The podcast explores high-frequency trading (HFT) in crypto markets, contrasting making versus taking strategies and emphasizing infrastructure's critical role. Jeff Yan, founder of Chameleon Trading, shares his experiences in HFT, from traditional finance to crypto market making, highlighting the inefficiencies and opportunities in crypto exchanges. Yan stresses the importance of understanding API nuances and managing toxic flow, including market manipulation tactics like spoofing. The conversation covers estimating "fair" prices, the viscous fluid model of markets, and the surprising predictive power of HFTPNL on mid-frequency price movements. Yan introduces Hyperliquid, a decentralized exchange built on its own blockchain, designed to provide performant order book execution for perpetual futures, challenging the limitations of existing DeFi protocols.