Dr. Anthony Nikko

Houston Cosmetic Surgeon | Nikko Cosmetic Surgery Center [phone] | Nikko Dermatology [phone]

[Dr. Anthony Nikko @AnthonyNikkomd]

@monad 0x3066d9d60ce11275bd08c2e3e55855339421b0b3

[jeff.hl @chameleon_jeff]

Thanks to @TBPN for having me on! It was a fun conversation about the origin story, principles, and vision for Hyperliquid

[Christo Columbus @ColumbusTrades]

Not a bad day at the office in @whaleroomtrades

[Blackhole @BlackholeDEX]

The Blackhole has opened 🕳️

[jeff.hl @chameleon_jeff]

Why transparent trading improves execution for whales

Throughout Hyperliquid’s growth, skeptics questioned the platform's ability to scale liquidity. These concerns have been resolved now that Hyperliquid is one of the most liquid venues globally. With Hyperliquid’s adoption by some of the largest traders in crypto, discussion has shifted to concerns around transparent trading. Many believe that whales on Hyperliquid are:
1) frontrun as they enter their position
2) hunted because their liquidation and stop prices are public

These concerns are natural, but the opposite is actually true: for most whales, transparent trading improves execution compared to private venues.

The high level argument is that markets are efficient machines that convert information into fair prices and liquidity. By trading publicly on Hyperliquid, whales give market makers more opportunity to provide liquidity to their flow, resulting in better execution. Billion dollar positions can have better execution on Hyperliquid than on centralized exchanges.

This post covers a complex line of reasoning, so it may be more compelling to start with a real-world example from tradfi to demonstrate this universal principle. After all, actions speak louder than words.

Example

Consider the largest tradfi ETFs in the world that need to rebalance daily. Examples include leveraged ETFs that increase positions when prices move favorably and decrease positions in the other direction. These funds manage hundreds of billions of dollars in AUM. Many of these funds choose to execute on the closing auction of the exchanges. In many ways this is a more extreme version of whales trading publicly on Hyperliquid:
1. These funds’ positions are known almost exactly by the public. This is true on Hyperliquid as well.
2. These funds follow a precise strategy that is public. This is not true on Hyperliquid. Whales can trade however they want.
3. These funds trade predictably every day, often in massive size. This is not true on Hyperliquid. Whales can trade whenever they want.
4. The closing auction gives ample opportunity for other participants to react to the ETFs’ flows. This is not true on Hyperliquid, where trading is continuous and immediate.

Despite these points, these ETF managers opt into a Hyperliquid-like transparency. These funds have full flexibility to make their flows private, but proactively choose to broadcast their intentions and trades. Why?

History of transparency in electronic markets

A complementary example is the history of electronic markets. As summarized above, markets are efficient machines that convert information into fair prices and liquidity. In particular, electronic trading was a step-function innovation for financial markets in the early 2000s. Prior trading occurred largely in trading pits, where execution quality was often inconsistent and spreads wider. With the advent of programmatic matching engines transparently enforcing price-time priority, spreads compressed and liquidity improved for end users. Public order books allowed market forces to incorporate supply and demand information into fairer prices and deeper liquidity.

The spectrum of information

Order books are classified by their information granularity. Note that L0 and L4 are not standard terminology, but are included here as natural extensions of the spectrum.
L0: No book information (e.g. dark pools)
L1: Best bid and offer
L2: Levels of the book with price, total size of level, and optionally number of orders in the level
L3: Individual anonymized orders with time, price and size. Some fields including sender are private
L4 (Hyperliquid): Individual orders with complete parity between private and public information

Each new level of order book granularity offers dramatically improved information for participants to incorporate into their models. Tradfi venues stop at L3, but Hyperliquid advances to L4. Part of this is necessity, as blockchains are transparent and verifiable by nature. However, I argue that this is a feature, not a bug.

Zooming out, the tradeoff between privacy and market efficiency spans the full spectrum from L0 to L4 books. On this scale, L3 books can be viewed as an arbitrary compromise, not necessarily optimal. The main argument against L4 books is that some strategy operators prefer privacy. Perhaps there is some alpha in the strategy that is revealed by the order placement. However, it’s easy to underestimate the sheer talent and effort going into the industry of quantitative finance, which backs out much of these flows despite anonymized data. It’s difficult to enter a substantial position over time without leaking that information to sophisticated participants.

As an aside, I believe financial privacy should be an individual right. I look forward to blockchains implementing privacy primitives in a thoughtful way in the coming years. However, it's important not to conflate privacy and execution. Rather than hand-in-hand concepts, they are independently important concepts that can be at odds.

How market makers react to information

One might argue that some privacy is still strictly beneficial. But privacy is far from free due to its tradeoff with execution: toxic flow can commingle with non-toxic taker flow, worsening execution for all participants. Toxic flow can be defined as trades where one side immediately regrets making the trade, where the timescale of "immediate" defines the timescale of the toxicity. One common example is sophisticated takers who have the fastest line of communication between two venues running toxic arbitrage taker strategies. Market makers lose money providing liquidity to these actors.

The main job of a market maker is to provide liquidity to non-toxic flow while avoiding toxic flow as much as possible. On transparent venues, market makers can categorize participants by toxicity and selectively size up to provide as a non-toxic participant executes. As a result, a whale can quickly scale into a large position faster than on anonymized venues.

Summary

Finally returning to the example of ETF rebalancing, I imagine the conclusion of rigorous experimentation confirmed the points above. Addressing the specific subpoints in the introduction:
1) A transparent venue does not lead to more frontrunning than private venues. Rather, traders with consistently negative short term markouts benefit by broadcasting their autocorrelated flow directly to the market. Transparent venues offer a provable way for every user to benefit from this feature.
2) Liquidations and stops are not “hunted” on transparent venues more than on private venues. Attempts to push the price on a transparent venue are met with counterparties more confident to take the mean reversion trade.

If a trader wants to trade massive size, one of the best things to do is tell the world beforehand. Though counterintuitive, the more information that is out there, the better the execution. On Hyperliquid, these transparent labels exist at the protocol level for every order. This enables a unique opportunity to scale liquidity and execution for traders of all sizes.

[kirbycrypto @kirbyongeo]

Look at this guy.

- Won gold and silver at the International Physics Olympiad in 2013
- Graduated from Harvard in Mathematics and Computer Science
- Worked at Google and Hudson River Trading
- Founded Chameleon Trading, a top crypto market maker
- Built Hyperliquid, a high-speed decentralized exchange

Here’s the wild story of Jeff Yan, and how he quietly became one of the sharpest minds in crypto

A thread 👇

[jeff.hl @chameleon_jeff]

Debunking Hyperliquid FUD (Part 1: HLP, liquidations, and platform guarantees)

It's sad to see coordinated misinformation campaigns targeting Hyperliquid, which have led to widespread misunderstanding of what we are all working so hard to build.

In response, this series of posts provides detailed, factual explanations of how Hyperliquid works. As a community, we must actively fight FUD by spreading the truth. The tone with which we do this also matters: the best way to grow as a protocol and ultimately house all finance is to remain humble and welcome more users into the ecosystem.

--

The first post focuses on HLP and liquidations on Hyperliquid.

High level summary
The FUD is that the Hyperliquid protocol is subject to large losses stemming from manipulation. On the contrary, Hyperliquid's margining design mathematically guarantees platform solvency. Note that HLP’s losses are isolated to the vault itself, and Hyperliquid does not depend on HLP’s operation to exist. This was true even before the JELLY incident. After the JELLY incident, there is an additional change to protect HLP from losses during backstop liquidations. The fundamental changes are to HLP, not the platform itself.

HLP background
HLP is a permissionless protocol vault pioneered by Hyperliquid. HLP does not collect fees from depositors, and historically has returned 60M USDC in pnl to its depositors. On CEXs, this profit typically goes to the internal market making desks instead of users.
HLP plays two roles: market making and backstop liquidations. In terms of market making, HLP runs a passive strategy that accounts for less than 2% of Hyperliquid's total volume. The vast majority of volume on Hyperliquid is between two non-HLP users.

Liquidations
On Hyperliquid, liquidations are first sent to the book as a market order. This allows any user to participate in providing liquidity to liquidations, which is profitable flow on average. On other exchanges, this flow is internalized by the exchange as a revenue source.
HLP only performs backstop liquidations, which involves taking over positions that are unable to be market liquidated. When account values go negative, the last resort for platform solvency is auto-deleveraging (ADL). ADL closes underwater positions against the most profitable and highly leveraged positions on the other side, ensuring the protocol's solvency. ADL is extremely rare but importantly targets the attacker's position on both sides during manipulation attempts as described below.

JELLY incident
An attacker recently attempted to exploit HLP by opening a large long and short against themself. Open interest caps allowed a position worth 4M USDC at the time of trade, but the logical issue was that HLP collateralized the liquidation with its full balance. It is false that the platform itself had solvency risks, but HLP was indeed overexposed to the manipulation.

Changes made
Now the liquidator component vault of HLP has capped collateral, limiting its potential loss by backstop liquidations. A historical analysis was conducted based on this new system. Apart from the JELLY incident, this change would not have caused additional ADLs in the past, even during extreme volatility. However, it would have minimized HLP’s losses during the JELLY incident to low six figures, which is far less than the attacker spent on market manipulation. In particular, ADL would have closed the attacker’s momentarily profitable long position, leaving other JELLY positions untouched.

Validators now actively discuss delistings in an open governance forum on Discord. Several interesting dashboards have been created by users and validators: https://t.co/szhzxLnfr5, https://t.co/nvOxx9UfEV.
Market cap of the underlying spot assets will likely be an important input into delisting considerations. While delistings are important to ensure that users on the platform do not suffer from potential price manipulation, they are not required for platform solvency.

New state of margining system and HLP
Hyperliquid still functions as before, handling under-collateralized positions in the order of 1) market liquidations 2) backstop liquidations 3) ADL. Backstop liquidations on HLP now have additional protections to cap the total losses, making mark price manipulation attacks more expensive than the limited available gain from HLP. HLP's role continues to shrink as Hyperliquid grows, and at this point is nonessential to the protocol's operation. HLP still exists as a source of protocol yield through backstop liquidations and providing consistent background liquidity.

[Dr. Anthony Nikko @AnthonyNikkomd]

@ZssBecker 1

[Alex Becker 🍊🏆🥇 @ZssBecker]

New vid : Like & Comment "1". 5 will win a mini allocation to my meme coin likely worth 5 figures (Must like/follow/share)

Crypto is nuking. Selling here is so stupid. Here is why I am bullish AF and chucked millions at crypto at these lows.

https://t.co/JPaj4wl7bT

[Dr. Anthony Nikko @AnthonyNikkomd]

$MONARK is ushering the Monad blockchain into @daosdotworld, just in time for the beginning of the parabolic phase of this bull run.

[Monark @MonarkDao]

🚪Introducing Monark DAO: A decentralized investment fund focused on Monad.

Designed to maximize growth, we drive innovation and value, empowering collective success for both the organization and its members.

[Dr. Anthony Nikko @AnthonyNikkomd]

@albert_al_agent @play_memoria @LFJ_gg @avax @delaunch would be awesome if i can participate on this journey

[Dr. Anthony Nikko @AnthonyNikkomd]

@HypurrDao THE_HYPURRDAO_PARTY_IS_JUST_GETTING_STARTED
THE_HYPURRDAO_PARTY_IS_JUST_GETTING_STARTED
THE_HYPURRDAO_PARTY_IS_JUST_GETTING_STARTED

[DAOlympus (🌎,🌎) @daolympusworld]

We are making this change in hopes of improving upside for our early backers and protecting them from harsh market conditions.

Early supporters deserve to be rewarded.

Thank you for your support, and see you at the summit.

(🌎,🌎)

[Dr. Anthony Nikko @AnthonyNikkomd]

@daosdotworld @rwokcapital @bubbledaosol It would be kind of project to recognize those that have stuck around even after investing big bags with 95% loss, we still believe and have hope. Consider leveling up the DWL for those members could be kindly considered

[Purrteil @derteil00]

Hyperliquid NFTs.

- every OG will hold at least one, no matter the price (until some crazy valuations). There will be expectations from the market that it will be working as a ticket for events, GCs with other OGs and more social benefits;
- airdrops will be way more significant than the ones to $HYPE;
- most people from S1 were farming it on 1-2 wallets. People from S2 were farming on 1-4 wallets. Limited sell pressure, as they will keep at least one;
- airdrop mania will begin with EVM going live and multimillion/billion projects will airdrop to NFT holders;
- mindshare of HL exploded after the EVM, wallets signed amount more than doubled since then, while my guess is it more than 4x’d in real users, as people previously were using more wallets than one, while now newbies are signing with one to explore;
- supply of NFTs will be equal around 1% of all wallets connected to HL;
- EVM and new projects deploying will get even more people to HL (my guess is it will
at least double current amount);
- potential utilities for fee tiers via NFTs increasing the pressure from smart money;
- Hypio and Karu are 1st and 2nd collections traded on Base. It shows the need for NFTs on HL;
- 1k points were needed for an NFT. It means that people with NFTs received at least $130k+ worth of $HYPE, while most of them received >$1m. It made the holders already wealthy and they won’t be willing to sell their NFT/s cheap;
- OTC trades oscillates @ around $50k, which is 19.2 ETH, placing HyperNFTs as one of the most successful collections already, being worth more than Pudgys or BAYC;
- current OTC valuation places mcap of HyperNFT collection at $260m, meaning that airdrops from any protocols, which succeeds can be very significant;
- they will be cute :)

[Mimboku @mimboku_story]

In line with our commitment to community-led building, we're reducing the supply from 8,888 to 5,000 with the following Mint Caps

OG (GTD): 1
WL (FCFS): 1
Public: 2

OG/WLs can join subsequent rounds. Mint price stays. Team mints with you as OGs - no extra team allocations.

[Dr. Anthony Nikko @AnthonyNikkomd]

@mimboku_story @wallet ꧁The Great Mimgration꧂ !!!

[tojo @0xTojo]

hyperliquid btc spot capture potential

current state:
- $2m daily buyback from perps
- $7.7b market cap

theoretical growth path

1. initial phase (0.5-1%):
- $175-350m daily volume
- +$350k daily buyback
- total buyback: $2.35m/day

2. growth phase (5%):
- $1.75b daily volume
- +$1.75m daily buyback
- total buyback: $3.75m/day

3. dominance phase (15-20%):
- $5-7b daily volume
- +$5-7m daily buyback
- total buyback: $7-9m/day

historical context

perps market share growth
- march 2023: 1.5%
- jan 2024: 14.1%
- feb 2025: 60.5%

given their perps success, capturing 15-20% of btc spot should be achievable. would 3-4x from current $7.7b mcap with increased buy pressure

notes:

- assumes 0.1% fee structure
- based on current $35b daily btc volume
- excludes potential perps growth

now if they added eth and sol that would be a totally different story. assuming a similar theoretical growth path it'd bring the daily buy pressure to $11.3-14.7M, 5.5-7x from current levels

hyperliquid.