Star Xu, founder of OKX, says the Hyperliquid matching engine is designed to favor market makers compared to centralized exchange systems. Speaking on the New Era Finance Podcast, Xu explained the technical differences between Hyperliquid's approach and traditional order book exchanges.
How Hyperliquid's Matching Engine Works
Hyperliquid matches orders in blocks rather than individually, Xu said. Within each block, the system prioritizes cancellations, allowing market makers to cancel orders ahead of takers. Centralized exchanges, by contrast, process orders one at a time.
Xu attributed Hyperliquid's stronger order book depth compared to many centralized exchanges to this market maker-friendly design. He suggested the approach also provides a solution for long-tail assets that face limited liquidity.
Regulation and Risk Management
Xu discussed MiCA, Europe's regulatory framework, as an important step toward consistent crypto regulation across the continent. He emphasized that international growth for exchanges depends on earning customer and regulator trust through transparent operations and stronger governance.
OKX's approach includes board oversight, compliance and risk functions, monthly proof-of-reserves reports, and external auditing, Xu noted. The exchange also plans to pursue a public listing to increase accountability.
Xu stated that safeguarding customer funds should take priority over aggressive growth. He recommended that exchanges follow financial rules and earn revenue from technology and services rather than other means.
October 10 Market Turmoil
Xu attributed cascading liquidations on October 10 partly to USDe being treated as a stablecoin and accepted as derivatives collateral. He described USDe as a higher-risk, hedge-fund-like product where leveraged borrowing could amplify both returns and losses when prices moved.
Xu argued that tighter risk controls and regulated derivatives venues could help prevent similar episodes in the future.
Crypto's Future
Xu expects crypto to expand beyond trading into everyday financial services, including wallets for holding money, blockchain payments, and tokenized equities. He expressed optimism that on-chain asset management tools and self-custody solutions could become widely used financial infrastructure.
