Arthur Hayes: Why Hyperliquid Is Set To Explode Higher (What's Changed)

Transcript

A lot of us forgot that we came here in in a sense to take over tradfi, to be the actual financial system, to be an alternative at the very least, right? And a lot of that dream has been kind of sucked away with high FTV, low flow scams, infra, yada, yada, yada. But Hyperliquid is kind of like this golden child of fulfilling that dream and vision. And so, while these two theses are far different, Arthur, they attract a lot of the same people. Here's kind of what your high-level Hyperliquid thesis is. Where is this thing going, um, and why you're so bullish up on it?

>> I mean, what are the what is the one of the what is one of the killer apps of crypto? It's exchanges. Who are the wealthiest people in crypto? Exchange owners, right? I mean, BNB is still what, number four or five largest cryptocurrency. It's not even a cryptocurrency, it's CZ's computer and some chain he owns, right? So, like, we know how to make money in crypto. It's just that people want to create make make it hard, like infrastructure and RWA and yada, yada, yada, yada, right? Like, exchanges make money. We know this.

Right? The goal of exchanges at the end of the day is we have the internet, we have blockchain, let's let anyone, anywhere trade anything. And let's add some leverage on top of it to make it fun. And, you know, that's what we've been doing. You know, I've been in the I've been in the centralized exchange game. And we all knew that we're moving towards this DEX future, and it started with dYdX. It was the first, you know, golden child of DEXes, and it did extremely well in terms of the price performance from 2020 to 2021. And it kind of lost the plot. Uh, you know, they're trying they're trying to dYdX is literally trying to do all the same thing as Hyperliquid, just not as well executed and the tokenomics are fugazi.

Then we have some of GMX um, in the lull of like 2023. >> Yep. >> They had a a good model. Again, you know, they could have worked on some things with the tokenomics uh, and in terms of the way and the number of assets listed. And then you had a former high-frequency trader like Jeff and his team, very good engineers, and you know, they actually they shipped the good code. And the number one thing they did was they fixed the tokenomics because perpetual swaps is not a new thing, you know, we created them in 2016. Decentralized exchange is not a new thing, it's been around, you know, since 2018 2020.

All right, but it's really getting the tokenomics right. No VC sales, only a team allocation, and pretty much all revenue going back to token holders. Like no other project does this at scale in terms of the revenue that HYP generates, and that's why it's so successful. And that's why people are so involved in the ecosystem to such an extent that when they launch HYP3, the ability to permissionlessly list markets, now you were able to trade Nasdaq and S&P and oil. And again, these are all super small markets in January and December of last year, but the fact that politicians like to [ __ ] around with us on the weekends means that there's no price discovery.

And so, you know, they get three days of a free out free roll on what's going to happen with public opinion. But now we have HYPERLIQUID, and now it's the only place of price discovery on the weekend and decent enough liquidity that everybody can trade it. It's not just anyone with, you know, a US brokerage account that can trade these very important price signals to human civilization. And now you're having, you know, TradFi media mouthpieces writing about HYPERLIQUID because it's the only place they can go. If they could go to CME and talk about the oil feature at CME on Saturday, they would. And they would completely shun HYPERLIQUID. But they cannot ignore HYPERLIQUID because it's the only place available to trade, and everybody can access the data, everybody

can trade. And that's why now we have this flywheel effect that people started to learn about HYPERLIQUID, understanding that the revenue goes back to you as the token holder, you get fee discounts if you stake enough HYP, and you you participate in listing your own markets on Hyperliquid and sort of it's becoming a self-fulfilling prophecy and that's why, you know, it's I guess it's through its all-time high. I think it's going much, much higher because again the the TAM is the easy TAM is just like, okay, centralized exchange trading volume, right? And yeah, Hyperliquid is something like 7 or 8% of that market and it's only going to trend higher because they list more fun [ __ ] the leverage is higher, it's easier to use.

>> Yeah. >> Yeah, Arthur, the market cap of Interactive Brokers, I believe is 153 billion. In that range, around 150 billion. >> Yeah, and and I mean just if they just take Binance's volume, either they get the 10 to 15% of Binance perps, like the price of Hyperliquid would be much higher than it is today. So, they don't they don't even need to reinvent things going into the tri-fire world. We just we have a captive number of traders with, you know, stablecoins or other crypto assets who are trading and spending a lot of money on centralized exchanges who want a different type of experience and want to actually own a piece of the exchange for reals.