The Battle for HyperLiquid's Native Stablecoin with Nick van Eck, Bhaumik Kotecha, and Sam Kazemian

Transcript

And so you need to bring institutional partners and assets to this ecosystem if you really want it really want it to scale. >> Different kinds of genius compliant collateral like 28-7 money market funds securities treasury bills all of these things that are required to have a fully risk-free compliant fiat coin. We want hypeolders to benefit and so we could talk about this AF thing but really outlining kind of like our perspective and learnings really of like how do we grow this thing because you're right it's just a ticker. >> If you feel so strongly about this why is this the case? Why not just give all of the revenues from the stable coin back to the community?

>> How will you guys steward USDH to help expand USDH beyond the hyperl liquid ecosystem and essentially grow this pie? Welcome back to the Rowup. We are your hosts. I'm Andy. I'm Robbie. And this is your home to learn from the biggest guest, the brightest minds at the tip of innovation. Our goal is to help spread the collective knowledge of everyone in our community. >> We are breaking crypto out of its echo chamber and taking it to the real world. Well, we've got Nick in the back and um you know, I was just looking at the latest from him and and there's some interesting uh specifics that I think that we ought to get into from from the perspective of of Agora and kind of

their partners. So, look, Rob, what what we're going to do today is we're going to have a very streamlined set of questions for each of these people. try to make it very very uh objective and fair for everybody and uh just simply have some fun, hear some pitches and learn about what what these teams are are doing. I think uh this is all in the spirit of you know community of decentralization of the the success of Hyperlid and just you know the stable coin super cycle. So guys we are gonna get Nick up uh move in and talk about the Gora USDH proposal.

Looks like you're in a cubicle in New York City. That's what I expect. Good. It's good to see you, man. >> Yeah, thank you guys for having me. >> Absolutely. Welcome to the show. It's an exciting time. I think the USDH showdown has taken over the timeline and so, uh, yeah, we're in a position now where we can platform you guys. We're going to have a couple of the other proposed issuers on the show a little bit later. We're going to hear from each of you. And, uh, it's really exciting to put all these proposals on the table. I think this is democracy, meritocracy in action and no better place for it than crypto.

So, >> and it's fun. >> Absolutely. Absolutely. >> Yes. I'm happy to like start and give context on our proposal and you sort of like what we're trying to accomplish, but you guys let me know where you want to. >> Yeah. >> Exactly. Please opening remarks just kind of I just want to understand I think the community wants to understand kind of your perspective of writing the proposal where you guys are coming from uh and just kind of your opening statement here. And then we got a couple good questions for you. >> Yeah. So, I was going to the office on Friday. You know, little to my own knowledge that my weekend would get totally blown up by this. Um, yes. So, I first got someone sent me a DM and said, "Hey, uh, you know, this has come out.

They're going to release the USDH ticker. There's already sort of been this like pre-baked proposal um suggested. You know, you guys should should throw your hat in the ring." Um, and so, you know, we immediately jumped on it. I would say, you know, I had a stacked day on Friday with calls. So, I actually started drafting our proposal at like 5:30 p.m. on on Friday. Um, and the only proposal that was up at the time, uh, was I think the Native Markets proposal. Um, you know, which was a a good proposal obviously like super community aligned team, you know, but I think one of the advantages that we have is we're an issuer. So like all we do is think of

the challenges um of scaling a stable coin solution to uh deliver I would say the best economics for the community right like I think the native markets proposal was most and we're like hey like let's just make this a public good right that was always uh an intention that we had at Agora is like actually our original slogan was digital dollars are public goods and you know we want to actually highlight um some of the most important things when running like a very large institutional stable coin, right? USDC supply on on uh Hyperlquid is like at 5 billion or six billion give or take. Like that is like like real size, right? And so one of the things that we wanted to call out um at least

in in one of the proposals is that like outsourcing it entirely to like a third party where this isn't their core business, I think puts a lot of inserts a lot of risk into um into the system. Um and so you we we called that out and then I you know I think one it was just sort of upping to 100% uh revenue kickback and then three like trying to actually build a coalition around this to make it successful right a lot of the other proposals were like you know single issuer focused immediately what we did and I think this is just kind of how we operate is we you know pinged a lot of infrastructure partners that we thought would be super helpful said hey we're going to put this proposal together you know would love to have your guys support with USDH right and

you know rain jumped on super fast. So did layer zero um as well as uh EtherFi and a number of people just you know over the last 24 hours have continued to to ping me directly um and I think you know while they wouldn't be like exclusive to just us and and nor should they be right I think obviously if someone else wins like they should support uh USDH you know they want to work with a team that they respect have good communication with and feel like they can execute with which is I think what what we bring to the table and yeah this all happened like very quickly.

Like it's funny, you know, funny getting some of these questions in Twitter and in the Discord, you know, oh, have you thought about this or you thought about this? Like, how are you thinking about this? I'm like, some of them I'm like, honestly, like, we don't know, right? Like, you know, we want to be committed to giving like a 100% of the revenue back, but we want to hear from the community on like, okay, do you orient that towards stakers? Do you buy back hype? Like, what do you want us to do? And so, something I was spitballing earlier this morning is like, well, maybe we actually just do like a quarterly governance vote. It's like how do you want to, you know, spend the the revenue from USDH, right? And maybe that's like the best way to do it versus like saying, you know, in this proposal,

you know, we're going to do this for, you know, forever, right? Which is probably not the smart thing to do, right? It gives you no no flexibility. Um, and so yeah, there's a few more days. I expect there will be a few more proposals. Um, but I think ultimately like this is bringing a lot of really good attention to the hyper hyperlquid. um and you know has kind of led to the best economics for the community. So it's pretty fun to watch. >> Um I think one thing that >> all time highs this morning guys like it absolutely has. >> Yeah. >> Sorry. Go ahead. >> No, I mean that that it's ob there's obviously a lot of demand here. I mean Hyperlid's one of the mo most forward-looking teams just to consider how much money that they were leaving on the table and now going through this

open process rather than doing this behind closed doors. I think it it presents the best of why we're in this industry and that's healthy competition. And so I think it's it's really really cool to see play out. Um, one of the things that I I was curious about is and we were talking a little a little bit about this before you hopped on, which is that, you know, th this uh proposal is for this ticker, this USDH ticker, and then it's really like the work just begins. and and I've seen a lot of these proposals talk about, okay, no matter what, we're going to contribute and be active participants in the hyperlquid ecosystem as well as be shepherds for this USDH stable coin beyond just letting it be the quote asset for

Hyperliquid's markets. So, I'm curious, what would Agora do to help broaden USDH beyond just Hyperlid? and and what other things do you have in mind to become active and more active participants in the hyperlquid ecosystem? >> Yeah, I think it's a it's a great question and it's like the work really does begin. And I think like a lot of people have sort of um put a lot more weight on this than right it is just a ticker so it is just the beginning. But for us like we wanted to really open up you we view this as a way one to you know distribute revenue back to the community but two open up hyperlquid assets to places where they haven't been exposed before. Right? It's why we

reached out to rain. They support you know 150 plus countries you know two you know billions of merchants. you get access to Visa Rails and all the payment rails that they're integrated in. With us, you have access to institutional grade banking, um, you know, Swift, SEPA, AC, wire, all of this. Uh, with, you know, other partners like Moonay as well. They're connected to every like pretty much every wallet in crypto. You know, we've had a war room chat going with them and thinking like, okay, how can we integrate some of the builder codes direct to Moon's wallet clients?

Uh, and so I think it's it's really broadening up the distribution of USDH beyond just yeah the hyper the hyperlquid ecosystem. And so we work with like I would say a lot of the best-in-class you know either infrastructure or applications sort of outside the hyperlquid ecosystem to you know really broaden up uh up exposure. I would say within like hyperlquid it's all about seating liquidity early and working with a bunch of partners. We've had a number of apps reach out over the last 24 hours that are interested to not only just see liquidity uh but also you seed some incentives. We've had one counterparty reach out that wants to seed it with you nine figures of TVL and get some vaults going as soon as this launches. You know, I think and it's funny someone uh

actually in the Discord uh community was like you why um you know why will this be successful? like why will USDH be more successful than like some of these other you stable coins or white label stable coins? I'm like because this is like really owned by the community and like the hyperlquid community is like so much bigger than I think a lot of people realize, right? It's you know you go to Binance or OKX or someone they're like okay you know it's going to be this to list me. We have people saying oh we'll do all this stuff for free right because they know that the demand is going to be there.

And so look I think we're going to do an excellent job executing with some of the best partners in the space. I think there's a number of other great proposal proposals out there as well. Um, you know, what I would hate to see though is that like that this effectively goes to, you know, sort of a competitive firm and a competitive issuer that has their own own chain and own ecosystem and and might like, you know, really look to use this to sort of vampire tax of Hyperlid, which is kind of what we called out in in our post originally. Introducing Extended exclusively on Stark, a nextg per trading platform live today with 50 plus trading pairs from crypto to tradi.

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>> Oh, Matt's tweets about Hyperlid. Uh so there's been some some some push back from the hyperlook community with regards to the way that people within the the VANC organization have addressed the platform in the past. just want to give you a chance to kind of speak on that uh and kind of address how VANC works and kind of uh how either the views of you know one person or within the or don't represent all people in the or just kind of give your take on that because I think that the community is going to want to hear a genuine response to this kind of push back.

>> Yeah, I think I think it's a good call out, right? I think uh the way that Matt Matt probably could have been a little bit more generous in in how he engaged with the community then like it was frankly like personally speaking it's pretty painful to watch uh you know for me when it was happening and I kind of hoped people would memory hole it and I also know it was like painful for other people in the van team right like it's it's a 500 plus person organization it's $30 billion asset manager there's many different teams right you have the research team the venture team the trading team you ETF team, right? And uh I would say particularly on like the venture team and the trading team side, like they're very active with many of the teams in the hyperlquid community.

They know them. Um you know, many people at Van are users of Hyperlid, right? Uh either professionally or, you know, personally, but I can't comment, you know, on that. Um and yeah, it is what it is. Look, I mean, like it's good, I think, also for uh you to have independent voices um that may like be open to a lot of criticism, which he clearly is. Um so that's kind of like how, you know, how I feel about that. You know, I don't work there. I don't control them, right? So, it's kind of unrelated to me. I understand like if people have like an issue with, you know, supportive of other proposals, they may want to pin that on me, but like I have I have zero control over that. Um you know, do I wish it didn't happen? Yeah, of course. Like it's

annoying, right? Hyperlid aside, I just generally think like kind of acting like that is obtuse, but >> again, that's kind of it. >> All righty. All righty. Um, guys, so Frack 35 minutes ago has just updated their proposal. Um, so Nick, I'm not sure if if you've had a chance to look at this and I appreciate the response there. I think the community uh I think a lot of people doubted Hyperlquid and it's one of the very first kind of projects in the space that has really flipped the switch or flipped the script per se on uh uh kind of gave a bunch of these young maybe communityoriented folk that aren't like prominent in the space big air drops became powerful in the

space you know and now and now it's like the tables eternity you've got Van coming for uh you know to participate in this ecosystem. It's like the institutions are coming for us or it's like the big players want to participate in what we've built. I think it's a really strong sign of product market fit, but I also think it comes with a lot of that kind of like tribalism that you see early communities have success with. But kind of switching to what FRA has just done, they've uh announced that they are establishing a FRA USDH alliance with a federally regulated US bank issuer. This bank is prepared to issue USDH if we are selected with contracts under review. Um 100% to

hyperlquid hypercore ready yada yada. Nick, what is your take on the competitive landscape right now? Is Paxos missing the beat with 95% of revenue only? Is FRA now going to be uh more competitive with this new announcement? generally maybe how are you seeing this landscape within the realm of being hyperlquid aligned like when you're looking at the other proposals and your own I'm curious what you think hyperlquid native or align means to you uh you know in the landscape of this current situation given the other proposals >> yeah it's interesting right because uh

specifically for this product too like uh as an issuer right everyone else has almost been frozen out of hyperl liquid um because you know when the project originally started right it was like you know USDC right and so there was actually no way for like other issuers to be in involved um so it's interesting right you could sort of have like the community led ones where I think they're sort of outsourcing the operations you know stable coin regulation entirely to someone else and saying like hey we come from the community but we're going to outsource this to someone that we think could maybe do a good job Right. And so I think those are the ones that are really indexing on on community, but like that brings a lot of risks to the table, right? Because then you basically

have a team that isn't an issuer doesn't maybe understand the ins and outs, right, of of how to run these financial products. Um, and then has a lot of dependencies on one provider to the table, right? Then I would say you sort of have, you know, us, Paxos, FRA, I'm sure a bunch of other people are going to come in, right, that have said, "Hey, we've operated this type of business for a long time. like we know how to do it well um and we want to broaden broaden really actually the aperture of of hyperlquid to all these other ecosystems that we either participate in or traditional financial rails right so I would say like from our perspective um the way that like you know many of us have been involved is is primarily been personally and talking to teams whether

they're hyperlquid native or actually came from other ecosystems and then have started uh you either pivoted or sort of added their product you know into the hyper ecosystem Uh, and so working very closely with them to get lending and and index markets stood up as soon as possible um would be a priority of ours. But I'd say in terms of like alignment, right, like our objective and I think everyone uh's objective is to how do you make USDH a huge success, >> right? And clearly there's going to be a tremendous amount of support within the Hyperl Hyperlid ecosystem. And so from our perspective, we're like, okay, well, what else can we bring to bear that like Hyperlquid doesn't have today, right?

It's Visa Rails, access to, you know, millions of merchants globally, you know, access to exchangees, you know, bringing traditional institutional spot products into the hyper EVM. So, you know, we've been talking with a number of, you know, centrifuge, you know, came out yesterday. We're talking with a number of providers. I would love to say more about Van but unfortunately they are very much a tradey firm and will not let me say anything publicly but look you can imagine we would have conversations with them black rockck everyone else right to really bring these guys to the table because if we think about like hyperlid you know it's obviously been a tremendous step but this is like still early innings right like if you look at like Binance OI or like the trading

volumes of traditional exchanges like if you ask Jeff that's probably his north star right and so you need to bring institutional partners and assets to this ecosystem if you really want it really want it to scale right and I think that's where we can come in and really add a tremendous amount of value look I think probably the ideal scenario is you have a number of these proposals that can sort of come together in in some form some shape or another um because like you bring like the whole weight of of some of these to bear and it's going to be nothing but good uh for for the hyperlquid ecosystem And so that's like where I would say like we we slot in. Obviously like there's a matrix of you know who's maybe more community

oriented versus maybe who's the the safer operator and and who's done this and can maybe bring other institutions. So it'll be up to the community to to sort of see what they want, right? that you want to index on uh teams that can bring a lot of domain expertise to this specific product and a lot of other support or index towards community teams that have been with Hyperlid for a very very long time are super dedicated to the ecosystem but might be outsourcing this product so we'll see it'll be fun. >> Yeah, absolutely. Uh Nick, we just got a few minutes left before we keep it rolling here and I wanted to give you a chance to expand on what I thought was a pretty important part of the proposal.

You mentioned it again here and it's the potential conflict of interest from an entity that comes in and issues the stable coin as a method to vampire attack a lot of stable coins away from Hyperlid's ecosystem and and take it onto onto one of its own competing products. And you know I think you made kind of a subtle nod to this in your proposal. You know you said Agore is a neutral is issuer without its own settlement network or brokerage eg Paxos. like is that what you're kind of pointing at is the potential conflict of interest here and and and why is it such a potential like such a concern that you know Paxos has its own brokerage. What what how do you think that might play out?

>> So I actually don't think Paxos is really like the real threat here because similar to us they don't have their own chain or or ecosystem. They of course have their brokerage product, but like being intellectually honest, I don't really think that competes uh with Hyperlid spot markets even though it, you know, does a little bit of the same stuff, right? What I was really actually calling out was like Stripe, >> right? Like Tempo just was announced last week like these guys are planning to win, >> right? They put on like a happy face. You know, we want to, you know, work with a bunch of different, you know, parties and build this multi-party network. you know, we're not uh we're not like the bad guys. Anyone that comes from like fintech or Silicon Valley will

tell you that the Stripe team is like the most ruthless people in fintech. >> And I wanted to really just call that out like it's like, okay, like you're going to seed potentially the biggest asset in your ecosystem to someone that is a direct competitor and has a conflict. And I think we sort of and like really the the other considerations of other proposals we outlined was really at at that, right? Um, and so maybe even like going back to just like you the community alignment. I think the native markets team is super community aligned. You know, I said this in another post this morning. What I would encourage them to do if they win is to actually maybe work with someone that is a bit more neutral, has gibs, uh, and and has much more robust financial

service infrastructure. Look, it could be us, it could be Paxos, it could be someone else, I don't care. Like, this is something that was really important to get right. Yeah. And so like I would really urge the native markets team to maybe rethink uh who they're using on the financial infrastructure side. Um and so that's that's really what it was it was focus focused on. Um you know I think it's time for people to wake up otherwise like all of crypto is going to be owned by one company and and I don't want that to happen. So would you say that that Paxis and Agora are are better positioned than Fracks to to to do US?

>> I think we well we're regulated ourselves. We have bank accounts in our own name. So from a financial operations perspective, I think that's that's certainly certainly the case. >> Okay. Um the there's uh there's some weird comments going around about Dragonfly being investors in Rain in Agora and this guy Alex again. This guy keeps giving you a a whole handful but he's saying um >> this guy really doesn't like us. I don't know like like it's funny. It's either us or Matt Seagull. I don't know what but it's funny. >> I know.

>> Try to be polite with him. >> Yeah. And Rob from Dragonfly stood up for you guys and whatnot. But but um yeah basically I mean I I just think that that uh you know you know that's that but there were some interesting comments on this in and one was about changing the structure or the rev share in the future. Let's say you guys win. How dedicated are you to keeping 100% of the rev share to hyperlquid? Is there plans to change that? We don't we don't we don't plan to make any money on this like and people are kind of like oh the net revenue revenue >> we are not making money on this 100% of the revenue would go back to the community in in some form of another I think what would be really cool is to do this on like a quarterly governance vote

right it's like because you can really clearly like we can you know we have accounting team we do this in a very rigid way it's like this is what we made every single day from USDH and vote on it where how should this get sliced and diced like 20% go to the assistance fund 60% a state right stakers is all like I think it's it's up in the air but we are 100% committed to giving 100% of the revenue you know back back to the community um in whatever form you know form the governance you know governance sort of decides and maybe that's what we do is we do set up quarterly um yeah for us like this is clearly we just want to run it as a public good and deliver maximum value back to the community >> yeah and and so this is obviously a win

for Hyperlid because of you know kind of bringing this into their own stack >> it's great like native markets I think was going to do like 50% and then Paxos and us came in and we're like no like 95 100% or bust and so no one's making money on this no one should make money on this at this point right >> and and so at this point so how how does this benefit whoever ends up winning let's say it is Agora right you guys aren't going to be making anything from the net revenue but how does it help advance Agora's interests >> look I think for us obviously like it's an opportunity to pro like for me it's personally very cool like the reason I've been in crypto since 2016 uh the The reason I left to start my own company is I feel like we're in a once

in a generation transformation of financial markets and and payment rails, right? It's going to last for 30 years. Very similar to like how cloud software is just eaten on prem and human driven workflows the last 30 years. And like I just want to spend my life being a part of that. So for me personally, it would just be an incredible opportunity I think to do like a public good service. You know, I think for like the company itself obviously like many um people within the firm interact with Hyperlquid or you know, you know, have friends that are in the community or run companies or you know uh validators within the community. And so for them it's like personally very very fun as well. And then obviously it's great brand value, right? Like Hyperlquid is the most

important perex in crypto, right? like by far. And so, you know, us I think proving, you know, that our battle tested infrastructure can support something like Hyperliquid would be a huge win for us. And so, that's that's how I see it. Um, you know, I think there's you we have a great proposal. I think there's some other great proposals out there. I think at the end of the day, you know, it's great that uh Hyperlid is going to get 100% of the revenue or should, right, given the the proposals and, you know, that it's generated so much uh interest in the community.

>> One last thing for you. Yeah, go ahead. >> Just if so, you know, I saw Mike Dudas and Sixman Ventures went out and said that they just bought a ton of hype over the last I don't know some some time period. Um ho how will how will your personal uh or you know how will the the people around you's uh contributions to the hype ecosystem in terms of actually owning the asset participating in the hypervm uh and kind of seeding that ecosystem be affected if you guys win this?

>> Yeah. So Mike obviously worked at Paxos, right? Um but uh for us, I mean, I think Paradigm is probably like the biggest holder of like hype on earth, right? And and they just let our seed round and are, you know, one of the most involved parties in Agora. Uh Dragonfly is also super involved. And then, you know, again, like I don't work at Van, but they are definitely involved and are actively working with teams in the in the space. Um, you know, unfortunately they're a little bit more trady, so they're making me keep a lid on it, but >> I got everyone we know.

>> All right, man. >> Yeah, just call. Let's go. >> You know these guys. You know, Gabe, you know, just call >> please. Like, you know, I've been asking the last 12 hours to stay more and you know, compliance is saying no. So, you know, it is what it is. But like, that's that's you know, how you operate a real business actually too is is uh keeping mom on on certain things that you're doing. But that's that's how we're uh we're involved and a lot of the people around us are involved and you they'll continue to be >> beautiful. Nick, that's all I had. Uh thanks for your time, man. Looking forward to hopping in on some of these spaces later this week and thanks for sharing your perspective and your insights and for the the weekend proposal. I know it's a it's a journey,

but I I hope it works out for you and uh and uh thanks for coming. >> Thanks, guys. It's been fun. >> All right, Nick. See you soon, buddy. Cheers. All right, Rob, initial takeaways, thoughts on Nick. Uh, what's your what's your take? >> What I'm trying to take away from each of these is the unique advantage that each of them serve to the Hyperlquid ecosystem. >> Um, I think Nick is very keyed in on his relationship with some of the institutional partners. Rain is a big one.

>> I I don't know if RAIN is a unique differentiator to Agora's proposal. I think a couple couple of the other proposals also mentioned that they work with RAIN >> and so >> you know RAIN is obviously important because their debit card uh infrastructure spans multiple continents several countries and they're they're tight with Visa. So USDH can then span globally and scale with Visa's network as a result of working with an issuer that has a nice relationship with Rain. But again I don't think that's a unique differentiator for Agora. One thing that he mentioned was um that they have partners that are looking to commit nine figures, so hundred million dollars of uh capital on day one in liquidity.

>> I think that that's pretty unique. I don't know if these other issuers are looking at something similar. >> Well, the reason why I asked that question at the end was just like I don't I was trying to figure out like if they win, are they just going to be massive stewards of the hype liquid ecosystem and uh you know, basically buy more hype? But, you know, obviously he can't just answer that straight up. But, all right, we got Bo in the background. Bo is the co-founder of Paxos Labs. Um, it's funny that I just asked Nick about Mike Dudis's take and then he's like, "Yeah, he's he used to work at Paxos.

Classic Mike. Gotta love it." We got Bo in the background. We'll get him up uh and we'll talk all things Paxos proposals uh and more. Bo, welcome to the show. And, uh, I'm sure it's been a busy weekend. Andy, Rob, thanks for having me. And uh it has been uh uh the team and I were actually doing our offsite down in uh Mexico and uh we were all flying back on Saturday and so Friday night we like went to dinner and then it was like heads down. You saw the proposal came out uh moved quickly. Uh we're scrambling at the airport getting proposals out, Discord comments up. Uh it was crazy but a lot of fun.

>> Yeah, man. >> It's pretty convenient to have a war room spun up in Mexico City, >> right? Yeah, it was actually great. We were all there together. Um, you know, we like took one break to go get dinner and then we were like back at it around the dining table. Uh, it's actually a lot of fun. >> Yeah. >> Crazy, but a lot of fun. >> Well, Bo, I want to give you the chance to open up, right? Opening kind of statement here, you from Paxers Labs perspective. Obviously, you guys decided that this was a a venture worth uh endeavoring on on the weekend. Um, you know, talk to us about your perspective.

give us the Paxos Labs viewpoint on why Paxos Labs is the right fit for this uh kind of USDH stable coin and just kind of walk us through some of your you know storyline to getting to this point. >> Yeah, totally. And I think um this proposal like seems like it came out of the blue for a lot of people, but I will say it's something that you know Hyperlid as an ecosystem is something we've been thinking about and obviously Paxos has been doing stable coins for a really long time. Um but the background is right like Paxos um started in 2012 and and the position was always hey there's like a better financial system to be had. Um and really the thought was our belief was that that better

financial system was going to be served through the existing winning platforms, right? We're going to go work with the platforms that have the users and help them build on top of our infrastructure. And specifically we believed that that infrastructure needed to be regulated infrastructure. Um the hypothesis was like hey like to really bring on billions of users onto crypton native rails um that's not going to happen in a completely unregulated way right and so Paxos has done the hard work um you know was the first crypto company to get um a charter from the NYDFS um you know we have our New York state charter we've issued stable coins out of Singapore, the EU, Abu Dhabi. Um we are the only globally regulated issu issuer. Um but we've learned a lot over the last kind

of 10 years of issuing stable coins. Um and and one of the things that we really learned was it is very hard to do stable coin issuance right um regulated um safe stable coin issuance that enterprises will work with right um but what we learned you know through all of the launches we've did the Binance stable coin we did PayPal stable coin we've done USDG most recently with Robin Hood Kraken Anchorage a few others is that launching is just day one and this has kind of come up in a lot of different conversations like people are so um concerned with the details of like which regulator are you going to use, how's this going to work, how's that going to work and it's getting to launch is really hard, don't get me wrong, but it's like what happens after that and so we actually started on this kind of

journey um end of last year. Um so I was the product lead for launching several Paxos stable coins. I worked on PYUSD. I worked on USDL which is our yield bearing stable coin. I worked on USDG and time and time again the same problem came up. It's like we do this really hard work of getting regulated, getting the banking infrastructure set up, but then what, right? And what we started to like think about was like, hey, like a lot of the growth today is coming from onchain um onchain native ecosystems, right? And obviously Hyperlid is blowing up and so we had our eyes on that. And so what we actually decided to do um at the start of last year is um start this Paxos Labs initiative. Um and the entirety of the Paxos Labs initiative was how do we go grow stable coins and stable coin

adoption and kind of more cryptonnative ecosystems. Obviously Paxos was very focused on enterprises, the PayPal, the interactive brokers, the new banks of the world. We kind of figured we need to bring both these things together. So we started working on this initiative at the end of last year. Um at the start of this year um we got you know the opportunity to meet um Molecular Labs which is a team that's been building in the Hyperlid ecosystem from day one. they're the infrastructure behind L-Hype and WHLP. Um, you know, their vision of kind of like building utility, tokenized asset utility in ecosystems really align with what we were looking to do. Um, and so we entered an agreement um to acquire them um I want to say in June. Uh, and we've been in kind of in the closing

process. We were going to do an announcement obviously like this whole thing came out of the blue and we had to um, you know, cats out of the bag now. Um, but we have an awesome team that's been building in Hyperlid since day one. And so, you know, our position is like, hey, like bringing together Paxos's regulated expertise of doing all the hard stuff that takes you to get to day one with the team that we brought on in Paxos Labs, we can actually help USDH scale beyond just kind of like, hey, we have a regulated issuance. >> Yeah. Yeah, I mean you guys mentioned across the board some of the Genius Act compliance um you know some of the other key benefits in the actual proposal and I think Rob's probably got that up while while Rob's scoping some of the dets on on that just kind of more broad question

following this opening statement vibe per se is uh just curious like why like what this ticker in particular means to Paxus Labs and to yourself Bo you know there's there's no reason why you can't bid for a different ticker and still get a lot of the same perks in the hyperl ecosystem. Spot code assets, per margin, access, these types of things. Uh why does this USDH ticker matter to you specifically and and then I think we'll dive into some of the nitty-gritty of your proposal and look at the others and and see what the community uh has to say.

>> Yeah. So, in full transparency, we've already bought tickers that um we plan to we were already planning to launch a stable coin hyperlquid, right? Um, and so, um, I think with this USDH proposal, like our hope was like we could bring the community with us, right? Um, there wasn't really an opportunity to kind of like put our foot forward and and kind of explain like how we thought we could bring a great stable coin to Hyperlid. This was kind of like the perfect opportunity. We've already bought tickers. We've already been doing work in the background. Um, and so regardless of where this vote goes, we're bringing a stable coin to Hyperlquid. >> And so, uh, this is kind of a great opportunity to do it with the community.

And honestly, one of my favorite parts about this whole process has been there's been great questions in the Discord. There's been great questions on Twitter and um as someone has like that has built products and shipped stable coins, um getting feedback before you launch is the best thing you could possibly ask for, right? Because you do all this work, you launch this, you might have built a bunch of stuff that people don't actually want or doesn't address kind of the needs of the community. And so this proposal process is an awesome way for us to connect with the community, understand what they really want, and build the right product for them, right? and build a product that serves hyperlquid. And so, um, yes, you're right. It's just a ticker. Um, but we see it as an opportunity of like, great, if we get this ticker and and we

can really build this with the community, amazing. If not, we're still going to bring a stablecoin to Hyperlquid. And, you know, we welcome the community to give us feedback. We want to build the thing that makes sense, that benefits the holders of Hype, benefits the ecosystem, benefits everyone building on Hyperlid, whether it's with this ticker or not. >> Yeah. One of one of the things that we're we're trying to do on this on this show today is is identify the unique value propositions that each of these proposals bring. Um, one of the things that sticks out is the multiple billions of dollars in stable coins that you guys have launched so far. Mission PayPal USD BinanceUSD you know, there's there's several others as well. And so I'm I'm curious, how does the the network effects and the and

the and the liquidity in stable coins that you've already launched, not just the experience because I think a lot of the the issue the proposed issuers have experience launching stable coins, but they haven't quite launched them at the scale that you have stable coins in existing circulation. So is there benefits that you can provide through linking together these stable coins? Is it greater clearing? Is it settlement? Is it lower fees? Like is there general network effects that you can bring as a result of having this network of stable coins that has alreadycliped billions of dollars?

>> 100%. Right. And and that's part of the vision and and I'll give some concrete examples here. Right. So, uh USDG and I heard you guys talking about Rain before I jumped on. Um not only does RAIN accept USDG, but USDG can be settled with Visa. Visa accepts USDG as a settlement asset. Now if we are the issuer of USDG and USDH right and it's all on Paxos infrastructure we can enable one to one interop right because if you think about any if if these are two different issuers right the only way you can have true interop is like the underlying base layer banking needs to talk to each other >> again then you're back to kind of like existing banking rails but really in this world we're just moving between our own bank accounts right our own custodians and so we can offer true

onetoone interop not only between USDH and USDG but any of our other stable stable coins. And the reason we think the hyperlquid ecosystem is so interesting is we do think it's different. It's kind of like a disjoint uh addressable market than like who we typically work with. And our view is like we can be the perfect connectivity point between kind of this really cryptonnative hyperlquid ecosystem and the enterprises we work with, right? Whether that's Visa, whether that's Mastercard, PayPal, Interactive Brokers, I can go on and on and like kind of the huge list of enterprise names. And so it's not just about launching the USDH token into the hyperlquid ecosystem.

It's like, hey, we're going to go connect this and make this the connection point between the entire financial system, right? And I think that's where it gets really compelling. You're absolutely right, like network effects of this thing, especially as we're the issuer of multiple assets across multiple um kind of like corners of the financial system. We can connect all of this together and create kind of a a bigger outcome for everyone. >> Yeah. Well then, Bo, I just have to counter that with just a more you very objective question here, which is if you feel so strongly about this. Um, you know, the other the other proposals are not taking any cut. They're giving everything back to the ecosystem. you guys are the only one that is is doing a 5% or 95%

uh you know retribution to the community, 5% not. If you feel so strongly about this, why is this the case? Why not just give all of the revenues from the stable coin back to the community um and kind of be in the same league as the other two major proposals today? >> Totally. Uh and I think it's a fair question. What I will say is I think incentives are a very powerful thing and I actually think it's not good if the issuer of this doesn't make any money from it because what's going to happen is if it really is not driving the business for the issuer in any way, right? It becomes very likely they walk away from this and it doesn't actually become something they support for a long time, right? Um, look, we want to give

as much away to the community, to the validators, to hypeolders as we possibly can. Um, but I think, you know, we need to have some skin in the game, honestly, right? And and I think there's a couple ways to do that, right? It's it's from the revenue from the stable coin itself. We plan on obtaining some hype for our own balance sheet, right? And we can kind of contribute that way. Um there >> we're not we're not um tied to the model and again like part of this is like you know one of the pieces of feedback and I'll just come out and say it is like there's been so much around like why isn't this going to the assistant fund, right? >> I think that's been some great feedback and we are going to iterate on that and include that in our updated proposal. It

is something we're completely open to doing, right? Um, with that said, I think the issuer needs some skin in the game, but also the the platforms or the ecosystem players that are going to integrate USDH need some skin in the game. They need some incentive, right? And this is again like from all the learning we have from our stable coin issuance, right? People don't just like flip their entire platform to something else overnight, right? And you need to have some sort of incentive to drive that. And really our goal is like hey if we can get USDH integrated into the entire ecosystem very quickly we'll move to like 100% to AF great like right or like 99% to AF like amazing right and so >> love the idea of it going to assistant

fund um I think we need to be like pragmatic about like how do we actually get this thing to grow and be big um and become kind of the standard stable coin in the ecosystem. Um so hopefully that answers your question. Yeah, and I mean I think it totally makes sense. Uh, you know, I can imagine that in any sort of business line if it's just a a expense or a red line on the on the balance sheet it, you know, there's only so much that one can do in the sake of like alignment or whatever it is per per se. Uh, but it seems like Agora and Fra don't really care. It seems like they're willing to eat that. So, I'm curious to see what your update proposal has has kind of uh built into it.

>> And and it and it seems that these other proposals, they're they're bent on getting some indirect benefit as a result of just broadening their stable coin issuance, >> right? Like Nick was saying like, oh, don't trust the chain like if there's already a chain that wants a vampire attack into Hyperlquid. I think he was talking about tempo maybe was alluding to to fracks a bit but it seems like Paxos and and um and Agora are kind of separate from that. >> So Bo I wanted to kind of frame this question. How does it work with some of the existing stable coins that you guys have launched? Take one you know for example maybe you can explain a couple of the different structures. Do you guys take, you know, fees from those guys and that's how you're monetizing it? Or if you're not, how do you monetize a an

asset where you're you have all this issuance but you're not directly collecting fees? >> Yeah. I mean, ultimately like the business model here is asset management, right? Um, and so you're taking um BIPS off of kind of the man the kind of like yield generated by the asset. In almost all of our issuances, we share the majority of the benefit with um our issuance partner. Um but yeah, that that's that's our business model, right? It's asset management plus technology on top and and and all wrapped with um uh regulatory compliance. Um and so so that's the business model. Um and you know that that I think like anyone that's in this business will tell you like you know that's kind of how it goes. The interesting development has been like you know Tether obviously keeps

everything right. I think Tether is in like a unique position. Uh, I don't think it makes sense over like a medium to long-term time frame that stable coin economics don't look like dollar economics, right? In in in a world where like if there's dollars out there and people are getting nothing, I don't think that makes sense, right? But I think there is like it it looks a lot more like kind of asset management on on you know tokenized money market funds or money market funds generally. Mhm. And another unique value proposition that I saw in your proposal that I didn't see in others was the second to last paragraph and and it says that you plan to add support for hype as an asset within Paxos's brokerage infrastructure powers crypto trading for platforms such as PayPal, Venmo, several others,

Interactive Brokers. And so these other these other issuers, they don't have their own brokerage. How could that help the hyperlquid ecosystem by getting added into Paxos's brokerage? Yeah. So the Paxos um runs crypto brokerage as a service, right? So we don't have a brokerage offering that is directly trying to go get end users or compete with, you know, whatever uh hyperlquid or even like the Krakens and the Binance. It's crypto brokers as a service, right? And the idea is like, hey, you know, on the PayPal app, on the Venmo app, on the new bank app, customers want to buy Bitcoin, customers want to buy ETH. Um and we power that.

And we actually route some of our flow to our own exchange, but we also work with a bunch of different exchanges. And so it's really like a brokerage as a service offering. Um, and the idea here is like yes, we're going to add support for hype to our infrastructure. Does that mean everyone turns it on on day one? No. But like look, if you believe hype is like one of the three bluechip tokens in the world, those people are going to want to turn it on, right? Because their customers are going to want access to it. And at the end of the day, everyone is customerled. So, um, by us adding support for Hype to our crypto brokerage as a service offering, everyone that uses us as, um, as a crypto brokerage platform can now enable their users to buy and hold Hype. And so, um, obviously, you know, we've got

existing massive players on this. Everyone from Ricardo Libre to Venmo to Interactive Brokers. But what I will say is over the last six months, this business has completely taken off and some of the largest names in finance um, are integrating today with Paxos Crypto Brokerage. And so, um, I think that's going to be even bigger. And the benefit to the community is like, hey, we're increasing the amount of people that can access Hype, right? Um, and they can access it in their everyday apps, right? They don't need to be cryptonative to get it, right? They can access it in their mobile apps. They can access it in their payment apps. Um, and I think that's a really compelling use case because um, you know, those are people that probably wouldn't have access to it otherwise.

>> Yeah. Bo, real quick, you put out a tweet saying about how you guys didn't mention any of the um partners that you guys were were going to work with. I hear now from you that you're going to uh take the kind of feedback from the community as well as some internal discussions and do another proposal. What are the core changes that you aim to make in that proposal and which partners will be included? Yeah, look, I I think um I don't think we're going to come back with a proposal that lists a bunch of partner names. Um we we have a ton of partners, right? Um we work with Rain, we work with Layer Zero, we work with uh like we work with everyone. Like I I really want to keep the focus on this to like, hey, we're

trying to build USDH to be this kind of like neutral base layer asset in the hyperlquid ecosystem and the focus should be on that. Um yeah, >> we talk about partners totally work with all those guys. They're awesome. you know, we talk to them all the time. Um, but I don't think our proposal needs to focus on that in my opinion. Um, and just because the feedback we from the community we've gotten hasn't been like, oh, who's your, you know, on-ramp partner? Who's your debit card issuer? It's really more been around like, hey, how do you how are you going to ensure you stay aligned with the community? How do you think about kind of some of this assistant fund stuff? And so, um, I I think some of our our iteration will really be around kind of, um, showing the community the balance in our

thinking of we want hypeolders to benefit and so we can talk about this AF thing, but really outlining kind of like our perspective and learnings really of like how do we grow this thing because you're right, it's just a ticker. You know, we can go build it and launch it and it sputters out and it's like it was a waste of everyone's time. You know, if we're going to go build this, we want this to be the asset. We want this to be a multi-billion dollar10 billion asset. And I I want to make sure the community understands like our approach here, right? It's like this is not just about us being like, oh, it's 95% or 97%. It's like we have a plan of how we're going to make this really big.

>> The end goal of this fully benefiting the community and hypeolders, right? And and like outlining that. I don't think we did, to be honest, the best job of outlining that journey we want to go on in our initial proposal. So, I think a lot of the focus will be around that. Yeah, I think that's a really good kind of follow-up uh point here because Rob and I have been in the Hyper Grid community for some time now. You know, we were talking to our team in summer of 23 uh all the way into the token launch and have uh you know, been been big investors into the token um and just kind of like wanted to represent the community today. And I think like the main question that that that some of the prominent members of the community wanted us to ask uh is kind of aligned

with what you're just saying which is okay you guys have a plan you guys want to grow this thing but what is this like what in this lens of your growth vision what is being hyperlquid native or aligned mean to you and Paxos and and how is how important is that versus being like big company big institutional focused? How do you guys kind of navigate this uh kind of juxtaposition of two different types of communities and character archetypes and all of that and you know how how what is being hyperlquid native and aligned mean to you in this lens of growth?

>> Totally. And I think a lot of this is why we uh created an entire new team. This is why Paxos labs exist. um to embody some of this kind of um you know different ethos that you might see in in in in a hyperlquid like community than you might see like when you're working with giant enterprises and and I think you know I can't point to anything else besides like the team that is actually working on this has been on hyperlquid since day one right they are they have been the the team that's built infrastructure behind LHIP with behind WHLP has actually worked with multiple stable coins in the ecosystem including USCT0 including USDHL um as a part of the WHL LP product. Um, and so this team has been building um, in Hyperlid since day one, and that's why we brought them

on. We want that DNA. We want that team to be a part of the team that goes on this USDH journey. And so um, we get to benefit from a lot of Paxos' expertise, background history regulatory compliance legal banking everything that you would want from a world-class issuer. But we have a dedicated team. I'm here in the office with them in Williamsburg. We we have like our own spot, Paxos Labs. Um, we're together every day in person. and um you know this team like kind of lives and breathes this ecosystem and um hopefully um the community can see that with all the uh contributions they've had to date.

>> Yeah. Uh one last thing in your in your proposal, the last paragraph says, you know, regardless of the outcome of this community vote, you're committed to continue building in the hyperlquid ecosystem, stay aligned with the ecosystemled philosophy. And so, you know, obviously the the uh partnership that you mentioned with the team there. Uh, is there anything else that you have in mind? You know, for if the the vote doesn't go your way, what else do you have here that you have in mind as far as like how you're going to continue to support the ecosystem? Anything that you haven't mentioned already?

>> Yeah. I mean, look, I think um, and this is why kind of like we think stable coins are so important is like we think they're the foundational asset in any ecosystem. Um, you know, we still plan to bring a stable coin to Hyperlquid regardless how this goes. But again like to my point in the beginning like Paxos has a lot of experience issuing stable coins. I think the thing that we really want to show is like the and then what right and we're going to build products around that stable coin whether that's unique yield bearing products whether that's different ways to kind of take out leverage. I I think there's like the utility on the stable coin after is just as important as like getting to that day one of compliant regulated stable cocoin issuance again which we are very good at and we have the best track record in the

world of doing. Um, but what we're out to here out here to prove is like we are going to build products that complement and grow that asset even further and grow stable coins in the ecosystem. Um, and so that that's what we're really looking to do and that's kind of what Paxos Labs is all about and um that's that's why Paxos created Paxos Labs. And um Bo, when it comes to actually seeing the the fruits of the stable coin kind of like growth here, what would you say is your multi-year vision for this stable coin? Like Hyperlid is is aiming to be the the chain to house all finance kind of TM, right? soon. TM um what is the one three

five year potential kind of outlook for where you think Paxos can take USDH and thus how you can help impact the community over the next one to three years. >> Yeah, totally. And I think this is honestly the strength of Paxos's proposal, right? It's how do we take this beyond just an exchange asset? How do we take this beyond just an asset that you trade with? Um I mentioned before, right? Like some of our stable coins are already settled by Visa. you know, we're working with the largest payment networks. We're working with the largest payment processors. We have on and off ramp providers in every corner of the world. And so the the goal is like yes, this is going to be a core asset on Hyperlid and the exchange, but how do we get to a world where um you know people are getting paid in USDH?

How do we get to a world where people are buying their groceries with USDH? How do we get to a world where people are saving in USDH? Um and and by people, I don't just mean cryptonative users. I mean the, you know, the user that doesn't even know there's a stable coin in the background, right? They're using their mobile app in some developing country. How do we get USDH to be the asset behind that, right? And again, like the value prop there is like not only are we giving people something they want, the demand for tokenized dollars is massive, we're driving the benefit of that adoption and distribution back to the Hyperlquid ecosystem, right? And hopefully creating a really virtuous flywheel. um because we agree, we think Hyperlid is going to be a central part of um kind of the financial system of tomorrow and and

that's why we're here and that's why we're going to keep building. >> And just one last thing for you, you mentioned that um some of the thought process was okay, we want to further allocate into this space uh into Hyperlid. uh you know is is there anything that you can kind of share on that at least what's going on in your in the in the background or at least kind of in your thought processes as to all right we want to be owners of this ecosystem as well and participate in you know hyper EVM the the DeFi apps there as well as be users of hyper core when you mentioned that you know you you guys want to come in you know with some size into the ecosystem you know maybe you could just elaborate on that a bit

>> yeah um so we have our existing products right now with LHype and WHLP and we're going to keep investing in those and growing those assets. Um I I think what we really are interested in doing, you know, beyond the stable coin stuff, um I do think there's some interesting partners that we're talking to right now in the hyperlquid ecosystem, um where we build um utility on top of either hype or hype stable coins, right? Um, and so again, like this goes back to kind of the mission of Paxos Labs and why it was created is like we're here to kind of like build the like utility that comes after having the asset, right? And so a lot of the conversations we're having with the ecosystem are around that, right? Like unique yield opportunities on stable coins, unique looping

strategies around hype. And I think taking kind of like great, you have the base asset, how do I do some more stuff with that? Um, is kind of where where our heads are at. >> Yeah. So certainly a massive opportunity here like NASDAQ and you know is talking about bringing all all of these markets onchain and hyperlquid is a great destination for a lot of those markets to land. So it's five and a half billion dollars of stablecoin liquidity in hyperlquid markets now. Who knows where this is going to end up 6 12 18 months from now. Um best of luck in the proposal and thank you so much for >> Yeah. But actually one last thing for you uh Robin if you don't mind. Um, Agore was getting a lot of push back about uh kind of like this Dragonfly influence, then have them having their

own stable coin uh some of their team kind of giving uh you know giving push back to Hyperlquid in the early days. I know we're all friends here. we're all in the same industry, but but do you feel that that Agora has been unfairly kind of singled out on the timeline or or do you think that there's some that there's kind of some substance to uh you know there being a lot of moving parts behind the scenes of their proposal? >> Look, I I think uh I think to a certain extent they have been unfairly singled out, right? I think uh there are a lot of like everyone is invested in everyone and everyone works with everyone in this >> Yeah. in this space. Yeah. Exactly. It's like anyone can dig up a conflict of interest if they dig deep enough kind of thing. And so, look, you know, I know

Nick and and the Goro team, I think they mean well, they've got like kind of the right mission. Um, I know the Dragonfly team and I think they they really are believers in this. And so, to a certain extent, yes, maybe they've been um unfairly called out, but you know, that's just kind of like the world of world of Twitter today. It's like someone finds a thread and they they pull it until >> can't be pulled any. >> Yeah. All right, Bo. Thank you for your time, man. I appreciate it. We'll we'll see you soon and uh enjoy the week. I know it's going to be slammed. >> It'll be a fun one. Take care, guys. >> Well, Rob, thoughts, takeaways.

>> I I think Paxus has a strong proposal. >> Yeah. Yeah. That that their stable coin um their stable coin success in the past. I just they should have just done 100%. I don't get why they not just do 100%. >> Yeah. I mean, how significant I guess when we when we extrapolate out, I mean, five and a half again, five and a half billion dollars of stable coin liquidity. Now, this is gonna end up doubling, tripling, quadrupling in the near future. >> Yeah. How much does it really matter, right? So, we said there's 200 million on Hyperlid, right? Or something right now, I think, is a half billion dollars of USDC. Yes. Primarily st uh USDC on Hyperlid. Now, for they're it it once they launch USDH, all of that's going to

get collateralized. are going to generate interest on the reserve >> on the 5 and a.5 billion. >> Exactly. 4% of that is going to give them about 220 million. I think that's math >> per year. >> Yeah. >> No, that Yeah. Yeah. 4% >> of five and a half billion. Someone someone with a calculator that >> come on you're the math guy. Up next we have Sam. Um get back to us on that Rob. Sam is is the FRA uh FRA founder who has just updated their proposal. We we we got the um updated link here from one guy on the FRA team. I I I believe it was their

head of comms. Um and yeah, we saw some of the updates really the big thing being the federal regulated bank issuers. So guys, you know the vibes. Uh we are going to roll into Sam's opening remarks. Give him a chance to kind of open up and then and then get into the questions that we've asked each guest here. We're just going to give Rob one more second to give us the the final calculation here. I think he's dialed in right now. Uh Sam, good to have you. >> 220 million. We are doing math. >> Okay. Good, good, good. Well, that's a lot of profit to be made. So, Sam, good to have you.

>> Welcome to the show. >> What's up, guys? Happy Monday. It's good to be back. >> Yeah, man. busy weekend for you. I bet >> a lot. Yeah. Well, exciting weekend. Um there's a there's so much stuff going on with this that like I I'm almost like um like holy crap, it's going to be uh like every day there's going to be a bunch of stuff coming out and then it's going to be over before everyone even knows it, you know? >> Yeah. I was talking to Rob from Dragonfly about it and he was like, "Yeah, it's just going to only get more dramatic." And I think part of that is you guys changed your proposal today or updated it. Let's let's say Paxos B just came on saying that they're going to update their proposal shortly and release that. So we've started the first

two with just kind of an opening remarks. Would love to get your perspective for FRA's USDH vision kind of how like what the storyline is for uh kind of inserting or you know entering up proposal here and just kind of open open the uh the air for us here. >> Yeah, for sure. So, so let me actually give some some background of like how we we got here as as like FRA. As a lot of people might know from like last uh cycle, FRA uh is one of the biggest decentralized stable coins when we when we launched, right? The original FRA uh decentralized like dollar stable coin.

We went all the way up to three billion or just under total supply. So, we really do have the infrastructure, knowledge, engineering, integrations to run a multi-billion dollar uh stable coin. We actually started moving more towards a uh regulated and genius compliant model as you guys know with FRAXUSD, FRXUSD which we started actually working on this uh in 2024 before like the genius act or the name or whatever uh actually even became a uh a big thing because we believe that the base underlying uh digital dollar of like an ecosystem should be basically risk-f free. You can build the yield stuff on top of it. Um I think that

structural bet uh looks like it's probably correct because you can see um Athena also having USDTB which is really cool right if if you didn't need that right why would you even um have like an underlying base right like risk-free fiatcoin essentially right um and one of the cool things was when the genius bill started to take form right with the new administration uh I actually went to DC uh with Travis my co-founder and we actually helped directly do a lot of the um the the definition of a genius stable coin, a payment stable coin, all of this stuff. And we've been very very active uh actually in the regulatory space. So, we built this infrastructure for FRAUSD.

We have a full 20 chain mesh coverage, right? That that's powered underlying by layer zero, but it's a a sovereign hosted version where the OFTs everything they're underlying owned by whichever entity that they want. We own the FRA USD USDH can be owned by Hyperlquid uh you know hypeolder stakers and um the interesting thing is we thought well we have this infrastructure we have the engineering and and the name brand and the lindy and the resources that uh was previously a3 billion uh dollar decentralized stable coin that everyone knows as a household name in DeFi. Why not open this up and allow other stable coins to actually be uh used and issued through this infrastructure and with our

partners, right? And so when we started working on FRA USD, we obviously approached institutional RWA issuers that are genius compliant uh institutions that can actually issue uh different kinds of genius compliant collateral like 28-7 money market fund securities, treasury bills, all of these things that are required to have a fully risk-free compliant fiat coin, right? And so we have these relationships, this infrastructure, the audited smart contracts, all of it. And so we said, well, this doesn't only have to be for FRAUSD, right? Like we don't have to just actually uh do all this work for just FRAUSD. And so we started actually thinking what are the entities and this is a few months ago by the way. We had

no idea the USD thing. I don't think many people did uh that was going to come up uh last week or whatever a few days ago. Um and so we started approaching different um entities like hey we can actually uh help you issue your own and have it be onetoone uh composable with all of the underlying fracks. USD is another stable coin, right? One:1 composable, all of these RWAs that are genius compliant, right? Um like USB from Superstate and uh Fidelity, Black Rockck, B, all of these things, right? And so we can connect all this infrastructure in a onetoone way. It's audited. It's it's FRA is like a a prestigious and pristine history of no no funds lost in any of

our uh history, right? Like our fiveyear history. And so why not open this up, right? This is valuable infrastructure and being able to actually have multiple stable coins be onetoone fungeible with each other is actually of unique value of money, right? The whole point of money is the more funible and liquid it is between all the other things, the next marginal uh user that accepts it or or holds it uh is is more has more utility, right, for for that person. And so um that was basically our our vision. And so when this came out, uh, obviously it it surprised us because I actually had talked to, um, Julian, I I believe he's like one of the Hyperlid core team members a long time ago, like I think

over six months ago about some like this where I was like, what is Hyperlit's uh, you know, view on stable coins? You guys obviously are a huge huge user of USDC. I don't know like uh you know what one of my original thoughts to be honest was like maybe Jeff and Jeremy have some kind of like NDA and like secret like deal of like there just is share I can't imagine you you know mid nine figures of of like annual revenue you're just like nah whatever right so like I I was like I would love to help if I could just know I'm not here to sell you anything in fact like I I want to know what like a visionary guy like Jeff or you guys at Hyperlid what are you guys think? How are you guys thinking about it? Like how

like uh educate me and it didn't seem like at least from what I was told obviously like they might have, you know, internal plans or something. I don't know. Um now actually it seems like they're totally true and transparent is like they're like we're not thinking about it right now when we're thinking about coin stuff. You'll know and obviously I think now >> 200 million is on the table >> at current numbers. Uh well the yeah and well 200 million for the the hyperlquid community as it should be right and so that that's actually kind of important because I think fra was the first one um if I remember to just be like 100% no uh no yield share like intake right and um and I think like that is kind of

important because I think you were asking Bo uh who I love we we've talked a lot actually we trying to figure out how we can work together. I've like this is one of the things that I' I was figuring out in terms of like philosophically this stuff obviously hyperlquid is the biggest prize but like because it's obviously one of the biggest L1s and ecosystems in in the crypto world but I was thinking about it more generally from like a economic perspective and I was like you know if here's a thought experiment if if you had the the right to issue all like genius compliance stable coins like like Robbie and and Andy like let's say for some reason like

amazing the law kind of gave that to you for in exchange you cannot take any any revenue yield share from it okay or nor can you charge like redemption you know mint fees or whatever just just nothing from it kind of you you are in trying to give this as a public uh good so to speak okay would you take it would would you accept that and and everyone had to go through you, right? This is the thought experiment, right? The deal is >> they go through you guys, okay? You you you are the only issuer allowed to do this like you know in a uh regulated manner because that's sort of you know de facto what's going on here even though you know they're like this the USDH ticker there will be other stable coins of course there will

but like the reason everyone is so gung-ho about like pushing and competing here is like this is most likely going to be the hyperlquid stable coin right unless so Yeah. >> I mean, we would, right? >> I'm just finishing up. >> Would you take the the actual uh right to issue it? And and I I would if if I was like Sam is the only one that can issue uh genius compliant stable coins. You you are not allowed to legally take any any revenue or mint redeem fees, right? But you're close to all of the flows. You're close to all of the flows that come in and out. you are essentially the clearing house for all

uh genius compliant stable coins. Would you take it, but you're not allowed to take any revenue from it? I would. I don't know. Maybe some people would be like, "Oh, no. Like the only reason I would ever be interested in this is like if I can skim some T- bill yield off from the top or something like that." Um that that's also like a legitimate potentially answer, but I would take it. M >> so Sam you're saying the fulfillment doing something meaningful providing this service to the entire ecosystem a very valuable service that philosophically is enough for you to commit time effort resources or are you saying there's another method another an alternative way to monetize the flows and that is how you're able to

capitalize on on providing this service >> both right like this is not like a like a like a charity I'm not saying like right but what I'm saying is the clearly clearly like just logically thinking about it everyone is giving either 95 or something close to that or like 100 like even the first one just say 100 >> getting to be the in and out of the flows of one of the most important economic L1s >> is by itself uh valuable right and so that's actually what I was trying to say online as well is like one of the most who is actually a responsible steward and like who actually um what will they do with it, right? Will they actually

help onboard more people that they you know wouldn't necessarily come to hyperlquid like a lot of a lot of the things is like like you know FRA is very very good at defi right I I think everyone knows that in fact like one of the first times when uh pyd launched um from paxos and PayPal we actually helped them figure out how to navigate all the curve and defy stuff and so I think one of the first pydin uh pool actually uh and and so we are always at the forefront of like DeFi stuff. Obviously now it's more we've leaned in on the frontier of like regulated payments like like risk digital dollars as well. Um I think

obviously other just being transparent other teams might have like a stronger background in that area right because they they've started from there but I think our defi crypto engineering getting builders that would not otherwise come somewhere are unmatched from the other you know um the other guys >> this is something we were talking about before we had any guests on today which was that the cultural fingerprint of like the cultural identity of hyperl is one of airdrop farmers power users. These are people that are engaged in onchain DeFi. And I think that suits a a cryptonative company at the frontier of DeFi more so than it might suit a more buttoned up corporate company. Even

though there might be more experience there, it actually more aligns with the community to go after and partner with a company that's more cryptonative and it's done this before on these rails rather than done it in the more regulated compliant way. Yes, that that's correct. And but I'd go even a step further too and say like it's interesting because how fast the proposal stuff is going because on another level like when we uh gave our like revised proposal today like we actually clarified about how we would work with uh chartered bank issuer to to issue this and then we obviously we work with stripe and bridge they've been our orchestration partner right same with I think stripe and bridge works with uh

front the frontier markets team I think that they were one of the for the the original um proposal by um Max Fij I think um and the what I was thinking the other hour was like >> a lot of these partners regardless of who wins right who who's like name >> it's not like they would refuse to like participate right so like if we win right Stripe and bridge will will work with us because they're already working with us if they win I think they would work with us and and I know certain people have different payment process process or preferences or or whatever.

And there's like different concerns here or there, but the point is if you ask, right, the point is they're all uh interested in being close to the flows, right? >> Of course. >> Yeah. And so the the real thing you have to ask is who's going to be a responsible steward of being close to the flows? And is there anything unique between any of the current ones that uh are some intangible strengths like getting builders to come that would not have otherwise came or would there be um I don't know e extra things that other uh partners would not actually be able to do right because I think all of us can make it

genius comp is like compliant we we're working with actually like a issuer that will announce We we this has happened so fast that we we can't actually uh say everything that that we want to. But I think genius compliance is is like done is a done deal if like you're competent like the Paxos guys the world class uh you know everyone else we know what to do. That's not really like that big of a deal. It's like table stakes. Right. >> Right. >> With 100% yield share. That's kind of table stakes. Okay. 95% I don't think that's going to be make or break or or anything. you know that's why we even said 100 because I'm like why why even be asked like the last five five bips or something right the most important thing

is who can actually bring a coalition uh essentially a coalition of the willing of builders uh regulated entities which I think everyone can payment processors which I think most people can just because it's hyperlquid and who can actually create new innovative ways of making the most value for the hyperlquid community by being close uh stewards to the to the flows. Right. >> Right. And so when you when you're talking about being a steward of the flows, this is essentially scaling hyperlquid beyond and and USDH beyond its current capacity. And so how would you and just for to frame this completely? We've I think both of the

issue proposed issuers that came on earlier in the show uh Nick from Agora and Bo from Paxos has both talked about Rain as a debit card partner to like they you know they're plugged in with Visa they can help expand that network. Is there a unique value proposition that you got how will you guys steward USDH to help expand USDH beyond the HyperL liquid ecosystem and essentially grow this PI so that the flows are greater than what Hyperlids already built themselves? >> Yeah. So, so here's the first question I' I'd pose back first before answering.

Have we gotten the RAIN guys who are an awesome team to say, "Hey, if uh if Agora doesn't win, we refuse to work with USDH because >> I don't think that that's they're going to say anything like that." Right. >> Absolutely not. >> Right. So that's not right. So they, you know, both of these guys said it, which makes it not unique. So they're it's almost like we're looking at these proposals and and we're looking at the checkbox. It's like, okay, well, they both have that, they both have that, they both have 100%. It's all Genius compliant. So where's the uniqueness in these in these proposals? >> Yeah. Well, I I'll I'll tell you some examples where the the uniqueness of these proposals. For example, what if one of uh these proposals like FRA, maybe someone else, maybe like Athena

seems like they're going to propose something I' I've heard the rumblings of. But what if they what if our idea for USDH is close to a consortium based issuer? So that we first start right as if if we win for example the proposal but then we actually get as many uh issuers in a novel genius compliant structure to be able to actually uh plug into USDH and and as a as as a uh extension the hyperlquid network right because they have to add uh hyperlquid support all this stuff so that it is kind of like even a better Libra right like which which everyone's talking about recently because of like tempo and this and that and they they build it in in a way where you use Hyperliquid's uh

distribution and size to push the frontier of like a specific design where you can get as many uh issuers to on board, be able to mint and redeem to be able to get additional DeFi people to deploy on Hyperlid because of this structure getting unique flywheel incentives for example that that we're known for but obviously Athena is is even bigger right now right to be transparent right they're known for it as well right and So these are the things that are intangible, right? That that are unique if you dig through the proposals between each other, right?

>> Right. These are like between the lines of like you have to kind of imagine what what would stuff look like in a year, right? If if like if if Paxos won or FRA won or Athena, I think they're going to announce whatever they're going to do uh soon, right? And if FRA wins, I think what the one thing to take away is that we would be trying to align as much of the participants as possible in an area where they integrate Hyperlquid as a network. They integrate USDH across a wide range of places in in ways that like for example native consortium mint redeems with Genius compliant issuers, right? additional

DeFi that we don't see for example on Hyper EVM but that we have connections to in our wide uh DeFi network right those kind of things are kind of the intangible uh things that like just putting up a bunch of logos uh is not just going to is not going to do >> right Sam what is mean what is being hyperlquid native or aligned mean to you guys and how important is that versus being a kind of big company institutional focus And and and I asked this in a more pointed way, which is that there has been push back from Paxos and Agora about other teams that have their own chain or ecosystem or products trying to come in and kind of like vampire attack

some of what Hyperlid has already built. You know, what is your vision for being Hyperlid native and aligned and and kind of how do you how do you fend off uh this kind of vampire attack accusation? Um, that's an interesting question because I would love to actually ask how would that even be possible like like h how exactly what would we even say to get people to leave the largest per like exchange ecosystem and and like that that's kind of what I mean in terms of like uh being responsible stewards because it's like that that's so like interesting but egregious that it's

I I I feel like it would we we would not no one would be that that stupid to even kind of try to do anything like that because the whole point of this is like the more value you can create by being responsible stewards to to the flows in and out of Hyperlquid, the the more everyone benefits, right? the more everyone can come to Hyperlquid, the more hype token integrations there are in different places. like the the mere fact that like you know people are like oh uh Stripe just announced Tempo and stuff but Stripe is totally willing to literally integrate like bridge the bridge guys right they're willing to integrate anything with like USDH and stuff and work with them just shows like

everyone wants to integrate this you just need a responsible like like group of people at the top >> yeah top to make sure everyone is like aligned that's that's the real uh thing that I think the uh proposal needs to look for is like a responsible steward. And and the and the other thing I'll say about this is like I I thought about this uh last night where let's say FRA doesn't win. Okay, great. Like you know someone else I'm amazing like I'm very happy for whoever wins. Um we would still love to work with them in in a structure that we're like we're envisioning. So hopefully they envision the same thing and and like positive sum of bringing as many people in like a coalition to to responsibly like look over and build around the massive flows.

Um but obviously then that's their choice, right? Whoever wins like they they could decide no like you know that we have a different view of like how this will work, right? And so, um, one of the things that I think is really important is how can we get the most number of of people to responsibly work together to increase the size of the hyperlquid pie for hypeolders, right? if that if this is the ecosystem that we're all very excited to actually build on and and actually make bigger because of how special it is, how big it is, how wide of a distribution it has, how amazing of a of a deep product it has in Hyper Core with the Perex.

>> Yeah. And just one last thing for you, Sam, why is this ticker in particular important to you guys? Like theoretically you can spin you can uh buy a different ticker in the future for you know and get all the same perks per margin access spot pricing uh markets. Why is this USDH ticker uh important to FRA? Honestly, the ticker is not that important like like uh to to be completely clear and I know the hyper uh uh liquid guys like made as oh this just just for the ticker or whatever like guys don't you know no one get too flustered like there's going to be a bunch of other stable coins we all love each other you know yada yada yada I think like the important like clear thing there's a reason

everyone you guys are having like an immediate like emergency live cast of this competition all is that is is de facto the hyperl liquid stable coin. Uh you know the ticker could be whatever else too, right? It could be mudang or whatever USD, right? So like but but the the main thing is the alignment of the entire hyperlquid the the foundation the core team this stuff the community right this is basically a massive shelling point right this event is a massive shelling point uh and and king like legitimacy like event of who actually is the socially agreed on steward to to the flows and stuff we don't actually mind what the what the ticker is in fact like I was saying I was talking to Julian um and some people from Hyperlid months ago

months ago about what's your guys's strategy. And so the the feeling I got was that they're still figuring it out and the transparently that's what it sounded like they they were saying the truth like they'll figure it out later. And this is seems like is what what they're going with which is really cool. I actually think this regardless of who wins this will actually set a very very uh great precedent of how to do these things. Like earlier today I I saw um Athena and Mega ETH. I don't know if you guys saw that. They announced like USDM. >> Yeah. And that's super cool and that's awesome and actually um somewhat jealous of guy. Good good work.

>> Like like a I am I am an investor in Athena. Full disclosure. So I'm at the >> at at the same time though I was like well if we knew that existed uh why I wish the Mega ETH team did something similar to like Hyperlid. Why not just be like, "Hey guys, like we're thinking about this instead of doing this like behind the scenes or whatever." Uh >> yeah. Just put it out there for everybody to to to you know get the best deal. >> Exactly. Exactly. >> Give us some entertainment while you're at it. You know what I mean?

I I think it's preceded setting uh event for I think you know everyone can probably think of obviously like no one is as big and systemically important as Hyperl it's like a top 10 coin the biggest like like uh decks in in in the entire world this is like the S tier of like it's like the Super Bowl of stable coin issuance competitions right but I think there will be uh you know um like like NCAA championship kind of case as well. >> Yeah.

>> Yeah. Like bracket style. No, I mean look, I think there going to be a couple more entrance. You know, you mentioned Athena. Maybe we get one or two, but the time's coming up. I mean, we're about 48 hours away from the proposal being, you know, set set on. So, >> Sam, >> I just got one last thing for you, and we hadn't asked the other two uh uh potential issuers this, but I I think we'd be remiss if we didn't talk about Circle a little bit. and what Jeremy Alair put up on on Twitter and kind of reposted a blog post from a couple months ago. Any any thoughts? I don't want to put you on the spot, but I am just curious like it seemed like his proposal kind of fell flat. People were saying you made a mistake. You got a couple days to fix it. They're in the

position where you know they've got the five and a half billion. They they're they've got the foothold, but they're at risk of losing it. If you're Jeremy Aair, what what do you do? I I would love this is why I started talking to the hyper liquid team like months ago because I was like honestly at first I was like do these guys just have a secret deal with like circle to just like yield share almost all of the thing but the condition is like sign this NDA and don't tell everyone because then everyone will go to circle and be like do it for us because you did it for them. Uh, I guess it it does not appear that they do or they might actually and they might use this competition to go back and be like, "Yo, like actually uh we want 100% or like you know, you're

you're screwed, right?" But I would actually love to see Jeremy uh just come out and be like, "Okay guys, like you uh you know, you're upping the ante. Circle will just give, you know, 100% 90 95% or whatever and see what happens." I I would actually love to see Circle commit like nearly 100% or close to 100% yield share the same way they have we know they have it with Coinbase, right? USDC on the Coinbase platform. Coinbase gets 100% of that, right? And again, good example. Look at how beneficial that is. I know people look at the the S1 filings and stuff being like look how much they're paying to Coinbase, but Coinbase King made USDC by having the basically the official

onofframp for dollars in in and out of USDC, right? And so like that's a perfect example of like look there's a there's a deal that Circle doesn't get any like revenue from, but clearly it's it's symbiotically beneficial. Clearly, no, no one would see Circle is not benefiting from that in some way, right? >> If Hyperlink could make Circle bend the knee like that, it would just be the most the just epitome of DeFi's power uh and just in in just of the of the status that they've reached as a as a chain, as a protocol. Sam, just closing thoughts.

We're running low here >> for sure. So, last thing to reply to you and then closing thoughts is I think that's a good way to take it. But from if if you if everyone says it like that, I think Jeremy wouldn't >> do it. Yeah. So, maybe that's not the right way to say it. >> So, so the way that I would say it is like like Jeremy would come out and and like basically uh Mortal Kombat KO combo KO everyone >> absolutely destroy everyone. Yeah. >> Yeah. I would love to see that. But anyway, the closing thoughts uh I think I I would um leave everyone with is the most important thing is is not the genius compliance because I think everyone uh that is in the short list is is competent enough when they say

they're going to do it. They're they're going to work it with the proper structures. The other thing is not obviously the yield share because 95 100% completely uh that everyone is basically matched or thinking they're going to be matched and and I don't think that five bips is going to be the thing that's going to you know uh the last straw that's going to break the camel's back. The most important thing is what are the intangibles, right? Every everything that looks uh kind of different on on paper like oh they have like rain cards great but I'm pretty sure rain cards would would integrate this right as well. Same thing with us.

We work with stripe and bridge but then so does uh the other um proposal earlier and then maybe maybe another proposal later right and bridge is going to be willing to be the integrator. The most important thing that I leave everyone with is who is going to be the most responsible stu stewards and positive sum of the flows in and out of one of the most important uh ecosystems to ever exist in crypto and will increase and maximize the coalition that feels they they have a have a stake in making this the biggest pie possible. Right. And whoever the the hyperlquid community, the validators and and and the hype holders vote um regardless of whether it's frags or not, the point is we would

love to work with them if we don't win because again our vision is we want to actually be a part of making sure that this is one of the the best the most positive sum in and outflows of USD uh regulated stables in in the world. >> Beautiful. Sam, thanks for your time, man. Look forward to the next 48 hours. I know it's gonna be crazy for you. >> Awesome. Thanks. >> We're rooting for you, Sam. >> Thanks, man. Speak >> soon. See you.