Can Hyperliquid Become the Everything Exchange? | Roundup

Transcript

So the everything exchange, everyone is going after this idea and it's a very crowded, very well-funded space with many competent teams that are pursuing this vision and it's just crowded. I think the Hyperlid team is incredible, but the competition is extremely fierce. This episode is sponsored by Canton, the only public permissionless blockchain built for institutional finance. We'll hear more from Canton later in the episode. Blockworks digital asset summit is back in New York March 24th through 26th. We'll have top speakers from leading asset managers, financial institutions, DeFi protocols, crypto companies, and policy makers all under one roof. Think Black Rockck, Coinbase, Robin Hood, and more. Follow the link in today's show notes to buy tickets, and

make sure to use code bell 200 for $200 off at checkout. See you there. Hey everyone, quick disclaimer before we get into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed. All right, guys. Uh, welcome back to another episode of Bell Curve. Got Miles a mess, how we doing?

>> Doing great. One week countdown. >> One week countdown, baby, to the most institutional conference ever. We actually do have I will say we got a this was a interesting first for us. We got our first uh I guess two bank CEOs. Um and I can tell you these are they're not really sales cycles in the sense that we're not selling anything but sometimes these conversations you know they take a very very long time and for the first time ever we have banks being like I know D. I would like our CEO to speak at DAS which is >> it's fantastic.

>> Pretty cool. Pretty cool. I can plug in something as well that might make you happy. Uh Mike, um so one of my >> a guy a guy I know from my hometown in traditional finance actually reached out saying to me, oh he's going to digital asset summit and you know will I be there and you know it's the first time that his tradey firm in South Australia is like you know branching out into digital assets and all the way to New York just to the conference. So you're making a splash worldwide mate. Wow. Wow. Well, we love to see that. Um, thank you, Z. That actually brought a big smile to my face. And actually, some alpha, I guess, for uh for bell curve listeners, which is if you are a

procrastinator like me and you're sitting there waiting looking at tickets, we uh we got a massive So, we got a sailor up there this week. We got the CEO of BNY Melon. Um, we max out uh like there's a fire marshall code and we are now knocking at the door. So, actually, we're going to do a we're absolutely going to max out on the space. So, if you're listening now, we're going to start doing basically price hikes until um but probably you probably have until like Monday, Tuesday to buy and then it's going to max out. So, good. You know what though? It really is. It's it's crazy because um and I you knowve I've talked to some um honestly been getting back to uh Elkur roots and talking to a bunch of the

infrastructure um kind of like staking providers uh call it like the L2 uh you know framework supporting infrastructure you know helping enterprises build onchain and it is really like it continues to be um there's the most dispersion in the space that I've ever seen. Um, we're absolutely in a bare market, but not if you're in prediction markets, stable coins, and actually even like, you know, some of the pretty old school um infrastructure guys are seeing a lot of traction on kind of the banking and financial services side of things, but all their traditional the traditional businesses, you know, really really struggling um in many cases. But yeah, I it's a really interesting time. Man,

when we kicked off D last year, I said I've never seen it so diverged, but it's gotten far wider even in the last year. And it's gotten to the point where I kind of think that in good and bad ways, like that old um I was talking to one of our investors this week and he's like, you know, that old like when Lambo, I I think that that culture is just I think it's dying in crypto and I think 80% of these coins are just gone down and they're never going to get back up. And you know, I was just tweeting before we got on here saw Larry Frink talking about tokenizing every asset and I fully agree that that's going to happen but that also doesn't mean a single coin has to go up because of it. Um so yeah it's like a very interesting time where uh

the industry is changing a lot and the institutional segment of it is just doing really well. Um but yeah, I don't know if I have much much more thoughts than that, but >> yeah, so the institutional converts will definitely be the highest uh you know, best sentiment. I would say >> people there are stoked. People there are really stoked. I mean, I know Miles, you've got this the strong background of Fidelity, but like they they're just all like they're building a ton of stuff. Um >> Exactly. No token.

Well, did you guys see um uh a cross? Um I think this is the first of these sorts of ideas that I've seen so far, which is they allowed a We're going to be talking about Hyperlquid. I should have talked about that at the This is a Hyperlquid Bull Bear episode. We haven't talked about that at all, but um before we get there, I'm curious. Do you guys see the across? It's a token equity swap and they're allowing uh token holders to swap into being equity holders. The catch being you have to be a US accredited investor. Um and or you can swap out at a certain uh a certain rate you could essentially redeem for cash which at the time was something like a 25% premium. Now it's I don't know it shot up like 100% today. Um and

so now it's actually a little bit of a discount. But yeah, curious what you guys thought about that. Like I'm thinking a lot about uh token holder rights and things like that. And I this is a really interesting I haven't seen anything like this before. It's pretty cool. super fascinating. Um, [clears throat] and like it's worth thinking about the history of across. So they launch uh they launched a token in a bare market. So this was like 2021 post FTX. Um, and then and the product is has always been great. It's always made revenue. So it's been one of those like good tokens like it was fit for the revenue like fundamentals, you know, era. Um, and I remember like shortly after they were launched,

wormhole and layer zero launched at like a insanely high DVD, really low float. Um, and like Cross kind of launched on the bare market, so they were they were lower and I remember the team was just like not like they felt like they left value on the table. Um, and yeah, the like the fundamentals have continued to go like up and to the right. They've brought on more like really high quality liquid investors. Like I'm pretty sure Paradigm did a liquid round a while ago. Um >> they did. Yeah.

>> And yeah, it's not like they've gotten overly caught up in the Dow stuff, so that wasn't the problem. It's just like a very sober sort of like reflection on, you know, there used to be a premium to token prices and now there's arguably a discount token prices because um it it takes away flexibility like they are likely trying to go for an acquisition um and that's really complicated or a non-starter when you have a token. So, um, yeah. Know, I think I'd be interested to see more of these, but, um, this is definitely high signal.

>> I think it's great. I wonder if Paradigm had any say in this, um, as well. I can't remember what valuation they brought in at, but, you know, it's it's also interesting because you're you [clears throat] you're really just seeing I think this is a this is a really interesting move. It's one way of taking care of token holders. You know, at the same time, you're also seeing Ripple do a buyback of their private equity, which is kind of funded by selling tokens. I mean, that's >> what that's not expressly funded by selling tokens. It's not like they announced that at the same time, but it's a huge part of uh you know, how they generate revenue. This is very interesting to see. Um I think that there's going to be much more scrutiny on these um on the relationship just increasingly in

between token and uh tokens and >> or you just better pick one, right? >> Um or just clearly better to pick one. Uh >> it's clearly better to pick one and by the and that's a strategic decision that's not just like what will be, you know, what will go higher, right? Or like what is currently in vogue. It it is about like um I think the long-term like plans of the project and keeping optionality open if an exit you know if an acquisition exit is probably the most likely exit. You know what? You know what though? The challenge with this is I mean at the same time Stein Stani wrote a piece this week. I don't know if you guys saw that and he criticized it's like the first instantiation of Dows wasn't necessarily correct and you know

he called out we want to keep the best parts of Dows but you know I guess like another unsaid thing here is that a lot of the at one point investors and projects were just trying to get the token out the door as fast as possible. Um, and now I think what you're seeing is because the mar because there's an overupp of tokens in the market and investors need to see traction, you kind of are getting all of the negative it's there's a market I think token uh projects are waiting longer and longer to launch the token because that's what the market is demanding. It's a you know there's no regulation that's forcing that. That just makes sense from the standpoint of the entrepreneur. And so you have a lot of projects though that have launched before they had the requisite traction to support a positive

valuation for their token. And so they're like now what? And you've seen uh you know at different stages of maturity like Morpho had kind of a really like baller move pretty early like they moved to they only have a token. There's no equity structure back there. They did that very early. Um you know a is cleaning up. It's kind of like uniting the incentives of the DAO and the labs entity. Um, this is the first instantiation that we see and Hart came out and said, you know, I'm paraphrasing here. I don't remember exactly what he said. Like, as much as I'd like this not to be the case, it just doesn't make sense for us to have a token. It's the the cons outweigh the pros. And so, actually, this is them saying, "Hey, I know we launched this token, but I think I'd like to uh we're we're preferencing

the equity and we're an equity play here." I mean, so you're starting to see all different everyone kind of started from the same place, which is we're going to launch a token and get it out, get it out there and and be early. And now, um, now that the market is rejecting that in many cases, you kind of have a couple options. You can do both and align, you know, only token, find a way to align incentives, or go only equity. And it seems like this is across preferencing the equity, which is a totally rational thing to do. Yeah, maybe also worth mentioning, um, a lot of teams right now on the token side, I think, you know, they're still going to want to launch tokens at some stage, but as you guys probably know already, it costs a lot of money to list a token on

various centralized exchanges, you know, 1 million plus at times. And you know, if you're a preedec seed team and you only have a few million and a quarter of that minimum is going into exchange listing whilst you're sort of like, you know, you're running out of runway, it's can be difficult to launch the token and so they're sort of stuck with equity. And I've also seen the other way recently of a team launching a token uh but then they're dealing with enterprise now and now they want to spin off equity. So I think right now it's still very unclear to like if teams are going to go the equity or the token path. I could see a future of both. If crypto markets come back, I think teams still like the early liquidity of tokens. I just think in a bare market you see a

lot less tokens launch because a obviously there's less traction. There's less hype and interest from exchanges and investors. Therefore, these teams have less money. Therefore, they don't have the money to cover the costs on exchanges. But I could also see it going the other way around. So, mature teams like Moro, etc. with the token already live, it's much easier for those teams to move everything into one entity. Whereas I think as a startup it's still very very challenging to know if you should go the token or the equity path. And so it' be interesting to see how that pendulum sort of swings in the bare vers bull market. >> Right. And if you stay equity you always have the option to launch a token later.

It's much harder to put the the token back in the box. But that's exactly what cross is doing right now. So I'm very curious to see how it plays out. My hot take prediction I guess is that Stripe is going to require them. Um and this cross token turns into stripe equity which I have no idea how that would work. But they did say you know this is all about like this is part of a strategic pivot to basically abstract stable coin liquidity fragmentation and the issues around it. Right? We have an al alphabet soup of stable coins in the world. How do you think that Stripe is going to acquire Bridge here? Um I think that they want to support a world where there's lots and lots of stable coins,

especially like a diverse stable coins on Tempo itself. Um and I think there's like non-trivial like pieces that need to be in place such that um let's say it's it always looks like USD to the user but when you withdraw then it gets converted from like you know let's say white label platforms stable coin to you know branded highly liquid public stable coin and then back into another one. This was like the original bridge thesis from a few years ago. Um, but I could be totally wrong and even the DLE's very wrong here, but it would be funny because I've held those across tokens for a long time. They've gone up.

They've come all the way back down. And maybe to play along was just to get some. >> Before we get back into the episode, here's a quick word from our sponsor, Canton. The only public permissionless blockchain built for institutional finance. >> Trad wasn't built for 24/7 [music] markets. Defi wasn't built for regulated institutions. But Canton is where the power of finance meets the promise of blockchain. [music] The only public blockchain with institutional grade privacy, true composability, real [music] assets, real markets.

Why reinvent finance when [music] Canton makes it work the way it should? Canton, where finance flows. >> Um, all right. We started this episode to talk about Hyperlid. This is a uh bullbear hyperlquid episode. This this is actually inspired by I'm going to get to some of the statistics on this, but uh you know what really so obviously the entire world is fixated on this conflict in between the United States and Israel and Iran uh with especially the price of oil being in the crosshairs here. Um time for everyone on CT to dust off their geopolitical straight of Hormuz uh expertise caps and and pretend to be experts here. But what was really interesting was the success of Hyperlid

Seal USDC um oil contract. Um and this was kind of a sleepy contract uh like an oil per um that they launched on January 9th. Um so not that long ago under the HIP 3 um you know under HIP 3 like the builder code uh upgrade that they launched and you know it did okay but really really blew up um recently. So the actual stats on this are pretty wild. So for the first couple weeks, it was more of a niche product than anything else. Uh it averaged about 21 million uh per day in daily trading volume um and accumulated roughly about like 400 million in cumulative volume uh during like the month or so after its launch. But after um but after the Iran

situation blew up, it went completely parabolic and during a two-day stretch uh generated daily trading fees exceeding $5 billion uh which actually briefly overtook Ethereum's uh per markets. Um so basically uh if you looked at that at its peak trading as a com as a percentage of the um oil contracts that were trading on the CME it's about 1 to 2% of CME's uh peak day and maybe 2% 2 to 5% of a normal day. That is crazy. Uh that is absolutely nuts. And a huge part of this as well, which is what got people talking about hyperlquid, is that these trades were happening on the weekend because the US and Israel um launched their like early

Saturday morning, Friday night, US time. So oil spiked to like $111 originally over the weekend before going back down. And Hyperliquid, you know, as this kind of 247 venue captured an enormous amount of this volume. And I think this excited a lot of people because this was kind of the first clear indication of the 247 nature of these exchanges being a massive value prop for even more traditional traders. Like Hyperlid was getting cited on Bloomberg and bunch of the Bloomberg analysts like what is this Hyperlid thing and it was just it's pretty interesting uh kind of crazy. Um, but I thought maybe even before we get into uh some of what hyperlquid like we're just having like a fun kind of

boundary episode here around like bull and bare cases. Um, can we go back in time and look at I think one of the things that's at least been hard for me around hyperlquid is I've just seen so many perplexes run up especially during bare markets and uh maybe historically pattern match that a little bit and um just maybe there's an analogy here between Hyperlid and Google where it seems like Hyperlid has just fully won this category but it was not the first or the second or the fifth it was like the 15th right I mean you can list you know gains you know GMX DYDX Vertex all all of these exchange like know these perplexes that at one point had a lot of hype around them and I'm curious um you know if we were to go through kind of the lessons of what Hyperlid has done

right um what do you guys think is part of the reason why they were so much more successful than their peers. >> Yeah, happy to kick it off. Um so yeah, I think all of us in this podcast uh were somewhat around Hyperlid. Maybe not as in the weeds as like the typical trader, etc. But of course, even Miles and I have worked pretty closely with teams like Dydx in the past, which you know was and still is targeting a very very similar market. However, the outcome has been completely different. So I think it's worth talking about especially DYDX which used to be the front runner for this category and then also like Hyperlid as the now winner and and why Hyperlid is the winner at this stage. So I think really Hyperlquid for

me if I look back on it and their success is like a game of timing on like multiple different fronts regulation, social technology legal economic like everything. Um, so I want to start with kind of regulation first and I think Mike you tweeted recently uh which you might pull up at some point around why uh Hyperlid was so successful and one of the reasons given I think maybe by Alex Peek uh at HackVC was because they internalized their market makers to begin with and got the product to a point where they had really great liquidity on the supply side which obviously made it a better experience for everyone on the sort of demand trading side to use. However, the timing of this was very unique versus something

like DYDX uh back when I used to work at Chorus 1. >> Can I flag Can I flag something about that though because I I know Miles is going to tag in here with the FTX the hole that FTX left behind like the you know the HLP vault um is essentially them internalizing their own market maker to provide tighter you know liquidity and spreads. There's an analogy here in between this is what Alamita essentially was to FTX um which I think is a really interesting point where if you guys remember at one there was this idea that FTX you know managed risk unbelievably well and they just have these unbelievably sophisticated algorithms and it's just like there was just a hedge fund on the back end that's internalizing all of this and as soon as

there was a massive you know like three standard deviation you know price move on a big asset that they had exposure to like Luna they just got smoked. Um, and the maybe the improved version of this was I wonder if Jeff was looking at that thinking, man, they really messed the execution up, but actually they didn't have a bad idea here. And there was something very similar. It was very interesting to watch if people remember this um the HLP vault with uh Jelly Jelly. And I guess like two differences here um you know in between the way that HLP was set up versus Alama is one they weren't doing anything nearly as crazy. Two uh they had a bunch of people that were staking there and taking on knowingly taking on risk um

instead of SPF moving uh customer deposits from the FDX exchange. I don't want to compare them, but you know how you can see like a really bad version of something and be like, "Oo, you really messed the educ like the execution up, but you had something." I wonder if Jeff did look at that setup and think not not bad actually. Um I I think like yes, yes and no. I obviously there are somewhat similar products. They're both exchanges trading derivatives, etc. Obviously FTX was completely centralized and therefore there was a huge governance risk on the team itself and obviously SPF as we've seen uh didn't take that seriously and you know now in prison whereas Hyperlid had a very interesting ethos which I think is also worth talking about around

the decentralization versus decentralization and this in my opinion this is technological in terms of timing. So pre- hyperlquid it wasn't clear to anyone in the blockchain space that the market would accept a team coming out with four or five nodes you know many of them run by the internal team building the product itself and then releasing that to market and then getting a bunch of adoption and attention and demand for the product. So you know going back to DYDX Dydx had several versions of their product and there was probably errors throughout each version. You know, error number one for me in version three, we uh mentioned it earlier in this podcast that you know, DYDX V3 had an issue with token versus equity value acrew. And I think that kind of turned a lot of DYDX token

holders off. At the same time, they had a lot of VC funding DYDX. And you know, these VCs were sort of like mercilessly dumping these tokens into the market at all costs. And so the Dydx price was going down and down and down even though adoption was actually going up pretty hyperlquid. And I think that really hurt DYDX long term. Eventually, DYDX4 came out and they tried writing the wrongs of actually delivering value back to token holders. But at that time again, Hyperlid had just came out in the early innings of getting started, building liquidity, getting that internal market making system going, you know, in a good way, plus the order matching, etc. And so, I think by the time DYDX kind of worked it out, Hyperlid found this social moment in terms of timing in

crypto of like very, very antiVC. And so you can imagine, you know, DYDX was a great product. People did buy into DYDX. People bought into the vision. People thought you could compete with Binance. Then it came out that actually like all these investors were just being dumped on by VCs that made all the money. And even though the product was great, they got nothing for it. So there was a lot of negative sentiment towards that happening. But that was also beyond DYDX. That was in the entire space. Hyperlid came out with a great product, built a great community, a lot of D5 natives, a lot of people who were fed up with that DYDX kind of history and then launched the product and into a kind of semi- bull market if you think about it.

So already the valuation was quite high and then air dropped to a bunch of their power users and you can imagine socially how much of a great achievement that was at the time and probably the best social achievement almost in crypto. And I'd also make the argument in crypto it can be a very very social game. So although Hyperlid is earning a bunch of revenues to the point where they earned more revenues than Ethereum last year, which is an amazing achievement, they also have an amazing narrative because they have so many people bought into like the success of Hyperlid. And so you see teams like Leer now, which is a new competitor to Hyperlquid trying to come out to compete, but there's not enough people almost in crypto on the social side to like care about lighter. You know, they can get two or three funds,

but they're going to have the exact same issue as DYDX where they're going to dump on all the people. I don't I think lighter has no fees. Hyperlid obviously has fees and they're buying back the token. So like there's a lot more alignment I think in Hyperlid than any other DI any other per uh sort of exchange before and also in the future. So like I'm under the impression that Hyperlid is actually here to stay which I'm sure we're going to touch on reasons why. And I think it's here to stay and I think that tailwinds like regulatory uh technology everything is actually in their favor. I think they're going to build bigger modes over time. So, I guess if this is a bull versus bare episode, I'm definitely in a bull camp for Hybrid Liquid like I was 3 or 4 months ago when we first started this

bell curve round up. But it is fascinating to see like the timing of everything they got right. Also, they they even launched the exchange if you think about it like right as Trump was elected. You know, they decided to bring the exchange back on shore as soon as he was elected. Last point I'll make here. I was speaking with major kind of HFT firms and market makers when DYDXV4 was coming out and they couldn't market make a DYDXV4 pre-regulation and this really really hurt liquidity on DYDXV4 and therefore the product itself kind of fell apart. Hyperlid timing wise was like all right do it offshore bang onshore as soon as regulations are more favorable and obviously you see now how much more successful they are. So, I just think they got so many things right on the timing side, and I think you're never going to repeat uh that level of,

you know, ingredients lined up and stars lining up again for any purpose exchange. >> Yeah. And uh maybe just to like double click on the the timing standpoint and like get a little bit more concrete, like um Dydx is a good example of the wrong timing. That's not the only problem they have. Um but their assumption was that dydxv3 the single sequencer roll out um could not return uh value to token holders because it was a centralized sequencer right um and that just turned out not to be the case at all. Like if they had just done that

and waited till the next administration I think they would have been totally fine. like V3 had other issues but that was you know like I I don't I don't think anybody would have stopped using V3 because the sequencer was centralized like look at look at base right now. Um, right. So, that was the original impetus for like DIYs being like, let's move over to an app chain along with the fact, yeah, Stark Rare was like we we're talking about like one of the earliest iterations of a ZK roll up with like tons of custom ZK circuits that only the Starkware team could like actually implement and upgrade. So like they needed to move anyways, but um they could have just run a centralized Cosmos

chain and all of this would have been like at least a lot more competitive. Um but yeah, I would say like uh so okay, why did Hyperlick Hyperlift would win? I think it's like or structure and operating model. They just don't like let things leave the organization. They don't outsource development of like core features to other people. um that makes you able to move fast and like you know they trust each other and they have expertise. Um they've chose the right features to pay attention to. So like permissionless listings no other you know per stacks has been able to actually crack that until then. Um then I'd say like and and speed bumps or

cancellations all these things that you get on only TXs of the world, right? And then yeah, the competitive landscape around them and the like just collapsed TX fell apart. You know, they can siphon off some liquidity from from Binance if it's if it's attractive and especially if there's like points and an airdrop coming. Um, and DYDX focused on all the wrong things unfortunately and had the wrong and it's a sad negative sentiment. And that brings me to the last piece which is brand and I think this is this like sense of belonging and a sense of like when we talk about hyperlquid it nobody dislikes hyperlquid in our space right like it kind of is the poster child for

everything that we you know can do well right so yeah it's a lot of things but um the story is pretty clear up to date it's a lot less clear like going forward you know if it can make make that another leap I uh I want to mention something that we've spoken a bit about on the podcast before around distribution. Um interestingly enough, Mike, I totally agree with your point around Hyperlid now making it into mainstream media in you know news places like Bloomberg for example. So the fact that Hyperlid now has expanded beyond crypto and it's now in Bloomberg. It's kind of similar to like Poly Market and Koshi where like they can get actual attention outside of

crypto. How? Because people are trading on macro events outside of crypto and you're seeing a formula now in my opinion of events that are traded from a macroeconomic perspective. for example, prediction markets, maybe oil markets on Hyperlid that managed to break into mainstream media. That is another form of distribution, which is like an actual moat if you ask me right now in terms of like it's really hard for any crypto project to tap into mainstream media attention. And the fact that you can have people trading on these markets that macroeconomic news for example, I think is still a very very underrated distribution method. Uh so yeah, hats off to Hyperlid for opening these markets. It's also worth mentioning the stat that from what I understand out of the top sort of 30 markets only seven are crypto and 23 are non-crypto markets

in equities or anywhere else any other kinds of markets or commodities etc. So, I think Hyperlid is already positioning itself for the future phase of growth, realizing that crypto is a limited market and it's a good front runner and they're pioneering what it looks like to go from cryptonative, playing that social game we just talked about and Miles just touched on to then moving beyond that social game and playing that more kind of yeah pure macro game to get even further people interested in the product including larger traders outside of crypto. So, yeah, very interesting distribution sort of they've got right now. You know what? Um I mean that maybe as like a little bit of a controversial take here and uh and I don't mean this in the negative way but in many cases

many ways I think Hyperlid stepped into Hyperlid is kind of the best version of what FTX could have been in my opinion in so many ways and the connections are for me uh so outside of the construction right like in many ways like the some of the core um infrastructure around like I think that SBF and Jeff maybe look at uh things architecturally from a pretty sim in a pretty similar way because uh Serum people forget was something that SPF was really excited about and kind of instantly saw the potential um of like high throughput blockchains. Um he also had you know we talked about the similarities in between HLP and Alama but there was a branding thing. I think part of the reason why

FTX had such a strong brand and people can't even remember this because of how much it's been tarnished. Um, but you know what they did really well? They had a very keen sense of product. Um, traders loved FTX and there was a lot of genuine product innovation like you know pre um, you know, pre-token launch like pre-launch markets would trade on FTX. they had those like kind of binary kind of like anticipating that that the the the Trump uh markets kind of simultaneously anticipating prediction markets and um meme coins like there there was a lot of product innovation and they they got to new assets and markets really quickly in the same way that Hyperlid did uh or Hyperlid

currently does and it feels like that same brand it's kind of the traders exchange and even if you look at the biggest proponents of Hyperliquid. They're all traders, right? Um, and I know, yeah, I get it. The VCs didn't get any allocations, so they're not going to be evangelists, but it's kind of like that guy Flood, right, who loves Hyperlid. And so, in many ways, I think it's the spiritual ancestor has a negative connotation. I guess the way that I would frame it is it feels to me like Hyperlid is the best version of what FDX could have been at one point, but it also reflects how well they identified the like one of the most valuable customer types in the world. Uh because I correct me if I'm wrong, but I

think they only have like 50,000 active daily traders or something like that. Like it looks like just according to Gemini, it's 600,000 total traders like and it's usually like 50,000 active traders. That means if if they're running like if their annual run rate revenue is a billion dollars a year or like you know I think it's like 850 million per year that means every user is spending 16 grand on the platform per year.

>> Yeah. You know, there's another uh I guess like another connection here. Um do you guys remember the debates that used to happen in between OpenC and shoot I'm blanking on the um onchain >> blur? >> Blur. Thank you. Okay. There's a there's a there's a connection here with Blur where people used to debate um you know Blur kind of won against OpenC this market of very few kind of whale professional NFT traders and FTX had that as well and there is a there's a debate to be had here it feels like that's the market that FTX or that Hyperlid really dominated and you know

as we get into the bull verse bare cases I think the success of Hyperlid is really predicated on expanding out of that customer set. Um because when you look like I think you you need like even if you look at the way that an exchange gets valued. I remember talking to an investor about this back when FTX was big comparing it to Bybit. Um and Bybit uh at that time was doing like similar revenue and similar um you know volumes and things like that. But the thing was Bybit was almost entirely retail in its flow um which is far more valuable from a flow standpoint than like expert traders. So I think you know as we start to go into the bull versus bear cases here hyper liquid and it seems like this is their plan but part of the success

will be predicated on their ability to onboard either a combination of retail or more institutional traders as well. Um because I think that the crypto whale active trader segment's a great way to bootstrap but then it seems like many of those exchanges that dominate that segment they run into a ceiling. Um which is kind of my interpretation of uh Kraken as well. um you know like Kraken feels like they're breaking into the US market here. They got their that banking license which was a huge win. They're bringing tokenized equities, but they they haven't really fully from my from a brand perspective really identified who their audience is outside of that and it just seems like that's a limited >> I don't know man. If I were them I would just like double down on the really high

value like um trading types that that they've won on to date, right? um especially when it comes to prediction markets which do today have like a longer tail. Think of like small volume traders. Um and I think they're likely like the the power users are like frankly like pretty pretty underserved just you know like if they're like a cow sheet or a poly market user that's trying to appeal to like a broader swath. Um and then the like facilitating strategies that um combine you know her and prediction markets for something like you know oils hedging would be super interesting. Um but I don't know

if you've been talking to like more teams in the hyperlquid ecosystem. Do you have a sense of if they're focused more on that like you know super like concentrated but high value sophisticated users or if they're trying to you know expand the pie and let users grow into that. >> I think it's both really. I speak with some teams. I mean for me Hyperlid is trying to become that kind of Robin Hood and they do want to access those kinds of retail traders as well which is also as we've seen a massive market. At the same time, you come across some teams obviously trying to build their own HR3 markets and you know capture some of those fees and value capture from the front end and building an app on top of the market they're trying to open.

Another thing we haven't mentioned which I think is also a great economic call by Hyperlid as to why they're so successful right now is the actual economic alignment between how much you have to stake in hype uh to actually open up a new market for people to trade on on the platform and to like get that amount of capital and I can't remember the exact number right now. Maybe Miles or Mike, you you might know it, but it's in the millions and millions of dollars to open up a >> 500,000 hype. >> 500,000 hype. Yeah. Which exactly is in the millions of dollars to open up any market. And the fact that you need that capital just to get started, it kind of gives you the skin in the game to be a part of Hyperlid even further. So on top of the airdrop, you have further skin in

the game opening up markets. So yeah, many teams I speak to in Hyperlquid are actually just trying to build like kind of consumer apps and be that everything trading app uh you know using different HIPP3 markets uh using novel distribution strategies getting in front of these users and I think it's a really interesting time. we haven't really touched on yet very much but a lot of teams I speak with now in hyperlquid are actually really focused on HF4 which is more about sort of how markets are settled different outcomes uh etc which is the next evolution of hyperlquid and at this stage I do think that hyperlquid can actually start eating into some of poly market and koshi's market share ultimately I think poly market koshi and hyperlquid are playing in very similar

markets I think you know prediction markets trading short-term long-term term. I think it's all going to look very similar. I mean, you're already seeing Poly Market on the other side sort of moving shorter and shorter prediction markets to like 15-minute markets on a Bitcoin price. Maybe at some stage they add per like probably they're going to I think Mike you were saying earlier it's a bit of a race to become the everything app. I do think that Hyperlid is very well placed here. If you think about like who uses prediction markets, you know, a lot of macro traders, etc. If you can use prediction markets and per at the same time to hedge and create new instruments in various ways, I think this is a very bullish reason for why Hyperlid might actually win long term. Um, and so yeah, I think in general it's a very very

interesting time. It also might be worth mentioning because as you guys have mentioned several times, Hyperlid is quite centralized like top down as well, not just centralized on the blockchain itself. Uh, I do think they have a major say in what teams win. It's a little bit like Salana if you think about it like a Salana also is a bit more top down than something like Ethereum. So I have spoken with some like really great stable coin projects for example on Hyperlid but they kind of you know allowed USDH to be the predominant stable coin hyperlquid and good luck competing after that. So like it does make a market and ecosystem that is hard to bootstrap bottom up and become like a major outcome as a startup. So, I'm much more bullish on Hyperlquid as like an asset and a chain as I am on like maybe

Hyperlquid apps and teams building there. In saying that, there are some really incredible teams. I also want to actually shout them all out because anytime you speak to any Hyperlid team building an app on top of the blockchain, they're very very focused on products and business models and like generating revenue. You don't actually see that across any other ecosystem, which actually makes me very very bullish on even though it's harder to break in because you need top down kind of authority to be able to do that. Um, at the same time they realize that to create a great app and to be a truly great outcome, you need to actually have a proper business on chain, they all have that hyperlquid mentality themselves of like they want to generate revenues, they want to buy back the token, they want to like give back the value to the token holders. So yeah, I

think it's a really phenomenal ecosystem and we haven't even touched on the bullcase for it. And actually to be honest doing my research for this this episode like I've always admired Hyperlid and I've always spoken with builders in the ecosystem but I think even still even though there's a lot of traders longing and socially it's massive like I think it actually deserves it and you know it's actually counteryclical anyway because the more volatility there is the more macro scar there are you know the better hyperlquid does. So that's also very very unique in crypto which has never we've never really seen before. So yeah, looking forward to going on to the bullse cases.

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And I I here's here was my number one point. And I'm it's actually what the one of the big bull cases from my perspective and I think something that Hyperlid has benefited from is it's not just an exchange it's a platform and um I mean it gets more of I think Hyperlid gets more of an L1 you know style valuation uh almost than anything else um and I'm curious like a bull case from my perspective for Hyperlid is you know it find it makes the transition from being a perex towards uh you know something which is more of an actual genuine platform and to your point I think there are really great um like blockark we work with hyperlend um you know who's a great team building on hyperlquid I think um and

they're definitely I think you are starting to see the beginnings of a real ecosystem but I think in the same way that you know even if you were to decompose um you know Coinbase's earnings like they're they get a heavy discount on their very transactional on their um transactions based revenue but they've built this Um it's cut it's they they bundle everything into services and subscription which is kind of their you know blockchain reward like their staking their share of USDC uh their subscription Coinbase one that type of stuff. So I feel like if the part of the bull case for Hyperlquid is if you can grow some of the steadier less cyclical more recurring platform based revenue um that would be a big bull case for me. I

have a list [laughter] for my bullcase for for hyperl liquid. Um so just just briefly so yeah I think as mentioned before the fact that now you know the majority of the major pairs are actually outside of crypto pairs themselves in commodities and equities etc. For me they're already expanding the TAM in real time and it's really exciting. They're now at 309 pairs. this could be off uh you know give or take but that's a lot of pairs they have now that are being actively traded and you know if the majority of these pairs aren't in crypto I think this is very excited and in that case I do think they're actually able to compete with something like CME or IC etc and the valuations of those exchanges are at kind of 80 or 90 billion and so if hyperlid keeps growing

expanding at the TAM the regulatory window is also opening you know CFTC is maybe allowing per in the US and like sort of fostering ing that sort of innovation now which they haven't really been doing before and of course hyperlid has hired Jake who's very well known in the space for talking with regulators etc and so I think the timing and positioning on the regulatory side for hyper liquid they could be getting very very right again they've already had one amazing period of timing and I think they could be entering another amazing period of timing with macro uncertainty more markets more trading regulatory windows opening you know commodities now being allowed to be traded on in US etc I think again a really great timing for for hyperlquid The other side I do think as a bullc case for hyperlquid is also like HP4 as a new uh economic sort of

model or business model for hyperlid itself expanding their business lines you know not just having3 markets but also HP4 uh different outcome markets you know expanding into prediction markets etc. I think having multiple revenue lines is super smart. Um, I also think in general, you know, as we go in an era of AI agents and AI and being able to replicate these exchanges, anyone now can use AI to like build an exchange. But what Hyperlid has now are these, you know, structural moes I think around traders, liquidity, pairs, regulators, compliance probably in future as well. Like I think they're going to be very very hard to displace as as the number one sort of player in this field. And I just think in general they've got so much rights and I think

that it will continue going right for them. I have a bear case as well of course that we can crack into after. I don't know if we want to finish the bull cases but I think they're set up right now really well and I'm actually quite excited for the ecosystem in the next few years. >> I want to add so I agree with all of that. Um, and I would maybe add to some of the uh, you know, you brought up the regulation and timing and, you know, I think one thing, you know, to go back to what Hyperlid got right, I think it's, you know, not to beat up on DYDX here, but I think they it's very interesting. They kind of took the inverse, right? I mean, they had some of the same thinking. Um, but it's funny like remember you guys remember when Hyperl

would launch and there was a debate, is it an L1 or an L3? I don't like wow crazy era of crypto. Remember that debate? Um, but it is funny. Hey, they did they did ask you to bridge, you know, from Arbitum and actually part of the benefit there is it, you know, you got to siphon off a lot of the liquidity on ETH main chain, right? Um through the arbitrum bridge. Um which is very different from how Antonio was thinking about it. Um and he was totally fine with centralization. Um and I think actually every every founder, every exchange founder has to take some degree of real risk. Um and Jeff has done that here. Like CZ obviously did that. Uh Jeff did that. Um there's some amount of that that's required to be successful.

But it seems like we're entering an era where I mean you see Mike Celg uh of the CFTC and Paul Atkins of the SEC saying we are going to reform our you know regulatory bodies here where first of all they're they're coming closer together. There's talks of them working in the same building and I think the the the message that they're clearly sending to markets is like this is a different regime. We are not going to punish you for innovation. We need innovation in finance and Hyperlquid is just far better set up to deliver on that, you know, based on their where they are in their company life cycle, the size of their team, like the time has never been better for a company that's set up to push the bounds. I also would say um you know, we've talked about this is going to get into like a bare case argument as

well, but you know, I caught up with Jake Travinsky who's now leading the hyperlquid policy center. What a great what a great play from. I think it's recognition of if you want a seat at the big boy table, you have to be advocating yourself in for in DC and there's just no one better to do that than Jake Travinsky. Um so really baller move I think from both Jeff and Jake. Um and I think that's a big um tick in the pro category. I also think um you know it's very interesting. I know that these are technically different and some you know our analysts would yell at me if they were on this podcast but you know when I look at the architecture of how hyperlid is developing and salon like if you look at um prop ammms on salana and the combination of hip 3 and hip 4 on

hyperlquid it's kind of actually going towards the same thing which is actually in a in a sense these platforms look more like I mean in in traditional finance right you the very discreet separation of the exchange and the broker and the brokerage. And it feels like Hyperlid is actually moving towards that, right, with builder codes and allowing anyone to deploy um and trying to increase, you know, the overall revenue and um and fees that they're generating at the detriment of their margin. Um but it seems like that's happening. At the same time, kind of something similar is happening on Salana with ACE plus prop amm, right? It's the same thing. It's kind of like a bring your own exchange

type thing with, you know, the underlying layer being the internalizer. Um, >> yeah, that that's what I was going to add too. Like my bold case for them is that they're um there are three potential outcomes that are massive. Uh, one is like the ICE play where you're you may even have like a collection of order books that um many different brokerages all tap into for different assets, right? Second is that there it's more like just trying to replace Binance which I do think could happen which is like an alt exchange plus brokerage plus sort of you know mini app store and then the last is like Salana just head on

right developer platform general purpose. I lean towards the first two for them as like more likely and what I would be betting on. Um but I don't know if they want to own the interface forever and if that really matters. My sense is that the interface that they built is a big part of their success. Um that they likely don't want to lose that. But you know, meaning like they there is a world where um you can trade on Hyperlid from Robin Hood, right? Um in the next 2 to 3 years very very easily. And that may not, you know, seem like realistic today cuz we're we we're almost like implying that they're heading towards a collision course and

they're competitive. But if they do decide to be, you know, ICE, then yeah, like that Robin Hood routes trades to NY, right? Robin Hood is not an exchange. Um so yeah, that's the bull case is that there's a bunch of different very bullish outcomes for them. And I do think that they're like probably heading on the right path um towards one of the first two. >> Yeah. Um I am keen to move on to the bear case as well because I think um the bear case isn't talked about enough. Uh yeah, so I think in general when I think about the bare case for Hyperlid, they're mainly around risks which I think are like very prevalent still and we've spoken about it a bit on this podcast already, but like because Hyperlid is still centralized to the

most part, there is still some governance risk there which we saw with FDX of course um having centralized control and making the wrong decisions at the wrong time and we've talked about it in this podcast already, you know, kind of internal market making and different markets and how you make people whole and stuff like that. They're all decisions that need to be made at the top. Hyperlid is a small team as well. So like you just have to hope that they're all aligned on the decisions being made and you know they have great bureaucracy within the company. But that for me is like a risk at some stage if something did happen to that regard that could be you know a major downfall for Hyperlid. The other risk I see is also sort of even just smart contract risk. Uh again, a lot of hyperlquid is closed source, which we

haven't actually spoken about in this podcast yet, but something could go wrong with the exchange and people might not know how to solve it or fix it. I just mentioned the hyperlquid team is is very small and maybe they don't know how to fix it themselves and this could be like pretty catastrophic. So, I think you have to take this risk into consideration as well. The next risk is actually on the other side of regulatory is that the regulatory goes the other way and we go into another election and they want to regulate all this stuff and Hyperlid starts doing really well and they're like well actually we want to bring this back to centralized players that we can regulate in a way that we understand and take it back to the old school. So I think that risk still exists today and probably the crypto

space doesn't talk about enough. The fourth risk I'm going to mention is economic risk. So again, we haven't spoken about it, but I think many in the hyperlquid community do speak about it is the token unlock math and I've lost the numbers here, but it's something in the hundreds of millions uh in unlocks uh that will come out at some stage of hyperlquid team and other people that are connected to the foundation etc that will be selling into the market and I think sell pressure of hype itself is something we haven't seen very much of yet or recently that there was some sell pressure at some stage and they actually reduced the amount of tokens they were releasing into the market probably because they're still in a stage growth and they want to continue having positive sentiment. But I think if the community starts becoming unhappy with

these token unlocks and you know being dumped on by the team as other per exchanges have done in the past, I think that could be a negative uh sort of thing that happens to the team and therefore the token. Uh the the next two I think are risks one is competition risk. I actually think this is lower than the other risks I mentioned. I don't think that there's going to be a competitor that pops up that actually does very well against height. You've seen lighter already try and drive fees to zero and still not be able to compete and they're backed by some major players. I think that's a really good signal showing you that like Hyperlid is here to stay. However, I do think Hyperlid has this matching engine which is just the best in the space right now and it's been the best for like a long

time. And there's a question of like does that matching engine become a commodity at some stage even if it's closed source and you can't really work out right now how it works like with any era of AI can another team do it even fast and even better and get even more traders involved and I think that's still something that's very possible to happen in the long term I don't think it's going to happen in the short term but I could see it potentially commoditizing in the long term. So that's my counter but I would say just to finish right now I'm leaning much more bullish in the short to midterm and the long term obviously anything could happen so who knows. >> Yeah. And if you had to like pick uh in the bear case if they'd be disrupted from like an incumbent or like or

discarded by incumbents versus like an upstart. Do you lean one way or the other there? >> I think it's going to be really hard for an incumbent to disrupt Hyperlid. could see a startup, you know, someone like Jeff who's like an amazing trader with a small lean team in the era of AI just come out and pump out a product that's like somehow even better at matching even better UX, maybe a gentic facing. I think that's not out of the question. I it's obviously cool to see incumbents moving in the space like Kraken, etc., but I think it's still uh it's it still feels very cryptonative to me this this kind of product and I feel like for a while that's going to be the case. So maybe longterm they could come in, but shortterm I think it's more startup risk to Hyperlid. I have um I actually forgot

um one of the I think most interesting bull cases, but we'll leave it we'll leave it towards the end. Um on the bare case side of things, I actually I mean one this isn't a long-term bare case, it's a short-term bare case. We were talking about this before the episode. I think the danger uh for Hyperlid the token at the moment is just how overlaid overweight all the liquid funds are. So retail is completely dried up um in terms of flows in crypto. There's just no retail action at all. And what's driving price action right now is the ETFs for the majors and then the liquid funds. [clears throat] And the problem is the liquid funds already own all own hyperlquid. So there's no one left to buy is kind of the the feeling that at least they were going to launch a DAT.

If you remember there was >> Bob Diamond. Did that actually happen? >> There is a there's a hyperl at least one. At least one. Yeah. Um, so yeah, I mean it's possible. Um, right? Like I mean I could see a DAT with an asset that people actually want to own driving net flows. I mean that's definitely happened with Bitcoin and Michael Sailor um and strategy. Um, but for the most part from a positioning standpoint it just feels like everything's overweight. And then that positive reinforcement loop uh Z that you talked about at the start of the episode which I very much buy into that could go into negative for at least a little bit. Um I think um there's also a

way and this is something where I know Z and I end up debating this a good amount but I um you know the the other thing about the I I tend to think so the everything exchange everyone is going after this idea and it's a very crowded very wellunded space with many competent teams that are pursuing this vision um and it's just crowded um I think the Hyperlid team is incredible but the competition is extremely fierce. Um, and I don't know, same way like similar thing with Netflix, right? When you had a bunch of streamers, like Netflix has continued to do well, but you know, it's tough to continue to grow market share when Disney and Paramount and Amazon and Apple and everyone are launching really great content, really great shows. Um,

so I think it's just going to be a very crowded space. Um, one thing that I sometimes struggle with in my own mind is, you know, I imagine the uh I also don't know the hyperlquid team that well, but I just imagine what does that founding team of around 11 people look like? And I know people have the example of Tether here. Um, and in some senses, man, you you you love to just root for and there are so many advantages to being a small and scrappy startup. There are also lots of advantages to I imagine the executive team at Coinbase or Robin Hood and you know you've gone through many more ups and downs and you also have a one big advantage which is you have a really great understanding at that you should right to have gotten

there you have a good understanding of how to allocate capital um and at the end of the day I think this is going to come down to like like yes the technology is important I think it this is especially at the at where exchanges are. I think it really comes down to your ability to um onboard new customers and distribution. So that's I think the the the real advantage here that like the Coinbases and the Robin Hoods have over the hyperlquids is what it seems to me. Um so I think that would be the uh I agree with Xavier list of bare cases like the honestly it's a big risk for kind of all of crypto. Um people aren't really talking about this that much but you know the house is going to go back

to the Dems. Senate. Um, now it looks like it's neck andneck. It's about 50/50 the odds on Poly Market. So, yeah, that could be um that could be challenging as well. But I I tend to my prediction for Hyper I think Hyperlid has firmly made it. Um, they're they're in the echelon of uh projects that I think are just going to be around and serious and very successful for a long time. Um, but I also I I think between unlocks from, you know, existing employees and overweight position of liquid fund managers, I think it has the potential to be a a tougher year for them. Um, that would just be my that would be my guess. But I but I'm 100% in the long-term bull camp as well. Or you could do what we talked

about last week, which is like going and finding the black rocks and the you know um the big the big guys of the world just to to take out like buy secondaries essentially. >> Well one of the interesting things too I mean in HIT four right like one of the things that wasn't really possible is these binary contracts but that will be possible in HIT 4. So they could actually start to win some of the underlying like they could start to catch a piece of the prediction market um stuff as well. Um >> I think they will. I think it's pretty clear that actually we will a big chance of doing that.

>> I have um one bull case maybe to end on that we didn't talk about. But you know it's really funny to see I mean if you watched you listen to all of the um you know the kind of arguments that have come out of the Ethereum ecosystem for why financial institutions are going to choose ETH its validator account. It's credible neutrality all this stuff. You know what they really like is that it's 247. And you know, it occurs to me, I think this will look really obvious in hindsight, that Hyperlid is just 24/7 and you can easily, there's going to be some guy with gray hair saying, you can already trade FX 24/7. It's like, yeah, but not not everyone and it's not as easy. Um, and Hyperlid being 247 from the get-go. I mean, if you literally

just think about it, there's seven days a week to generate trading revenue. If you're open on the weekends, I mean, that's a, you know, 28 30% increase, right? Like in your in your it's it's not it's not a small thing. So, I think that is um I think that's actually is going to end up as small and simple as that is, I think the 247 nature from day one, it's going to take the incumbents forever to >> unlock compete with that. and just getting like the HFT like power users of CME on the weekdays to trade out trade on hyperl on the weekends like it's a massive chunk of revenue and that itself could be like what it all it needs for

the next year. >> I think that could be all it needs. Um it's a huge part like we're like the 247 thing is just so I mean even I I was um you know I was reading this thread over the weekend on you know what's under the hood of you know some I I think so these these crypto banks silvergate and signature had these you know theoretically 247 like what was it really or is this kind of USDC it was like a fancy rapper on top of USDC and I think that's just a huge part of the killer feature of you I I had an interesting conversation about a year ago with a really large uh delta neutral fund manager was kind of asking him why do people keep money in you know no

shade on a but a at this time is yielding like 3% you know below treasury so it's like why why does anyone do that right like why do you lend on a if you could get like you're overthinking it um you know for them you know if they're moving a bunch of money around and they're trading 24/7 like having your money tied up in treasuries over the weekend where you can't move it is its own type of risk and actually the risk outweighs one the revenue that you can generate over the weekend but two if your money's locked up on a bank and you need to top up your collateral you can't do it that's its own type of risk and so I think this is one of those things maybe to conclude like yeah hyperlquid is the um first of all the result of

excellent decision-m great timing um kind of the definition of second or even third mover advantage and having seen what worked and what didn't work. Um, and kind of the culmination of the stuff that the market has proven that it cares about and likes about crypto 24/7 to in some areas more permissionless. Um, but some areas are just permissioned and managed and that's what the market wants. Um, and it just took us a while to figure that out. So, >> yeah, they nailed like the revealed preferences of, you know, the market that they went after.

It hasn't changed. It's not like anybody's like, "Oh, can we get more validators in there?" Or like, "Can they get some more subdows to like decentralize operation?" No, who gives a [ __ ] So, unless what Z said ends up being true, >> can we at least do some kind of prediction here for like uh like where do we think, you know, we're having this podcast a year from now, how are things going to fair with Hyperlid from the standpoint of adoption? um not financial advice, do your own research, you know, like if you had to guess where things end up. Um >> I mean it's for me it's very clear it's going to keep growing in the next 12 months at least. I don't know about 36 48 months, but I'm also not a trader, but if I had to look at the macro of the

setup, I think it's well set up to grow the next 12 months and it's already been proven to be growing right now even in the face of more competition. So I'm I'm quite bullish on growth there for the next 12 months. >> Flat [laughter] That's really brave miles and then it'll end up back up at this next year. Uh or it'll go up and it'll end up back. I I really have no idea in like three or four years. I think I can tell you like what will make or break you know success here and that's what's important. But um yeah, I think I could see they are doing tons of buybacks. So it's not going to go down that much unless there's a black spot like you said. Same.

I have a um my prediction would be I think actually hyperlquid does well for the first half of the year continues to outperform um and its fundamentals and metrics continue to do well in the last half of the year but price will come under pressure um and this is literally just the inescapable dynamic of I think in bare markets the liquid funds that set price hide out in assets that you can super easily justify um but then when risk comes back on, you know, maybe there's a little gaming token that's looking good and maybe there's a little like what and I think you just move out the curve. Um, and >> hang flat. [laughter]

>> I think >> No, I think it'll I think it'll be up, but I think I I would reverse your order. I don't think it goes down then up. I think it goes up and then >> um flat and frustrates and confuses people >> because that's the story of crypto, right? It's like the people are often confused about why is the price moving now and it tends to way precede fundamentals and like you look at there are many crypto businesses out there that the fundamentals are improving but the prices aren't and you have to remember like the token dynamics um and price are sometimes not related or loosely correlated or there are different um dynamics acting on it than just like are the fundamentals improving. I mean, my counter to that, Mike, would be if you're a liquid fund

and Hyperlquid has been performing the best in your portfolio and then you liquidate that to move into memecoins or something, how do you reason about that to LPS? And then when you start performing badly on the more riskier assets, I think they're always going to want to hold or they're always going to want hype in their portfolio because it's a kind of base case of like if they want to take more risk, hyperlquid is that one asset they can rely on and count on. And even VC funds in the past used to have liquid sleeves and back in the day they might be buying Bitcoin or Salana. I think if a VC fund went live today like they'd be buying Hyperlquid as that like kind of very very uh solid asset they'll have in their portfolio that would keep going up. And I think liquid funds are the same where like I

just think it makes sense even if they take more risk like a VC does in startups like it's that one asset that everyone's going to hold. So I take the counter. I think it's still going to be okay. But let's see. could be proven wrong. >> I'm not saying it won't be okay. I think just pattern matching to, you know, what I've I think it's, you know, I mean, it's arguably the best performing protocol or like, you know, kind of DEX, DeFi type product out there right now. >> Another another point I'll actually make because I think it's actually interesting to talk about. If you look at like the universe of investable assets right now in crypto like for even mega VC funds if you think about it like if you raise 400 million where do you

put that in startups right now? There's not enough projects to put the money. So like again another bull for hype per liquid this year would be mega VC funds even andor liquid funds continuing to plow money into this because it's already working and and the universe of investable assets is somewhat shrinking in in real time. So maybe actually we're underestimating this happening in a space in the next 12 18 months if people look for a place to put it but can't find anything. You know, I was speak I was speaking to a growth equity investor this week who actually, you know, is mentioning that even though there's a bare phrase or bare phase that we're going through right now, valuations for some of the hot private markets haven't really come down or um rationalized that much and it's a question of are they actually going to and that fit I mean I

think there's been so much just like capital fracturing. I mean even on the macro side like AI is mogging crypto at the moment, right? Like we're just not winning hearts and minds. Um and uh I think crypto is absolutely going through gonna go through a period of consolidation here, right? Like you know this like when people would say on the DAT side of things we have a capital access problem. We don't. We have an asset quality problem and I think that you just need a certain amount of time. So yeah, actually Z, I'm externally processing, but I can see cons I think consolidation is going to happen and yeah, I could see hype um hyperlquid attracting and winning a bunch of that those consolidating flows.

I could see it. All right, guys. Well, audience, we'll leave it up uh to you. Maybe we'll talk about this live again. D week and a half. Um hope to see you all there. Um, if you are a procrastinator like me, seriously, we're ticket prices are going up like 300 bucks on um, after Friday. Um, and we'll probably sell out by like Monday or Tuesday latest. So, get your tickets, come see uh, the three of us and it'll be a ton of fun. Kane, guys, excited. Bye, guys. See you.