Haseeb Qureshi on Balaji's Advice, Hyperliquid, and SOL vs. Robinhood

Transcript

That is just a wild thought that that Bitcoin would eventually saturate the debt market. It's not a sprint. They're not trying to win any one cycle. They're trying to win the long game. And you've seen their very regulation first approach, constantly taking their customers and their regulators into account when they're thinking about how to build their business. Uh not leaning into every single narrative. Do you think it's possible for companies to go public and also launch tokens? Ultimately, how do you think these two paths play out? 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 guests, the brightest minds at the tip of innovation. Our goal is to help spread the collective knowledge of

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Learn more at magicnew and onx. We've got a real not theoretical, we've got a real with us coming up next. Here we go. We had some fun questions for him. I think I think this should be a a good segment. I don't I don't really know how he's going to respond to these. So, let's get him up. Um, these should be these should be interesting. Sees in the building the show. Thanks for having me. Where are you calling from today, man? Uh, I'm at home here on the West Coast. Uh, but I'm headed to London tonight. Sweet, man. Always on the move. Rob and I were at a research day today in New York for a couple hours. Watched some good talks um on the infra side. There's a bunch of just you know, technical people there. It's pretty good. Very good. Very good. It's a pleasure to have

you on. We uh you know, we've we've only been doing a couple of these shows and I think uh you've got a unique insight and a unique perspective on the industry. So, I'm really really stoked to get into it. Um and you want to kick us off here with the uh the first question for Hid? Yeah. I mean, so we were just talking about Nakamoto raising 710 million, Jack Maler's buying a ton of Bitcoin, and obviously Michael Sailor. And so our question, our first spicy question for you is why would you run Dragonfly and do all the work of doing VC and all these due diligence and all this stuff when you could just collect fees on Bitcoin and run and run like a a Bitcoin strategy company? Yeah. I look I'll tell you every cycle it looks like there's

somebody who's making money way easier than you are and it it's it's always temporarily true and in the long run it's not true is that you know over over a long enough period of time I mean the thing about venture is that venture more or less it always works in that there are always founders building something new that that is worthy of investment and that is going to do well um it's not necessarily in the same sector all the time but it's it's something that always works because there's always need for capital there's always need for capital markets uh But, you know, whether it's launching an NFT collection or whether it's, you know, being the new uh the new memecoin platform or whether it's, you know, doing these micro strategy type type knockoffs, like it's going to work until it doesn't, you know, where the

point at which these things start trading at NAV or at a discount to NAV. Obviously, this this playbook is going to stop working and these things can't work forever, right? people will issue enough debt and they will keep doing this over and over and over again until all these things end up compressing down to NAV except for maybe one, right? It may well be that Micro Strategy is the only one that gets away with it. But like we saw this before with GBTC, you know, it is not in principle all that different of a mechanism. As long as these things trade at a premium, people will still do it until they push the premium down below one. Now, quick question for you on on this one and I think Micro Strategy and uh 21 Capital and Nakamoto the these sort of operate a little bit differently. Um so I I think

what we were all seeing on GBTC was the opportunity for redemptions, right? and and that was sort of what compressed uh the discount or the premium because then you could freely in go in and out when you're looking at something like a 21 capital and and you see the priority around Bitcoin per share suppose they do implement something like redemptions do you think that is a positive or negative mechanism uh for the survival of of this company long term look people obviously will not implement redemptions and for something you know for for something like GBTC Obviously, the marginal uh buyer of GBTC could not redeem. Uh and that was part of the mechanism behind the trust is that you can you can create, but there's there's no actual

mechanism to redeem. Uh this it's it's a one-way street where Bitcoin goes in and no Bitcoin comes out unless there's a liquidation, right? If they get margin called and they have to sell the assets in order to pay their debts, that is the only situation in which Bitcoin exits that that vehicle. Um so now that being said, I'm not I'm not implying that this thing is is going to do what GBTC did. It's a very different object and it acquires capital in a very different kind of way than the way the GBTC was, right? GBTC did not issue debt. Uh these these uh it's it's financial engineering of a very different kind and clearly the kind of leverage that Michael Sailor is able to get and that all these vehicles are able to get is better than the kind of leverage you could get on your own

going on Binance and you know going levered long on a per, right? You're going to get blown up really fast if you try to get levered on Bitcoin yourself. But the corporate debt market just operates very differently than the the kind of uh short-term leverage you might get uh in a normal crypto exchange. So that's why these things work the way they work is that there's in a way a sort of leverage arbitrage that's taking place here. Um but again the the fundamental laws of economic gravity have not been suspended. As long as these things trade above NAV, people will keep doing this over and over again until eventually it stops. Like you will eventually saturate the debt market, right? Period. or or you'll just buy so much Bitcoin that there's no one left to that is just that is just a wild thought that that Bitcoin would eventually

saturate the debt market like like coming from where we've came from that is just wow you know that's that's something but but at a certain point you hit a wall right depends on you don't know which wall you're going to hit first but you're going to hit one of the walls. Yeah. Yeah. Well Bri Brian Armstrong said everyone everyone in their mother will be buying Bitcoin. um they're going to be buying it in their 401k. They're going to have exposure. Coinbase just joined the S&P 500. What do you think Brian Armstrong understands about building in crypto that most founders still don't understand? I mean, it's exactly what I just said, which is building for the long term. You know, Coinbase now has been around what is it 12 12 years? Uh they this is a marathon to them. This is not a sprint. They're

not trying to win any one cycle. They're trying to win the long game. And you've seen their very regulation first approach, constantly taking their customers and their regulators into account when they're thinking about how to build their business. Uh not leaning into every single narrative, but instead thinking about the long arc of okay, how do we become the venue for ETFs? How do we partner with with Black Rockck and all these wealth managers and make this the gateway for regulated crypto within the US? That has been their strategy. Now they're, you know, what $60 billion business. absolutely incredible uh outcome for everybody who's been building this thing. And the the thing that I think many people in crypto could take away from Coinbase, people like to dunk on Coinbase. Obviously, they just had a black eye today with the announcement of this um this this big

hack and ransom that that uh they were responding to this morning, which I don't know if you guys have already spoken about it, but look, they've they've had their shares of stumbles. Happens all the time. But at the end of the day, the thing that everybody knows about Coinbase is that their heart is in the right place. And they're constantly pushing the vanguard for the industry for the long term. Whether it was fighting the SEC, whether it was pushing Black Rockck and becoming the the clearing venue for all these ETFs like that, you can only really get that from being extremely long-term. And there's so many teams in crypto that don't really have this DNA. And Coinbase does.

And and it's just so rare to see. Yeah, I've just been bull posting Coinbase on here as my uh one and only stock holding which is uh pretty den of people. That's just that's just how I am. So on the on the note of these kind of uh institutional consumerf facing applications, Robin Hood's been doing a lot of like teasing and they actually just acquired Wonderfy. Um, so it kind of begs the question for me about distribution and and the way this like opinionated infrastructs and this kind of verticalization of owning the stack is going to work and play out in your opinion. So from your perspective, is it easier for Robin Hood to build Salana or Salana to build Robin Hood? Like who's going to eat whose lunch first in a

hypothetical like this? That's an interesting way to frame the question. Um, look, the reality is that it's really hard for both of them to build each other, right? They're they're just completely different animals. Building a centralized exchange, like the thing that you you have to respect when you look at Coinbase, right? Coinbase is not necessarily the best product. It's not necessarily the fastest exchange. You know, that people were clowning on them for they recently launched 4hour candles, I think, and people like you didn't have 4-hour candles. You're a 13-year-old company with an exchange and you don't have 4-hour candles. Um, but so the reality, look, it's it's it's not necessarily the best product, but it's the most trusted product. And that is the thing that you're ultimately competing on when you're building an exchange is that it's not about having

more features than the next guy. It's about having the most robust overall platform. And in the same way, you know, you can you can probably get a Kraken or Coinbase to go build an L1, but will the L1 be trusted? Will it be neutral? Will it be perceived as being the same kind of bizarre that everybody can bring their wares to and compete on an equal playing field? Not necessarily, right? That's why you see, you know, Coinbase has their L2 base. Obviously, it's been very successful, but it's nowhere near the scale of Salana or an Ethereum because of the fact that it's not neutral, right? It's a it's a it's a corporate uh L2. I think these are great. Kraken has its own with with Inc., but uh that that's a far cry from what we're trying to build with this globally neutral substrate, which is the

layer ones themselves, right? That's why Bass and Inc. are built on Ethereum, right? They they settle to another chain that actually is credibly neutral. But if it was built by a corporation, of course, it wouldn't be and that's not the role they're trying to play. Yeah. Yeah. Absolutely. Ultimately, it's different strokes for different folks. I I think it's beneficial for the industry as a whole that we get this bifurcation. Everyone is able to fit a different gap in the market and that's why why these guys are are valued what they are. Um, I see one thing that we've been talking about going back and forth a little bit as we're seeing more companies launch in the public markets. Galaxy with their IPO is due to come out tomorrow on the NASDAQ. We're we're kind of going back and forth and on the fence. Do we think

that there's going to be tokens and equities available for companies? Will will companies that go public also have tokens or is this a one-way one-way street? What is going to determine what path these companies take? Whether to go the the equity path, the public path, or they go the token path. Do you think it's possible for companies to go public and also launch tokens? Ultimately, how do you think these two paths play out? So, look, that's ultimately a regulatory question and that regulatory question is going to be settled by this SEC or CFTC probably come the market market structure bill that that's uh currently working its way through Congress. So you can imagine a world where uh we have

well- definfined definitions of what is a security and what is a commodity and if you do there's nothing that stops a company that has stock from issuing a token um as long as that token falls within the legal bounds. But one one thing is is very clear if you're a public company you're not just going to take a guess. You're not going to be like hey I think it's probably fine to launch this thing because you know if you get delisted from the NASDAQ or you get slapped down by the SEC and you say hey you can no longer be a public company. that is just such an absolute disaster. Nobody's going to take that risk, especially when you know in in such a bulliant capital markets that are already rewarding you and giving you liquidity, right? It's possible that someday that you see base launch a layer

2 token. It's possible someday that you see um you know, unis swap, unis swap labs go public even while unis swap protocol is itself a decentralized protocol. None of these things are incompatible with each other. Same thing with etherealize, right? Etherealize is company that's built on top of Ethereum. they could potentially go public even when Ethereum itself has uh has of course you know decentralized token. So the thing that we ultimately need for this is regulatory clarity. Uh but we've already seen you know Micro Strategy is basically a big pile of Bitcoin that's public on the NASDAQ. Um we've we've yet to see other uh companies do this for other assets. I guess technically somebody's doing it with Trump token but uh you know I guess I guess memecoins are definitely not securities so I guess that's technically kosher. Um but

getting this kind of full stack where you have an actual token then of course the question which you know many people have raised about unis swap which is okay how do the fees break down right in in crypto very often people kind of just close their eyes and buy the thing based on the mimemetic value so it's like oh you know this token has this name on it therefore I'll buy it um in the stock market that's not how it works right so if you see that well you know uh Coinbase is going to give half the revenues to this token and half the revenues to the stock well the stock is going to plummet by half in like 10 you know that that in crypto we don't necessarily see that level of market efficiency. Um but it will get reflected on the other side of the ledger if you

see a company have both a stock and a token and and vice versa, right? You you have unis swap that launches uh or goes public and all of a sudden they say look we're going to be directing our revenue right not to the token but we're going to be directing it to the stakeholders and pay a dividend that you would anticipate that their their token would drop to half value and that value would go to the stock uh in the form of that that dividend. I have a quick followup here and then we'll we'll move on to our next one, which is that if if you were speaking to Congress and you were advising Congress on this market structure bill, what would you say are the two to three things to keep in mind if Congress is working this through and they're writing the laws? What should

they include in the market structure bill so that we recognize both the public markets and the the the tokenized markets and and have a market structure that works for both? Yeah, candidly, I think actually the market structure bill is pretty good. I think it's a big improvement over Fit 21. Could you break it break it down for us into the the main component here? Oh, I'm not going to be able to do a good job with that. Um, so there's a so there they they originally had this concept of a decentralization test. Uh, they've now replaced it with a maturity test. Uh, there there are a bunch of thresholds that are in there now. So obviously they they divide up uh what the SEC and the CFTC are responsible for. Uh there's a notion of graduating into becoming a mature blockchain before you're a mature

blockchain. There are certain limitations on what you can do, what you can sell, the the sort of ownership thresholds, and you have a certain amount of time. I think those numbers are still being baked uh as the the bill itself is being debated about when a blockchain quote unquote matures and then once it matures it gets treated more like a commodity and part of maturing is that okay you're decentralized you don't have too much centralized ownership or too much uh collective ownership. I think one of the big problems right now with the bill is there's a lot of con there's there's a lot of focus on ownership thresholds. Um, so there's this idea like, oh, if you own uh more than 1% of the token or more than 10% of the token, then more than 20% of the token, you're at this versus this versus this. And the reality

is that crypto is a global market, right? And so, you know, if you say that, well, somebody who owns 10% of the token is not allowed to do X, how is that going to be policed practically, right? So, so many of the people who are participants in these networks are not in the US. They're not subject to US jurisdiction. So, some Chinese guy owns 10% of a token and he's like dumping it on day one. uh somebody in you know let's say there's some there's some uh somebody's on hyperlquid somebody's on Binance how exactly is the US going to regulate these laws getting enforced on these other domains so I think there's there's a little bit of um kind of polyianishness about this this bill in certain parts where it assumes that there is some sort of eye of Saurin that can look over what's happening in all

these crypto markets which is just not practical right especially when a lot of these things are trading on dexes so uh that that I think is one of the biggest weaknesses of the bill but overall I think the the bill is actually a real um you can tell there's been a lot more sophistication in Congress about the real problems in the digital asset industry. Now, all that being said, this is the version of the bill that they got after talking to a lot of insiders, right? After talking to the trade organizations and the exchanges and the VCs and all the other people who are making their voices known on the Hill, um it's yet to get chopped up and kind of, you know, compromised. And it's only once that happens that we're going to actually get a glimpse of what the real bill is going to look like. So, this is

the best the bill is ever going to be. It's only getting worse from here. And so, I think you should sort of reserve your judgment until you see the thing that's actually going to be up for vote. Uh, that's the time when it's, you know, you want to start making noises and really calling out what needs to be improved in the bill. But right now, honestly, if this thing as it exists today got passed, I think it's it's a really big improvement for the status quo and significantly better than FIT 21. Yeah. I mean, we've been waiting for this for so long, right? Just like some clarity. That was the big thing about Gendler's campaign the last four, you know, six years or whatever it's been is that it teams just had no idea what to do, like what they could or couldn't do.

It was just kind of like shooting in the dark. So something like this provides a bit more of a framework for, you know, dos don'ts and best practices. And I think it just it's going to just add to the acceleration of of institutional adoption. On the kind of opposite side of this realm, we've got very interesting dynamic happening on chain right now with Hyperlid. Um, Hyperlquid's open interest has bumped up to, I think, over six bill. I think recently hit 6.7 bill. Um, my question to you, Hashe, is if you're CZ sitting on your billions and your 10 million Twitter followers, you were watching Hyperlid hit 6, seven, 8 billion in open interest, what would you do about it?

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It's a good question. Um, I mean, you have to assume that all the centralized exchanges are uh doing everything they can right now to fight back against Hyperlid because, you know, in absolute terms, Hyperlid is still pretty small on the global stage, right? If you look at the the biggest exchange in the world, Hyperlid is still, you know, um I think they're in the top 10, but they're not that far in the top 10. Uh so the the answer is probably a combination of multiple things. one, my guess is that there's a lot of conversations happening behind closed doors to regulators about Hyperlid, especially now that Hyperl is going to end up in the news more and more. Uh, not just as, oh, it's a big exchange, but also it's the natural place to go because it's totally decentralized for market manipulation,

right? For for sending hacked funds. Um, you know, all the stuff that people are whispering about, oh, North Korea was preparing to use Hyperlid. The bigger Hyperlid gets, the more this stuff is going to happen, and that's naturally going to draw a lot more attention and eye towards Hyperlid. uh compared to what it's it's been standing historically. When you're small, you can get away with being like, "Ah, you know, we're kind of just doing what we're doing." The same thing was true with Tornado. Uh tornado was more or less uh operating underneath uh most people's attention until North Korea noticed and after the Ronin hack, tornado cash all of a sudden became this very central story for for many people's imaginations when previously they never heard of it.

Um I'd expect you'll probably start to see people regulators around the world sort of to take notice of Hyperlid. Uh now that being said, Hyperlquid their job in order to get past this is to decentralize aggressively and you know this is one of the most common criticisms I've seen of Hyperlid is that you know their decentralization is obviously incomplete. The team is still very very actively iterating and developing stuff and you need that in order to be you know at the end of the day Hyperl is still a startup and they have a lot of work to do to compete with centralized exchanges on all of their features and all the dimensions on which they they they should. Um, the other thing of course that that you might be worried about for hyper liquid is that Coinbase is making a lot of progress on getting PERS approved by the CFTC for

the US. If you start to see PERPS in the US, that is a lot of the demand for Hyperlid is basically venues or sorry countries where they don't have access to trading on PERS, right? You can't get on Binance, you can't get on by bit if you're if you're a US citizen, but you can trade on Hyperlid. So this kind of regulatory arbitrage may go away not because of regulation against hyperlquid but the opposite of the regulation opening up to US customers. So now that being said, you know, again, one of Hyperliquid's benefits is the fact that it has very good liquidity and it has relatively low fees. If you see pers launched by Coinbase in the US, I guarantee you it's going to be a high fee product. You know, that's that's kind of Coinbase's MMO is that they they they're able to demand very very high

fees relative to most their other competitors. Uh so that that may be the saving grace for Hyperlid. Uh but the game is just starting right now. Hyperl is a player and once you're a player, all the weapons come out. So uh I I think they're a very strong team. They've executed super well. Uh but you you nobody here has the mandate of heaven. You have to fight every single day in in the exchange market because it's extremely competitive. Yeah, I appreciate that. It seems that Coinbase may be a bit more of a potential threat than Binance and the other exchanges. But as you said, I'm sure there's a lot of things happening behind closed doors. Competition is fierce, especially in I mean with market makers with with the uh fee generation from these uh per exchanges from the token performance. I mean, Binance

hasn't listed Hype. Binance hasn't listed Fartcoin. Hypquiquid just listed Fcoin. None of these centralized exchanges will list Hype except for coin and a couple others. So very interesting times there on Hyperlid. Last one for you, Hib. Um I know you spent quite a bit of time with um Bellagi back in the day doing kind of like mentorship stuff and working together. What was one important thing that you learned from him which you still think about today? One important thing that I learned from him.

Um, you know, honestly, one of the most pivotal pieces of advice that he gave me that led to me building what I'm building today at Dragonfly, uh, was, you know, at at the time before I came into Dragonfly, uh, I was really uncertain what I wanted to do. I just left another fund that was the fund run by Naval called Metable Capital. And I was a free agent. Was looking around trying to see, hey, should I should I join something? Should I start something? I wasn't really sure. Um, and I I really felt like maybe I should join one of these bigger platforms, uh, like Polychain or A6Z.

You know, this is this is way back in the day, so they were they were not nearly as big as they are today. Um, and, uh, the thing that Bology told me was that the number one thing you should optimize for is agency. Go to the place, do the thing that's going to give you the most agency such that you can actually make the decision yourself of whether or not to write the check of deciding how to build the brand your own. And uh it may be hard, you know, when we first started Dragonfly, we were nobodyies. Like actually nobody knew who the hell we were. I remember the first deal I ever did was the seed round of Matter Labs uh which is the company behind ZKYNC. And uh that that seed round it was a very competitive round and uh I people only

knew me because I'd written some blog posts. You know, I was kind of one of these guys who just sort of mouththing off on Twitter writing think pieces. And um at that time uh literally when I when I got on the on a call with Alex uh the founder of Matter Labs, he was like, "I've never heard of Dragonfly. I don't know who the hell you guys are, but I saw your post on Twitter. I thought you're pretty smart. Here's a little you know, here's here's 100K for you guys." And that was that was our first ever deal. Um so going on that journey of building Dragonfly into what it is today, I wouldn't be here doing what I am doing now if it wasn't for that advice from Bology. And it's it's it's a piece of advice I reflect to to all the the young people who ask me for advice

on what they should do in their career, which is optimize for agency. Whoever's going to give you the most responsibility, go there. Doesn't matter how much money it is, doesn't matter how much prestige it is, like ultimately that's the best way to bet on yourself. Yeah, exactly. And [ __ ] up and make mistakes and then learn from them and take risks. 100%. Thanks for coming on, man. Always a pleasure to have you on. safe travels to London and hope you enjoyed the new segment. Ciao.