How Hyperliquid Succeeded by Going Against Crypto's Ideology First Approach: Uneasy Money

Transcript

Hey everyone, I'm Kane and welcome to Uneasy Money because what happens on chain never stays on chain. I'm here with my co-host Taylor Monahan, security expert and Luca Nets, Pudgy Penguins expert. We are going to dive into everything in a minute, but one quick thing before we start. Nothing you hear on uneasy money is financial advice. We're just three builders talking about what's happening on chain and we want you to always do your own research before aping it. You can find all our disclosures at unchainedcrypto.com/unemoney. And before we begin, here is a word from the sponsors that make the show possible.

>> The energy network is an intelligent decentralized grid that coordinates smart devices to balance supply and demand. Energy Dollar is the native token of the network from one of Europe's fastest growing energy startups. Follow at Fuse Energy on X to find out more. Multi-chain Advisors is an emerging technology growth firm that has helped create 50 plus billion dollars in enterprise value for 80 plus clients over the past four years. They're the partner to help navigate markets, build real traction today at multi-chainadv.com.

>> All right. Hey everyone. Um our first uh topic this week is Hyperlid um is morphing into the world's casino. Um they have I think had three or four hip um upgrades over the last like six months maybe um that have been like edging towards this adding um you know different um asset classes, different uh different things like commodities etc. Um, and obviously with uh all of the Iran stuff, um, I think we've seen, you know, a ton of interest in oil prices, people wanting to speculate on oil prices. Um, and so yeah, uh, it it's now like this 247 venue for global macro

trading, um, which is pretty crazy. So they have an oil linked perpetual, um, which is CLUSDC, um, and it did over 1.2 2 billion in daily volume uh this week, which is pretty wild. Um so uh the the OI the open interest on the contract is almost $200 million. Um and uh there were about $75 million in liquidations presumably shorters, which we don't care about, so that's fine. Um so um so yeah the uh the I think the interesting thing about I mean there's a few interesting things about this like people have including me tried to launch commodities synthetics

launched uh you know uh oil uh commodity back in like 2021 or something um with chain link um and it was first of all max pain to get it launched because the oracles were not available. Chainlink had like a whole Oracle system that was set up and then the upstream provider of the data rugged them at the last minute and was like no you can't put oil on chain like oil like it's really crazy to think that like that was like a bit of a controversial thing like now we put shares on the blockchain but um but at the time it was like no no no sorry like that's our proprietary data you can't just like give it to some cracked DeFi project to to trade. Um so you know in the last six years I guess the world has

evolved um quite a bit and it I think you know the most interesting thing to me about this I guess is that like it really just comes down to having a highly liquid venue. If you have a really liquid venue everything suddenly works. Things that people have tried that didn't work before um all of a sudden work. like we could probably try NFT per again and it might work because you just need that shelling point of liquidity in a single venue and and things that seemed not viable are now magically viable. So, I don't know, Pangu NFT per I'm writing it down. NFT per [clears throat and laughter] >> I'm not going to lie. I actually don't I

don't I don't think that's a bad idea. >> Yeah. I mean like the perpication of everything right like you know if we want to bring NFTTS back we need some demand for the underlying and you know if you have a highly liquid per on it the I think you know without going down too big of a rabbit hole when people have tried this in the past the challenge is what is the price of an NFT you know because they're not fungeible because everyone is unique um you know the floor price tends to be somewhat fungeible right like you know you can say a floor pen U is worth, I don't know, whatever it's worth right now. Uh three three to five each or something like that. Um and then there's like special ones that are worth more, but

really what you care about is like the baseline thing, right? Um so yeah. Uh I don't know. What do you guys What do you guys think about the the whole uh oil hype? >> I think it is absolutely fascinating. I think it is really the future of crypto being displayed and honestly and frankly a masterclass by these guys how it's all transpiring like you said Kane like we've had these ideas they've been around but it's just working there.

>> Um is it is it is it luck? Is it a culmination? You know who knows where we derive it but it's phenomenal. And I'm going to be frank, when I'm looking at the crypto landscape, it's just really hard to imagine a world where Hyperlid isn't a top five coin. Um, so kudos to those guys and keep on trucking on. And in a world where I think everything's focused on AI, you know, shout out to them for, you know, holding some relevancy at least for the crypto side, at least in the short term. But it it it's the future. I think everything's going to be perped. I think everything will be tokenized. I think you will see a world where TRDFI and tokens converge.

Uh, and I think Hyperl is going to be at the center of it. So, at this point, it's train that's not stopping. So, kudos to those guys and gals. >> Yeah. >> Sorry. Go. >> Yeah. I was just going to say I think it's interesting that this very centralized team, no offense hyperlquid folks, but really like since day one, right, they have been, it's a small team. Um, they work together in real life if you guys don't know, like they have an office that they go to and they work together. Um, and obviously a lot of the choices that they've made early on have been more around shipping and getting it right rather than like

the ideals the of yester year. Um, but I think it's really interesting that they've actually then kind of pushed out these new markets that are permissionless, right? Like actually permissionless. And that has then successfully done what everyone wants to do, which is empowered a whole bunch of other people to create new markets, right, for whatever the the current thing is. Um, and I just think that that's that's quite interesting because if you go back in time and you say, "Hey, could like a small team of people uh build like a sort of centralized thing, mostly centralized thing and

then, you know, within a year push out decentralized permissionless like markets and be massively successful." I think the crypto culture, you know, five years ago, three years ago even. >> Yeah. I I think there's two things. One is, you know, talking about all the things that Hyperlid is doing that people have tried before that haven't worked. One of them is permissionless markets. Permissionless markets never worked >> in the past. Like many many people tried permissionless markets. Um you know, anyone can turn up and make their own uh you know prediction market etc. But like at the end of the day there is some critical mass of liquidity that you need

liquidity attention traders whatever um beneath which nothing works and beyond which it seems like almost everything works right um and you know hyperl's on the other side of that um I think Mike uh if um you know what's the best explanation for why Hyperlid uh succeeded where sorry Tay you're um doing your >> oh sorry >> crazy typing typewriter system um so uh so hyperlquid like what's the reason why hyperlid succeeded where um basically all of the other purpose dexes failed right like what is the underlying reason and I think there is no one reason um

but there are you know this is something I've thought about quite a bit um and and you know I think there are like several proximate causes that are like really if you take them away it doesn't work right um and and I think the most critical of all of them is that they made the right decisions for the best liquidity like they were optimizing for an outcome without you know uh without trying to like do this ideological decentralized thing and you know the interesting thing about it is they chose chose an L1 to do this, right? Like by choosing an L1, by saying, "Okay, we're going to build our own chain to do this

thing that will allow us to have control over throughput and, you know, uh all of the things that we need." Um, that allowed them to then build an order book, which was the thing that was missing. you know, most of the dexes were like these weird hybrid AMM systems with like just like janky components to them. Um, that prevented liquidity from really like aggregating there. Um, and and so I think the fact that they started off with this, you know, architecture that allowed them to build a DEX that was genuinely competitive instead of trying to reinvent how uh a a perp exchange should work, they said, we'll just replicate a perp exchange but on an L1. And that like as soon as they

did that, then everything else kind of unlocks from there. There's a bunch of other things that then work um because you have the capability to handle the throughput and and whatever. So yeah, I think you know when when we look back on you know Hyperlid's what like 3 years old or something like that, right? Like when we look back in another 3 years time uh you know I I think we will see that Hyperlid kind of cross some liquidity chasm where uh it's it's pretty unassalable which doesn't mean that there's not opportunity for other players. you know, there there are 20 large centralized exchanges that have a ton of liquidity, ton of users, etc. Um, but in in terms of like per dexes, I think it's going to be hard to take

Harper Liquid down from here. >> Yeah, I I agree 100%. Uh, they they're killing it and uh yeah, we'll see what comes next. Is it zero sum you think or you think this is like can be perplexes can be like centralized exchanges where there are a couple that are incredibly successful. I think that you know we saw the the success of lighter um you know with a different architecture but like a similar principled approach right like like product principle not not decentralization principled right um you know we are going to optimize for a thing that has the best you know but I would argue that lighter probably still got a little bit caught up in

the like you know weird Ethereum decentralization stuff like around, you know, like we're going to use like zero knowledge proofs for this and it's going to be all provable and it's like as soon as you start add it's hard enough. It is very hard to build a uh good protocol. >> When you start adding extra magical requirements that are like orthogonal to the the underlying aim, you're just like making your life way harder than it needs to be.

>> Yeah. Yeah. Exactly. And I think it's um I think it's a testament to like their their choices and their focus, right? And I think that we're going to see this a lot more in the coming years. Uh we're going to talk about this later on in the show, but like we're we've been talking about this sort of overhaul around Dows and like where is the value? Is this hindering people from building that kind of stuff. Um, and I think that, yeah, I think crypto is growing up a bit in the sense that you have to focus, right? You have to like set those goals and those goals have to be um, have to revolve around your success, not around like some fancy

technology, some fancy culture, some fancy, you know, whatever it may be. Um and I think in this case the most interesting thing is that the like the permissionless markets are actually part of like their goal, right? Like their goal is like to build like the best, the fastest, the most used, the highest liquidity. Um obviously like permissionless markets unlock a whole new layer of of markets, right? Um and but but that sort of like that drive comes from that singular goal that they've had since day one rather than some philosophical ideological thing

that they wanted to do. And I think that that is another like thing that um we're going to see more successful teams do. Um and it doesn't necessarily mean that we're going to like lose the ideals or lose the the value of the permissionless tag. It just means that the permissionlessness is going to come from the value rather than from like some uh enforced culture or ideals or whatever it may be. >> Yeah. I'm remember coming into crypto and I remember like my day one it felt like you had to do two things which was like accomplish the function of the business that you were trying to

accomplish and then also pander to the ideology that >> [laughter] >> everyone had and if you if you actually the unfortunate part is they they were most of the time paradoxical they meant opposite things and you know like like in our situation like you know imagine if everything that we if I got caught in that loop we would have unequivocally failed. I'm glad that crypto has matured past this past this point where I think people are starting to accept that and I and I've said this about Ethereum.

There's like there's two different blockchains there and there's two different functions I think like one is to be you know important for the world and important for humanity and those builds are different than builds that are supposed to be performant and make money and that you know can scale into really big organizations like you know those two ideologies are functionally different and it seems like we're going from this you know cipher funk ideology which again got us here and I think is very important for just you know remove the money and the success right like that's just an important fundamental you know right that I think humans should have that I still think is important but

in a world where you're going to compete with AI businesses and you know huge financial incumbents like you do have to play their game to a certain extent and I feel like we're crossing into this new era where it's okay to you know, build a a first principles business in crypto and not try to, you know, save the world while while you're doing it. >> Yeah. >> I think Yeah. Like there's there's two issues here, right? Like one is that the audience the you know, we weren't completely [ __ ] like the audience that we had at that time.

>> Yes. >> That we were building for it was like a giant circle jerk of people that were like decentralization and communism and like all of these things, right? And so, you know, if you didn't do that, you had no audience. Like genuinely, like if you weren't like decentralization first, there was no audience for you. Now, it didn't help that we also had all drunk the Kool-Aid because we're all in that audience. So it was this bubble of people that were like we're going to change the world by like forcing the world to be like us, right? And you know, we're going to do things like in a maximally transparent way, etc., etc. So you had these two things of like a bunch of crazy people who were like ideologically aligned and then that was

the only audience that you had, right? Um, and if you deviated from this stuff even a little bit, like there my favorite thing from like the old uh like Haven Synthetics days, like this goes back to like 2018 or something. There's a Reddit thread where this guy like tears us apart because we had proxy contracts and and the contracts weren't like completely immutable and it's like a tirade and people are just like piling in like these guys are monsters and like how could you do this? Um, and we're like, we just want to be able to build things quickly, guys. Like, and they're like, unacceptable. Like, you cannot like you cannot optimize for anything other than pure decentralization. And

so, I do think that like as the the audience has matured, right? And as we've like added more non ideological people, we have gotten to a point where like you have an audience where you can do things and not immediately get you know burned at the stake for for not um you know uh being maximally decentralized. And then I think the second thing is that it there's like very practical we didn't have many practical examples of like good businesses in crypto. We had L1s and protocols that were like they happened to be very decentralized and very successful. So it was hard to like look at a thing and go, "Oh, you know, I want

to be more like Pudgy Penguins where my [ __ ] is in Walmart than I don't know Cardano where like I've got hawks on a farm or like you know like there weren't good examples of like this is, you know, this is the thing that I want to be, right? Um, and so I just I think that like 15 years in, we have much better examples of things that people can aspire to be and aspire to do. And like I want my I want to build products and I want those products to be in the best places to be distributed. I want them on Amazon. I want them, you know, that sort of that sort of stuff.

Um, and I don't need to be a DAO and I don't need to like do everything in public and be maximally decentralized. Um and and so you know that also conveniently happens to be a much more sensible way to build value. >> Yeah. And I don't think it means that we have to like lose the values entirely. It just means from like an operating perspective like uh the core goal of what you're trying to build needs to come first. And the reality is is like decentralization, permissionlessness, all of these things are valuable uh but they're not inherently valuable.

Like just building something in that way doesn't make it valuable. However, as we've seen with like Hyperlid, right? Once they've unlocked permissionless markets, that is new value on the table. They are creating new value in a way that is uh one aligned with their goals, but like two like huge amounts of of new value that they couldn't do by themselves. And I think that's um that's sort of the the the missing piece from before was that everyone was trying to build these things just for the sake of it, right? And so there wasn't really a lot of clarity on like why does permissionlessness or why does decentralization why does this help us unlock new value or create new value or

achieve our goals? Um and that's why like Luca, you put it really well, right? you're like we had to do these two things that were like not the same at all. Like we're trying to achieve our business objectives, but then we're also like, you know, trying to pretend we are something. Um, >> and we got to tell everyone what we're doing like six months before [laughter] we >> um and so yeah, I'm excited. I'm excited to see what comes next. I do think that thinking about it in a purely like like I don't I don't think that there's um a reason to think that like this the cypher funk like values are completely gone. It's just that you're not starting from those things. You're not doing them just for the sake of being this thing.

Um it's going to be, you know, it's going to come from your broader goals, what you're trying to do for the business, for the product, for your users. like Ethereum is the embodiment of this like at the protocol layer. If you're building something on Ethereum that is just like much better inherently than if you were building your own database. >> Yeah. >> You know, so like this was the like one of the problems is it was like everything all the way up the stack has to be decentralized and if it's not then you know it's worthless, right? And it's like actually there's different ways that you can approach this problem, right? Like you know don't be custodial.

I think that's like not you know don't be custodial like if you if you have to be custodial to achieve your aims then that's not ideal. But even then there's like you know uh like some kind of gradient right it's not binary. Um, but you know, if you're if you're non-custodial and you have 10 different teams that are really centralized that are competing hard against each other, the outcome you're going to get when one of those is successful is in like just inherently better than if you have 10 teams that are trying to be maximally decentralized and compete against each other. There's just like there's no We've seen the empirical evidence of this like every single time someone turns up and is like I'm going to build this as if it were a business but on

these rails and it just is better. >> Yeah. Exactly. >> So, all right. Let's uh let's see what happens. Um, one thing, Luca, you you uh made this kind of off-hand comment about um Ethereum the network and and this has been on my mind. Um I think that particularly because Vitalic has had this very long-term view, right, of like this is where we want to go to, you know, and I I think he, you know, there's definitely been missteps, right?

like the whole L2 thing, you know, there's been a whole bunch of places where like the world has not ended up in the place that the Ethereum community and particularly Vitalic expected it to end up, right? Of course, like it's hard like you know, you're building things in an imperfect information environment, right? Um but I think that like the outcome the the goals the long-term goals have have kind of remained uh really clear. Um, and you know, I remember sitting there in 2018 and Vitalic was like, "The merge is coming in three months or something like something ridiculous, right?" Um, and you know, it was actually like two years later, but when we look back, it's like that's actually not that bad. But I think that there is something that is about to happen in Ethereum that is not

priced in at all which is that all there you know for the last what 10 years there have been like 20 guys who can actually build the thing and all of a sudden there are these magical aliens that we have inside our computers that are making everyone so much faster better at building this stuff. Um, you know, there was there was someone who was like, I built the whole 2030 road map on the weekend, right? And it's like, cool. Like, obviously, we're not going to ship that tomorrow, but the pace of innovation um in the Ethereum community, I think, is about to accelerate massively. Um, and if some of those things that were, you know, I

remember we even talked about this on like one of our pilot shows that didn't get published, right? We talked about the the 2030 road map and how like ridiculous it was that you were like publishing a 2030 road map like you know we could be past the singularity by then right but I think that 2030 road map might happen in like a year now and if it does that is just not on people's radars I don't think they they have an expectation of how quickly Ethereum ships and how quickly it moves and it's been better lately because better coordination but I think we're about to see what happens when it gets better because all of a sudden the engineering resources are 100x what they were, you know, six months ago.

>> Let's go. >> I love it. >> All right. Um before we continue, uh here's a word from the sponsors that make this show possible. >> The world is about to see one of the largest infrastructure shifts of the century. New technologies [music] are using more energy than ever before. But our legacy grids can't supply the demand and we are barreling towards a global bottleneck. So Fuse is rebuilding it. The energy network is an intelligent decentralized grid [music] that coordinates smart devices to balance supply and demand.

The network harmonizes existing infrastructure, increases [music] grid capacity, and unlocks lowcost clean energy. Energy Dollar is the native token of the network. The more electricity the world needs, the higher the demand for the energy network, [music] the value of energy dollars may fluctuate. From one of Europe's fastest growing energy startups, follow at Fuse Energy on X to find out more. Multi-Chain Advisers is an emerging technology growth firm that has helped create over $50 billion in enterprise value for more than 80 clients like Pith, Moon Commerce, and Wormhole. They've worked with some of the largest and most impactful companies in the space. They're the partner you

want when you're navigating markets and trying to break out from the noise. They help navigate TGES, go to market, BD and partnerships, capital markets, advisory, PR, media placements, KOA activations, and more, driving execution from launch to scale. Their results are measurable. To learn more and start building real traction today, visit multi-chainadv.com. >> All right. Um, very exciting news. Pudgy Penguins has shipped its Club Penguin uh moment. Um, Pudgy World. Um, I have to hand in my Pudgy Maxi card because I have not yet played it after 24 hours.

So, uh, I'm going to be relegated to the Pangu Gulog, I think. Um, but, uh, my kids and I are going to play it um, this afternoon when they get home from school. So, I'm very excited to check it out. Um, yeah, Luca, give us the give us the rundown. What what are we looking at here? >> Yeah, it's a uh browser free browser game. Anybody can basically go to pudgyworld.com, click a couple buttons, and basically live in this immersive universe. Uh as I was mentioning in Kane just a second ago during that commercial break. Uh it's one of the you know o always a good time in the igloo when you know people outside of our sphere specifically technical people you know kind of give us our praise specifically

around the 3JS webgu community. Uh I was telling Kane just a second ago that there's only a couple people in the world who can build a product like that. It's really a developer and a talent issue. Um not many people build in that tech stack specifically in the WebGL realm. And I can confidently say we probably got one of the best out of, you know, three or four or five guys in the world that know how to do that. So, it's a it's a unique experience in and of itself. Really proud of it. Uh, it's the first game we've ever built in house. So, Pudgy Penguins has shipped games in the past, most notably Pudgy Party, which is our, you know, partnership in with Mythical Games, which is, you know, a AAA mobile gaming studio, but we built this all in house, and we've never built

games before. Uh probably the the closest build to this that we've that we've done is our igloo.inc website which is just like an immersive lander that that is a pretty cool experience to say the least. Um but it's great. I think the the the reception is great. Uh obviously we have a lot more to go. I think we have an AI agentic vision for what I think this could be. like how do you you know bring you know Tamagotchi to like this immersive world and like you have to take care of your AI agent like we have a we have a pretty big vision for it uh but we needed to see if people even wanted the product and so I think right now today we're averaging a bit about 20,000 daily active users so

far so good um and uh another another win uh in the igloo in the igloo camp so happy that we finally shipped it after many years Yeah. So that was my question. My my first question is like how long have you guys been cooking this for? >> We've been cooking this for like three years. So that actually came out of an idea with the community. So for those of you not familiar, every two weeks I do an inner igloo with the community. I basically speak to them and I say, "Look, what ideas do we have? What problems do you have? What objections? What's good? What's negative?" And it's kind of like a good feedback loop for me to keep them aligned and really just the the build of the brand and the company as transparent as possible.

In that world, we basically, you know, created the bridge with the toy. So, you buy the toy, you get the QR code, you scan it, you get your NFTts via gas experience. The whole, you know, web wallet is custodial. So, that product was built, but then once you kind of built your own little pudgy penguin after buying a Walmart toy, the question became really obvious, which is like, what do I do with this character that I just made? Uh and unfortunately at the time because you know we've been you know we know we've been running on a tight budget but we came to the conclusion that like you got to bring it into an open world. Duh right scan QR code build your own Pudgy and then play with it in an open world.

>> Uh the the task seemed pretty gargantuan. Thankfully over the last year and a half two years the capabilities of browser have expanded. So we were really keen on making this a browser only experience. I think from like a click-through rate and how we already built the product via the toys, it kind of needed to be that way. But if you understand like why haven't experiences like this lived in the past, specifically on browsers because of the limitations technically that browser kind of presents, you know, you can build anything if you download a packet on Steam and you do the whole nonsense, right? But I believe that that experience, especially for a brand like ours, didn't really fit the bill for what we were going for. Like I can't expect somebody to buy a toy at Walmart, scan the QR code, get the whole thing

set up, and then, you know, port that over to desktop, download a a packet, and and and have that whole installation, that flow just seemed obviously broken. But in a world where you can actually take it directly into the game from browser within 15 20 seconds seemed like a really great experience. So, it's long overdue, but at the end of the day, uh the community gave us grace. I mean, we we were supposed to launch this two years ago. Uh the community the community gave us grace uh understanding this our first rodeo and I think it shook out pretty good.

>> Nice. That's really exciting. Um and and so uh one of the things that I read is that this is very much like not crypto in your face. Um you know what what's the uh what's the thinking there in terms of like how do you integrate crypto? How are you thinking about what a consumer crypto product should look like? >> Yeah. So what I think it can evolve to is I think you can add a lot more crypto elements. Today the login and the account is on abstract. So it's all through the abstract global wallet. Uh the traits and things that you collect are NFTTS right so it's not in yourrface crypto but you know there is those rails are in place so that people can

eventually trade the traits back and forth sell them for real dollars. So you can kind of create this browser cute penguin world, but also that has some sort of real economy tied to it. Uh, and I'm excited for that to kind of open up as we kind of go over the the next couple of weeks here. Um, I think from from our perspective, I've always been this this this champion of this idea that, you know, crypto onboarding has to be or crypto rails have to be a tech stack and not a hook, right? So what I mean by that is like when you build when you tell somebody to get on Instagram, you don't tell them, hey, get on Instagram. It uses this amazing technology called Python and like it does these great things, right? It it

should just be a function of how it runs. And we've never been a brand that sold crypto first. We've actually done the complete opposite, right? Which is like sell crypto last and try to merge the two worlds. I think that's really the the role that Pudgy Penguins plays within crypto. I think there's other people that are going to try to shove crypto down your throat. I think our role is to be the brand that the family and that every person within that family can get around and participate in without having to understand the complexities of exactly what our industry is. I think as time goes on the user will mature and they'll start to understand it a little bit more and we will probably walk them through that process. But everything we ship always has to be crypto second in terms of an

of of in the eyes of the user. If if at any point in time through that process it becomes crypto first I think you lose people on that journey. So in layman's terms I believe in abstracting everything away. Hence why we built the abstract blockchain to try to help build that that in that thesis and vein. >> Awesome. Awesome. I mean, it's funny like we have so much Pudgy merch in our house, like it's everywhere. Um, and you know, when my my kids friends come over, like it's the first thing and it's crazy, right? Like they're not into crypto. It's not like they've like seen a Pangu NFT and they're like, "Oh, that's the like they have no idea." and

they turn up and like um we have uh we have this like golden uh penu with the the red baseball cap backwards um one of the like uh you know I guess half-sized figures or whatever um and um like every single kid who comes in is like oh like what's like what's that right and and my kids like oh pudgy penguins tell you know um and try and explain like what NFTts are or whatever um but it's just it's really interesting like as a brand, how powerful it is that you can just have a pudgy piece of merch like a a figurine or a plush toy and like kids gravitate to it.

Like they see it and it has nothing to do with NFTTS. It's just like it's a good brand, right? It's a good brand and a good >> Well, let's hope we stay in business because we just got sued by the original Penguin. I don't know if you saw that. We got we got a >> we got a trademark lawsuit. It's hilarious. You missed it here. >> I saw Dude, it was it's crazy. What's going on? I know. I need to know about this. >> The funniest tweet, let me try to pull it up. The funniest tweet though was the the Pudgy was like >> they put the two penguins side by side and they're like with the like like they're the same thing meme, but like they're not the same thing at all.

>> It it it is the most frivolous. Usually, you know, I'm in the business of cortisol spiking. I mean, I'm I work in crypto for God's sake, so half of my job is to manage my cortisol spikes when they happen. The lawsuit is so frivolous. I [ __ ] you not, Kane. I had the least amount of cortisol spike that I had had in the fiscal year when I saw this frivolous, ridiculous lawsuit that I I frankly think they did it for marketing purposes actually because it's so frivolous. They try to compare this like scribble of a penguin to this like cute, beautiful blue penguin that we have that everybody knows. And they try to make a comp. And they also I apparently you can trademark words and

you can own words and they make the claim that they own the penguin word and that you can't sell things that use the word penguin. So, you know, I actually thought you were prized, so I was I wasn't going to go I'm not going to go down a deep rabbit hole, but it's a pretty funny joke. And Kane, you should definitely check out the tweet. I think that I feel like our intern did a really great job luring it for sure. >> That's funny. Yeah. I mean, look, like, you know, crypto, I think, has a long history of like frivolous nonsense thrown at it. Um, you know, including by the US government. So, uh, you know, we we'll probably be okay.

>> Yeah, we'll be fine. >> Um, cool. Okay. Uh, so I'm very excited uh to to play uh the Pudgy World game this afternoon. Um [clears throat] uh our next segment um this is I guess kind of speaks to this idea of like you know more company like entities building stuff in crypto. Um Across is considering turning their tokens into equity or pseudo equity. Um so the idea is uh ACX holders u which is a token that's been around for I think maybe three or four years now um may be able to exchange their tokens for um equity.

Um it you know it's it's interesting um across and um and like the whole you know there's a whole ecosystem here of uh of um different protocols and tokens um that have had this same problem like many projects of you know the equity token split and you know where does it live etc. Um so so this is this is quite interesting. Um, I guess they're they're still a DAO, so they're doing a governance temperature check to see if they're allowed to become more centralized. Um, so that's very on brand for Dows. Um, but the proposal is basically that ACX holders would choose

between exchanging tokens for equity in a new company or redeeming tokens for USDC. Um, I guess this is like the equivalent of like a take private transaction, right? Like they're they're basically saying like we've got this public token and we want to privatize it. Um, and you know, we're going to we're going to offer uh like a a you know, open bid on um and you know, this is a very common thing in in public markets. So, um, we haven't seen much of it because there wasn't much you could do. Like the the the premier that tokens get versus being private was so distorted that like it just didn't make

sense to do something like this. Like, you know, your token's trading at $100 million and a private company with the same structure would be worth $10 million. So, why would you possibly reverse this? But I think you know um as we see more um projects that have like you know decent revenue, decent um kind of uh you know business structure um that maybe are like mispriced by by public markets because tokens have been so crushed. Maybe this becomes viable.

Um you know the fact that they're offering a 25% premium to the the recent market price is is pretty indicative. What's the I'm curious. What's the um uh FTV at that price? Does anyone know? >> No, I'll tell you right now. 25% to market premium FDV would be 80 million uh 70 million. >> Right. >> And so the announcement well before the announcement it would have been 50 million. >> Yeah. Because it pumped, right?

>> Pumped. >> Interesting. interesting. >> I'm curious like I don't I don't know. I guess one thing to point out is I'm not uh super familiar with the across token familiar with the bridge. Not sure how the value occurs to the token as it is. Um I think I don't know it's just [clears throat] interesting. What is the guess like what's the end goal here for them? remember um you know [clears throat] like across was uh was this like second product on top of um you know the the original product right so like there was an original token and then the new token and so you know

there's there's been already some confusion about like you know where does the value acrew etc but you know across as a protocol as a bridge does a lot of volume um has like you know very good Lindy um you know has I think uh it's one of the bridges that Infinex um integrates like they've got a they've got a good architecture um you know uh good liquidity so like as a business running a bridge and this is the thing right like can a DeFi protocol bridge thing be a business is like the question right um DeFi Ignis says absolutely not

get the [ __ ] out. Um, huge failure of crypto. It feels like a betrayal of the crypto spirit investment across um, uh, sorry, investment access for everyone anywhere globally. Um, ACX stops being freely tradable on dexes. If they ever IPO, that liquidity goes to Tradfi instead. Um, it should be the reverse tokenized equity. Um, and look, I think I think this is a fair point and people are trying multiple different variations of this right now. um you know uh Leshner um good friend of mine has Superstate where he's trying to you know create these kind of hybrid pseudo equity tokens right um where it's like a

token but good [laughter] um you know instead of non >> Robert's gonna love that description by the way >> I know yeah you can you can put that tagline on your leer um so so uh but you that to me though, Kane, because actually this is a very interesting thought and very serend so I actually want what's Lesnar doing actually. >> All right. So, so um I sat at dinner with him for three hours and he explained the entire thing to me. Um so I should have a deep understanding of it, but I do not. Um I have a a very cursory understanding of it because I've purged all context that's not related to

AI coding um in the last six months. Um but but essentially the thesis is that um the good parts of tokens are that you like what literally what like defi Ignis is saying right like global liquidity global access um transparency um you know there's there's a bunch of benefits to the token as an instrument for liquidity and trading right which we all know like I think that I think the innovation of tokens was like in the instrument itself, not in the underlying value generation, right? Um, you know, the the criticism of tokens has been that you have no idea what it is, most

of them are somewhere between nonsense and vapor. Um, even if you do have something that looks good, every single one is like roll your own pseudo equity. So every single token is issued in a different way with different structures, different like there's no template for how you do this. And so you know I mean talking about fungeibility right like no token in crypto I would say is actually fungeible with another token right as in like you can you know a cross has all of these things that are like similar to SNX but also very different and like you would need to have a table that was like

a hundred rows deep to be able to like do the comparison of all the little nuance differences of like how a cross works versus synthetics and that's just two tokens, right? Then you throw in say Pangu, right? And again like a whole different set of like things like where does it live, what happens, what does it do, what doesn't it do, what does what rights do you get from holding it, etc., etc. And so um the the inefficiency of the market is that you have this very very powerful instrument that is not um coordinated at all. Right? There's no structure to it. There's no way to reason about it. Um, most of the ways that the tokens work are not even

explicit. They're like implicit. Like, oh, you didn't realize that this thing does that, you idiot. Like, what are you doing? And it's like, that is not an asset class that is investable. The only reason why tokens have done as well as they have is because of the underlying genius of having a 247 liquid instrument that can be traded by anyone anywhere with no KYC. Like that's the brilliance, right? The brilliance is that you have a global blockchain that anyone in the world can access and these tokens just like flow around on it and can can be bought by anyone.

>> So what is he proposing the solution to be? So, so what Lesner says is let's put some structure to this like yeah if you buy let's say you know Lesnar comes to you and says okay we're going to do a proper Pudgy Penguins token that is a representation of the Pudgy Penguins company is a representation of the cash flows that the Pudgy Penguin company will generate from the business activities that it does um it has very clear rights that you get as a token holder. It has um you know very clear disclosures as to what the company is doing, what the

company is not doing. Um you can't have a bunch of tokens that are sold on market without, you know, disclosing who's selling them. you know, it it makes the token much more like uh an equity instrument, but it maintains a lot of the benefits of the you know, global 247 highly liquid instrument. Now, there are trade-offs because uh you know there there are um like constraints around like who can trade it etc. Um but I think that and this is where like you know we haven't solved the problem. So we need people trying different ways of solving it. Um but the the idea that we

will have tens of thousands of tokens that are all unique snowflakes in terms of how they operate and and you know uh what rights you get um is just not viable, right? like it's not it's not going to be something that is like actually long-term viable. Um and so the idea is like find some way to put some structure around this so that people can reason about the difference between the Pudgy Penguins token and the Across token. >> Yeah. And so Taylor isn't sitting here every single episode saying like, "By the way, what does this token actually do?"

>> Right. because that's [laughter] like and then you have to go like do some deep research and a lot of times the answer is uh it's not super clear and the team has made promises very informally on Twitter but actually you don't >> that's a good disclosure regime like [laughter] Twitter yeah like >> like you don't actually have like token holders don't actually have rights uh it's not actually if there is like a real company with equity that's separate. It has no real link to the token itself. Um, you know, jurisdiction is all over the place. So, you know, I think Robert Lesner is approaching it in one way, which is sort

of take the the good of the traditional system which has in my opinion like the benefit is that the you actually do have rights. Crazy concept, right? I think honestly that's the crux of it right that like you you have you know you have this instrument that is is liquid but also has like very clear disclosures around what the rights are for holders. >> Yeah. Well, well, I I I do have some >> you have some breaking news, but I will say in this vein, I'm probably >> before the end of quarter two, we probably I probably change how everyone

looks at this. >> Interesting. >> That's why I'm asking. I'm writing things down. Well, I like my hot take is we should get Lesnar on the show. Um I can force him. Um so so I'll I'll make sure that he comes on the show uh in the next few weeks u because I feel like this is a thread that keeps coming up like how should be structured why and you know how important is this you Kane if you were to index this like how important is this for the future of crypto I think it's I think it's I think you can't find three bigger problems than this but what do you think >> yeah like >> yeah like nine out of 10 >> like easily nine out of 10 um you know so so

>> because it's the whole it's the crux of everything right it's like we have it's we have undefined informal [ __ ] posting as rights and then people keep getting rugged in the best case they get like inadvertently rugged and there's like governance forum posts around your rugging but in most cases like you just get rugged and then you just have to sit there and stew in the fact that you just got rugged. um if we want to unlock real value at the end of the day like we need to have structure buying a token um sure we can still have meme coins right I don't care but >> if the token

>> if the token is reflecting like uh something right if promises are being made then there needs to be like yeah there needs to be disclosures there needs to be some formalized structure around that there needs to be accountability Right? If you screw your token holders after making promises to them, like that should be you should be punished for that, right? And so all of those things need to be defined. Trying >> and so like but why like why should you be punished for doing the wrong thing?

And this is like a really critical point and I I think Leo would would have a lot to say about this. Not because it's good to punish people. >> Yeah. Not because you know people who do the wrong thing are bad or whatever. The reason why you need to have enforcement of rights and responsibilities is so that the market is [ __ ] efficient. >> Yes, >> that's it. >> If the market is inefficient, then we're allocating capital poorly and everyone is going to be impoverished, right? If we're allocating capital well because we understand what we're allocating capital to and we don't put money into nonsense because we know it's nonsense and we put

money into good things because we know they're good things, then we will have a much more efficient market and everyone will be happier and we will generate more value and that's it. Like it's not because people are bad or rugging people or you know like this is a sad situ. There's none of that. Like who cares about any of that? the the sole reason to have uh you know um disclosures and clarity around what the rights of token holders are is to make the market more efficient. It's better for everyone who is trying to generate value that people can reason about the value that they're generating. The more transparent and open and and easy to gro it is the better.

>> Yeah. And the and anytime there's uncertainty there's like and like with tokens there is so much deep uncertainty that is risk but it's not quantifiable risk right if the token if the people who created the token wake up one day and decide to do something completely insane and nobody can do anything [clears throat] about it if that's like a real possibility then anyone investing in it like outside >> that like whether Whether it's explicitly or implicitly priced in, that is priced in. If if all tokens can just evaporate at any moment, that's priced in.

>> Yeah. >> Like the market understands that. How is it priced in? Because 90% of people will not touch them. That's how it's priced in, right? And if you remove that risk that someone can just like evaporate a token overnight on a whim, then all of a sudden there's a whole group of people that could be like, "Oh, okay. I like the pudgy. My kids love pudgy penguins. I want to invest in this thing. Um, I just want to make sure that if I put a million bucks in that it's not going to just disappear the next day, >> right? >> I want to know like what are my rights? What am I going to get?

>> Who's going to make sure that Luca does the right thing? You know, what jurisdiction is he operating in? >> You know, is he in the Sey Shells or is he in Miami? Right? Like, you know, we need to we need to know like what's going on here. And if we know all of that, then it's like, okay, now I feel comfortable. I think the Pudgy brand's awesome, and I'm going to, you know, I want to put 10 million bucks into it. Great. >> Because then you can reason about the risk as well. But when you have when like the quoteunquote longtail risk is uh that the whole thing can just disappear and that longtail risk isn't actually longtail. It's like the entire risk. [laughter] >> Like I'm sorry you It's just It's completely insane. And it's I think it's

one reason why the industry has gravitated towards memecoins because it's like the the the facade of all the other tokens. Like turns out you didn't actually have rights, you know what I mean? And people kind of got sick of that. But but the the solution is not to just turn everything into this like nihilistic nobody expects that they have rights. The solution is to fix that. Like the solution is to like establish structure, do disclosures, have rights, uphold promises, create accountability, on and on and on so that people can then reason about the risk and then you can unlock immense value. Huge. The problem is like the problem is that there was a period of time where the partners who

would have been sitting on the other side of this process >> were like if you come within two miles of our building you will be disappeared and no one will ever hear from you again. And maybe not even that. Maybe we'll just come to your house and just like you know shoot you in the head, right? like those those people uh were the ones who were supposed to be working with us to create a regime where you could have clarity, right? But the problem was and you know we saw this with that like Mary lady or whatever the hell her name was. She's like you're all scammers so why would I like of course I'm going to shoot you in the head if I have a chance. Like you know the fewer of you that exist the better the world

will be, right? Like that was like the tacet assumption behind all of the things that they were doing, right? As opposed to like, oh no, this is another industry that's like generating value but is inefficient because there's no structure to the market, etc. And there's a bunch of good actors that are trying to, you know, create value and if we help them to form like but like, you know, whatever they like went to Harvard Law School or something, so it's fine. Um, so, so I think I think like we will we will figure this out and we will we will solve the problem ourselves. And you know, the most bullish thing for me is people like Lesner who have been through this. They've seen how expensive it is to have a token, how insane it is

to like manage a token, how you can't even give people the disclosures that you want to give them even if you tried because you would go to jail. like all of these things and he's like I'm going to turn up and try and solve this and that's one person and there's like 20 people who are trying to fix this. It sounds like Luca is also working on it. So, you know, enough people working hard to try and and the problem will get solved, the market will solve it. Um, which was always my view is like hoping that Mary from the SEC solves our problems is like just not a thing, right? Um, so you know, I I'm I'm bullish on um on our ability to to actually innovate around this and and

solve it. Um, so yeah, let's let's see. Um, I think our last segment, uh, if we still have a little bit more time, we do not. Okay. Um, I guess we're going to wrap it up here then. Um, so, uh, we'll talk about Ave next week and maybe. Um, so, uh, that's it for this episode of Uneasy Money. If you enjoyed the conversation, follow the show on the Unchained feed on X and subscribe wherever you listen to podcasts. And if you're watching on YouTube, hit subscribe and drop a comment. really helps the show reach new