Is Hyperliquid an L3? | Tolks, Max Fiege, and 0xOmnia

Transcript

every single uh ecosystems native token like the gas token soul for Solana e for ethereum ETC as the base quote asset effectively against every token that's created and on hyper liquid that flow is not there yet there's a lot more friction involved like imagine yes there was a ton of wealth printed with hype but the problem is people need to realize that wealth first before they go into any other spot token nothing said on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show are solely our opinions not Financial advice Pacho Ryan and our guests May hold positions in the company's funds or

projects discussed what's up guys welcome back to another episode of zerox research today I'm joined by tolk Max and Omnia um to talk about what's happening in the markets with probably a specific focus on hyper liquid um before we get started talks people already know about you uh Max Omnia do you guys want to give a short introduction of what you guys do who you are little background information yeah so um I'm a defi contributor uh and Hyper liquid commun Community Advocate it's probably the simplest way of putting it at the moment um I I lead growth at liquidy uh specifically with the V2 stable coin that's dropping uh imminently um and

then on the hyper liquid front I been helping onboard uh new teams to the ecosystem for the past few months via a Syndicate Club whatever you want to call it um of hyper liquid power users um and you know getting Builders uh over the chasm so to speak very cool yeah nice uh myself been in the space for quite some time uh formerly worked for quite a few interesting D5 protocols and uh yeah I've been on hyper liquids since very early 2023 uh hence meeting back not long after um and yeah uh most recently founding contributor to kinetic uh which

is powering liquid staking on hyper liquid uh which yeah some may or may not know about but yeah happy to chat more about that at some point but anyway yeah that's me in a nutshell fantastic we'll talk a bit about uh I want to talk about both hyperactive and kinetic a bit later as well but um early 2020 free is kind of ridiculous like join Total accident by the way yeah how how did it happen yeah I I basically um my co-founder sent a uh podcast that Jeff was actually on called the flirting with models I could actually send you the link it's pretty great and uh that I was like well it was a really boring time in the market actually so may 2023

to be specific uh is when I actually started Ching on Harper liquid a couple weeks after finding out about it and and yeah honestly like I remember thinking to myself I was like damn it's been a while since I joined a Discord like it was literally that time in the market I was like oh [ __ ] like so anyway I I joined and I was not a perp [ __ ] back then but yeah I very quickly became one um yeah with no expectations funny enough and yeah like it was pretty interesting to say the least and in other words like very I think very few people people believe uh when Jeff says stuff like uh you know the scope has 100x like several times and I think

that's that's pretty it's pretty crazy cuz hyper liquid Discord and Hyper liquid scope at that time was like so bare compared to what it is now so anyway yeah without chewing everyone's ear off yeah that is uh that's how I came across it very cool and um I guess I want to ask a bit about that and then we can get into I guess Market stuff and then we'll do bigger hyper liquid but um max om you guys are both talks I don't know when you joined hyper liquid um like when you started using it but I assume both Max and omn started using it earlier than us so that like idea that's a safe assumption I think I was I was early enough but not not uh you know not out in the Forefront no that's fair um me too I would say I was

early enough but not like 2023 um maybe late 2023 I need to check but what how has it like shifted I mean you guys have seen the Discord and the team say actually we're not going to do just pers we're going to go into the L1 one um and then they assumably have like done more and more um what has that like been like or do you have any comments around that in general I got involved back in December of 23 um and I would say at the time it was very much a you know a platform for if you know you know you know Dex perpetrators uh you know relatively small community um and when I think about the the growth since then um I think it's

been most pronounced with two extra phase phases there right so um in April of 24 right was when spot trading became possible on the hyper liquid L1 and that obviously is a different user profile than pers Traders um that that was more aligned with I guess you know how I interact with like onchain stuff um I'm not much of a per Trader myself to be honest um and you know I would say that initially brought in quite a chunk of Interest right because everyone that had earned points up until that point received per um and then new spot deployments started rolling out later in

May um and I think by the time summer rolled around right there was like a core group of 50 to 100 people uh regularly trading spot on chain was still quite small aside from a bit of a Mania uh around July um and yeah it definitely you know felt like a ghost town later in the summer early in the fall I think you know we were all calling each other bozos for not catching still I would add to all of that is you know in some of the you know just conversations I have with regards to like hyperactive and just getting to learn more about who's actually in this ecosystem there's kind of a a parallel

development to all this which was just the um kind of deployment of more sophisticated Capital as well uh so like I'm aware of like you know trafi Prop Shops that started in February of 2024 starting to use the purs product in particular some even dabbled very very small amounts in the spot markets over the summer um and so I think that's kind of you know a bit of a story you don't necessarily see uh just from crypto Twitter Alone um right but it's yeah the the influx of more than just retail liquidity uh is definitely you know a factor here it's it's not just all

retail you know aping against each other yeah seconding that for sure uh the spot Market I mean just to to go into where maybe there was a particular click for me was like the introduction of the SWOT markets obviously per was cool but like uh even myself at the time funny enough like I I hadn't even developed like any sort of material exposure in the form of points until uh until after spot markets went live uh where that was where the real I guess you could say um excitement kind of ramped up to a ridiculous multiple compared to what it was before um and not just because of the fact that there were spot markets

but because of like what came with that right like the fact that there was the initial uh roduction of hyper bft uh and how quickly it was shipped following the announcement right like um usually these things are discussed like months if not quarters in advance and and then then you get some sort of like Bots to roll out but it literally came like significantly less than a month before it was actually discussed which just kind of displays the rate at which the team ships um and that alone was enough to be like yeah like pretty much do not focus on anything else except this because it it you don't get this I mean I I can't I literally couldn't think of any other time that something like this had existed and just remove all potential biases and and thought

about like oh you know am I like where where is this wrong and I just I don't know I couldn't find you know kind of like the the vanck uh dude saying we are right the shields are wrong you know it's an L3 it's an L3 yeah it's it's it's obviously an L3 right uh without proof St AR but anyway so yeah that was very interesting in terms of like maybe a turning point if that even answers the the question as to like where things started to really click even further um and obviously on top of the fact that there was like like I similar to Max I'm not a per Trader at all I lar as one on PVP uh as many may know now but yeah so em I have been embarrassingly active there um but yeah

otherwise the spot markets have been very very interesting and I think like one of the craziest things that I don't think I've ever said publicly um is that you were quite like and this was an opportunity that most people like by most I mean like literally like 99.8 or 9% of the market did not see that you were effectively like towards the tail end of the har liquid kind of points program you were effectively paid like gillions of dollars literally um to just trade meme coins and like people did not understand this so there was true material Edge in doing that and anyway without rambling on that was a very exciting time uh and still is and seeing now like obviously the AI C come to hyper liquid and whatnot like yeah it's very very very cool to see like it's

currently not not the whole you know general purpose smart contract platform that people are obviously trying to point out but currently it's like an insanely Advanced extremely performant exchange with a native spot token listing component which already started to kind of break into the Monopoly of like centralized exchange spot token listings um and then what it will be very soon is the like all of those things I just mentioned on top of like an extremely composable evm layer uh aside right so it's going to be very very cool it's going to in our opinion obviously against extremely bias saying this it's going to make like the binance to BSC relationship uh SL coinbase and base relationship look like absolute

child's play um because they're operating on very different you know boundaries and yeah I I'll stop there all right fantastic um kind of run over the whole hyper liquid bull bull section as well but you can't contain it it was contain it you know it was expecting right yeah no I mean what you're talking about with the launch of spot markets though like I mean sometimes and you know you mentioned earlier like you're early enough to a thing and you're kind of talking in your head like am am I wrong here like am I Bozo am I wasting all my time um and for me like the parallel is just to salana like it's just it's ins because you can go back

you know two years ago and I felt that way about salana and then it was the goto air drop really that kind of it was just like oh [ __ ] like actually all of this is is real you know like and sometimes it takes a launch of you know whether it's an airdrop or volumes going up or the spot market and the spot spot Market coincides with the part volume and then you start looking at the volume numbers and you're like oh [ __ ] there's something here like a lot of times you know being early can almost be a fault in a way because you don't realize exactly what you know the Grand Vision could be and and what can be accomplished and it takes a launch of of something like the spot Market to be like okay yeah there is actually something here and we we're on to

something here and it just kind of um I mean it just spirals your conviction even more which you know can be a good or bad thing but obviously for for you guys it's been it's been an incredible journey TLS with regard to because we were talking about this a bit earlier do you think um in my mind hyper liquid and potentially base are the only like real competitors to Solana and you were talking a bit about like how I don't know Solana doesn't look so great right now um especially like the the spot like onchain trading on Solana has just been so so bad um except for like one coin today which is large language model I don't know if you guys saw that was really oh jeez talks what do you

think um I think it's difficult I mean I remember when we were talking into um I think it was kez a couple months ago before hype launched and just talking about price targets and for hype and I say it's difficult in the fact that yeah it can be a competitor but a lot of things in crypto move in unison and they move off of relative basis and that's why I was so excited about hype because I mean partially because the product but also partially because of the way sui was performing because that just creates an upper bound on the relative valuations and like I said so much in crypto relies on those relative valuations um it's the same thing with you know going back to Soul versus eth

and why I was so excited about Sol is because you could look at certain metrics and they're comparable to eth and eth valuation is at X and soul is at Y and it's underpriced by Z and so there becomes a Target in a way um so yeah I mean I do think hyper liquid base so are you know and obviously um e main net a little bit I guess but those are the main four ecosystems that I would definitely be focused on and um I mean we'll see what the hyper evm launch you know kind of what that does for the ecosystem I'm pretty excited about that but yeah I mean I don't really have any interest in in putting any attention anywhere else um I mean even like recently with the uh Phantom Rebrand to Sonic and you saw kind of how that PA

dissolved and you know nobody really you know there's nothing really going on there and a lot of times you know CT and and these narratives get spun up about you know how this is bullish um but you can just look at again you know go back to the volumes go back to the metrics go back to the users to the inflows um and you'll see that hyper liquid is you know one of the one of the only true competitors to um I'd say the spot market and obviously you know it's dominating in in per too for as a you know Dex app chain um so I think that'll continue to be the way in the future that upper boundary thing um I I assume you guys saw this um some really smart guy posted it but this is

like this is bro one and a half trillion what the okay so I want to clarify a few things here because I got kind of roasted for talking about this like because we talking about this with the rest of the team because they were like V you're [ __ ] like it's obviously not going to one and a half trillion which is is partially true bro called us the Bulls bro the Bulls think it's going to one and a half trillion but to our listeners who don't have their video on or who aren't looking at a screen this is basically comparing hyper liquid uh fees compared to other L1 and L2 fees um and basing their valuation off that and the main gist of this was that like hyper liquid is making a lot of money and

there's clearly like the team ships there's going to be growth um they're launching a whole new L1 to support the um evm the hyper evm so there's definitely like ways for it to grow um in terms of valuation and I think this is something that like kind of bugs people is that like typically we've seen dexes like per dexes top off at like way less way lower valuation than hyper liquid um and that's because people think that the growth is done um and like liquidity moves elsewhere because per uh volumes are very like dictated by points programs but we've seen hyper liquid actually continue to compete and even increase I think like

um it's the only per Dex that has been able to compete with Sexes like anything else GMX grift um not to say these are bad products um but they haven't been able to compete with um Sexes while like it's not hyper liquid isn't just a blip on the map it's like actually taking up a small a small but decent percentage of OI and volumes yeah yeah um yeah go ahead I was just going to say I think there's you know a kernel of Truth to um the the table you made there right because like like yes you know your team is right people aren't out there basing their valuation models for

l1s on uh you know earnings multiples but right in the hyper liquid context the vast majority of those fees go to token buybacks on the Open Market at a you know every 10- minute type pace um when you know for almost every other L1 it's the opposite right like the marginal flow is unlock unlock unlock vesting right there's this barrage right of on the on the margin of Supply hitting the market um whereas hyper liquid it's it's the reverse um and in a very momentum based asset class like digital assets right uh I I do think

that really has um uh a magnifying effect o over prolonged periods of time so I would I at least that's what I tell myself right because obviously you know macro conditions are what they are right now cryptos probably going to take a beating at the very least until the inauguration um but when we talk about like relative outperformance or underperformance within the asset class I think it's just very hard to ignore um what you know a multi-million dollar buyback every day which is what the Cadence is at the moment right you're not even like asking for an all-time high volume day to get that level of buyback uh H hitting the market um and

so I I think you know that that is very relevant When comparing different you know l1s or or networks or platforms you know whatever whatever phrase We want to use to not alienate anyone today inverse BNB burn right it's actually o open market supply not just shaving off the fdv inverse BNB burn is a good uh that's a good tagline there I mean it it's so I mean yo like honestly whenever could you think of I mean again this is not delusional right like this is actually objective because yeah I'm I'm I'm ready for the uh s tier cope replies because I post many of them

myself but anyway um like whenever could you be so happy that uh an asset price is like lower in dollar value because of the dollar fees that they're collecting going back into turbo punting literally on repeat uh if anybody's never seen the assistance fund address go to hypers scam. and type in assistance and then click assistance fund because it's already tagged and uh just yeah just enjoy watching the transactions honestly uh but yeah basically whenever could you be so happy that the asset price was lower because you just lower the cost basis of the assistance fund uh I personally can't remember got I try to think of this as a as a researcher right and like from an analytical perspective as

opposed to just delusional bolard um but yeah I mean that's that's part of my mental framework and you know quite a few others share that um but yeah I mean just something I think is not thought of often no it's a fair point um and I think on top of that like all of that is is a great point and you know maybe from time to time we see something like this with a protocol that is absolutely bleeding you know fees and revenue and volume and users from when the incentive program ended but that's clearly not the case with Hyper liquid so you know it's not like you're just you know like you said irrationally just throwing out this this bullish propaganda like the metrics

are still there to back it up on top of that which is crucially important yeah um ju just to clarify uh before I get like absolutely um mogged I do not think that my Valu my valuation my thing the screenshot and the the like 1.5 trillion was a joke um was it was not serious I just thought was funny um and also hyper liquid posts do really really well on Twitter the theer um yeah I mean like you said um we don't really have this interaction with

a team or with a protocol where the team is actively buying back this fly um like typically what we see is the inverse where the team is actively selling um at monthly unlocks I think that this kind of throws people off um typically we but it's all verifiable on chain but it's kind of hard to explain that there's a multi- like billion dollar bid per day just based off of fees and perss are very very good for fees because people are horrible Traders like if you just look at the hlp you can see that like people lose money and people keep closing and opening positions they keep getting liquidated so these things are money-making machines and then once you take that take whatever fees you earn and implement the permanent bid um I

mean it hasn't worked very well over the past few days but um it's supposed to be really really really good bid yeah indeed in other words yeah like I think the interesting point you made there is that it does throw people off um and this can actually carry over not just to the high price which is obviously the most relevant I guess you could say surface point but even when looking at like spot markets for example like I man like I get nauseated by you know continuing to post this so I can only imagine when people actually read it but the fact that there is only an available like just over 20 million as of right now like as we speak just over 20 million of usdc in bside capital again

to to be fair like this is not factoring in um individual liquidity providers whether it's like retail retardo bidding at some price like with with their own usdc or Institution for that matter uh buying any other asset it could be per it could be the shittiest of [ __ ] coins right um just talking about hip2 which is effectively you could think of like an amm right like for an easier mental model uh to compare like this is It's criminally low compared to like available liquidity on uh other ecosystems and on top of it there is this constant again Casino chip effect that doesn't yet exist on hyper liquid and what I mean by this is that you

cannot yet use your hype to directly purchase any spot tokens right like this is still a ridiculous amount of like uh I mean I don't want to come off here as as in give like totally no Financial advice involved in saying this but again like just objectively looking at other ecosystems right you have you know every single ecosystems native token like the gas token soul for salana E for ethereum ETC as the base quote asset effectively against every token that's created and on hyper liquid that flow is not there yet there's a lot more friction involved like imagine yes there was a ton of wealth printed with hype but the problem is people need to realize that wealth first before they go into any other spot

token um and inversely for U moving out of whatever other spot token into hype right like they need to sell for usdc which is already mentally like you've TP right and then take this otherwise precious usdc to trainers right and then move it into some spotcoin and then vice versa right so there's still a lot of friction and everyone talks about like you know the greatest trades being you know still having friction etc etc um and then you still have people that have the the goal to say that you know like this is played out you know etc etc so anyway it's just very interesting and just you know I would say unique takes that I haven't seen on potential mod mental models for

for hyper liquid and it's it's subsequent ecosystem and before hyper liquid defil a thing so yeah I hope that this helps for any listeners who are just taking in regurgitated information and can look at it from a different perspective obviously biased but yeah I guess maybe let's do um what has been said about hyper liquid the regurg DAT stuff and then maybe try and correct it and also kind of think about it um and the big one was hyper liquid is an l3e I um I think like the actually probably good take on this is it depends on how you define an lre like if you think in the traditional way it's not an L3 because it doesn't Post State on hyper on arbitrum

um but if you're taking it from the context that it relies on arbitrum I think it's safe to say that it does to an extent what do you guys think yeah this would make salana an eth L2 in my opinion because there's wrapped eth on salana right like it's it's a bit of the same thing yeah like there's uh something to be said about the fact that there are not anywhere near as many validators uh on hyper liquid that it's yes it's controlled currently in terms of consensus by you know 14 validators but there has been really really active steps in that direction and I think that there's been a lot of cherry-picking uh about like what currently exists as opposed to what will

exist in the future and a lot of discrediting to the steps that have been taken to accomplish that that very very clear Vision like people talk like this hasn't been stated people talk like this hasn't been like this isn't a goal like it's horrible OBS blah blah blah when meanwhile like there are multi-year road maps posted elsewhere and these are factored into institutional thesis for ethereum for example right like so like it just doesn't make sense the hypocrisy is a little bit weird but yeah I just think it's important to realize that um very soon when other native spot assets are available on hyper liquid that they do not become like hyper liquid does not become a Bitcoin L2 it does not become an ethereum L4 or a

Solana L2 the chain extension right like so it's a little bit of a weird frame of mind but I I I honestly like I will give credit to the point that you made actually which is along the lines of it's subjective right like how do you look at in L3 is it currently anchored by arbitrum usdc yes therefore can you look at it as um a point of failure absolutely and I think there's Merit to that yeah but I'll I'll stop there yeah I just think there's I mean there's a ton of a Nuance in the discussion and yeah I mean you can look at the technical aspects but I mean at the end of the day like um I think the market valuation is generally what matters and you know kind of while you were talking there I just pulled up coin gecko categories and I had to scroll to

to page two and the 117th category was l3s and the top one is djun with a valuation of 400 million and to me like and then there's what one to three others above 100 million and then they fall to 50 million so like you can talk about the technical nuances all you want but the market is valuing it very clearly as an L1 and so that's just how I'm going to treat it I'm not going to be you know the guy pointing in the in the mirr meme and just saying you're not wrong the market is wrong like that's just that's not the way these markets operate yeah so at the end of the day like that's you know generally what you want to rely on and I think you know just looking at the valuation and I mean

Bach like you said you have that chart up there with that it should be a $1.5 trillion do asset um but there's other valuation Frameworks compared to the other o1s and like you know there's only so many metrics you can use you know in crypto like we're still trying to figure it out a little bit and Hyper liquid as in L1 like its metrics are you know off the charts and comparison so at the end of the day like that's what I rely on for me like you know if you want to get in the technical nuances of it you can but to me like it's just you know that's more of a uh of an academic type exercise versus a market exercise Max what do you think I mean I I would just say you're not convincing anyone otherwise

think opinions are pretty strong on this uh in my mind it's just a weak L1 right like there is a validator set with a ton of caveats but ultimately that's where the straight State transitions are occurring and yeah if arbitrum went down Bridge stuff gets wonky but you know for the period of that downturn uh it doesn't necessarily impact uh users you know signing transactions on the HL side unless those transactions are to withdraw or deposit right um so yeah I mean it is what it is um I think test net progress is pretty clear that this will be an irrelevant conversation in a couple months time

maybe sooner uh but yeah I think in general right like the these conversations have been tough especially for I don't know guys like me and Omnia whove you know been advocating for hyper liquid for a long time and we do so in the dark right like we're not getting special team access we don't we don't know any secrets um we don't talk with Jeff every week or monthly Cadence you know exactly and so you know I do recognize that most of the criticisms against hyper liquid are valid the question just for me has always been you know are there steps being taken to remedy this this is it actually you know uh something that the

team values and lastly are you getting compensated for the risk you're taking and taking trust and um being willing to you know accept some of these faults in the short run um so yeah that's a very longwinded uh response to the original question but I do think you know you know some people take a binary approach to these definitions some I think you can take a bit of a spectrum approach in this case it's very much on one side of the spectrum at the moment I I don't deny that but you know I I do think it's a bit cheeky to you know go the L3 route on the conversation yeah I agreed with that um for what it's worth I think it's an L1

as well I do but I do understand if you want to make the argument but apart from that I mean tols what you said makes a lot of sense it's like at the end of the day market price the market is pricing it as an L1 and Max like you said like you can take the risk um that you believe that it will become what people have been criticizing it isn't yet and then potentially get um potentially do really well because you're willing to take that risk just by like seeing that the team has worked towards this goal and the team has done stuff in the past that they've said that they will do so you can put some of the trust in that and say I think Jeff and the rest of the guys are going to deliver therefore I'm

fting um I think that's a and you always have to recognize right for a lot of people certain even certain Milestones will never be enough right like I'm sure there are people that don't think of Solana as an L1 right they like everyone has different uh thresholds for some of some of these Concepts and some of these terms and again right like you can't please everyone so I'm yeah yeah I think we forget that for the majority of the bear before Solana did like a 5x in 3 months people were calling it a database that was like by yeah so yeah I think I don't know I

think some people don't like giving people chances which is also Fair because you have to be the one to take the risk and if you don't want to take the risk you're going to find that there are reasons for you not to want to take that risk so I think that makes sense um I guess maybe on the more positive no let's go negative again what is your hyper liquid fa how do you see it fail oh let's let's let's definitely do this this is interesting you want to go first M yeah I mean so I would say I think on a technical front you know of course there's going to be questions around just how decentralized this thing could ever become in my mind I think there's enough evidence from what I've seen from

testnet like you know worst case scenario is this a 30 validator system that like you know the Swift of trading you know for crypto going forward like I think that's reasonable obviously that's not the end State I would prefer but I think all that is to say like I I don't know if I'd rest any bare thesis uh at a technical level um like I do think it's a pillar exchange application that is you know Superior than Superior to relying on a truly centralized single entity counterparty whom you give your assets to right and foro custody with um so putting that aside I would say the

the only risk that really keeps me up at night from a let's say relative underperformance perspective right like you know if crypto goes to [ __ ] presumably this also goes to [ __ ] so I don't think it's worth spending too much time on that scenario but um you know we we do have a pro crypto Administration coming in uh in the US but I think what we're seeing right is that it's going to be quite cronous right you're seeing Elon be in favor of removing EV subsidies because that hurts his competitors more than it hurts Tesla if you look at some of the you know crypto related individuals coming into the admin I think well let's put it that way right they don't have a hyper liquid

exposure um and Hyper liquid is gunning for just about every incumbent platform application Network in this space right so you know I I think if you you know take a political view of technology and study the history of Technology uh there's very many instances of good Tech or things that were publicly and popularly adopted kind of Getting swashed By incumbents who had political power because it didn't you know benefit them economically so honestly that's where the the majority of my concern lies um I think if hyper liquid can just continue to grow in a in

a vacuum let's say like I think the technical execution will be good enough I think the liquidity will just continue to compound and you know it's it's a good user experience for both retail and institutions alike so far you know it probably won't be a straight line right but you know I think it's something that can grow over time pretty reliably but if there is you know strike from the heavens that uh that would be kind of harder to overcome and of course that's where you can get into decentralization arguments and the haha I told you soos right um but I think timelines do matter on that front and we'll see how how far we can get before those types of

concerns you know manifest um so yeah that that's where I would hang my hat on for for that question yes s I'll uh I'll piggyback off that uh and maybe talk about some other points of failure that could result in formulating a bare thesis around hyper liquid uh maybe to touch on what already exists and then maybe to then go on to what will exist in the future and uh talk more on execution risk will be U does hlp completely fail right hlp is arguably one of the more popular Parts about hyper liquid and what makes it so compelling for so many people the fact that you can basically take the trade

against uh like trade against Traders ultimately and uh bet on them losing money effectively I mean this is not a new trade uh introduc very much popularized by GOP last time around um they're definitely is something different to hlp as opposed to GOP where uh it's not a basket of assets so this is a proprietary strategy that's obviously not disclosed um some could argue that that is bearish for them but again it's it's similar to what Max has said which is that for some people it's never going to be enough as opposed to just knowing it's it's a good product and depositing and taking that risk I mean there is obviously risk in doing so um another part is obviously the failure

of the like the purpose product itself like if there is a competitor that happens to offer something Superior is there something out there right now not that we can think of um but again be open to the to the reality that this is a possibility as you know there there was a possibility for the existing um per dexes and and even current centralized exchanges before hyper liquid arrived um you know we have to continue kind of taking this into account so that's that's another thing so execution on that front uh evm introduces again significant risk as well which is uh will the execution of the evm be uh you know up to par and enough to bring developers over for example like maybe something that that

already is kind of showing where I won't say there's there's cracks but potential for uh developers to be a little bit put off by the fact that teams aren't willing to kingm make anyone like you have to essentially take the available information that the team publicly puts out and then do what you will with that information effectively right it's it's it's extremely extremely meritocratic and the reality is there has been a lot of scoen feeding in crypto from the from the ecosystem level with regards to teams some of it obviously good right like that's not all bad uh but the point being that uh it is is the teams are not used to that at all when they come to really good they're they're expecting the team to kind of like you know again spoon feed them with all the information

that that uh that teams need in order to do their thing uh the evm I think helps this quite a bit as well and is a smart move from the team to not have to to baby every single kind of uh project or or willing team that is looking to deploy on hyper liquid particularly because there's going to be a lot of tooling that available from existing evm ecosystems and the fact that it's the more mature VM so anyway those are a couple things in my mind that make it like that introduce risk and could kind of help serve a foundation if somebody was looking to create a a be thesis on hyper liquid another thing to kind of throw on the tail end of that as well is if hyper liquid defi doesn't take off

right like if the introduction of everything we know and love about defi whether it's uh amm uh liquid staking yield trading products you name it right like if that doesn't do well in hyper liquid if that ecosystem doesn't you know grow from budding to exploding right like that could be a significant risk as well right like there are other Market participants that could invest a lot into that and uh effectively siphon teams from deploying on hyper liquid and spending their their energy on doing it there where they won't get the same treatment um so yeah I mean those are a couple things that I think about as as well on top of obviously what Max has mentioned and so hopefully this is uh a fair and objective take to everyone

listening but yeah I think I think that pretty much covers it in terms of how I think about it yeah fantastic talks do you wan to do you have any you want to share uh no I mean not really too much to add on to those um I think that that covered the main ground there I mean I guess you could always say there's you know that the tail risk of another hyper liquid type that you know like we talked about at the top of the show like one of the bullish cases for hyper liquid is that every other perex that has you know brand something like this and granite hyper liquid has much more than just per desks but any type of incentive program like this like you know we've seen the the volume and metrics in in users you

know generally it's right after the air drop it it fades significantly and we haven't seen that um on hyper liquid yet so there's no reason to think that it will be the case but you know from the per from the kind of launches that hyper liquid was like we've seen this type of Playbook I mean hyper liquid is you know different in many facets um but we've seen this kind of fade out before and like I said I don't think that is the base case or you know even likely at all um but that would be just kind of another tail risk is that there is you know another per platform that that pops up and um you know some liquidity and in Ines flow there but then again like you

know you have the hyper evm launching and the spot market and some of that should should build a little bit of a moat so um but yeah I think everything else was covered pretty well yeah I'm gonna add um I agree with all you guys Max to add on to the regulation side the Pol the politics regulation side um will also say usdc usdt um like native deployment is something that I think about I know you're with liquidy and I love bold I had the guys on the Pod but um per Traders do prefer usdt usdc um as their base asset so that's one of my things so

I agree with you on that is like if there is um some form of political motive or incentive um then that's something that kind of worries me in general getting spot assets onto hyper liquid is my big thing um just to cut out that Reliance to arbitrum um but I think that's that that should be pretty easy I imagine there's a lot of money to be made on that for protocols and for um custodians or like I guess um stable coin protocols so I imagine there's a lot of people working on it um and that's actually something I wanted to ask you guys because Max you're on the angel Syndicate side Omnia You're Building um and one of the concerns is attention as in will the

hyper evm get enough attention from from users for the user side I think we have to see um from the application side maybe you guys can give a little bit of background on um I guess like hyperactive and then kinetic and also like what your experience has been like investing or building and what like the ecosystem looks like right now like is there a lot being built um do you think the base like protocols that are necessary are being built what do you think people need to focus on etc etc sure so on on on our end with hyperactive acve we've basically just been you know a hyper liquid power user Club since August and what we've done so far is we've incubated two projects

meaning you know I got Builders from my network to come together set up new teams set up new projects and raise funding to to build on hyper liquid and we've also in invested in to other projects and for you know disclosure sake uh Omnia and kinetic are are one of those projects um and the focus with the teams that were incubated was just on you know what we expect pain points to be um so one was a liquid ev2 style stable coin right that'll basically allow users to get a you know a ux that is not coin margin but at least you know unlocks borrowing that could filter its way back to per

trading um if they would like that um and then the other is a still in stealth project focused on dark pool execution which is you know another fun topic everyone has opinions on so I won't um linger too long on it but basically you know the main takeaway here is that you know to omnia's previous point right like there's not a lot of handholding in this ecosystem um test net is um a you know Battlefield at times um and so giving Builders the additional support they need and at least make the fundraising side and the you know advising side like as

frictionless as possible as has been our goal with that um and what I would say is at the moment you know a lot of the defi um kind of core building blocks are are of course like low hanging fruit right like there's multiple stable coin projects there's multiple lending markets um you know I think incumbent teams from other networks you know a few of them have deployed on testnet like like curve um and what's cool about hyper liquid too right is that you have this whole kind of business model uh that works for interfaces as well um so you know for those who aren't familiar um interfaces that submit either per or spot transactions to the chain uh can attach small fees to to doing so um and

so you know if you are a team that is able to get a lot of volume through the door with what you've built um you basically have very scalable liquidity and a and a you know matching engine backend right for for lack of a better phrase through hyper liquid um and so we've definitely seen some cool um cool successes there already um whether it's with uh the hyper fun telegram bot or the PVP bot um on also on telegram right like both of these projects have been just throwing off fees um with relatively small teams um so with with all that said I would say my current view on like the Builder landscape for you know hyper liquid and the hyper evm

in particular is um you know I I do think there will be growing pains um that's just going to be a fact right with something that's new like hyper liquid um there is a lack of a grants program right so that you know already is is a turnoff for some Builders and what I would say is you know the lack of you know uh open source exec ution client and just even you know a bit more detail around um hyper bft itself I you know I've spoken with a lot of D5 builders that are excited by the fact that you know hyper liquid has chosen an evm for its kind of you know smart contract sidecar but there are concerns

around you know what does meev look like in this type of ecosystem right and you know what can we expect from the validator landscape on on one right like those are pretty existential questions especially when you're dealing with people right who you know got into defi for ideological purposes more often than not like it's it's definitely um I would say there's definitely a friction right between like do you want users in liquidity and are you willing to make you know ideological concessions on that in the short run right like I think that's going to be a question a lot of Builders ask themselves you know here over the coming orders um and we we'll see what what the majority

chooses you know I think Downstream for users there will be enough uh that take the plunge I think you'll be able to you know borrow and lend and and do kind of some of the the basic defi stuff necessary to unlock you know the the type of activity you see on other l1s so I'm not too worried about it at the moment but you know I do think there's quality talent that doesn't make the jump because of that and that's you know always disappointing uh but it's the cards we've been dealt here in the community and you know we'll see how progress gets made um on topics you know like like open sourcing and Shining a

light on some of this stuff um here in the coming months fantastic uh om what do you think yeah the hyper liquid team does also not pay for any integration so for example like there was this I think not sure if this was confirmed but apparently Blast for example paid like $2 million for ether scan to create blast scan and I'm sure countless other chains have paid ridiculous integration fees and yeah hyperic could does none of that and they're very very public about that fact as well so um you know for example like there have been ecosystem builders that we've seen for example try to make comments about this and try to pressure or bully the team into you know paying for such Integrations but so much so that people have even considered like

crowdfunding among themselves like for certain stuff like trading view for example or uh ether scan um but yeah it's it's very interesting and and again a very unique dynamic because now you you kind of pit the um you put the pressure on the on the teams themselves to basically figure out whether it's worth U making the jump without any sort of direct uh incentive or not and like one example of of why this has made sense and why it's extremely consistent with the hypera team by the way saying this now from a a builder perspective right is even uh earlier in 2023 right like first connecting with the hyper liquid team uh they as in like literally just asking a

question in Discord saying hey like is there a DMM program or a designated Market maker program for example for um for hyper liquid and yeah the response has always been pretty much Crystal Clear like I'm positive the team has like copy pasted responses somewhere uh either on their machines or like in in their offices somewhere because like the responses are remarkably consistent uh and have been now for a very very very long time not just like a quarter or two so anyway that's an interesting perspective I feel um is good to bring up but yeah to to chat more now on the hyperactive part as well um in second everything Max has actually said because I'm part of hyperactive myself um and

I've co-invested in a couple of projects um so yeah like it's very interesting to see the quality of Builders increasing since the introduction of hyperm and by the way introduction meaning like announcement in April May uh it has certainly increased by quite a lot hyper liquid is coing from a Crossing Chasm as Max said earlier um it's going from a a Indie developer Community to yeah like a proper ecosystem of honestly like um like there's projects that are beginning to like reach out and follow like daily now like oh building this AI agent yeah who could have guessed that or um

building some sort of launch pad or building some sort of uh casino on hyper liquid or uh something right like there's there's a number of things that are are being developed now everything from like core uh defi kind of tooling as Max had mentioned like borrow lens CDP stable coins obviously liquid staking as we're developing with Kinetic and we've seen a couple others offer uh or announce that they're going to be offering uh liquid staking Services as well um and beyond that too right so the social trading element obviously like PVP um and Hyper pump by hyper fund so yeah there there's quite a lot to it and I only expect this trend to accelerate

and we've been talking with quite a bit of teams that are that exist in very prominent ways on a bunch of other like grandfather chains right and are extremely excited about uh deploying on hyperm so in a very short period of time and by this I mean like within 90 days teams have gone from yeah we'll evaluate to yeah we just can't fade this like it's not possible so now it's it's being like baked into their their GTM and nobody like nobody's going to get any direct Financial benefit as in like a grant of any kind like if everybody if anybody looks at like the hype uh distribution structure there's only like 30 basis points of Supply that are set aside for Grants anyway

and I really can't even think of what that would be that would probably be like the dashboards or explorers that people have built but that's that's about it like that's Community stuff that like people have invested significant amounts of you know Blood Sweat and Tears time energy and and obviously capital resources into so anyway I mean I think that's a good blanket statement of my thoughts on uh some of the the things being built and expecting this trend to really really accelerate especially post evm obviously as people can actually do stuff um so yeah that that's a cool part one thing that I'm a little blank to at the moment because there's no clear explanation of this um and I've been trying to think about it for quite some time actually

has been um actually one of the parts of hyper liquid that most excite me um funny enough so something I'm I'm questioning the most in a good way and then also one of the parts that excites me about so the native token gas auction system um like on the one if you will like the trading environment where you can effectively like compete with anybody for the right to launch a token right like Precious token space uh or ticker space whatever you want to call it um that is very interesting and I don't know how this applies to the evm like on the evm will people just be able to Mint infinite tokens ala salana and eth or will they have to follow the same um the same path where to Min a token on

the evm side you'll have to uh you have to win the TGA and like I don't see that making sense for long-term grow so yeah just a thought no I agree with you I don't think it makes sense in the long term we'll see that's something that I was actually thinking about as well but I imagine so one thing that's semi confusing to me and I think I might just try and beg Jeff to come on the podcast again but ipping but one thing that doesn't make a lot of sense to me is how the L1 the order book L1 and how the V ml1 is going are they're [ __ ] how they're going to work together um yeah I need to chat to him about that me side is another question that's something that I find

interesting Maxi brought that up but um I think I think that's probably a good place to end it um talks do you have anything else you want to add no not really I mean I think it was it was great um there's a lot of exciting things to to look forward to in the in the hyper liquid ecosystem and i' definitely be be tuned in for that and I appreciate uh all you work and and building out the ecosystem and continuing to do so it's uh it's much appreciated and there's a lot to be excited about yeah that's perfect very political very American I love that Ma thank you guys for coming on um thank you guys appreciate you it's been really fun and uh we'll definitely have to run it back at some point with various updates I'm sure by that

time I hope so maybe when they when they do the five million validators we can maybe when it uh upgrades from L3 to you know L whatever great [Music]