LIVE | HIP-3, markets_xyz and Kinetiq with Omnia | 0xResearch

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All right, welcome back and good morning to another Zerx Research live stream. Myself and Picacio joined today again by Shondaanda Deans. Uh glad to have you back on as well as Omnia uh with or from Kinetic. [laughter] >> Very good. Um >> how we doing today, guys? >> Good to be here. Thanks for having me, guys. >> Yeah, thanks for coming on. This is like your fifth time on, so I think you've been on more than Sean. >> So many to go still. >> Yeah, >> we just keep on doing them every every so often.

>> We have to update the people. >> Yeah. >> Um I guess like to start us off, Omnia, you guys had a very major announcement that was also kind of not particularly public. Like you very much started off Well, you've had two major announcements actually. I guess I don't know how much you want to talk about the TGE, but maybe like is there something you would have done differently with regards to the TGE and the points program now that you like >> Yeah, that's a good question. >> Uh quite literally zero. Um I think Kinetic >> is in the right place at the right time in the right ecosystem, you know, with the right people. Um everything about kinetic today, I honestly wouldn't

change a single thing. U the trajectory is extremely clear. uh the people that are working on it like all 18 contributors uh including ourselves like three founders um yeah I mean it's just really a dream team and everything that's being worked on is just uh of ridiculous proportions and uh the things that we seem to focus on like seem to scale by like 10 to 100x like every time prior to like what the idea by itself was right like and I always talk about how like liquid staking in a vacuum is actually like an extremely extremely boring business um and how I would weep if the largest liquid staking protocol on hyper liquid that was truly native to the ecosystem was simply just that right and ceased to be anything else. So yeah,

that really sets the stage for everything that's happening right now and everything that's to come as well. It's uh obviously very ambitious for liquid staking protocol today. Yeah, I want to kind of talk about that a bit because and maybe the other guys can correct me if I'm wrong, but liquid staking is not a particularly attractive business, but you get lots of um capital within your and that that works. Is that how you guys are thinking about it as well where you're like look like liquid staking is the bread and butter and it's what we starting off with, but we're very much like focused on adding multiple businesses on top of this liquid staking product.

>> Yeah. Yeah. Liquid staking for us even since the beginning when we started thinking about building krick last summer so wow about a year and a half ago we always knew that liquid staking could not be the end game liquid staking is very much a wedge it's it's the distribution arm um on top of the fact that it is very much an extremely necessary and required building block for any DeFi ecosystem we had a deposit last week that was larger than the entire liquid staking ecosystem on mon for an example Right. Um, you know, the hybrid VVM ecosystem is very very alive and very well. Um, a lot of capital moving through it. A lot of people running strategies uh with liquid staking tokens already. It's accepted on

options desks for example. It's accepted on onchain options protocols. Um so yeah our mission has always been with the liquid staking arms to ensure that Khype is by far and large the most liquid and utilized LST and ultimately the perfect money Lego for hype. Um an example of where KH could end up next which you know we don't have influence on besides making sure it's a really robust and sound product is perhaps BLP. That could be really interesting. I mean, there's nearly $800 million worth of kh that could be utilized in in BLP without the Hyperlid Labs team having to rewrite some sort of staking logic that allows like stake tokens which would be locked

on transfer uh to be used for BLP. So, it only makes sense to use an LST, right? And one that's already done all of the leg work in terms of infrastructure security liquidity etc., rather than like you know try and use I don't know like already natively stick type right because of the fact that it is a blockchain and you have to respect the things you've implemented on that blockchain right like on staking time or transfer windows from spot to or or staking to spot balancers takes seven days on hyperlquid so I very much respect that there are things that I don't know but you know liquid staking token very much like it's not just cutting corners but huge for efficiency uh when with regard to

something like BLP so anyway That's just something that comes to mind especially with recent events about things about like BLP coming out which obviously we're not privy to but that's okay. I think we've built everything we need to have done to to make things happen there including a recent hyper core listing of Kh against USDH. >> Yeah. I I um I want to ask about that thing you mentioned with the Monad stuff. Um this is specifically referring to KM hype, right? Uh >> no. So like one singular deposit into Khype last week.

>> Oh wow. >> So yeah, I was like 509,000 hype deposited. Uh KM hype actually like you're right. That's that's even larger than the single deposit I was referring to. Um but KM hype with regards to markets was also history in and of itself. It's the first time an exchange related LST with an actually disclosed and guaranteed profit share has ever been created really. Um this started off as like a really small idea where you know you could think of I mean hyperlid obviously sets the stage for like some really really crazy stuff to happen and um a few months ago we started thinking about it like what if with HIV3 and obviously through liquid staking

obviously you could effectively open up the ability for an exchange to be co-owned by its users right like wouldn't it be crazy if you know some portion of Binance uh was tradable but like if somebody who really believed in Binance and traded a lot on the exchange, wanted to actually bet on the upside of it, you know, you could, right, and back it and in exchange for that, take whatever proportional ownership you have in that as some sort of revenue or take for it. And that was essentially what set stage for what we call XLSTs or exchange specific LSTs. And this is more so designed for the launch platform, which is effectively a launchpad. You can think of it as a pump fund for people who want to launch HIV3 exchanges. um nowhere near the same in terms of like uh frequency given like

there's memecoins and like $20 million they need to raise for an exchange, right? Very very different things, but the point being the concept is the same, right? Like you drastically lower the barrier to entry. Nobody needs to go and build a liquid staking protocol by themselves. You can use the battle test and architecture that we've already developed and then it the the work will be on you to come and create a really robust offering for people who decide to back you. And in exchange for backing you, these people should get upside in what you're creating, right? This is what KM hype is. This is what we raised for uh last week. And thankfully in an hour and a half, and why K&TQ was a really cool part of that was because it was entirely K&TQ gated, right? So if you were not a KTQ holder and even if

you had the entirety of the hype yourself, you couldn't just come in and like strongarm your way in. Uh or even if you were a KTQ holder, you couldn't be the only one seating it, right? So in total nearly 500 people seated it and then like 40 or 50 people bought on secondary markets uh which allowed this kind of uh pre uh pre-launch exchange token to be traded which is very interesting. So anyway that is the high level of uh kind of the lore behind what happened and then obviously like what followed. So >> yeah I guess one so just for the listeners as well as my understanding KM hype you get the deposit and then that is used for the launch product

>> so that KM hype has a completely different risk profile technically to Khype because Khype you find KM hype is >> from what I understand whatever is like used to launch markets is semi like permallocked but not really right Yep. Yep. Yep. So at Kinetic we have this philosophy of isolating risk, right? Like any traditional company would or like any anybody in their in their right mind, right? Like you would want to segregate the risk between what is a general purpose liquid staking token which is Khype, right? This is like the building block for DeFi. KM hype is not the perfect building block for DeFi, right? you are taking way different risk by staking into KM hype than you would

be for KHY or for VK hype for example which is the earn related product right that is a different risk profile than KHE so you have the general purpose LST which is KHype you have earn which is represented by what we call VK hype this is hype staking again like nobody's losing hype exposure under the hood it this hype is being deployed by beta into several different protocols like project Xelix hyperlend and it is generating further returns right in one specific vault that goes and basically gets exposure on behalf of users right it's a way to diversify your exposure to the hyper liquid ecosystem get exposure to hypervm protocols without having to manage it yourself it's totally passive

and then there's KM hype right which is which stands for kinetic markets hype effectively this is still hype obviously completely under the hood you're still earning the native staking yield but similarly to reststaking without all the nonsense that goes into staking. You are taking your hype and you are essentially associating it with uh or or delegating it if you will to the exchange that kinetic is going to launch which is called markets >> right >> the underlying stake will power the exchange again now this is totally separate from the earned product this is totally separate from from the general purpose LST it will power the exchange in a completely isolated environment without exposing anybody who you know connect is the single largest staking

account on hyperlid outside of team right? Why should anybody on Hyperlid even if it was 1% or you know 10 basis points uh have any sort of exposure to what happens at markets right if they're just doing regular you know DeFi activities that makes zero sense right and this is the case unfortunately with like you know a rising trend if you will where across the ecosystem there seems to be this blended risk right uh so at kinetic you know we have very clear philosophies around making sure that risk is completely isolated and there there's no need to basically blend uh risk across what should be separate products. Um that's why you know trap by you know you don't get exposed to certain you know underlying contracts or

exposure if you're just depositing into like a checking account right or a regular passive investing account right so it should be similar onchain and obviously with the advantage of you know being able to you know do what you want to have freedom over your own capital but still not get exposed to things that you shouldn't have exposure to if that's not what you opted into. So that's that's the high level philosophy. >> I think that makes sense. Um I guess one of the actual questions there you go you can ask. I I was just going to ask something about kind of the risk profile of KM hype and like based on my understanding it's not necessarily pegged to one hype and it could trade freely right because on one hand you

have this downside that the hype is illquid it's locked because the protocol [clears throat] needs it for the HP3 markets but at the same time there's a upside because in perpetuity earn 10% of the exchange revenue right so if people expect that this exchange is going to do really well it might trade at premium, but if the exchange doesn't do well, there's a risk that it trades uh below >> the value, right? >> That's right. That there's liquidity risk and then there's obviously like the execution risk of the exchange. So, the the liquidity risk any of the 500ish holders right now could price and trade it at like basically price at a discount, right? So, people can come in and actually buy, you know, KM hype at a discount if that was the case, right? Um and then like you said as well

Shondaanda like people could price the revenues for cam hype much higher and anything else associated with cam hype much higher and then people could buy it from them higher premium or anybody could price it at whatever premium they'd like if there was a willing taker. So that's the idea and that's the duality of KM hype and like kind of the beauty of exchange LSTs like all it's it's stakers make up the pricing of you know said XLST. Now the interesting part again and what makes the KM hype I guess interesting for arbitrageers as well is that all of the hype for KM hype is staked under the hood right so the interesting part about this is that none of the hype is actually being used to finance anything from ticker related auctions or any other sort of expenses

so all of the hype stays there and is not getting put um it's not getting spent the protocol so kinetic is still purchasing each and every single ticker right and every market and handling all the expenses. It's not like this is like a pool with like a management or performance fee if that makes sense. Right? So I hope that also makes sense, right? like uh this is one of the dangers where you know a portion of an LST right if like say some other team is building an LST for HIPP3 exchange you have to be sure as a staker that they're not using it for other things that you're not comfortable with right which is like financing the ticker auctions which gradually depletes the amount of hype that you have under the hood right like if I go and buy an HIPP3 market for a thousand hype and I've raised a

million hype then I technically partially unbacked right because some portion of that hype is no longer in possession of the LST. It's been spent as gas, the hybrid of good blockchain, right? So that has been the philosophy with KM hype. All of the hype is there. It's all staked. You could see it all on chain. And you know, at any time should the buffer be filled. So to give an example mechanically as to what this looks like, there's 500,000 hype required for each type of exchange as we all know. Uh what kinetic did with markets essentially is have a 388,888 hype buffer so that people can come and go as they please. So if that buffer is full, somebody can come and withdraw uh

any amount of that 388,888 and that 500,000 uh is is not able to be withdrawn because it is powering the exchange. At some point in the future, Canada governance will be able to decide whether the exchange should continue to live on or not. Um, and the beauty as to why KM hype was gated by KMTQ holders was because the people that are associated with, you know, own coowning the exchange just so happen to be completely aligned with the protocol, right? So, they're one and the same, right? If you are a KM hype holder, you are more than likely because you can technically buy this in secondary two, you are more than likely a K&Q holder.

Therefore, there again, you're one and the same, right? Like your hype exposure or some of it is tied to the protocol, you know, managing it on behalf of, you know, markets growth. So you should also be able to vote again in the future on whether you know the exchange ceases to exist or not. And that gives arbitrageers confidence who people again who are obviously interested in having hype exposure and if somebody for for whatever reason prices at a discount will be able to always know they could buy 1k of hype and redeem one plus hype off that in the future because it is earning the staking rewards even if it earns zero money from markets. So yeah, I hope that uh makes more sense out of it.

>> Yeah. No, that makes a lot of sense. Um do you maybe want to get into the philosophy of markets XYZ and what assets you guys are planning on listing? I know that uh Felix is doing equities, Ventual also doing pre-markets. Um but I'm curious what you guys are doing. Are you going to compete with them or kind of offer the same markets? >> Yeah, it's a good question. I think comp competition is like really relative, right? Like um that was the question for us for five months like if we were going to compete with like existing liquid staking protocols and for us the the approach was completely different. So I I guess naturally you could assume that there will be competition on HIV3 who markets competes with is is up to uh the market entirely. But like the idea is that markets is coming to become you

know a beast of its own right. uh in our in our videos we outline some really interesting ideas for markets that will exist. Um but the general philosophy is that it'll be all markets at all hours and all onchain right so you can you can always make of this what you will but the idea being that you can expect the world's biggest markets to be traded on uh the markets platform and this is the importance for cam hype right it's powering the entire existence of the market's offering uh rather than going and sourcing the hype privately or uh you know any other sort of you know I guess you could say methods by which people can source hype for HIV3 um the entire ity of the idea essentially was that all these markets can live on chain and be co-owned by their users right so

there's a world just tagging on to what you said as well Sean that is that you know there could never be sellers of KM hype or there could be you know such small amount of sellers that only you know a singledigit percentage of uh you know KM hype is in circulation and available for trading right um and these people would be be able to essentially have uh upside in whatever comes with the markets exchange so whether that equities, whether it be FX, compute, uh, energy markets, um, commodities of any kind, you name it, right? It can all technically exist on markets and, uh, you know, the KM hype holders be able to essentially share in the upside of that and not have some sort of, uh, dangling carrot, right? Like you have some sort of revenue that you can use to price KMI

or whatever that should be and should scale with the growth of markets as well. One question I have here is who who's doing your um I guess like this is one of the few opportunities I have because Charlie's very quiet and the last time I had a chat with him. He didn't want to [laughter] exchange at us. So I'm going to ask this and you don't have to answer it if you don't want to. when you're approaching this building out of this markets product. So you're bringing in liquidity and who's doing the because the primary variable here is and Shondaanda you can correct me if I'm wrong but the primary thing here is like you have to choose the asset name and like what market it is um and Oracle how are you guys doing the Oracle are you working with the um

how are you guys doing the Oracle side >> yeah it's a good question so the Oracle provider for markets is KO so KO is an extremely established institutional data provider uh you know provides data to the CBOE CFTC SEC, you know, all the threeletter agencies. Um, and yeah, I I guess has some crossover with crypto too, but the point being that yeah, the focus for markets is real world and institutional, I guess you could say offerings and uh, you know, assets that can be traded. So yeah, KO will be the oracle provider for sure. In terms of who provides liquidity, I think the idea is like the breadth of markets should allow for all types of liquidity providers to essentially have a great

time in terms of asset selection. Like that is a huge huge uh point of the offering. Um and we definitely expect to have some institutional liquidity providers uh especially because of the fact that you know the pricing source is expected to be top tier essentially. We've been working on it for a very long time. Um and yeah, ultimately people can actually see like on the markets site like where we raised the 888,000 hype uh some of the the features as to you know what they can expect uh from you know markets in general and how it'll be priced. So obviously like what won't be made public is some of the formula as to like how things are priced but in general um the high level information

that traders will need to have will be publicized for sure. I >> think that makes sense and When you say um so Felix has USDH, Mark trade XY Z is using USDC, how are you guys thinking of the quote asset? >> Yeah, we also stated that the quote asset will be USDH as well. >> Yeah, it only makes sense, right? Like if we're >> if we're going to have you know this uh I mean I mean in general like kinetic is built for hyper by people on hyper liquid, right? So why would we use anything other than an aligned quote asset? Um competing on the validator operator per side um is something that we noticed probably wasn't the best

idea. So therefore it's really just to bring exotic assets to hyperlquid things that don't exist on chain. Um at least not in the form of like a really efficient perpetual to trade. So yeah, this is uh this is why you know USD was selected because it would also make it the cheapest place to trade all of these equity ps and um you know commodity ps etc. Like anything that exists on markets it will be the cheapest venue by far trade. >> Yeah that makes sense. Um last question I have and then Danny actually Danny you can go and I'll just follow up. Yeah, I was going to ask I think it's relevant to the discussion here like how are you thinking about kind of distribution or like monetization of the trading

activity itself like when I look at some of these other like eventuals and some of the other non >> uh kind of XYZ listings there's not a lot of activity happening there um if you might be competing over potentially some of the same tickers >> like I see there's kind of maybe you know connection or working with pbtrade like I guess fundamentally how you thinking about It's it's a competitive space. How are you going to get, you know, volume and trading activity to to your offerings? >> Yeah, it's very competitive. Like that is uh you know, not inaccurate at all. Um the the primary difference for markets is that you know what we've realized is that CT is a very very small bubble, right? Um these things need to be super super cheap and accessible for

anybody to trade outside of crypto Twitter. Um, and while crypto Twitter clientele, if you will, are like really really valuable to have, they are very much the tip of the iceberg. Um, people seem to forget that PvP is the highest grossing app uh that's developed to builder codes ever essentially probably now neck and neck with Phantom. And the reason they did this is not just because of the pure USD that they generated, but also the fact that they plowed the entire thing into hype and staked it. Um, they've earned, you know, high four digits hype in terms of staking yield.

now on this. So yeah, I mean these guys they they know distribution very well. We know distribution very well and the idea would essentially be that you know who we go after in terms of users on markets uh will be those that are really priced out or in inaccessible in terms of or or or are in a position where markets of this caliber are inaccessible to them uh especially with like the ability to trade a perpetual on them, right? So it's one thing to be able to buy spot which has its own I guess you could say cons uh but we believe that you can make a perpetual at some point way more efficient to trade or hold than a spot. So yeah, you know, there is there is a line between how much you

focus on the same pool of users and then how far out you go outside of that. And I guess you could say you can expect markets by far in collaboration with, you know, the different partners that we mentioned, PvP being, you know, the core one. Um, yeah, you can you can definitely expect us to branch out far far away from purely just CT. Uh, it is super capped. there's a huge ceiling and uh again if that that's not you know CT is like usually expected to just trade pure crypto assets and I think what has been cool to see over the last year or so has been the fact that there's been a lot of bleeding over between like trad assets and crypto in terms of the people that trade both um I mean like being in the space since 2017 is the first time I

see such convergence between people that are talking about trading you know traditional assets versus crypto assets or both at the same time. So I think what will be really cool to see is like what kind of crossover does come on over but the idea being it's not for target. It's not the end uh it's not the end state in terms of target users. and stay in the target users is obviously putting, you know, markets in the hand of households, right? Uh maybe that leaks the fact that there's going to be a mobile version of markets, but still I think the point being that yeah, like um the ceiling with crypto Twitter audience is very real and not something that we plan to focus on outside of the core users that obviously do come in. So yeah, I hope that helps give a little bit more color

as to what some of the direction will look like and why market's not really here to simply compete with um you know any of the existing exchanges. We have a lot of respect for them all and the idea is not to like sit there and like [ __ ] on each other's turf. It's more so just to grow the pie in general. Uh I think if we could bring in net users, which is like the goal by far, it makes Hyperlink a better place. And uh yeah, it's not done for purely altruistic purposes. I mean, the idea is obviously to build a really kick-ass app here. Uh, but the point being that there are a lot of other ways to go about it besides people who are, you know, really interested in trading for like, you know, maybe a couple of reasons as opposed to like

actually solving somebody's problem, right? This is probably best for for people who may find it hard to open a Robin Hood account or an interactive broker account or something like that, right? Like that's an example of uh the type of trader that could thrive on markets. >> Yeah, I think that makes sense. Um, one more I guess taking it away from Marcus for a second. Um, you guys, and I think this is expected. Um, post points program, you saw a lot of hype leave. Um, you've I think you made some of it back with KM hype. Um, are you looking to do more and more of these styles of um, programs to bring in new hype

stakers? What's the like what's the strategy going forward for that to like question very well and alive? >> Yeah. Yeah. So, Kinetic today still has close to 80% market share in liquid staking. And I think what we've noticed is that a lot of people are obviously very very defensive when interacting with HyperVm protocols, especially with their forever hype stacks. So in our case it's it's more so a matter of how do we make everyone feel as comfortable as possible staking with kinetic and one of the biggest things has essentially been just making sure that any you know security related concerns are as alieved as they possibly can be. Um, Kinetic has a ridiculous security culture and obviously this is not a a super public

thing uh understandably. But yeah, so Kinetic has been audited six times, right? First of all, which is absolutely massive. Prior to launch it was four. We just did two other ones to audit the uh launch platform and also KM Hype. Uh so one of our largest audit partners, Spearbit, we also run one of the largest uh bug bounties in the industry for uh which is $5 million bug bounty. Um and daily we are monitoring you know every single type of submission there is on this and mitigating anything that has that has ever arised. Thankfully um you know there have been zero issues and the idea is to make sure that that is not the case. So a couple things that we're rolling out as well. U on top of the audit program we've we've worked with Hyper Native for you know monitoring systems for a very long time now. And

then on the other side of it is like safe harbor related opt-in which allows anybody who does you know in the event of some sort of unfortunate situation um you know who does like white hat something you know they would get a proportional reward and like no ability to like legally you know go after them. So, so like Kinetic has like put in place a lot of really interesting security redundancies on top of the fact that we have like a massive bug bounty which should deter, you know, a lot of people from acting nefariously. Um, but also encourages people to if they find issues, bring it up to us and get paid accordingly, right? Like that's been a big thing. HyperVM like is very much a quote unquote beta, but you know, we treat this as if we're building on the most established, you know, blockchain

in existence, right? Like if this was Ethereum, right? this would kind of be considered like a standard thing, right, for like a really large protocol. So, we're very much like punching above our weight here, right? That's one thing. Um, and very soon people can expect some very very interesting changes on the protocol side that should encourage a lot of stake to flow from hyper core to hypervm through kinetic. So, again, without saying much here, the point being that yeah, it is something that is still a really core focus for kinetic. Obviously, like the staking component is is massive and it always will be for us.

Um and it's now again like the the the next part and like you said like talking about a post points era or post token era. Kpoints still run today. Um you guys may have seen recently or may not but quite a few people have noticed that Kpoints have been going on since November 13th which is the day that uh Kpoints originally ended. So that was really interesting to to reimplement and uh we saw a lot of people really excited about it obviously which is great. Um, and the idea for us now is making sure that a couple things happen, right?

Exporting the liquid staking infrastructure and and doing this in a way that is extremely profitable for the kinetic protocol and subsequently the KTQ token holders. Um, and obviously now with KM hype, you know, markets going live and the exchange being, you know, forced to be reckoned with should be super exciting and like an industrial case study to say the least. um you know the staking business takes uh it is still very much front and center but I guess you could say it is like a dualpronged approach right dominating the staking landscape as well as dominating the exchange landscape is is very much going to be a super fun task to undertake and now kinetic can do it without like the quoteunquote overhang of like the uh pre-token state of every protocol essentially on on

hyperl but like well beyond hyperlid as well so I hope that makes sense and like gives some color but u yeah It's it's definitely an interesting state of the union and yeah, we couldn't be, you know, more excited to be in this position. Like we honestly like we give very little [ __ ] about macro micro. We just really focus on um you know what it is that we do best which is staking and now uh the exchange related component with markets on top of hyper liquid. >> Yeah, I I think that makes sense. Um, I want to ask a bit more about the HyperVM after this, but first Danny needs to complete his task for the day.

>> Sure. >> Before we uh continue on for the day, I want to do a quick shout out to our sponsor for today's stream, Katana. Katana is an L2 built for DeFi and is pioneering the ecosystem category of productive TVL, believing that change should be graded on how efficiently assets are put to work in DeFi rather than just TVL. From now until the end of November, users that bridge to Katonic can earn boosted yield from CAT incentive campaigns. add a vault, bridge yield, and other chain revenue. Follow the link in today's show notes to get started. All right, back to it. >> Perfect. Um, I have I was going to ask about the HyperVM unless anybody has any more questions on the LSD stuff.

>> Yeah, I guess um I have one question more about the tokconomics of kinetic. So, I'm wondering how you see the role of the kinetic token. Like I know for markets 10% is earmarked for KM hype, 90% is going to be used for growth initially. Do you see more of that eventually going to the kinetic holders or is it more like they just got whitelist access to the KM hype product and more of the value is going to flow to that. Without divulging too much about KDQ specific uh future developments, what we did soft announce was KB1.

KB1 is going to be very interesting. you know, having a staked version of the K&TQ token uh very much allows connect to do really really interesting stuff in terms of positioning the token as, you know, the very heart of the ecosystem, which I I don't know how anybody could deny uh is is very much already the case. Uh if not shown already by KM Hype, you know, the future of product rollouts should be very apparent that KDQ is extremely important in everything it is that we do. Um there's been I had a conversation recently and um I've seen a lot of things happen like across the industry around like uh special differences between like uh tokens and

equity and stuff and at kinetic that's never been the case and that never will be the case. The token is everything for every single participant whether it's investors in kinetic which is pretty much the lowest across the industry for liquid staking protocol at seven and a half% sold to investors. Um for contributors, same exact thing. That is the only upside essentially every single participant has. Um and then again, obviously the same for the entire community, right? So the KTQ token float was the largest of any liquid staking protocol practically ever. Um for context, uh even above uh JTO at like 150% larger in terms of supply that went through an airdrop. So yeah, I hope this helps to kind of send a message in terms

of like where kinetic stands and short-term price action is not something that affects really anybody on our team when we're focused on doing a lot more than just like liquid staking especially. Um an example like going back to like the investor related conversation as well. something that was super interesting about like when kinetic rays so like I' I've been pretty public about the fact that you know kinetic rays in in 2024 you know well before even the launch of hypervm and uh you know well before we went live in July and now well before you know the token itself went live you know it is extremely extremely important like to have the context that the team is looking at this through because otherwise I mean it just it just looks

like any other liquid staking protocol but you know kinetic raised less $2 million, sold less than 8%, so 7.5 to be specific, of the protocol to investors, and has basically gone on to have essentially the highest, you know, growth to cap table or growth to invested uh raised amount uh ratio out of pretty much any protocol outside of Hyperlid. Uh so that in and of itself has been extremely important to see play out and is very important for what's next. Usually protocols that like oversell, especially the liquid staking side of things to investors end up having to to to battle a pretty interesting, let's just say path, right? It's like one path is like

do you essentially just hoard up whatever you can for like the first couple years and like know that the token essentially is doomed for the first two or three years of trading or do you essentially give as much as possible to the community and then essentially you know build up from there and regardless of what happens you know the protocol is positioned to be very very different to liquid staking uh those that price it as a liquid staking protocol you know are able to do so and that's perfectly fine it's a free market uh but the intention has never been you know since we started thinking like I said about in 2024. The intention has never been to remain a liquid staking protocol whatsoever. Um, like I said, Hyperlquid allows you to do really, really interesting stuff. And if it wasn't already clear, the fact that

Kinetic is building infrastructure on top of Hyperlid to export its liquid staking offering and then on top of that take advantage of the applicative uh, you know, technology like HIPP3 like where you can build a proper application on top is uh, definitely not something that is normal by any means. And you know, we're very much trailblazing in the sense that this is not the case with any other ecosystem. We have a lot of respect for what Lido and Jito have built in their respective ecosystems. But the fact that Hyperlid is an exchange and like it houses that flagship application that it then allows uh for the creation of applications on top of that, you know, for us to not use, you know, this staking component to basically build into something like that, um yeah, would be would be really

sad. So that's exactly why that's not the case. So yeah, in a posttoken era, it's uh if anything, it's it's actually better for us, right? Uh you know, we're obviously extremely keen for, you know, what whatever comes, but obviously very excited to see like the levers in the kinetic protocol like ride to for whatever whatever comes next, which is obviously markets in early January and uh beyond that with launch where anybody will be able to launch their own exchange on top using the kinetic infrastructure. So yeah, you know, not in it for, you know, a couple months of glory or whatever that came with uh Kinetic being, you know, the largest liquid staking protocol and still is, but very much in for the whole picture if that makes sense.

>> That does make sense. So just I guess like to clarify one thing there. Um you don't have any plans to launch a new token for markets. Um and >> no, not at all. I don't I don't think I mean I uh I recently >> have the token right like >> yeah there's only KQ there's nothing else like markets will never have its own token ever it is all it is a kinetic product you know third and third >> um that's why it literally says in the bio it's by kinetic >> so yeah you know it's very funny you say that because I had seen you know some speculation on like Arcus having its own token that would literally never happen there is only one K points program there's only one token and that is it right like there will not be anything else. Um, kind of like Coinbase and

Bass, right? Like, uh, I think coin holders would be very upset if Bass ever tokenized, right? And, uh, rightfully so right? >> So, anyway, that that would never be the case. >> What's that? >> I I I have this theory that I've had for like a year now is that Bass is going to have to tokenize because they've put themselves in a position where they kept saying the token is very important. The token is very important. I've actually never even seen them say like they would that's crazy. >> Jesse Pak is very much like coin it, right?

>> Oh yeah. >> So I can't imagine that. We'll see. I don't know. >> Hopefully hopefully they don't coin that. [laughter] >> Um we talked about >> coin shareholders. >> Yeah. I don't and that like brings a whole new dynamic into it, right? Like it's cuz in crypto it's very much like there's privately owned equity and then token and then that's like the the issue that you have versus like now if you have like public equity and then >> yeah it's like borderline fraud in my opinion right like you have like companies that will basically like take the equity on the back end and you know like shaft token holders for the sake of like I don't know raising or something

like it's like practically like I don't know daylight robbery in a in a weird enough So yeah, that would that would literally never be the case with Canada. It was funny enough like we had a conversation about that the other day like somebody had had brought that up and um I was almost like bewildered that this is like a a thing. But it's a very real concern, right? like it's a very very real concern that you know some I don't know entity is like pocketing equity like revenue on the equity side and like the tokens get nothing because I don't anyway so the point is like uh yeah I don't know kinetic is very pure in that sense and like we have a very purist mentality about that everything should be clean very straightforward and there's no you know muddiness between you know is there some sort of private

equity deal that takes something or not like everything is done really transparent our treasury isn't on chain entirely. Um for really interesting updates that are coming out, all of every single bit of uh revenue will be detailed. Um and like how it's split and whatnot. So yeah, the point being, yeah, I don't know. I mean, I I feel it's almost it almost feels weird saying that yeah, we would be an anomaly in that sense. I I thought that by now that would kind of be industry standard, but I guess not. So >> unfortunately not. Um I have I guess I think I have like two more questions. Um one is um and these are more broad questions. One is you've I don't think you guys are the oldest protocol on I

prevm um >> no definely you've definitely been there for quite some time. >> Yeah. >> And I feel like >> I prevm launched in February of this year and we launched in July and the reason why was because of the fact that core rider was not ready for free. So it was some of the most brilliant times because you know obviously wanted to get in there and and get after it. But uh yeah it was good. We had almost a year to basically like build up every sort of uh integration that existed for kinetic pretty much day one and the ones that followed after. So >> yeah, >> how has the hyper EVM landscape changed in your opinion especially I would say like preb

and then also over the past one and a half years like you clearly talked to more of the ecosystem participants than any of us maybe Shondaanda talks a lot more as well but how is like competition changed opinions changed the community changed in terms of builders et like any key takeaways any thoughts that you have over there? >> I think a lot of tourists have been rinsed out and uh as usually happens like as as naturally occurs in in ecosystems um and that's okay. Um it's actually preferred if anything uh like any ecosystem right hyperl has its tourists and uh you know they will naturally see themselves out

um acetic like you know connect kinetic was born because of the fact that you know we are very much like hyperlid maximalists and in every you know sense of the word that doesn't mean we don't take other things into consideration but you know if it wasn't for hyperlid I you I don't know. I I would have a lot less faith in in the industry outside of Bitcoin. And obviously like yes, smart contracts are great. Um but the point being that I don't know I it would be significantly less interesting like probably to the tune of like a fraction of a fraction, right? Um, not just because the the playing field was completely evened out, but particularly due to the fact that Hyperlid is really the only shot today and and honestly

like somebody can try and and correct me if I'm wrong on this, but today Hyperlquid is is the only protocol and it's funny that I'm even saying the word protocol and not just saying like business, right? Because usually you would expect this to be a private business of some kind, but Hyperlink is the only protocol today that has a shot at basically making Binance essentially obsolete at some point. uh portfolio margin is an example of this which I think is great. We can touch on in a little bit but the point being that hyperlrid has accomplished like I say very often now the holy grail of what exchanges essentially could never offer because of the fact that they are jurisdictionally handicapped. So an exch centralized exchange obviously has this you know jurisdictional uh lock to be like that prevents them from doing

certain things. Um, but they enjoy the ability to obviously like keep user deposits uh and and custody them and do whatever the [ __ ] they want with them essentially. Uh, they're incentivized to not act horribly because the fact that you know if you do anything wrong with user funds like you are obviously going to be held accountable for that. So they are obviously incentivized to play nice but that doesn't mean that you know they have to do everything according to industry standard as if there is any. Um but hyperlquid already by itself came and changed that with the non-custo major of hyperlid. Now the next level of the centralized exchange grift is launch your own L2 right um and then obviously give said L2 a token right so hyperlrated is once again like breaking this uh you know reality because of the

fact that the hypervm launched in complete connection with the flagship application which is the exchange right that alone in and of itself is exciting even if we were not building kinetic that alone would be super exciting and weren't you know doing things with um But after that, right, like you have the subsequent ecosystem that followed after like a massive wealth effect with the hype airdrop and you know, Kinetics placement is very interesting because all of this wealth needed some place to go, right? Like uh you know, there there's still what I don't know uh $10 billion or something of that nature worth of hype in circulation today. Um that has to go somewhere, right? Liquid staking is a natural kind of next step for that. and then leaping off of that pad into the into the ecosystem is um

you know kind of like what follows. So how I look at the hyperbmaturation is like I don't know we're at the part where you know the early touristic adopters kind of fall off prior to like real real uh developments you know making the ecosystem stand apart. Um what we did with liquid staking is obviously not a novel thing but the way that we do it is interesting. We're taking the stake on the EVM side and routing it to the to hyper core, right? This is why public companies stick with us. This is why institutions stick with us and uh so on and so forth. So, um I guess how I look at HyperVM today versus how I look at it in a year is is uh pretty path dependent, but I do believe that um you know, it is still the most exciting general purpose smart contract

environment to be in. uh not because there's like an insane amount of apps that are doing crazy things, but because of the fact that the ones that are such as kinetic um you know you can really get behind and there will be pure innovation that follows. So that's where my head is personally at on it. I still believe hypervm is like a massive massive component to what makes hyperlid what it is. Um that doesn't even talk about like builder codes which I think justifies hyperlid's valuation today alone. Uh a lot of people may disagree with me on this, but the point is if you value Hyperloop like a stock, like there's no no business in the world today that exports, you know, five six billion dollars of of liquidity without charging a dollar for it and makes money on whatever flow uh net new traders

bring in. So this is my general view, right? Like nothing is positioned like hyper liquid. I still do do believe that hyperlid is going to where it deserves, which is going to be like several thousand dollars. And that doesn't that doesn't apply that doesn't imply that it's going to be worth like trillions of dollars. But who knows what happens with 40% of the circulating supply, right? Like or or the non-irculating supply that's reserved for community. Does that get burnt? Does that get distributed in some way or shape or form? I'm personally in the camp that it gets burnt. Uh similar to Binance burnt, you know, a bunch of self-minted B&B. So yeah, I mean I I'll go out on the edge and say those things, but like you know this is why like the state of Hyperlid is actually very fluid, but in my mind

it's a it's a really really simple thing, right? Like there are very few protocols on Hyperlrid today that are not forks and kinetic is pretty much sitting at the very top of that list and we plan to ensure that that stays that way. So yeah, >> very good. Um we're coming at the hour. I want to ask um you to show you've already done everything you can but what do what do you want people to check out um I think everyone's already quite familiar with kinetic but like is there anything specific that you want them to look forward to look into what should they what should like people do as they um at the end of listening to the to this conversation

>> I would keep an eye on HIV3 auctions that's pretty much it >> very good okay well as always an incredible pleasure. I appreciate you coming on and spending time deeply into >> Yeah, thanks for having me guys. Appreciate a lot. Um, obviously very, you know, very good to be back as usual. And, uh, yeah, we'll obviously run it back at some point in the future again. But yeah, for those that have questions on staking their hype, you can always DM me um or chat publicly on it. Um, or any questions at all around like any kinetic products or or what's coming. So, should be great. Uh, appreciate it. And uh yeah, catch you guys on the other side.

>> Peace. >> What's going on? >> Cheers, guys. >> Uh yeah, I guess before we discuss anything else, uh one last shout out here for Katana. Katana is an L2 built for DeFi and is pioneering the ecosystem category of productive TVL. In just two months, Katana has surpassed 500 million in TVL with over 90% of that being productive in ecosystem apps like Sushi and Morpho. From now until the end of November, users that push katana can earn boosted yield from cat incentive campaigns at vault bridge yield and other chain revenue. Follow the link in today's show notes to get started. Uh really ought to find out whether that campaign is extended beyond November. Um >> we're gonna figure it out. [laughter] Um

guys, I think Mondays are one hour. So, uh I think this is us. This is it. Um Shondaanda, I appreciate you coming on two weeks in a row and asking multiple questions. It's very kind of you. Um, for reference, I had a very funny moment with Shondaanda today where Wait, I'm gonna see if I can [snorts] He He was like, "I need to get a haircut." And then I was like, "Okay, well, can you get it before the pot?" He was like, "Yeah, okay. I'll get it before." And he sent me this picture. And I thought this was this was what they did to his hair.

>> [clears throat and snorts] >> random like you see, but he informed me that it was Gemini. So, I got [ __ ] I fell for AI slop the >> and and and just imagine if if my hair actually was cooked like that, he told me I have to turn on the camera specifically and show my side profile. So, >> I think >> should tell you something about working for Balk. >> Very good. Um, okay. And on that note, we can end it. Um, Danny, again, a pleasure to be here with you as always.

>> Hey, always always glad to be on with you, gentlemen. Always glad to have Shonda on the show. Two in a row is incredible. Let's see if we can get him for three. I don't think we will, but uh >> maybe >> next time you go to the barber, I guess if you walk in and you could just say, "Yo, Chief, please just [ __ ] my [ __ ] up." I'd love to see the Gemini picture in real life. >> I mean, he already kind of does it, right? These zoomers and their mullet cuts is insane. Sean, do you want to give a Yeah, it looks [snorts] good though. It looks hard. He's muted. It looks good.

>> He's muted. >> He's muted. He needs to Yeah. >> He can't even sell it right now. That's crazy. >> Oh, but it looks good. Um, he's going to beat me up when I see him next. >> I mean, we're we're hunting you, right? That's part of the itinerary. So, >> yeah. Very good. I >> think that's how uh it might be how Axel token holders feel right now. They just got blind. robbed right in front of their faces. Another uh >> I'm gonna try and bring on Dude, Noah went on Empire. >> I know. Can you Let's be real with this guy. What is going on here? [snorts] >> Everyone wants to play in the big leagues.

>> He's going around us going straight to Big Yanowitz. >> He's [ __ ] shopping around. Same thing. James Kristoff did the same exact thing. He came on our show three times and he went to gore. >> Yep. >> Said, "These guys aren't big enough. I gotta go elsewhere. get my ideas out in the world. >> Disrespectful. All right. Um, to our listeners, I hope you had a nice Monday and I hope you have a great rest of the week. This Friday is an exciting episode. Um, we're going to be hosting the Block Works Research Advisory Risk Crew and going to talk about lots of math stuff. So, I hope you're all excited about math and it's going to be fun.

>> Thanks for tuning in. Catch you all next time. >> Thanks, guys.