How Hyper-liquid Quietly Killed Every DeFi Competitor – The Chopping Block

Like as a user, what you want is you want to like either have zero money left or you want to have a lot of money, right?

That's kind of like what you care about.

So I, I feel like that payout, you're not super, you don't really care exactly about structure.

No, that's, I, here's what I think that's not correct, right?

Is that it's not just that you want to construct a lottery ticket because there are, there are infinitely many ways to construct lottery tickets, right?

But it's that you want a lottery ticket that corresponds to this subreddit, really happy at the same time that I am.

Not a dividend.

It's a tale of Tuan.

Now your losses are on someone else's balance sheet.

Generally speaking, airdrops are kind of pointless anyways.

Um, unnamed trading firms who are very involved.

Alec E is the ultimate.

D5 protocols are the antidote to this problem.

Hello everybody.

Welcome to the chopping block.

Every couple of weeks, the 4 of us get together and give the industry insider's perspective on the crypto topics of the day.

So quick intros first you got Tom, the Defi Maven and master of memes.

Hello everyone.

Next we've got Tyrone, the Gigabrain and Grand Puba at Gauntlet.

Yo.

Joining us today, we've got special guest Jeff, Perp's pioneer and the people's champ at Hyperliquid.

Hey guys, thanks for having me on.

Thanks for being here.

And I'm Steve, the head hype man at Dragonfly.

We're early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice.

Please see chopping block.

XYZ for more disclosures.

So, uh, Jeff, for anybody who does not know you, you are the founder and CEO of Hyper, oh, I don't know if it's CEO, but whatever.

You are the founder of Hyperliquid, and Hyperliquid, of course, is the fastest growing perps exchange on DeFi.

It has rocketed to become a top 15 token.

Uh, you're now FTV is something like 35 to 40 billion with it was 1215 billion circulating depending on the day.

You guys have now completely crushed all on-chain trading to become the single most dominant venue.

You're, you're, you're kind of the man of the hour.

How, how does it feel to have basically crushed it as an entrepreneur?

Well, I'll, I'll first caveat it by saying there are a lot of people working on Hyperliquid.

It's not just us.

I lead a small team, we're 11 people, Hyperliquid Labs, we're developers, the founder, CEO of that organization, but Hyperliquid is, is so much bigger.

And so when people say, oh, you know, your team is so small, I usually say, well, I don't think the, the core team is the right unit to think about.

It's, it's all the like really smart and talented people, whether they're developers or community members, marketers, like not that we have zero marketing team on the core side.

Um, all these people, all these really smart people coming together, spending their valuable time working on sort of adjacent and synergistic things that collectively become hyperliquid, the ecosystem, the protocol, and yeah, so I, I wouldn't, I wouldn't take that much credit for.

All right.

So you're, you're, you're very humble.

Let me just list some top line stats so people can know how much you are crushing it.

So right now, hyperliquid is dominating on-chain purpose volume on any given day.

They're roughly 75% of all volume in on-chain perps.

You've, you've peaked now to all sexes, all centralized exchanges.

Hyperliquid is something like 5% total market share of volume.

And of open interest, you're something like 14% of all open interest across all chains.

Among all exchanges globally, on any given day, you're something like 7th to 8th depending on how you count the volumes, and you guys are rapidly gaining on many of the biggest exchanges in the world.

You're currently something like.

5 to 10% of finance per depending on if you're looking at volume or open interest, but you're gaining on them, right?

These charts have all been moving up into the right, and you're now something like on the order of what is it, roughly like a billion dollars of annual run rate for the fees that are being generated by the protocol, which are being used programmatically to buy back the token.

So this is a big part of why everybody is so galvanized by hyperliquid.

And then of course you've done all of this with no VC backing.

So completely self-funded and with one of the largest airdrops in history, over a billion dollars at present value is even, you know, even more than that, uh, but at the time of the airdrop, over a billion dollars that was distributed to early users of the protocol.

So, you're very humble and I think it's part of the reason why you're so beloved.

Um, I will say this, I've never seen a founder in crypto who whose project was like at the center of the mindshare in crypto.

Right now I'd say Hyperliquid is squarely at the center, who is universally loved.

Like, even if I think back to like previous main characters, you, I, I, I don't, I think like your favorables are like probably like 40.

I'd say more than any other person I've ever seen as a main character.

Like just people do not say bad stuff.

They might say something about Hyperliquid, but they do not say bad things about Jeff.

Appreciate it.

Everyone's Do you, do you, do you not, is that not your, is that not your experience?

Well, I, I'm not as plugged into the like day to day dialogue and Gossip and, and whatever.

So I just always assume that stuff is being said and it's historically has not been our strength, which is like navigating the perceptions of, of things and so I think as a result, a lot of fun is often spreading and uh we, we do want to get better about that and like part of that is kind of coming on these podcasts with, with great hosts like you guys and like talking through some, some of the misconceptions.

But yeah, I think, I think hyperliquid is viewed favorably mainly because It's, it's something new.

It represents something new and something that kind of In some ways has already pushed what, what people thought DeFI could do and in other ways represents what we think DeFI can be and I think everyone can rally behind that.

And I think the The sort of like community, in some sense, like in many senses like owns a lot more of it, right, in like the literal sense of like the platform, but also in terms of like what, what the protocol needs to do.

I think it's like more reliant on the community than maybe some other, other protocols where it's, it's more like top-down, right?

Like a centralized exchange is another, is a good counterexample there.

So yeah, I think for all these reasons, maybe people, people feel good, but I think it's, it's, it's this stuff's often, often temporary as well like.

I think there will be like rough patches that there were rough patches in the past and I think for us it's yeah, it's good to stay humble and kind of just keep keep building and not, not really like rest on the laurels.

And I can tell that's very core to how you operate personally and, and it's admirable the way in which you kind of stay above the fray, and I think it's it's kind of typified in many ways part of Hyperliquid's brand is that they don't do the things that most crypto protocols do.

Right, most crypto projects, they're out on Twitter every day.

They're making memes.

They're doing this stuff, and you guys are, you, you let your product do the talking.

And I think that's the memes, they're very good memes.

They're just not made by us.

There are, yeah, exactly, exactly, exactly.

It's like you're, you're not, you're not stoking the flames, and you sort of, you sort of let the, the, the product do the talking.

And I think that in a way becomes its own brand, right?

The brand of hyperliquid is the sort of negative space of the team is not the one telling you this.

People are using the product and they're telling you this.

I think that I think that's really powerful.

Yeah, I think, I think this is kind of how crypto was originally meant to be.

I think like I have immense respect for Satoshi, right?

And I think that that's like a much better example of all these things you're saying.

We're just, we kind of We, we also have to be practical, right?

Like if I think if.

Like people need to kind of know who's behind it, just that there's like element of trust.

I think in crypto at this point is like they're much more eyeball, many more eyeballs on it, so you can't really take the completely like clean approach, but I, but I think yeah, it kind of harkens back to that, and I think I don't know, I don't know why more teams don't, don't do this.

I, I think because nobody would care for most teams if they, uh, weren't trying to force people to care for themselves.

But, but I'm, I'm curious for you.

So, OK, you're building a decentralized exchange, right?

The, the, the, the protocol itself is open and permissionless and so on.

Do you ever envy Founders of centralized exchanges, they can do things that you can't necessarily do.

No, I very rarely envy them.

I, I think, I think we're, I think people have this misconception that hyperliquid is a centralized exchange kind of like that is like the end goal, but from our perspective like day to day.

We think, we think, we think of Hyperlogo as something completely different.

It's like a platform to house all of finance.

It's kind of like our, the tagline that the community has kind of converged upon and So maybe I envy them and that they're building something a little bit more well defined, so it's a bit, it's a bit clearer and I think you can kind of Go for more like metrics optimization.

So you know, the AB test stuff they know exactly what you care about, you know exactly what your product is supposed to do.

It's a very, it's a very important product and um so yeah, maybe that aspect is, is somewhat enviable, but I, I wouldn't, I wouldn't trade it by a long shot.

I, I think like, For us, it's what what brings us sort of.

Day to day excitement and what gets us out of bed is, is building something that doesn't exist and we're like not exactly sure even what the right solution to these problems is.

Uh, we just know that they're like in the future this, this thing is, is good for the world and like finance should be coordinated on this globally distributed like permissionless ledger like etc. etc.

I can, can talk more about that stuff but so when, when that's the vision, yeah, we don't.

Don't, don't think about the centralized exchanges really as competitors like Mark, like the stats you mentioned, it's like we kind of, yeah, we track them, vaguely are aware of them, but ultimately I see a world in which centralized exchanges like always have more volume than than hyperliquid, and that doesn't mean hyperliquid has failed, and I also see a world in which hyperliquid does like orders of magnitude more than centralized exchanges.

That doesn't mean the centralized exchanges have failed either.

So, you, you mentioned that, OK, it's, it's easier to optimize for a metric to A B test if you're a centralized exchange.

What are, what are the metrics of hyperliquid?

If, if you're not looking at, you know, the market share or volume or whatever, what are you looking at?

What, what, how does the team uh orient itself?

When, when we started, I, I always pushed back on trying to define these metrics or KPIs or any like number that you attempt to use to tell the whole story.

Um, I always said this is, this is for big.

Big projects, big companies, mature organizations that want to take incremental steps with high confidence.

You, it's like numbers are good for that and But even at this point you might, you might argue the hypo is kind of big in that sense, but we, yeah, we still, I, I still don't think there's like a well defined quantitative.

Way to measure success and I think that's good because I think once there is, like I'm, I'm a bit cynical about this, like once, once there are numbers and everyone like stares at those numbers all day, like a really bad example would be like, like token price, for example.

If that's what you're optimizing for then You start doing things that are that aren't actually good long term.

I find that very surprising.

I don't know, Tom, what's your take on this, that like, I would think an exchange would be one of the places where metrics, like the tie between metrics and success are extremely legible compared to a lot of other kinds of products.

Yeah, I think, I mean, I think I agreed, like token price is probably too glossy and not accurate of a metric to like, be your North Star.

But I mean, for you guys, maybe, you know, obviously, KPIs feed into a product roadmap.

How do you think about what to do next?

And I think also, like, what do you include in hypercore versus what do you want to see someone else build, someone in the community build and say, hey, no, this is, we're going to be a platform here and sort of let other people build on top of us and create value some other way.

So the first question I'm like it is surprising.

I think there's like a distinction.

I think metrics are good to track, but they're not.

They're not good to be like objective functions.

So like I think when you convert something from like an indicator to something you're like literally kind of like like performing back prop on for example, I think that changes things a lot.

Like like I think there are many healthy things you can numbers you can look at kind of like the things that Hai said at the beginning, volume as a percentage of total volume, for example, is a good one.

I think like that does tell a lot of the story, but if, if you You kind of like change your perspective and say now I want all I care about is this metric or like I I significantly like care about this metric, you can do things like there are ways to increase volume, yeah, yeah, even less extreme example like, like a hyperliquid, there's this, there's this thing that is kind of well known now where the protocol kind of like prioritizes cancels over taker orders.

I think many.

New things in Defi and even blockchains themselves are kind of like using this into their like sequencing logic or, or if they're now one kind of like block building logic.

If I think if Hyperliqui were, we're like, OK, well we care about volume above all else, you actually wouldn't make this change because the, the net effect of this change is to decrease volume and like maybe someone, maybe a centralized exchange would, would take this on or maybe like a stock exchange like would take this on, but like if, if you, if you're optimizing for like fees in some sense, like in some like local sense then you, you look at this change levels like terrible change, but But if you're a little, if you're a little bit more like first principles about it and you think like who, who are the real users of, of this platform, like let's improve execution for them, then all of a sudden this, this, this change looks very good, even though no one's doing it.

And well, that's the question, who are, who are the real users?

When you say the real users, who are the real users?

That's a good question.

It's hard to define, but I can tell you who's not a real user, and that is like, who's not a real user, like toxic, taking flow.

I'm, I'm, I think this is a bit controversial and so like, I understand, but like, I wrote those two long tweets and this is sort of at the heart of that whole discussion, which is a bit nuanced.

But I do think, well, let me, let me maybe first set, set you up for that.

Yeah, let me, let me set you up for that because we talked about it actually on a previous show.

So there was a sort of dueling threads going back and forth between yourself and CZ.

Where you described the way in which hyperliquid is transparent and allows everybody to see everybody's positions, everybody's stop losses, everybody's, uh, liquidation points, that is actually beneficial in some way to certain market participants and not to others.

In particular, it hurts high frequency takers, people who are kind of arbitraging orders very quickly and stuff like that, but it benefits market makers and, and kind of creates healthier liquidity for for uninformed traders or just, you know, people who are just kind of normally trading without having any advanced information.

And CZ and of course, all centralized exchanges don't operate in that model.

In the centralized exchange world, that's absolutely not the way it works.

Uh, you cannot see other people's positions.

You don't know who owns this order on the order book.

Uh, it's all opaque besides just the order book itself.

And CZ's claim is that this is bad and that, uh, we have to move towards some kind of privacy preserving ZK something something something.

And then you were called out by James Wynn.

This viral trader, uh, who, you know, has, has just been kind of a phenomenon in, in, uh, in crypto trading circles, uh, who is this crazy leverage trader who got repeatedly stop loss hunted on hyperliquid, um, and he claimed that like, oh, there's a cabal allegedly and blah, blah, blah, blah, allegedly, allegedly, alleged that there's a cabal that's after him trying to hunt to stop loss and so on.

And so, given, given that context, I want to give you the, the opportunity to, to describe like when you say.

There are real users, right?

There's sort of different categories of users.

There's hedge funds, there's high frequency makers, like, you know, market makers.

There's people like James Wynn who are just, you know, YOLOing huge globs of money.

Who are, who are the users of hyperliquid that you really care about and who don't you care about and why don't you care about them?

Yeah, so I, I do think it's hard to define exactly who the real users are.

I think like, Markets, markets are basically ways to kind of move risk around, right?

Like that's kind of like the general firm framework to think about it.

So like in some sense everyone's a user, like everyone is who makes a trade like helps move risk from like allocate risk in like a better way than the previous states like everyone you can imagine like all actors as Little like inputs into this chaotic system that ultimately like sort of like maybe that converges on a better state of the world.

So like every trade is like supposed to like kind of increase total utility if, if that's like how you want to measure it.

That's like a theoretical description, but I think I'm not super, I don't, I don't think super strong about like who the exact set of users are like I don't think that's an important question to answer.

There are a lot of interesting questions that are not important to answer, um, but I think one important answer is like are there subsets of users that are kind of like predatory on the system.

And I think this is a hard set to like finding define exactly, but ones that I'm relatively confident on is sort of like, like users who trade whose counterparties regret trading against them, like very shortly after making the trade, which is to say like you're extracting value in a way that you're taking advantage of, of some sort of like.

Usually technological asymmetry and as a result you make money, but you're not actually like pushing risk in a better way because your counterparty like immediately regrets making that trade and The chance that like, you know, they actually changed their mind is is very low compared to the chance that you actually just picked them off because they weren't as fast as you.

I'm like I think that subset of users like they add very little, they actually don't improve the market, they just kind of like extract money from it.

They're kind of like another, they're like another exchange that is just like skimming off the top of like general volume.

And so if you're, if you're, if you're like mental model is like a bunch of makers, very simplistic model, not actually accurate, but if you, if your model is like a bunch of makers coming in.

Being very like smart, having really sophisticated algorithms to like manage risk and then offer these like great quotes to takers, like maybe retail, maybe like institutions coming in and trading.

This is all fine, this is great, and then the exchange kind of like charges a fee on top like.

Arguably like you that fee should be as low as possible, I think, but you know, exchanges, building a platform by valuable service, etc. and then these takers come in and just start like picking off the makers so the makers say like I still need to quote because on average it's profitable, but I need to like widen my quotes so that like retail gets a worst price just so that these takers can come in and like skim their bit off the top.

Like I think that it's a very simplistic model.

I don't think it's this, it's this clear cut, but so I can go into more detail, but I think like the simple change of just prioritizing councils we takers like basically.

It cuts out a ton of this toxic flow and like doesn't actually impede price discovery because like no one really cares if if like the price is like slightly inaccurate for like.

Whatever, like, like less than a second or whatever time scale you choose.

No like real users in some sense care about that.

The only users who care about this are the toxic users, so I don't know if that explanation.

No, it does.

It does.

If I can maybe summarize the smart money, you know, the ones who are the, the sort of high frequency fancy infrastructure that are picking off these like real-time quotes and arbitraging, screw those people.

We, we, we don't even adding anything to our beautiful garden.

OK, well, not prioritize them as maybe, maybe I'll, I'll provide a bit more nuance here.

Like people running those strategies.

I don't think they even realize.

Like they will make many trades.

Some of their trades are toxic, some of them are not.

I don't think they actually care, like they're not malicious, they're just making the trades that make the money, so it's the system that is flawed.

The, so like when you when you turn on this when when you turn on like a slight cancel prioritization.

These takers still make money.

They pick, they trade against the orders that actually want to be filled.

Like when, when a user places a limit order, they, they're very happy that there are many takers competing to trade against them as soon as possible.

Like they choose to execute through a maker order.

I think that's, that's great.

That's like, that's a great value.

So I think it's not that sophisticated takers are bad.

It's that takers, sophisticated takers picking off sophisticated makers like that flow as a category.

Yeah, OK, so I didn't mean to interrupt.

I just wanted to, yeah, no, no, no, that, that, that a little more nuance.

No, no, no, that's great.

And so, OK, to, to add a little bit more nuance and kind of bring it back to the conflict between you and CZ.

Part of the point that you made in your argument is that, look, in a fully transparent system, one of the advantages is essentially a kind of price discrimination or a kind of a kind of user discrimination, which is that I can say, look, this guy looks like James Wynn, this guy looks like a YOLO crazy guy.

And like this, if, if you're a cowboy, I'm willing to quote you really tight spreads because I know that you have no idea what you're doing.

You're just, you're just throwing around a crazy amount of money.

You have no inside information.

But if you are this kind of high frequency, toxic trader, maker, uh, taker type person, I don't trust you.

Like, basically, I, I don't know that I want to fulfill your quotes as often as others.

And in a, in a, in a Binance style world, I can't tell who is asking, you know, basically who's hitting my bid.

But in the hyperliquid world, I can tell who's hitting my bid.

And because of people have persistent accounts because they have fee discounts and all that, over time you develop a reputation among the makers in Hyperliquid of who's good flow, who's bad flow, who's here kind of earnestly trading and who's here running a sophisticated strategy that I don't necessarily want to be on the other side of.

Is that a fair summary?

Yeah, I think so 111 sort of nuance I would add there is that it's not about whether you're smart or dumb.

For a market maker, what you care about is that, You're not toxic.

So like you're, you, you may be really smart.

Like, I think like maybe James Wy was making a very high EV bet.

Like it's really hard to tell because, because trading is, you have so few samples.

It's so noisy.

It's really hard to tell.

Sorry, sorry.

So it was like, just in general, I take any trader.

I think, I think you would be hard pressed even if you were like the smartest person in the world to like to tell whether reliably whether like, A random trader is getting lucky or they're making money or they're getting unlucky or just like consistently have a losing strategy.

I think that's like kind of the beauty of market, it's kind of like poker, right?

It's like you actually have to, you need a lot of samples to get significance and I think like that's it, you need even more samples if your strategy is kind of like changing at all times or like your inputs are like real world events.

It's not even like a black box kind of game in that sense.

So like, so that that's like one nuance and so like for market maker, all you really care about is like.

Like as a broad category of like market makers, like if you can hedge the flow coming in, like on some other venue, then you're like, that's kind of like a lower bound on like you're good, like maybe you could be the smart, like smartest person has like a great signal that realizes, you know, like, you know, like next week that um, you know, there's going to be some crazy world event that like some butterfly effect and like Bitcoin goes up like you may be the smartest person in the world, like you can make that trade like market makers will still quote to you, so they don't care that you're smart or dumb, they can, they just care like, well this guy's not like a toxic taker, so I can.

Worst case, I can just like move my quote a little bit and then like.

Hit like whatever by hand.

So like any other venue like hedge it out, collect the spread.

I'm good.

Jeff, that you are such a nice guy.

That was such a gentle clarification that James W Wynn is not dumb.

I'm sure I really don't know.

I'm brilliant I'm being genuine here.

No, no, no, I, I look, I appreciate that.

OK, well, let me, let me bring you back to one more point.

The, the backdrop of this also discussion between you and CZ was a previous episode that we also talked about on the podcast about jelly jelly.

So jelly jelly was of course this token that uh was like this random shit coin that got listed on you you guys listed a perp through Hyperliquid and um somebody basically performed a call it an attack for lack of a better word, against HLP and it's judging from the timeline of events, Binance listed the jelly jelly perp at the time that this episode was taking place, leading many people to believe that this was basically an attack from Binance on Hyperliquid.

So, I, I don't know how much you can or, or, or want to say or don't want to say, but I'm, I'm just curious, how do you think about the competitive pressure that you're facing from the incumbents today?

Because I know just reading, reading tweets and reading the tea leaves, it's very obvious that the big players out there, the big centralized exchanges, you know, they don't like you.

They don't, they don't like what you're doing.

And I don't know if you consider it to be a declaration of war or how, how are you thinking about how you have to position hyperliquid against this environment?

Yeah, I think I don't really know how.

Various people think about hyperliquid, like you said, can guess, like you probably have a better idea than I do because you're reading the tea leaves more than I am, but I think it's good to have it sort of like an adversarial mindset, like the thing should still flourish even if all of these worst case scenarios are true.

So that like the solvency of the system should not depend on whether other people are.

Malicious or or think you're cool like that should not be an input into funds kind of like adding up to like the right number, right?

Like like, so for me that the focus is always on designing the system.

Like, like thinking a lot about the system and how.

How it can be guaranteed to work.

So I guarantee is a strong word and I think that there can always be bugs.

I, I think in any complicated system, it's, it's not like a one shot like you're done kind of thing, but I think it's important to have like a strong mathematical foundation and I can.

I think it's important to be able to like write out and say like, look like no matter what happens like I can prove to you that like this complicated state machine like has these properties and like one of those properties is that, you know, it's solvent and I think that is, that is true for how hyperpogo is written.

So like the jelly jelly thing was, was unfortunate.

I think it was the, the fundamental flaw.

I think there's like a bit of misunderstanding here, like it was not a flaw in the margining system.

It was a flaw in like how HLP.

Kind of like chose to collateralize.

One liquidation with like too much capital and so like all these changes have been made, the margin system has also been improved in various ways like margin tiers have have rolled out.

They're basically like at least 5 sort of like learning points and I think it took several months to kind of fully, fully implement all of them, but at this point I think it's, it's like the system is a lot stronger and I think that there will be attacks in the future.

There will be, there will be issues, but I Kind of like have confidence that the, the protocol can, can kind of like rebound and generally learn and grow from anything.

Yeah, anything malicious that happens to it, so.

Fair enough.

OK, so I want to transition into some questions that we solicited from the folks out there because you're, you're, you're famously very, um, reticent about going out there and, and, um, you know, kind of doing the whole podcast circuit.

So we wanted to make sure that we made the best time of, of, of having you here.

Um, so one question we got from the audience was, if you weren't building hyperliquid, what would you be building instead?

I really don't know.

I, I've always been fascinated by markets, I think so.

I've kind of like made a journey through.

I, I, I, I got into physics in high school.

I was.

It really spoke to me.

It was like math was always cool, but then physics, it was like you you could, you could kind of take.

You can take these like mathematical formulas and you're like, like you're learning calculus or whatever and then you could, you could use it to predict like how long it takes like a ball to roll down a ramp or something like that to me was like, what was, was amazing because as someone who had like very little like real world capabilities, like, like a bit of a klutz, like not, you know, whatever, uh, so it felt like a superpower, and so that that really drew me in and then I think it's kind of natural for for like physicists to kind of then kind of really find like economics and That kind of stuff, very beautiful.

It's like, it's like kind of messy systems, but you can still like say these very powerful things about them and like incentives can really shape, well designed incentives can like shape a lot of behavior, like coordinate a lot of behavior like just generally improve the world.

I think it's like really powerful.

And so like, for me, like markets have always been super beautiful and like, trading was a way to kind of Basically, just like an excuse to like study these things like mathematical patterns and these like complicated noisy systems and um that's what drew me to trading initially and yeah, so I don't know what I've been doing, but I think I feel like it just felt like a supernatural.

Next step, which is like, once you really understand the system, like you, you can kind of participate in the system and maybe like profit from the system, but if you really want to like make the system better, you kind of have to like improve the system itself and so hyperlink is like.

It's what I feel like the best way to do that.

It's like you, when, once you see enough problems in the world and you kind of like shape your worldview, often I feel like many people would like take a stab at making the world better and I feel it is kind of that.

So yeah, to answer the question like I, I don't really know.

I think I can't imagine doing anything else.

Mm, before.

Before you built Hyperliquid, you were a trader, correct?

Yes.

Yeah, and so, um.

Oh good.

OK, I was gonna say, yeah, I was, was trading on my own crypto exclusively.

Were you trading on, on dexes, on sexes, and was it like, was the, was the animating energy behind building hyperliquid was like, oh my God, these dexes all suck.

Like I need to build this the right way.

There was a bit of that, so it was doing both.

So centralized exchanges is the majority of the volume, so I think everyone was looking at them as like the pricing source and the just like general like flow.

By 2022, we had We had turned towards Dex's just as like a.

Just, just as like a casting a wide net in terms of like what, what might be worth looking at.

And my general reaction was, was not just that they sucked, but that there was potential.

Like they did, they did suck.

Like I think there were a lot of like really, really poorly designed things back then.

I think just people kind of learning from learning firsthand like the lessons that I finance I kind of like already learned.

So there are a lot of like really dumb systems, but like, can, can you give me an example?

I think like non-KYC.

Like RFQs is like a pretty bad idea, and I think many teams are working on this back then.

Maybe it was like some, maybe it was it was like a mini narrative or something, but like, I just think the idea fundamentally doesn't work.

It kind of ties back to this whole like when things need to be.

When, when, when like permissionless anonymous works and when it doesn't, I think RQ is a great example where it doesn't, and you really do need, you do need a gatekeeper to like, like, like an OTC desk would never accept like anonymous flows, right?

So that's one example of like kind of an obvious thing, but was prevalent and, but I think the more important thing is, is that we, we saw the potential of Dei that like all the right pieces were there and the only reason it wasn't taking off was that.

Nobody was building like exactly like people were trying but like nobody had really hit the like exact like the correct combination of design decisions to build something that users can like that that will convince users to actually use it.

What do you think that combination was?

What, what was the sort of minimum viable version of hyperliquid that was necessary to crack things open?

Like, obviously, people talk about it's a great product, it's very fast, it's very, uh, very clean UX, great liquidity, but like what, what, what do you think is that necessary ingredient that separated hyperliquid?

I don't think it was one thing.

So I, I always say it's like a combination.

It's, it's in exchanges, it's kind of like a weird product because So maybe this is me speaking from ignorance about products in general, but I feel like many products you kind of like get one thing right, it's like a net new thing and everyone's like, wow, that's amazing.

Like maybe like TikTok, you're just like, oh.

You just like a like an endless fee like that's like that's so cool and like yeah you can improve the algorithm algorithm, etc. but like there was kind of like a step function like product thing that you did, but I think exchanges are not that, it's like you kind of like traders expect a lot of things and like there are many different types of traders and kind of need to like compromise on this like set of 100 features so that like most people are like mostly happy.

Like some people want more complexity, some people want simpler interfaces, you kind of just have to like compromise on everything and um so it's just like kind of multi-dimensional optimization problem and I think it.

Maybe like back then, people in DeFi were, were too focused on just getting the, the Dei part to work like all like what how does blockchain need to work like.

Composability was like big thing.

It's like really hard to get right and just like, I think it's easy to get distracted and just not realize, not respect the core problem enough, which is that like, it's actually very hard to build a good product for traders.

So, one thing that a lot of people have been talking about is this new feature in Hyperloopical called HIP 3.

So, let me, let me see if I can explain what it is briefly and you correct me if I get anything wrong.

So, HP 3 is a is a new protocol upgrade that's gonna go live soon.

And what HIP3 allows is for external parties to create their own purpose markets.

So they have to stake some hype, uh, they, they have to provide an oracle, and this perp market is not necessarily going to be listed on the front end, but they can kind of use the infrastructure of Hyperliquid to, you know, basically tap into the, the overall ecosystem of hyperliquid to launch a perp on anything else.

And this anything else can be literally anything else.

As long as it's got an oracle, you can do a perp on it.

Is that, is that a good summary?

Yeah, in fact, the, the oracle part is also abstracted away, so it's sort of like Up to the deployer to figure out how the oracle works.

So it's, it's very general purpose.

It's almost like you could even not have an oracle, right?

You could, uh, you can even make like a contract that kind of doesn't, doesn't have funding and it's more just like a future.

Or like you could like you like turn funding off and just like make it more like a, like a pre-launch style features contract.

So it, it's sort of like I view it as, yeah, like HI like HIP1 and 2 sort of way back, you know, maybe almost a year ago, maybe more than a year ago, was like permissionless spot trading and like leverage these.

This like on chain order book thing that's super performing but like you don't need to know the details about but that like users are plugged into and like you can just use the tech and kind of create native assets and trade them natively on chain and then this is the kind of the counterpart which is a much harder thing to build technically because pers like derivatives are just like way more complicated than spot trading, but it's the, it's the counterpart.

So it's like use this, use this like a complex infrastructure but kind of like Expose like a super nice API.

The users already used to their nice API of like interacting with trading on it and like now like builders have a simple-ish API.

I mean it can probably be improved, but like relatively simple way to just plug your what you want in which is like.

Yeah, like he's like Oracle, so like contract specifications and then focus.

So it's kind of you can kind of like trust that the system does what it does and you can, you can kind of like, you can understand that and like tweak that with these knobs that are exposed to you, but then after that it kind of works and then you just go and like find the users, build the interface, get, get your licenses, like whatever, whatever like you need to do to like ultimately make licenses.

Yeah, that's right.

Get your, get your licenses, kids.

And so I, one of the questions that I kept getting is, what are the markets that you're most excited to see people develop?

Using hip 3.

Like it's almost like it sounds like everything.

I I think perps are just a super good.

Innovation.

I don't think everyone, I don't think they're like a replacement for futures, but I think, I think more than half of the futures flow would prefer purposes, and it might be closer to like 80 or 90%.

I think there's a part of like education just like people don't realize you can do with purpose, what, what maybe you, you kind of traditionally associate with futures and options and another thing is that I think that perp markets haven't achieved the liquidity of like Chat futures markets and like when, when it does, I, I do think the product offering is like even more compelling.

So in that sense it's like, it's more just like making this.

This very crypto native, like innovative instrument.

And like an on-chain crypto aligned implementation of it available to anyone, so I don't, I'm not particularly excited about any one thing though I think, I think like TradF as a whole could benefit from perps, and I think US regulators are coming to terms with that and like drafting legislation right now, so it's like a positive step.

Uh, I do think it just makes markets better and I think this can be, so you're, you're not going to say perps on stocks.

You're not going to say perps on stocks.

I think what everyone wants you to say is on.

The question is which stocks, right?

Like, if you're telling me ES, could be in a perp, sure, right?

Like, but if you're telling me, I random biotech with 50 mil market cap should be a perp, probably not, right?

Like, I will say that there's, there are options and all these things, right?

Like options are really big for retail.

And one point I'd make is I think perps are, Should be basically preferred by all retail because when you're trading options, you kind of care about two things, you care about volatility, you're kind of trading volatility and you're, you're also getting leverage, right?

And I think very few retail traders like actually want to trade volatility.

They actually just want leverage and so perps are just like super easy to understand and, and it's actually better because I think on options it's, it's one it's like very hard to quote and very few people are set up to quote it and the, the, the effect of that is Yeah, you just get a worse price as a user.

Like if you're the only one trading that's like random, like out of the money, like elongated, it's just like there's too many.

But one counterpoint to that is that users who don't want to have constant interaction and keep checking their funding, checking their margin position, like, like users who want to just buy it and forget about it.

And like, hopefully it's a lottery ticket that pays them the money, which is a lot of the zero DT users.

They, I think there is actually excess complexity, so there is, there is, there are reasons for that market to be as big as it is, especially the zero day, the way the zero day options kind of blew up.

A lot of it, if you look at the holders, they're not actively trading, like the, you see market makers like flipping the spread, but then you see these people who just buy huge positions and then forget about them.

And I, I do think there is.

An interesting trade-off between like, these continuous pricing, but like dynamic price, so you can get blown out type of things versus these like set it and forget it, and for, for some reason, traditional finance does have too many of the latter, I definitely agree with that, but I don't think you can like totally replace them.

I think you're always going to be racemic with both of them.

Yeah, I would, I would push back a bit.

Like I think it's very, I think you can, you can choose to not look at your position and I would argue that that's quite similar to the payout function you want.

Like if you set a high leverage position, so this is not, this is maybe not so we know people can choose not to look as as we talked about James Lin a little bit.

Oh, isn't it better though?

Like you can always sell your option before it expires as well, right?

So I think it's an equivalent payout function.

It's just a better liquidity.

I, I think Turin's point is like there's, there's path dependency, right?

The path of the price between when you purchase the zero ticket option and when it expires, like it's, it's kind of irrelevant as long as it hits like to T's point in this lottery ticket versus like, yeah, if you're James Wynn, you might be maybe long term, right, even, even on the same time period about the price of Bitcoin, but You can still get liquidated, um, and, and that's like a weird concept for me for a lot of retail traders.

I, I think, I think it's like, you know, you don't see these like exotic options like Bermuda options or Asian options really that popular for retail.

Even though like they give you more of this continuous, you have to adjust more frequently, pay out, and those are only used in these kind of like, large currency trades.

So, I, I, I guess all I'm saying is like, there's obviously a huge market for perps.

I just think like there is also still this market for these kind of things where people don't think about them as like, one touch.

Hitting type of thing versus like thinking about the whole, it's more like I would just say you can, you can build quite a good product here with with perps though.

Yeah, yeah, I'm not, I'm not saying it's not possible.

I'm just saying like, I do think like retail investors do also love lottery tickets in a way that I think construct a lottery, you can construct a very good lottery ticket with perps, I guess is what I'm saying because like you can you can.

Go, go, go.

Finish.

Like as a user, what you want is you want to like either have zero money left or you want to have a lot of money, right?

That's kind of like what you care about.

So I feel like that payout, you're not, you don't really care exactly about structure.

No, that's, I, here's where I think that's not correct, right?

Is that it's not just that you want to construct a lottery ticket, because there are, there are infinitely many ways to construct lottery tickets, right?

But it's that you want a lottery ticket that corresponds to, is this subreddit, is this subreddit really happy at the same time that I am.

Like that's fundamentally, it's like a group activity, right?

Why, why are we buying lottery tickets on this random stock?

Right?

The reason why we're all buying lottery tickets together is so we can celebrate together when we win.

If you buy a perp, you might not get to celebrate when everyone else is celebrating because you got stopped out early.

Whereas if you buy an option, if, if Tesla, if Elon Musk does this or whatever, Trump does that and you bought some, you know, out of the money options on Trump, uh, Trump media or whatever, it's, it's a very simple function of I have a lottery ticket that is branded with this person's rise and fall.

In the overall world.

Do you think it needs to be tied to the contract specification though, because you could create an app that does this.

Like everyone who uses the app, like their, their perps are closed at the same time.

So that everyone is, everyone is aligned.

Like if your purpose isn't profit on subreddit, right?

Not everybody in the world who's experiencing this, uh, this, this ride with this character or this talk with you.

I also, I also think there's another interesting part about perps, which is like, They, the price impact curve is like more continuous, right?

You're like, you have to think about how much leverage you're putting and how it impacts the funding rate and how the payouts work, versus an option that's like, OK, the market maker quoted me a spread, and I kind of don't have to think about these other aspects now. in these continuous products, obviously in some limit, you can replicate the discrete thing up to some amount, right?

But it's just more like, I, I do think there is this, there is this weird subpart of the world, like every Robin Hood user or something, like, Who really loves these weird discrete things, and I, I think like it's cool that there's two worlds, and that they, they both can coexist, and I think they will coexist.

I think the more interesting thing is, what does an exchange look like that offers you both types of products, and like, how do they, how do they interact with one another, and like, yeah, how do you build the thing you just said, like, Like bet with friends or whatever, right?

Yeah, I think there will be a lot of interfaces built on top of perps and in the same way that Robin Hood abstracts away a lot of the complexity of interacting with options.

So and I think like hyperliquid, one thing is like we're as a core team where we actually don't want to.

We both don't want to and are not, don't have capacity and are not the best people to build this like ultimately like slick UI for whatever user group needs to use it.

And so I think there's like a lot of incentive for people to come and build these kinds of interfaces on Hypercode, especially as the like the universe of tradable things expands and the so like builder codes are very intentionally meant to.

Let people run it in exchange scale business, right, where your upside is literally proportional to the volume going through your interface.

Uh, I think builder codes are basically I think, I think we'll push people to build these interfaces like from a practical level and maybe, you know, maybe when Maybe we can revisit this.

Uh, it's a bit of a Bit of a bet, I guess on like whether, whether these whether perps can appeal to the, you know, what people are used to right now.

My takeaway from this is that, look, the menagerie of ways in which people will gamble has always been infinitely big.

You go into a casino and what you notice is that there's this stuff over, there's blackjack over here, there's roulette over here, there's slot machines over here, and like the, at the end of the day, like they're all just skins on a skinner box, you know, like they're all just different ways to lose your money.

And some people like these, some people like those, and the right answer is that you, you have enough for everyone.

So, I can, I can imagine a world where obviously it, it exists, that there are many people in the world who want to trade perps and don't want to trade zero DT options.

And there's many people who are like, no, no, no, zero DT options are my thing.

And, you know, perps, there's too many buttons, there's too many decisions to make.

Like, you know, I don't wanna, I don't want to think about all that.

So, I think the answer is yes, and almost certainly that's the answer because that's what casinos tell us.

I think the important thing though is, is that 11 thing to think about is, is like when you When you go into a casino, like some, I, I assume that some games like massively rip you off and then some are like much closer to basically break even and like, I would argue that there there's like a, there, it's not just about like diversity, it's also about improving liquidity and reducing the spread.

And I do think perps like uniquely suited to that.

I, I don't, I don't disagree with that.

I'm just saying that there is this part of the world that like enjoys this other thing also.

Right, right.

OK, so, um, 11 last, one last thing that I wanted to share with you.

So we got one tweet, uh, or one commenter, uh, this guy NVPplus.HL, and I'm just gonna read you his comment.

Uh, his comment is, tell Jeff not to fuck this up.

He got it.

Hyperliquid got it.

Just continue building the house.

No crack, no coke, no whores, no gambling.

If he ever feels the need to feel the dark side of the force, he should contact me.

We'll find a way to save the house.

Thank you, Jeff.

So that is uh NVP plus.HL in case you want to get in contact with him, Jeff.

Thanks.

Yeah, uh, OK, you're very none of the above right now, OK, but just in case, I thought, I thought just, uh, you, you, you two should have a connection because I know you don't read Twitter a lot.

Um, a lot of, a lot of good community members out there.

How, how do you keep it at like, do you, do you just like not know social media?

Like what's your, what's your information diet?

Um, no, I, I read, I read Twitter just to stay up to speed on what's going on, but I kind of trust the Twitter algorithm which maybe is not the best.

I'm not sure, but like It's it's so I guess I don't like interact too much with things on Twitter.

I kind of just like quickly scroll through and like, I trust it kind of like bubble up the most important things and I think it sometimes does and sometimes doesn't.

Yeah, I haven't, yeah, I haven't made much progress optimizing this.

OK, well, because we're, we're about to pivot to talking about some of the news that's happened in the last week and you forewarned or your team forewarned us that you have no idea what's going on in the world outside of hyperliquid.

So with that as a, as a, with that as a preface, let's, let's jump into it.

So, uh, some of the big stories going on in the last week, uh, first and foremost, we've continued with this SA, uh, uh, you know, treasury company micro strategy for X mania that's been going on for the last few weeks.

The, the big story, uh, so far has been Tron.

So, uh, Justin Sun, uh, Justin Sun, of course, the founder of Tron, uh, is sponsoring a, uh, a company that's going, doing a reverse merger with a NASDAQ listed company called SRM Entertainment.

There's going to be a $100 million private equity investment to acquire TRX tokens, which is Tron.

It was rumored that Eric Trump was involved in some way, and then Eric Trump denied that he's involved, but then the, um, Was that the investment bank has some ties to the Trumps, so it's all very unclear and vague.

Clearly the Trumps like, uh, they, they like Justin Sun quite a lot.

They, they described him in some tweet as a great American entrepreneur or something.

There's another, which is, which, which is not true.

He's obviously not American.

Yeah, he's not American anyway.

He's extremely Chinese.

Um, Gemini has filed for an IPO.

Bullish has filed for an IPO.

Uh, there's now, uh, actually there's another one of these, um, these pipe companies that's doing hype now.

It's called Lions Group, and um there was, there was an announcement that they may acquire up to 600 million uh facility, but I think that the actual amount that they'll be uh acquiring is like in the tens of millions.

So, we just have this stuff kind of going everywhere at this point.

Tarroun, what's, what's your reaction to seeing the growing emergence of not just the IPOs being super hot, but now all these pipes taking off everywhere?

It does really feel like the Sack boom, just except it's a spec that's more efficient because you don't have to buy a company, you can just go buy the token.

And again, I just think there's like a liquidity cap.

There's like only so many people who want to take the other side, like the convertible side or the lending do you think that's true across assets or for a single asset?

OK, so.

I think Bitcoin obviously has the largest capacity, that's sort of an undoubted thing, micro strategy has proven it out, people understand how to think about pricing the convertible notes, they're fine with certain duration risk.

I think, you know, if you look at the volatility of the non-Bitcoin stocks, forget about the debt, like the selling shares and issuance and, and buying the actual assets.

I think that there's, there's so much more volatile.

It seems like the market doesn't know how to price them.

And then there's also this kind of weird thing where they all, I forget exactly where this was, but someone was comparing the compensation structures of the different salonna purchasing companies.

It was Laura.

Oh, yeah, it's Laura, right, exactly.

Sorry.

Slate, and I, uh, I, I just was like, it actually does really feel like Spas, where it was like, your, your principals are only paid when you actually complete the acquisition, but not about the quality of the acquisition, and I kind of think like, If that boom and spacks are also back apparently, as I, as I constantly keep getting all these emails from investment bankers being like, hey, we're making a spec to buy X Y Z crypto thing, which they cryptos, or like they're all people who are like, I'm going to buy, I'm going to raise one, whatever.

It feels like we're back in that 2021 kind of era.

It seems like there's also this funny thing where like these kind of products come in vogue when there's like some macro calamity.

You know, it's like COVID, macro calamity, tons of these like weird products, you know, current macro calamity.

I don't know what it is, but maybe it's like people get distracted just like by gambling and they're just like, OK, yeah, let's just like, do this type of stuff.

I find this whole thing, like there's a capacity to this market.

There just can't be, and I'm actually more curious what happens when you saw what happened with facts, right, where like, the sponsors would be like, OK, no, actually, fuck this, we're not going to like buy a company and then they return the capital or whatever.

Minus expenses.

What's the equivalent of that for these crypto specs?

Like they can always go buy the token, there's no like return the capital type of thing as, as much.

Like it's pretty easy to do the acquisition part versus like a spec has to go find the company and diligence and whatever whatever, right?

There's no diligence here.

You said you're just buying hype or soul or Bitcoin or whatever, right?

Like there's, there's not much else to do there.

And so I'm kind of curious how it ends, because it feels kind of weird because like, they will have bought the asset, you know, it's, you don't have this like spack like thing where it's like, oh, maybe it's like a sort of convertible option, and in the future, it like, gets exercised, like it is, you are actually buying the, the underlying.

And so, I, I, I, I guess the real question is like, what's the distribution of premium, right?

Like, is this going to be like corporate bond premia where like, there's this like, huge fat tail of C companies, or is this going to be like, super concentrated and like, there's micro strategy and then everyone else, and I'm sort of biased to believe the latter, but maybe that's me being an old curmudgeon.

Maybe I'm not seeing this new paradigm.

Thomas.

Tick.

Yeah, I mean, within an asset.

Uh, I kind of agree with.

I'm more just surprised there's like actually demand for a lot of these long tail assets, but it does just rhyme with me so much of like when a trade just gets way overcrowded and like every random celebrity and person is coming out of the woodwork and also doing the exact same thing and like trade here being very liberal, it could be like every celebrity is gonna announce their own alcohol brand.

OK, then that got way too crowded.

And then there's no more alpha and where every VC's backing like a DTC, the CPG company, and then that got really crowded and that one didn't work.

So like, it feels like it's going to stop working.

And then when it goes in reverse, I don't really know what happens.

Actually, you know, what's funny is, is, um, I saw this Bitcoin maxi from like 2015, whose like name I hadn't heard forever.

Like it to give you a a a a word association, she would probably be with like tone vase from back in the day, you know, you know, like, that's a, it's a throwback to like 2013 or whatever.

But Leah Wald filed the sallana ETF.

Filed for a line, and she was like, super Bitcoin maxi, you know, like, Seed oil, red meat per whatever person and I was like, wow, it's like crazy how fast you can flip Bitcoin maxis in 2025.

But the ETF it feels like kind of off meta.

That was like a year and a half ago.

What are you doing launching an ETF?

But launching a Salana ETF like a Bitcoin.

No, no, true, true, I know, but it feels like you're a step behind if you're launching ETFs now.

Yeah, fair enough, fair enough.

Jeff, what's, what's your reaction to pipe mania, Sack mania, coming to crypto?

I think I have much fewer thoughts than you guys.

I will say with with the hype vehicles, it's Maybe actually Practically speaking, like, they it actually adds some value, which is that it's a bit harder to buy hype for some people right now.

Uh, it's on chain.

I think people don't really know or want to figure out how to deal with that stuff like custody, etc.

So these vehicles may provide a way for different people.

I mean, the the inevitable result if that vehicle gets big is this going to trade at a huge premium.

To to Nav and then it's kind of like this GBTC style trade where it's like, OK, you're betting on how much this premium is gonna move, and some people are buying in and like, you know, if you, these don't, they don't have like a mechanism where someone can, someone can kind of do the art and like buy and then contribute.

No, absolutely not.

No, no, not at all.

No, these are just, these are just buckets of, of crypto that are trading on the stock market.

And they're, you know, issuing debt to go buy more crypto.

So to be fair, micro strategy has a little bit of an arb because you can buy the convertible debt at a fixed strike at the offering and that you're now, you're at least kind of, you know, you're, you are taking some price bet on that, but it's not a, it's not a, it's a sad arb like you're betting that you're betting something about the asset price relative to this underlying.

Yeah, but if there's a huge premium, someone else can come in and like raise another one, right?

Well, that's what's happening right now.

Yeah, kind of, kind of, but I mean like that's the thing, you're not going to knock down because Microsoft is so much bigger than all the rest of them, right?

And so if you're, if you are the biggest and you just have the most liquidity, you just kind of have this runaway effect, you know, like GBTC was not the only Bitcoin trust, but it just had this crazy premium.

That persisted and then it collapsed and then, you know, whatever, it did what it did.

And so if there's one hype vehicle and it just goes crazy and it gets all this liquidity, or there's only one that's on the NASDAQ and there's some other ones that are in these weird markets, you know, there's one in Japan or whatever and no, you know, people like who cares, that thing is going to just glom all the demand.

And, uh, if you look at SBE, right?

SBET was the Ethereum one that, that consensus, uh, backed.

And SBT, it, it popped up to like, what was it like 10x Nav and then collapsed down to like 1.8X NA where it's sitting today or some, something like this.

I'm, I'm kind of fudging the numbers, but it, it, it, that all happened in the span of like 3 days.

So depending on, you know, somebody was like, I want to buy Ethereum in the public markets, and OK, you're just buying this like crazy vehicle that like has, has very little resemblance to the underlying so different from like spot futures kind of are, right?

Like like ultimately, it converges like someone can come and assuming you can borrow in short, like there is price discovery here, right?

There's there's an ex though for the for the spot futures right here you don't know, yeah.

Well, you need a funding rate.

That that's another problem.

There's no funding there's a zero eventually, right?

Like, well, that's, I think, I think the question, the question is how that happens betting this.

Yeah, exactly.

I mean, Carl I can is very much betting in this direction because he's very publicly shorting micro strategy and like people who have been shorting micro strategy, they've just been getting killed.

But you know what the irony. of Carl Icahn doing that is, is he did the same type of shit with, with Icahn Enterprises, where he kind of ran this weird Ponzi scheme where he would like, basically pay out more than the actual interest and dividends, except and he would cover like, say he was like, I'm going to pay 10% dividends.

And you only had earnings that were 8%.

He was just inflating the stock and paying the other 2% to to true true up people.

And it it it the reason he did that was getting added to all these ETFs that were like high dividend yield ETFs.

And so like it created order flow for like each new issuance, SEC like kind of went after him for this.

But it it's, it has a flavor of micro strategy and that there's this constant issuance process to like, Buyback and like, it's funny he's shorting, that's all I'm saying.

There's some huge irony to that.

Well, he's obviously he learned his lesson and now he is inflicting, he's trying to inflict that lesson on Michael Saylor.

That that that's one way of looking at it.

Yeah, yeah, but so far with limited success, right, because like the micro strategy premium.

Has just been extremely stubborn, right?

This thing is, is kind of stuck at like 1.7, 1.8, and just will not go down.

Yeah, why is it all the everyone I ever hear who's like, I'm shorting micro strategies is like someone who was like a big hedge fund manager in the 2000s.

Like, like, it feels like it's like a, like, like you have to be old enough to be like trying to do it and tell everyone.

It's a good, I don't know.

I don't know.

So it's, I don't know, just a kind of a boomer thing that you're like, look, these kids on my lawn talking about Bitcoin, you know, like they don't understand how finance works, something like this.

But fair enough.

I mean, well, I, I'm, I'd, I'd love to see this trend rationalize judging from everything I know about crypto, that is not happening anytime soon.

And uh I, you know, I posted the other day that like every cycle there's like this hot fireball of retail money that everybody's chasing and right now very clearly, it's not in crypto alts, it's all in public markets, right?

That's where you see these crazy valuations and all this froth and, and that's why everyone's trying to take the like, hey, we've got the speculative stuff.

Can we give it to you people on the stock market?

Will you buy our, our stuff?

Um, and the answer right now is yes, absolutely.

They seem to be very happy to do that.

So as long as I can say that that's risk trading hands, you know.

Yeah, it's all, it's all zero sum at the end of the day.

OK, so 11 last story that I want to address is we just saw the passage of the Genius Act.

So to reiterate, uh, the Genius Act is a stablecoin bill that's in the Senate.

Uh, it has now passed the Senate by a bipartisan margin of 68 to 30.

So once again, this is the very stablecoin friendly version.

There's another version, uh, in the House called the Stable Act, which is a little less friendly than the Genius Act.

Uh, but so now it goes to the House.

There's some negotiation that's going to take place, but Trump just truth socialed that he is demanding no change. to the bill, you know, bring it to my desk as soon as possible.

I want to get this thing signed.

No writers, no extra editions, no, you know, game day, uh, shenanigans.

So, TBD whether or not that's going to happen, but the expectation right now is that this bill is going to get done and signed.

On the back of that, today, we saw massive rallies in Coinbase stock and Circle stock.

Coinbase is up 20% today, uh, including after hours, and Circle is up 40%.

Uh, including the after-hours trading upside.

So, uh, Circle is currently trading at something like 40 billion.

So absolutely massive rally on the back of the, the passage of the Genius Act.

Quick thoughts all around Genius Act, stocks rallying.

Troon, uh, look, you, you look like you're about to jump in.

I mean, the circle thing was actually kind of crazy.

I just have never seen, I've never seen like uh this type of behavior in a stock in a long time, like it was.

Uh, it was kind of, it felt like it was like an S&P addition already rallied so much.

I know.

Yeah, yeah, no, but it felt like it was like one of those weird, like, crazy ETF rebalance trades where like, oh, something got removed or added to, to spy and you saw this huge move because like people didn't expect that a removal.

And this felt like something like that where it's just like nonstop demand all day.

I mean, you just like looked at the order book, it was like lopsided all day.

I was just like, kind of, But it's both kind of crazy.

And I mean, also, by the way, isn't it truth, not truth sociald?

Now, I'm now I'm now now it's like, I'm not, no, I'm not, it's definitely truth.

That's the verb they want you to use.

I am not going to call it truth.

OK, OK, I was just, I was just double double checking.

I mean, I do think that, you know, it's kind of as we discussed, I think the current act really favors the incumbents, right?

So it seems like it should be great for them.

So.

I mean, obviously, there's a lot of ebullience, but does this ebullience look that different than Core Reeve?

Not really, to me, to be honest.

What, what's it just that it's frothy like I mean, I mean, I mean, I mean, I just kind of think like, there are a lot of stocks that are not at all like our trading like crypto, and it's like, this doesn't even seem that crazy in that light, right?

Like Palantir and Corereve being the craziest.

I mean, Palantir being at 300 billion is just like insane to me.

It's like Ethereum and Palantir are the same market cap.

Which is like, kind of, you know, I would never, you, I, I don't know, I, I don't know why, but to me that's kind of like, insane.

Jeff, what's your take?

Stable act passing.

So I actually didn't, I, I, I realized it was passing, but I actually don't know the final form it's in.

So I would have to read a bit on that to, to form an opinion.

But generally speaking, I think institutional acceptance of crypto, even if incremental is, is always good.

I'm curious, I'm curious.

I'm constantly tickled at how little aware you are of stuff going on in the crypto industry.

Well, did you read the bill?

I mean, I think it's just like.

I think headlines, headlines often also don't tell the whole story, right?

You like that is true, read the bill and like just, yeah, maybe you could read the bill.

It's not that long.

You could do it today, yeah, yeah, yeah, for us it's really like I would like to spend more time reading these things, but Unfortunately, there's just So much stuff tugging at hyperliquid stablecoin soon I guess is what we can infer from that.

Well, I think hyperliquid is a great platform for stable coins.

It's not like an intended use case, but as like a byproduct of everything that goes on.

I don't know if this actually changes things on this front, but I, I feel like the fundamental problem of stablecoins is still distribution, even if it's like zero cost to spin one up, it doesn't mean you get a bunch of competitors to circle unless I'm misunderstanding something about.

This market, I guess, I suppose like you guys as investors probably think a lot more about this, but naively as like an outsider, it feels like thus far as the stablecoins that have succeeded, basically succeeded in spite of all these other things just because they had like a unique distribution channel.

So, yeah, I'm not sure how much that changes, but I think Hyperliquid has a bunch of users, a bunch of finance happening on it, hopefully all of finance at some point and uh yeah, I think, I think that's a great A great ledger on which to mint stablecoins for people who who genuinely, genuinely need tokenized dollars.

Fair enough.

Tom, what's your take?

Genius Act?

Yeah, I mean, great.

Like anything is better than what we have right now, and I think the Genius Act is actually pretty sound as far as, you know, US legislation goes, so excited to see something happen.

I mean, what was most striking to me, so obviously it's great, you know, we'll, we'll probably do this again once it actually gets signed into law, assuming that it does.

So, you know, there's like, it's one of these things where there's like, OK, there's like 3 celebrations, so I don't want to do this 3 times.

But um the thing that's most striking to me.

That is very emblematic of this moment, at least in crypto markets, is how just absolutely.

Crazy the activity in the stock market was, and if you had looked at crypto markets, you would not have known anything happened.

Right?

Like, to me, that is the most striking thing about this whole moment is like crypto market is just like another day, you know, it's like things are all slightly down today or something like that.

And in the stock market, fucking insane, you know, historic levels of rallying where they, I don't know if they like stopped trading at some point, but, uh, just like a crazy amount of activity happening on both those two stocks.

To me, it, it, what it's telling me is that like there are very distinct pools of capital right now operating in public markets versus crypto markets, and I have never seen the directionality be that the stock market is frothier and more and crazier and more retail driven than the crypto markets.

But that's, that's the moment we're I feel like 2018 was like that where like equity markets were crazy, venture market tech venture was crazy.

What, what equity there was, there's no public companies at that time.

I mean crypto and crypto.

Oh, no, I don't, I don't just mean crypto equity.

I just meant like fintech equity, like the fintech equity boom in the late 2010s had this thing where it's like, the fintechs were roaring and crypto is kind of like flat to nothing.

And it sort of feels a little bit like that.

Like this feels more like the fintech equity boom.

Well, starting in 2020, we started getting some public markets stuff even before Coinbase went public.

You had like Long Island blockchain and all these companies being like, we're doing blockchain stuff, and they'd get a spike.

Well, no, but like you'd see how public markets responded to like blockchain-y stuff and it was, it was meaningful.

But it was never crazier than what was happening in crypto, right?

Crypto was always crazier than what was happening in public markets, right?

Like if, if somebody got a whiff that like some normal like GE was doing a deal with like Iota, Iota would just go absolutely fucking bonkers, you know, like this thing would go up 30% in like 2 minutes.

And now it's like GE announces anything with some crypto thing.

I don't even know they would move a chart.

And On the other hand, I mean, does anyone care is like buying Bitcoin?

I, that's what GE announced it was buying Bitcoin, like GE would go absolutely bonkers right now.

So that I've never seen that asymmetry.

That's, that's the point that I'm making.

So I don't know how, like this can't survive that long, right?

Like this has to revert at some point.

I just don't know when and how, but to, to your point, to ruin, like maybe it, it's because something really bad happens and that's why people kind of back off.

Yeah, I, I don't, I, I, it, it's, it is, it is weird to see all these companies have, but then I look at the rest of the normal equity market and like, This is why I'm bringing up the Core Reeves and Palantir.

They look like 2021 SPL tokens, you know, like they really, it's like, it's like the, the valuation versus usage being out of whack was like, it is like a little bit like that.

Be careful, man.

I know, I know, I'm not trying to get the Palantir or subreddit to like attack my house.

Um, please, you know, I'm giving you guys props for getting to 300 billion.

I'm getting, giving you props.

Do not egg my, do not, do not egg my house.

Yeah, no, they're not going to egg your house, dude.

They do a lot scarier stuff than that at Palantir. actually, didn't the CEO say he would like, he wanted to like, Have people get pissed on or something who are like shorting the stock.

He had this like crazy ridiculous rant.

Yeah, yeah, yeah, like, like it was, it was like some very crazy statement.

So like, yeah, Palanter people, I'm not saying it's bad.

I'm just saying it's congratulations for getting to Ethereum size.

First off, that's right.

I just think like to Ethereum for getting to Palanter size is what you mean.

Well, Ethereum was already at that market cap.

Yeah, yeah, that's how we, the reason, the reason I'm saying the only reason I'm bringing this up is like the the the kind of retail fervor in this in equities overall, that's like frontier tech equities is like, is like what crypto in 2021, 2020 early 2022 felt like.

It's like, it seems they're kind of similar.

Structurally for some reason.

And, and, and again, I don't know why I'm I this macro doomsday thing seems to be the common thread, but there, it does feel like there's, there's, there is something.

Well, you're, you're not, you're not wrong.

So Jeff, as we wrap up, going into the end of the world, what do you want people to do?

Where can they find hyperliquid to make their, to make their final trades in the last, the last days that we have left?

That's bleak.

Anything you want people to check out or how should they follow what's going on in hyperliquid land?

Yeah, you can follow Hyperliquid on Twitter, Hyperliquid X.

I'm chameleon_ Jeff on Twitter.

I occasionally post very long blocks of text.

That's right.

That's right.

And he does not, he, he does not read your tweets unless they come on his timeline.

All right, with that, we gotta wrap.

Thanks for coming on, Jeff.

See you all next week.

Thanks for having me, guys.