Bankless - Is $LIT Cheap? | Will Price and Flip

Episode Date: June 9, 2026

Hyperliquid has become the breakout perp exchange of crypto. But is the market missing its biggest competitor? Delphi’s Flip and DeFi investor Will Price join David to make the case for Lighter, a ZK-powered Ethereum L2 with zero-fee retail trading, white-glove distribution, real-world asset perps, and a token buying back revenue at a surprising rate. Is LIT just a Hyperliquid beta trade, or is it one of the most underpriced bets in onchain finance? --- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🔮POLYMARKET | #1 PREDICTION MARKET https://bankless.cc/polymarket-podcast 🧭OKX | TRADE, EARN, PAY to OKX | 120M+ USERS WORLDWIDE https://app.okx.com/join/USBANKLESS 🦊 METAMASK | DOWNLOAD NOW https://go.metamask.io/BL-Pod-Download 🌐BRIX | EMERGING MARKET YIELD https://bankless.cc/brix 🎯THE DEFI REPORT | ONCHAIN INSIGHTS https://thedefireport.io/bankless --- TIMESTAMPS 0:00 Intro 3:05 Why Lighter Is Different 5:32 ZK Rollup Advantages 6:46 Charging Traders, Not Retail 12:07 Fairness Without MEV 14:50 Why Hyperliquid Can’t Copy 18:03 Distribution Beyond Crypto 22:08 Latency & Flow Quality 26:50 Technical Edge Across the Stack 30:31 RWAs & Pre-IPO Markets 34:07 U.S. Perps Market Play 36:05 Back-End For Big Brokers 38:28 Bootstrapping Liquidity 41:54 Lighter As A Platform 46:34 Token Value & Buybacks 50:11 Market Cap Versus FDV 53:02 Valuing LIT Properly 57:51 Cracked Team & Better Comms 58:13 Joining The Lighter Community 58:51 What Comes Next --- RESOURCES Will Price https://x.com/will__price Trevor Flipper https://x.com/trevor_flipper --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Is lit just a copycat beta trade to hype? Or is it actually something like differentiated in strategy and revenue and economics? As hyperliquid breaks a $60 billion market cap and is positioned to earn a top 10 spot in the crypto industry, investors are starting to realize how big the perps market actually could be. When you see Tradfai FinTwit commentators tweeting about hyperliquid and the hyperliquid ETS are pulling in tens to hundreds of millions of dollars of flows, it makes the entire perp sector more interesting and more exciting. But perhaps the number one reason to be excited about perps is that the world's largest capital market

still hasn't given them regulatory approval. There's no one with a perps license inside the United States because that license doesn't exist yet. So while you may feel like you're late to the growth of offshore perps, the onshore perp game hasn't even started yet. And this isn't just Coinbase, Cracken or Robin Hood competing amongst themselves for U.S. perp market share. perps are on their way to eat all of finance.

So you are welcome to dream bigger dreams. The real prize are the big rogerages like IBKR or Charles Swab. And winning those as clients can result in tens of billions of dollars of flows in revenue going to whichever perp platform gets regulatory approval and can execute quickly. The two guests on the show today think that lighter, the ZKL2 on Ethereum, is in prime position to win an outsized share of the United States market, given the eventual regulatory clarity the United States is going to provide to the perps sector. But even outside of the domestic market, the lit token, the token of lighter, is already buying back twice the rate of the token compared to hyperliquid.

And at just a $1 billion valuation compared to hyperliquid 60, all I want to ask through the question is lit cheap. I'm here with Flip. He does research at Delphi Digital. Flip, welcome to bankless. Thank you. Thanks for having me. And I'm also joined by Will Price, a defy investor and also an advisor to Lighter. And I think his first podcast in about four years, Will, welcome to Bankless.

Also, both of you guys was first time. Hi, David. I know I tried to record a podcast with you like five years ago and we lost the audio very sadly. That's right. This is my first appearance on Bankless. Right. Right. Oh, my God.

It was about yams. Right. Oh, my gosh, it was. It was about yams. Yeah. We'll let the listener go investigate what yams was if they don't know. They don't know, you don't know. Perfect.

Okay. Guys, I have some questions about lighter. There has been a ton of attention on hyperliquid, the hyper-business model is well-established as working extremely well. Hyperliquid is just getting known into trad-fi circles, Wall Street circles, getting a lot of clout and brand. And there is a lesser-known ZK layer two on Ethereum that is also doing well in terms of perps that I want to know just a little bit more of.

And maybe to kind of just start off this question, this is a question that I hear asked on crypto-twinter and around, is the token of lighter is lit. Is lit just a copycat beta trade to hype? Or is it actually something like differentiated in strategy and revenue and economics? Maybe Flip, I'll kind of just throw that one to you to answer to start.

Yeah, and I think the short answer there, that's a good question. The short answer is yes, it's different. And I think the first and most obvious is zero fees. And why does that matter? It really affects their distribution strategy. and the way in which they onboard new users and sell to existing platforms. And to expand on that a little bit as if, like, recently they integrated with Encelico.

And Encelico is also integrated with Hyperliquid. Well, Hyperliquid has a base builder code fee of 4.5. And in Silico, most OEMSs, or an execution management systems, charge one bit to their users for those type of orders. And so the total cost for the user is 5.5 bibs. First, if you use lighter, which has zero fees for their partner attribution program, which is builder codes, I know the team would hate me saying that. But it's essentially a builder codes.

There's zero fees. So in Silico can still charge one bit, but the trader, you save 4.5, which matters a lot for people who trade volume. And so the way in which they go about their distribution strategy is very different than a hyperliquid. And this also goes into like the team's density, the engineering team. They have quite a large engineering team. One of the sharpest teams I've met in crypto and the talent is very much show on par with a lot of the startups you see in AI now. And their talent density on engineering side allows them to have a white glove treatment

to integrating different partners, like integrating Telegram. Eventually, hopefully they integrate with brokers, the IVKRs of the world, is they have the talent density to go integrate this tech stack for IBKR, where the competitors don't quite have the same resources to go do that. And nor do they take that approach. It's usually here's our SDK. If you want to integrate it, please go for it. So what I'm hearing and Will, maybe I can get you to clarify it as well is it's cheaper.

Lighter is cheaper than hyperliquid. It's not just cheaper. It's actually just like zero fees. But I think where you're alluding to, Flip, is that actually is like kind of a paradigm shift in the structure of the lighter strategy. It's not just that it's competitive on the fee market. It's actually just a completely different strategy that is opened up based on being zero fees

and that strategy is expressed or being pursued by this very competent engineering team that you alluded to. Is that correct? Yeah, so I guess, zooming out for a second, like, yes, that's a difference in Leiter's business model and go-to-market. Leiter also has some architectural differences. Like you said, David, it's his ZK roll-up.

and who cares if it's a ZK roll-up? Well, there's a couple of things that that gets you. Number one is it gets you permissionless collateral, which reduces the trust surface for traders. You don't have to trust whoever the bridge operator is or a multi-sig. The other thing it gets you is exit rights. Leiter has an escape hatch to the Ethereum L1

that can be triggered in the event that Lider has a problem without any intervention from the team. And these are protections that people in general don't really care about until they really, really need them, because they relate to fail, saves and decentralization. And so I would say that the people that care most about it are institutions, but you still have to build a compelling product that is better for the end user. And I think that is the intention behind the zero fee for takers business model. And so the monetization happens by charging market makers fees to trade with retail users.

Could we just expand on that a little bit more? So let's start from like square zero or maybe square hyperliquid because that's the anchor that everyone kind of understands. That's the anchor that I understand. What's Hyperliquids business model? And then how is it differentiated with lighter? Yeah, the business model for hyperliquid is trading fees, right? And it is for lighter too.

It's just, you know, how much trading fees do you charge and who do you charge? them to. And then it's okay, what's that answer for hyperliquid? How much are the trading fees and who does Hyperliquid trade charge the trading fees to? And then I think you alluded to lighter only charges it to market makers. What's the philosophy of the strategy around that? That is a good point. And so hyperliquid, they charge the makers, they charge the takers. Various fees, they have the traditional fear tiers, which you see most exchanges do. NATO has it, extended has it, and a lot of the competitors have this tiered fear model for both for both makers and takers where where lighter says hey takers we just want you to trade on the platform and you know this incentivizes and brings

in usually retail flow they're used to that zero fee model and so you see a lot of market market orders instead of limit orders and the trade size on lighter tends to be a little bit smaller indicative of retail users and this is quite advantageous for market makers because this is somewhat benign flow for them. So they are willing to pay more in fees because they are more profitable per dollar traded against that type of flow versus a hyperliquid where you might be trading, jump might be trading against, you know, and one of the other market makers, winner mew. And that's not a very advantageous trade for them. First here, it's like, okay, I kind of know I'm trading against a lot of retail, so I can be quite profitable on that.

And so in order to do that, you charge your fees to the taker, the retail user, the front end user and then market makers, you pay a little bit. And their integration with Telegram has brought a lot of that retail flow in, which probably gives lighter some pricing power. My speculation is I think over time, you'll see fees increase for makers over time on lighter. I think they have some pricing power there. Just because market makers are so profitable trading,

and it's just retail benign flow. I see, I see. Okay, so it's worth highlighting to listeners that, like, retail flows are the golden goose for any financial app. This is how Robin Hood has done so well. This is also why Calci, the domestic U.S. Calci prediction market, is actually very profitable because they have such strong retail flows. And so I think we just call it uninformed flows.

Is retail just like smashing a market buy on a token they saw three seconds ago on Twitter is a really profitable way for market makers to make money? And I think what you're saying is like the retail trillions, traders are being given zero fees as a perk to come trade on lighter, which attracts the market makers to come and clear the noise, market make amongst all the uninformed flow. And that's, that's the market makers profit margins. And only the market makers are charged. And so the theory is that this is a better bootstrapping mechanism of attract the uninformed retail to attract the market makers and then the net effect of this is that you have this like feedback loop that grows and grows

and grows. Is that the strategy? Yeah, I think I think you're pretty much directionally accurate, David. Of course, there are big network effects to liquidity. And so if you want people to use your platform, then you need to provide them opportunities to trade for better execution cost or opportunities to trade with certain people that they want to trade with. And so, you know, lighter can do that with some of their, you know, fee structure design, and, you know, they can also solve the other end of the equation through onboarding as many people as possible on the demand side through distribution. Yeah, I think it's also important to realize there that I think a lot of people when they

when they see zero fees, it's like, okay, if you're not paying fees, you're usually the thing being sold. I think this is wrong in this context because as a retail user, I generally speaking, get better pricing because market makers want to trade against retail flow. So they'll quote tighter. And so spreads tend to be somewhat tighter. And so as a retail user, I get better fills. My total execution cost is cheaper than if I use another venue. And a market maker, I'm excited to quote tighter than I usually would elsewhere because I know it's profitable. And then the exchange, they still make money because they're able to charge the market maker. So like the three parties here, the retail, the market

maker in the exchange, they're all happy here. There's one side's not getting screwed in a way here. They're not getting the short stick, if you will. Yeah, so I don't think, you know, screwed is necessarily the way to look at it. But if we're talking about screwed, one thing to note on lighter is that even though it's a roll-up, which is a blockchain, there isn't any MEV on lighter. And we can get into the microscruits structure details as to why, if you like, David. And there is M-EV on other platforms like Hyper Liquid Eraster or maybe there's Leighton.

Not necessarily. It's just different design decisions. I guess I'm thinking more about like a blockchain, like Ethereum, with an open mempool where pending transactions can be seen, right? In the case of Leiter, Lighter has a centralized sequencer. And so, for example, base also has one. Right. And so transactions are processed in the order in which they're received.

And what's interesting about lighter's architecture is they can benefit from the latency advantages and speed up that's associated with running that sequencer in a centralized way. And at the same time, still verify to Ethereum that all of the logic of the matching engine was run correctly. And this is a function of fairness. Maybe we can talk about the importance of fairness

when it comes to perfect changes, because as I understand it, traders are actually quite tuned to whether or not the platform that they're trading on is treating them fairly or not. Can we talk about that? Yeah, traders want the best fail quality as a function of a couple of things, one of which is liquidity and another of which is any adverse selection if it exists. And so, you know, speaking of adverse selection, one of the things that you might worry about if you trade on as opaque centralized exchange is whether somebody is taking advantage of your flow. There are some pretty funny memes from last cycle around browser lag on FTX, just as one example.

And in the case of lighter, because the verification logic is open source, you can see that the exchange rules have been attested to and guaranteed by math. And so you don't actually have to trust a centralized operator, even though right now, Leiter has a centralized sequencer. Right, the centralized sequencer is fully auditable and verifiable because of the nature of a ZK roll-up. Doesn't Hyperliquid also have some of these properties

because Hyperliquid is also a collection of nodes? I know if we talk about a truly decentralized system, maybe Hyperliquid doesn't quite fit the bill of that, but nonetheless, it's not Binance or FTX. And so, yeah, I mean, I would say Hyperliquid's, not decentralized on the level of Ethereum, but it does have a validator set, and that validator set coordinates to produce blocks, which contain the traits. It's a different tradeoff space. Right, but don't you get some of the same levels of transparency around for traders if they

are being traded against with hyperliport? Yeah, absolutely. Compared to something like an FDX or other centralized exchange, absolutely. Yeah, so I think maybe some of the reoccurring question I'll have as we go on in this episode is like, well, can't hyperliqu just do that? Like if the strategy of lighter fees is to not charge retail fees and instead charge market makers, and that's such a good strategy that were bullish, why does that hyperliquid just do that? Yeah, that hyperliquid could do.

It would cannibalize a lot of their revenues and generally from the leader, you don't often see that sort of strategic positioning. There are other things that hyperliquid would have a hard time doing, one of which is approaching lighter's trade latency. Another of which is providing the same guarantees around execution and verifiability of collateral and proper functioning of the liquidation engine and the other things you get with the ZK.

Yeah, I think I would just add to like, why doesn't hyperliquid go zero fees? I think we'll kind of touch on it. It's like, why would you compress your own margins? Like you don't need to yet. you wait till the competitor does that. And I think you started to see some people get somewhat concerned about that pre-TG just because volumes were such a large percent of pert volumes. And now that's kind of faded and that's not less of a worry there.

But I think you are starting to see some of the fee compression in the space. Like look at HIP3 growth mode, like the discount there. Like a lot of people will say that they believe HIP3 growth mode will go away in a lot of these commodities and RWAs. I disagree, and I think this is just fee compression you're seeing across the board, but until your hand is forced, like if you're Binance or if you're hyperliquid, why would you compress your fees when you don't need to yet? And then on the distribution side is like, why doesn't hyperliquid take a similar distribution

strategies? They're not forced to yet. They don't need to. People come to them. People go use their stack. They go to the SDK. They implement it. And so until other people start going elsewhere because they're getting a white glove

treatment from a competitor, there's no reason for them to go do that yet. Hyperlequate is a great product. Incredibly. They've gotten great distribution because their product is great and they're, you know, they've formed a cult of sorts around it. And, you know, I just happen to think that there are people that enjoy this other spot in tradeoff space as well and that the exchange ultimate landscape will have many winners. And I think we see that with Coinbase and finance and OKX.

by bit, how can I forget by bit, in the centralized exchange venue space. And I think we'll see similar in decentralized exchange space. Yeah, okay, okay. I'm starting to get my mind wrapped around this conversation.

I think if we're bullish, the lit token, which is like a question I kind of want to end this podcast with, is just like understanding the lit token. I think what you guys are saying is that there's going to be some competitor

that forces market dynamics upon the hyperliquid because it can't just be a complete monopoly, because if there's a monopoly, you would send a competitor. Potentially that competitor is lighter. And the way that it chooses to compete with hyperliquid is going to change the market dynamic of this base as a whole. One of the ways we've talked about this so far is the fee structure dynamic. Maybe the next one I want to talk about is lighter's distribution strategy for actually attracting the retail flows,

which are, as we've established, so incredibly valuable. So maybe we'll, maybe I'll flip this one to you about. how would you define or illustrate what Lighter's distribution strategy is? Yeah, so I think Lider is competing with like the entire exchange space, you know, not just the crypto exchange space. And I think all of the best crypto exchanges would say the same. There's a much bigger pie out there and Lider's positioning itself to win. So you're talking about not, we're not just talking about like Lider versus Hyperliquid,

but also Lider versus Coinbase, Binance, but then also Robin, and interactive brokers, like stuff like that? So there's a few different potential universes depending on how things shake out. I think lighter can be a winner in multiple of them. You know, one potential future is that lighter becomes a globally popular exchange

with a ton of first party distribution. Another possible future is that lighter achieves massive penetration on the infrastructure side, even though it doesn't wind up getting to, you know, global scale distribution directly itself. And so I'm not sure exactly how things are going to play out. But what I do know is that it's a very talented engineering team with a good grasp on financial markets that is, you know, laser focused on getting to a outcome with scale.

Yeah, it's just they're going after like growing net new users. So instead of going like specifically after teams and wallets that hyperliquid already has relationships with or doesn't have relationships with, but they still leverage their tech stack is lighters going after like telegram wallet, for instance, I think is a great one. That's like net new users or net new perp users. Like some of these users probably haven't used perps or maybe they have, but like, hey, telegram's usually where I keep my assets. Like over in Southeast Asia, it's quite popular. And so you get users there that's like net new perp users, growing the pie, growing net distribution.

Net new per users, but inside of crypto still, correct? Right? We still haven't really penetrated outside of the crypto bubble. Yeah, it's hard to know where the telegram wallet user base comes from. You know, obviously Telegram is popular within the crypto community, but it's also very popular outside the crypto community. Yeah. Interesting. Okay.

So Telegram and a Telegram wallet, maybe we can just actually poke, open up the hood and talk about how that works. I think, I mean, lighter in the back, Telegram wallet and. the front. Maybe it's as simple as that. But also just like what else is in the distribution strategy from from lighter that is like this? Yeah, that's pretty much how it works. There are some nuances that I would say are out of scope of this conversation. But basically, you know, lighter helped telegram set up a bespoke solution that worked for them and their architecture that uses lighter on the back end. And I think we can call it a semi-custodio arrangement that uses decentralized rails.

And, you know, the right solution for each potential lighter partner is going to be different, but, you know, can be supported, you know, as per their needs. And I know the lighter team is focused on, you know, getting as many distribution partners as possible because, again, that's one side of the chicken and egg problem of getting liquidity network effects. And this is maybe where this apparently cracked engineering team comes in who are able to build these externally facing products to integrate with things like

Telegram or other venues that have users? I mean, they have a lot of things to do. That's one of the places that they contributed for sure. I think it's a competitive edge as someone, a third party here. I think it's a competitive edge that they do have. The same talent density I haven't seen elsewhere among their competitors.

Centralized or decentralized. Okay. The cracked engineering team. The cracked engineering team. Can we talk about the technical edge that lighter has? Will, you've talked about the latency dynamics that lighter has. What does that do for it when it comes to attracting flows and therefore fees? And then what are the other just like technical strengths that lighter has versus the rest of the market? So a human starts to notice latency somewhere around the quarter second mark or 250 milliseconds.

Lighter's latency for taker orders is somewhere on the order of 20 milliseconds. So, you know, well under that threshold. And, you know, that basically lets you provide an experience that is for all intents and purposes, instant for your traders. Lighter also on the architectural side has a speed bump for taker orders. So basically any takeer order or market order is going into a queue and it waits somewhere on the order of 140 to 300 milliseconds, depending on your staking tier and whatnot before it gets processed. But importantly, the market makers don't know that those orders are pending, but they can update where they quote in the book as fast as their connection to the API permits.

And so this leads to a market structure where if the quote unquote true price of an asset changes somewhere else, like wherever the underlying is trading, whether it's NASDAQ, or Binance or anywhere else, market makers can update their quotes and they can avoid getting what's called picked off by what are called toxic traders. And so from an architectural standpoint, all the market makers that I've spoken to, they really like this architecture and they consider it a very fair playing field. And so the very, very low latency just is just like an assurance mechanism for market makers and who are very sensitive to these very low speeds. And that's so preserves a volume on the platform.

Yeah, so we're not approaching NASDAQ scale latency quite yet. You know, we're on the like 8 to 10 millisecond range, whereas NASDAQ is, I think, at least another order of magnitude faster than that. But it's faster than, you know, competition in the decentralized space for sure. But certainly there's lots of room to improve. And all of the microstructure experts at trad firms that with their microwave towers would laugh but you got to start somewhere. I think you remove a lot of toxic flow

by using speed bumps first things like cancel priority. Cancel priority gives, you know, makers last look at takers' hands. And so if you see your trade, if Jump sees they're trading against one and mute or some really informed person flow, they can pull the order just because they don't want to trade against that individual, which makes sense for the makers.

But as a taker, you can, you see excesses, slipage at times. You can be placing orders and you can have people front run them. You can have people pull orders and you see access slippage, which you generally speaking see a little bit less of on lighter. Yeah, I think one one like North Star here is we want the order book to be what you see is what you get. And obviously, you know, there may be an organic price change between the time you decide to click the button and when you click the button. But, you know, we don't want surprises and we don't want people to feel like they're being taken advantage of. Trading is changing.

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return in each tier wins the biggest cut. Pick from 260 Ondo tokenized stock. funds and commodities to swap inside Metamask and let your portfolio do the talking. If you think you can out trade everyone else, this is your chance to prove it from now until June 18th. Click the link in the description below and opt in on Metamask Mobile. Trade RWAs on mobile or desktop to compete, not investment advice. Yeah, okay, so the themes of threads that I think I'm identifying here is like we have this cracked, cracked engineering team that is doing this thing which is really minimizing the latency, best latency in crypto on a purpose platform as I understand.

understand it. And then in addition to that, the same cracked engineering team is going out and doing just white glove integrations with things like Telegram, doing kind of the hard work to get flows. And then with the just like microstructure inside of the exchange, doing the things that really optimize for fairness and confidence in the platform, which attracts some of the larger, the larger whales, the bigger market makers, the bigger institutions. The ZK. roll-up side of things, also doing that same thing. ZK is a technical challenge, but again, we have this allegedly cracked engineering team to leverage ZK technology to do kind of the thing that the Ethereum community really always wanted to do. It's like, look, look what you can do,

look at the magic with ZK, you can prove everything, you can prove the state of things, provable fairness. And lighter is actually just like productizing that and taking that to, ideally to parties outside of crypto and say, hey, like our exchange is fantastic. And also we have perps and you don't have perps, but we have perps, so come trade on our platform. Yeah, I think that's a good summary, David, but one thing to keep in mind is Lighter didn't just choose ZK to sound smart. They chose it because it was a good architectural fit for what they were trying to build. And the same thing with Ethereum. They chose Ethereum for security because there's a good architectural fit for what they're trying to build, which is a application-specific

roll-up that you know you know is very opinionated about the design choices it makes to support the application of trading whatever those assets are whatever those instruments are and so that's led to i think yesterday lighter had something like over 10,000 transactions per second which is far and away the most in the Ethereum ecosystem um while only using maybe one percent of the blob space something like base for example somewhere around 100 transactions per second right me if I'm wrong will and David you might know this as well but also the choice of using zk should allow them to do true portfolio margining better than those without specifically with things with options just because that is very computationally heavy and so they should be able to do

portfolio margin at scale with spot perps options better than most competitors which is which is something that i think people just haven't thought of yet just because we don't really have on chain options outside of derive that have really hit scale. I think what you're getting at and what aligns with my intuition is that an exchange, especially one with a centralized sequencer that has the computational bandwidth

that I'm assuming lighter has, is they can just simply do more computation and since they are also the single source of truth as opposed to maybe even something like hyperliquid which is still a decentralized network of nodes since there's a single source of truth plus the computational bandwidth, they can make stronger assurances about what happens when positions net out across the exchange

and can do that simulation to be more expressive in some of their products like options. I think that's what you're kind of getting at. Technically, anyone can generate the proofs. It's just why would they? Because it's expensive to make a proof and you're unlikely to do it unless you are the exchange itself. But it is cheap to verify a proof. So from the user's perspective, as long as the proofs are being generated and they can trivially see that the rules are being followed,

they should be happy. Okay, okay. I want to talk about real-world assets on lighter because I think any perps exchange that only six to crypto assets is going to remain constrained by how big that market is. And as we've seen even on hyper-liquid, like real-world assets on hyper-liquid or have flipped crypto assets on hyper-liquid in terms of volume.

One thing that I was actually surprised to note is that Lighter listed SpaceX pre-IPO market on Lighter like two weeks before it did on Hyper Liquid. And I actually didn't hear about that until after it got listed on Hyper Liquid. Maybe we can talk about how Lighter's strategy for getting into this pre-IPO market, which I think is kind of like the frontier and what their strategy is, how this works and how they're going to grow it. Yeah, I mean, certainly Lighter doesn't have the size. or loudness of the community behind it at this point that hyperliquid has. And so it makes sense that you didn't necessarily hear about it. It also makes sense that real word asset volume is taking off for some of the reasons that you mentioned. Specifically on hyperliquid, I think there's also some speculation around a trade XYZ air drop, for example.

They might be driving some of it. And in tandem with, as Flip mentioned, the fees on RWA is being significantly lower than that. they are on crypto assets, all of that tends to induce a lot more volume. Lighter itself is, you know, listing more and more RDA assets every week. There are, you know, various indices and commodities and equities, not just from the U.S. market, but various markets around the world, and it remains a core focus area for growth. As far as RWA growth goes, I think oftentimes we forget, like the leader right now on the decentralized perps space,

hyper liquid, they really, the product is killer, but they really started to gain a ton of traction when they started listing assets that weren't listed elsewhere. And I think you see this

a little bit with RWA's as well. A lot of the group chats on Telegram and Twitter, like everyone's trading memory stocks, compute, robotics, and things like that. And as you get these assets listed that people want to trade with some leverage that maybe they can't get on IBKR,

they want to trade them in some, some other fashion. And so I think there's a game to be played here where if you can see where the puck is going with regards to like the hot potato of assets running that we're seeing right now, I think you can earn a lot of market share that way because both products are incredible.

And if you can get the product list of their first and then get people in front of it, let them know that, hey, this product exists. You can trade this here if you want to. Then I think you can get a lot of market share there. And that's something I'm like looking for like other teams and doing like Osteum was first to really lean into RWA's now variational with, with the recent race from Dragonfly announcing the push there.

And so you're seeing this big push, and I'm really curious to see if lighter can start to bootstrap some of these markets a little bit faster than the competitors. So if I'm a Perps Exchange, I think I kind of am just looking at the United States onshore market and thinking like that is the market to go after. Like if whether even coin base Robinhood, finance, whatever, like the onshore regulated, approved perps market is like this golden goose that everyone wants that no one can really get because

we don't quite have clarity yet about United States perps. But it seems to be that that should be where lighter is going. Is that part of the like explicit strategy, Will? What can you say about that? Yeah, 100%. So if you listen to Vlad on the last lighter investor update call, you know, he talks about, you know, the regulatory licenses that Lider is pursuing, and just as you say,

the main reason is the size of the U.S. market and our desire to participate in it. Lighters based in the U.S., the late token is issued directly out of the Delaware C-Corp. And, you know, there's a presence on the ground with, you know, all of the important people making decisions on the regulatory side. and I don't know exactly

or I don't even think the SEC and CFTC know exactly how the regulations are going to shape out but certainly there are people from the crypto industry that are there to advocate for common sense it seems like that is a $100 billion market that again no one's really claimed because it seems unclaimable yet

yeah that's correct and I think that obviously the U.S. market is a big piece of the picture. And whatever the requirements wind up being for accessing the U.S. market, whether it's like on-chain KYC or maybe it's like assurances about the exchange operating fairly,

I think that blockchain protocols are well positioned to compete. Okay, interesting. One of Coinbase's strategy is that it has like the first party exchange where like most retail people go on to Coinbase with their accounts, hook up their bank accounts, trade there.

But then also they're doing the white listing strategy and so they are also the back end exchange for Charles Schwab who like doesn't want to build a first party exchange. And so they kind of this white list coin base and provide Bitcoin and ether trading to their clients but it's really coin base in the background. Is Lider also thinking something along these terms?

So one of the big reasons that I think that building on top of Lider is attractive is that the underlying fee structure is more appealing. And so if you are the party like Charles Schwab or Fidelity or any of these U.S. trad institutions, and you're making this kind of decision, the first thing you're going to look for is the underlying gun you regulated. And then once you've checked that box,

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So looking at the Perps Exchange, it doesn't seem actually all that complicated to get a real-world asset listed. It's just like an Oracle. And even with the pre-IPO markets, they kind of just like guess a price and then a market appears. And so really the game is liquidity. So what's the strategy for getting liquidity to actually show up on these markets?

Yeah, well, I mean, the Oracle part is slightly more complicated, but you're right. Anything you can get a price feed for, you can trade. And so the most important financial primitive is the order book. Lighter's built a fully verifiable order book on chain that is a performance. low latency place to trade these markets.

And so the question then becomes, can you get the market makers on board to quote? And then the question is, who are the natural traders of these assets? And do they need to hedge somewhere else? Do they want to just structurally belong? And I think in the case of like RWAs, there is some hedging demand

and there are perhaps people trading on lighter that are able to like buy the spot token of the underlying and take the basis trade. But there is a capital cost hurdle to overcome. If I'm a market maker, I may not be willing to leave a bunch of orders open on the book because that takes up margin. And margin means those are dollars that I can't be earning money market making elsewhere. So Lighters built a RFQ product on top of the order book that basically lets

large traders signal to market makers that they want to make a trade and then the market makers can provide just in time quotes. But all of it goes through the order book, but we've got some very promising early feedback from the beta of this and we're looking to roll it out more widely very soon. I think this is a huge move by lighter. I wrote a thesis mid late last year talking about how I thought the winning exchanges would have multiple execution environments. They would have an order book, a club. They'd have an RFQ system and then they'd also have a privacy offering at

some point and kind of in that order. And lighter's the first one to have more than one. You've got variational osteoam, the two prominent RFQ on-chain brokers, if you will, and now you've got lighter stepping in. I think it's just another way in which a user can

express a type of bet and get filled in a different way. That's more optimal for them. I think it's a huge step for lighter. And it's an incredible way to bootstrap liquidity for long-tail assets. And you tend to see better fills on long-tail assets, both crypto and RWA's, through an RFQ system. So you see great fills on Osteum and Variational on these long-tail assets. Yes, it's, you know, early on their bootstrapping was difficult.

But as the scale, the liquidity and the fills and the execution costs with using RFQ on these long-tail is quite good. And so I'm very excited to see lighter kind of moving and having both the order. book and an RFQ type of system. And RFQ is very different. Like the way in which they do, Lighter does RFQ is very different than variational or osteum. And you could get Caldora,

you could get Lucas and Vladol in a conversation and hash that out. But like just to note, like I'm not saying they're the same, but like the way in which a user gets filled is pretty similar. I see. Really, it sounds like the broad strokes of everything

we talk about is like Lighter is trying to evolve itself into a platform. And it does that by allowing more, expressivity towards what it deems as like valuable components of the marketplace and so like right now it's kind of like a first party exchange but really is trying to

scale out into being a platform across all hubs and all spokes around its hub. Yeah it's more instruments to trade both like in terms of number of perk listings new instruments to trade like spot options

et cetera and then more ways to trade them whether it's directly on the order book, RFQ, et cetera. With the U.S. regulatory licenses, I think that's something that Lighter has over a hyperliquid because I don't really know. Maybe Hyperliquic can go get those things because they do have Jay Shavansky fighting the fight in D.C., but TBD, because they're still a distributed protocol. I don't know really how that would work.

I don't really know if anyone knows. But Lighter still has to go up against Coinbase and Crack and Robin Hood domestically aren't those like pretty big names to have to go up against because all of those want to do perps domestically inside the United States. So how would it's Lider expect to compete with some of those gargantuan? Yeah, so it's worth noting that no one including Lider has a license to offer these products

in the U.S. right now. From what I understand on the regulatory side, there's appetite to find creative ways to make sure that blockchain platforms can get licenses and comply with regulations that weren't necessarily written. when blockchains existed. And again, like I said earlier in the conversation,

I think blockchains can offer like a better product, both from a permissionlessness, you know, verifiability and cost structure perspective. But yeah, you're right. There are, you know, many large, you know, financial services businesses in the U.S. that are going to want to compete. But one thing I would point to is how difficult it is

to actually build like a, you know, highly performant venue. And if I'm one of these companies and I'm doing a cost benefit analysis, I'm going to look at, you know, how quickly can I get to market working with someone else as an infrastructure partner versus like how much money am I going to have to spend and how much time is it going to take me to build this in-house? And, you know, one thing that we see a lot in the US is that talent density tends to converge at startups, which is why there's often room for, you know, new entrants to disrupt the status quo. I see. So maybe one perspective is that, you know, maybe Coinbase is intimidated by what it takes to make a performant PURPS exchange.

And I would say less so, less so Coinbase. You know, they've been, you know, in the crypto space a long time. But there are plenty of financial services, people that aren't necessarily used to the, you know, like, crypto Ux bar, shall we say. Like, crypto products generally have a much higher level of UX, in my opinion, than many tried products. And I think, you know, there are, there are a lot of hard things that have to happen under the hood to achieve that. I see. So maybe I'm stuck in the crypto industry. Maybe like, I need to think even be. beyond the bubble of crypto. And I think what you're alluding to is like,

oh yeah, but Lighter's trying to get integrated to the back end of some of the biggest brokerages out there. And even those people are probably even more intimidating to look at a purpose exchange and try to build that in-house. Yeah, well, I don't know exactly how it's going to shake out. I think Lighter has a very good chance. And at current valuation levels,

I think that chance is underpriced. Yeah, I'll bite on that. I'll bite on that. Yeah, I think, I think the one I go after is, is the brokers and be the backends there. I think lighter is very much showing moving towards a super app. Again, another thesis I wrote last year was like Perp Dexas are going to eat all of finance. And you're kind of seeing this iteration where their asset managers, kind of like a vault, and then you have the bank, the exchange, the clearinghouse, the custodians,

eventually prediction markets, options. And then you recently saw USDC and Hyperliquid. They get in the stable coin. They'll have borrow in. prediction markets, HIP4, things like that, they're all going to converge into one platform and venue. And I think Lider is one of those that has a decent head start into Will's price. Like the valuation definitely doesn't reflect that. Yeah, I want to talk about the valuation. I'm looking at the price of Lider right now.

It's coming in at a $291 million market cap of the fully dilutioned value of $1.16 billion. Not that many tokens are well below the $1 billion market. cap that seemingly are alive these days. Lighter feels very, very much alive. Lots of development there. Just recently just raised a bunch of money not terribly long ago from like Robin Hood and a bunch of others.

And as you guys have alluded to, apparently, allegedly, that's cracked dev team. Can we talk about the fundamentals of the lit token? So similar to hyperliquid, there are buybacks and burns. There's some amount of fees. Can we kind of maybe flip off this one to you? Can we kind of just like do broad strokes over what the lit token is Yeah, absolutely. So they do buybacks for the revenues, 100% of buybacks. What they do is every hour, they sweep revenues and then place limit orders down 10% below the current market price and do it as maker orders. So they're not taking liquidity out of their own token on their own venue. And so they place some that way. And so they do 100% of buybacks with revenues there. And then as far as like fundamentals that we alluded to earlier is like the distribution strategy, I think is quite unique. They have pricing power when they

market makers. So I think there's, there's a world in which you probably see a 50% increase in their take rate, the revenue they make per dollar traded. I think there's a world in which you see a 50% increase there. And then you assume no growth, you could have a 50% increase in revenues and therefore buybacks and value accrual to users. And you can see your buyback yield increased to let's call it closer to 20%, which I think is quite attractive. And I think that's, that's a great spot for them to be as an underdog in this space. And I think there's a lot of dogmatism on Twitter and Telegram, which I go, if you hold lighter, you hate Hyperluka.

No, you can hold both. Crazy concept. Like, I exclaim, I hold both and I will continue to hold both. I think their distribution strategies are different. And I do like where lighter sits today. Yeah, I view it a bit differently. Yes, I am happy to see that, you know, the team has committed to token value accrual

and that revenue goes to buybacks. And it made the public statement that, you know, all value from lighter products and services is going to occur to the token. I see it as like more of a growth play. Like lighter currently does like maybe 20% of the crypto volume that Hyperliquid does something like 10% of the RWA volume. But it's not monetized to the same degree and that's a growth strategy. And so like you would expect a different order of magnitude.

two difference in the valuations if they were monetized in the same place, but, you know, lighter's focused on growth. And I know everyone else is focused on growth. This is just lighter's approach to it. Yeah, I think the quality of that growth too and quality of those revenues. I think Peter Tier talks about it all the time. He's like, who cares about how much revenues you make in a short period of time is how durable are those revenues. And that's why I really like their go-to-market strategy on distribution. Like, and you're going after quality distribution in Silico, like really working with them, making sure the traders like the product. Telegram, making sure that they really like this product and it's how they want it to be.

And so on and so on down the road is like, that's a very unique strategy. I think that's like high quality revenues that they'll continue to grow. Hyperliquids grown incredibly fast and a lot of the revenues are durable. But I like to look at the durability of those revenues and the partners that they're integrating with. So when I look at the valuations here, the $291 million market cap, $1.16 billion FTV, big gap there. It's like a three, a little bit more than a three X. What accounts for the gap between the market cap and the fully dothered evaluation? So there's a vesting schedule for team tokens and investor tokens like, you know, most crypto projects have. In the case of

hyperliquid, they have the difference between their circulating and FTV is team tokens. There's also in both cases a, you know, a bucket of unallocated tokens that that might get distributed for future growth, but we really don't know what each of the respective teams is going to do. But for all intents and purposes, they don't exist right now. I hope they never use those tokens for growth. I hope they never use them.

And then I'd do one part of the unlocks. I'd say look at the cat table. The cat table is very different than most crypto rounds. I mean, you founder fun, Rivet on Robin. Like, there's a very different names than you usually see in a crypto round. And, you know, speculating as a third party, I think a lot,

of those names, those people, they don't look for a quick 2x on an asset. I think they invests in generational businesses. And so, I mean, if I'm sitting in their seat, I'm like, okay, this is, you know, a 50x or it's a zero. And like, that's just the way I think about it. Like, if I go by it, 10 million market cap startup token, like, I'm thinking, okay, give me a 25x or it's a bust. And I think they probably think about it similarly. And I don't want to talk for Will or anyone else who's invested, but like, that's the way in which I think about it. Yeah, I mean, I've certainly got many, many zeros in my investing past, and it's part of the game. In terms of, like, whether to give out tokens for growth, I viewed it like as a cost-benefit analysis.

And if you have opportunities to spend on growth in a way that's going to create durable value for the business, you should do it. Most crypto projects have failed to meet that bar with most of their token distributions. It's something that I think about a lot. That's a good point. That is a good point. Like, I think if you were to like go to a season, whatever, a second season, second air drop, I think that's probably like a bad, expected return on dollar invested versus if you go to like IBKR and they're like, hey, can we do a trading competition?

Yes, please. Like, we will happily do that. I think there's a big difference there. And I think crypto Twitter thinks it's, think about the former all the time versus Will and other investors think about the former. Yeah. Yeah. Oh, I like air drops too. The latter.

When airdrop? I like surprise air drops that it's not for. I pray there's not. Yeah, it's, yeah, it really was like, you know, air drops, it's a good name because they come from heavy. Yeah, right, yeah. You're not supposed to surprise you. You're supposed to surprise you.

Okay, so maybe this is probably a question for Flip. Flip, again, the two numbers, $291 million market cap, $1.16 billion dollar FTV. Where do you, like, which number do you look at? I don't look at them that much, to be honest. I think they both, like, both the leaders in this space probably go much higher. I think if I'm actually running like a fundamental analysis, I'll use like an adjusted market cap is what I'll do is I'll take future unlocks

that I know are coming. So team and investors. And then I'll take out anything staked and any tokens bought back. And that's what I'll use as my market cap or FDV. And so I call it my adjusted market. catmetric and then I do it relative to revenues is how I would look at that and I would also include you know yield that they get on on stable coins on the platform so like hyperliquid gets 90% of us DC that's on the platform lighter gets something they haven't announced they don't know what it is

but they have announced that they're working with with circles so let's say it's 50% I would also include that in the revenue as well yeah I haven't crunched the numbers it sounds like you guys have when it comes to actual revenue and broad strokes, I think what you guys are saying is that the actual valuation of the lit token punches below its weight class

when it comes to the actual revenue dollars that it's actually pulling in. Maybe you guys can nod your head or shake your head if you... Yeah, so it's relative to the market cap. Relative to the market cap, right, of course. Over the last month, lighters bought back

twice the percentage of the supply. That's true of the circulating supply and the fully-duty supply because those ratios are about the same for both projects as hyperliquid has. Okay. And so, you know, the market is giving hyper-liquid a larger multiple.

There are many reasons why it might do that. Maybe it's pressing in some incumbency advantage or thinks that it's, you know, closer to having exit velocity. But that's where the numbers are today. And I would say as like an outsider, I would also say that I think the market's pricing in higher quality revenues for hyperlipid.

Yeah. Yeah. Okay. Yeah. Okay. Which I think is fair, like in a post-TGE world, especially going into TGE to, you know, to assume it trades 70 times revs. If you discount revs to some extent, that just seems kind of crazy. But here, you know, I call it 25 times, 20 times, depending on what metric you use, it seems a little bit more fair and in line with something you might see on like the CME and things like that.

Yeah, I don't think the right way to value these businesses is current revenues just because the TAM is so large. And so it's much more so about like positioning for future growth in my mind. Right. So the question I'm trying to get to is like, why is it only $1.1 billion? Like was there a failure in this strategy of lighter? Are people just not aware of it? I mean, you guys are obviously bullish. That's literally why I'm having you. So maybe you guys are just making me bullish. So maybe that's what's going on here. But it's just like the perps arena feels like it has such a premium on it. And the lighter token doesn't seem to reflect that. if I look at what lighter is built in the last 18 months,

I would say they've probably exceeded my expectations that I had 18 months ago in terms of how they've navigated the few months since TGE. I would say, like, if I was to make any changes, I would have perhaps done them on the communication side, but I've been very happy with what I've seen from a product development standpoint and shipping velocity. and so I think also there's like generally like a broad lack of awareness among the trading community that they can get you know better quality execution on lighter

and I think the more time passes the the more people are going to be aware of what's in their financial best interest yeah I would just I would just the to answer your question directly I think it was the market not sure how to discount lighters revenues going into their TGE. And then I think post TG it was comms, which have gotten significantly better since, since, you know, call it the last quarter or so.

Their comms have gotten a lot better. And I think they're starting to build trust and good relationships with funds and community as well. So I've been very, very encouraged to see that turnaround. But, I mean, the product, I mean, the things they've shipped in the last six months are incredible.

I think if they didn't have a token, I think the sentiment towards them would be completely different. I think it'd be a 180. It'd be like, okay, this team is absolutely cracked, and they truly do have one of the best engineering teams in finance. Okay, why do we keep coming back to the cracked engineering team? How do we actually know they're so cracked?

What do we know? To look at the product velocity of the products they've shipped and not just in the last six months, but since, since, you know, the early Elliott days, I mean, the team is incredible. All right. Maybe it's something you have to experience and just be in the community a little bit more. Can we talk about if I'm peaked and I kind of want to join the community? You guys talked about there's investor calls.

What does it mean to be like a part of the lighter community? How would I find it? Where would I go? What behavior? What would I do? Yeah, I mean, I would say openx.com and figure it out yourself. Ask Rock. All right.

No, I think they're pretty active in the Discord. So I would go there and then the Twitter account's gotten quite active as well. Okay, cool. And from there, you can just figure it out as well said. Sure. Just start asking questions and giving high quality feedback and people will reach out. What are, if you, what are you guys looking at for lighter in like the short and medium term? Like, is there anything that you guys are anticipating about lighter or anything you're

looking forward to, anything you're excited about? I just want to continue to see quality distribution partners. Continue to see that, continue to see this bottoming in volumes and revenues, and then to eventually see some pricing power on the maker side and maybe even through some ancillary product offerings and love to see their take rate increase quite meaningfully. I think right now it's like 0.6 bibs. I'd love to see it get up to one bit.

And I think if I see that over the next one to two quarters, I'm very excited. So that's what I'm looking for. Yeah, I'd like to see them win some big distribution partnerships, as Flip said. I'd also like to see them deliver on, you know, product roadmap, which includes things like options, which includes a lighter EVM programmability layer, and a few other things. But yeah, there's a, there's a ton to do. And, you know, we'll see how fast they get it done. Well, one of the good resources for people, I think, is actually Flavorian.

Flip, Flip, write some good stuff about Lighter on his Twitter and also for Delphi. I always got it on Twitter, but I think probably also for Defi as well. Absolutely. Flip, well, I had questions. Now I got some answers. I appreciate you guys coming on the show.

Yeah, thanks for having us. This was fun. Bankless Station, you guys know the deal. Crypto is risky. You can lose what you put in, but this is Frontier. It's not for everyone. We were glad you are with us on the bankless journey.

Thanks a lot.