On The Brink with Castle Island - Pbj (Perpl) on the Perp DEX Market & Monad's Imminent Launch (EP.677)

Episode Date: October 14, 2025

Wyatt sits down with Pbj, the founder of Perpl, a prominent perpetuals exchange on the imminently launching Monad blockchain. In this episode: How large are perp exchanges in the crypto market? Why perps are attractive to crypto users and traders Hyperliquid's success What assets would people trade on Perpl vs Hyperliquid? What makes Monad unique Perps for other asset classes? Reasons to be excited

Today, I sat down with PBJ, the founder of Purple. Purple is a first-in-class crypto-perpetual exchange launching on the Monad blockchain. I was fortunate enough to have this conversation with PBJ shortly ahead of the anticipated Monat and Purple launch this fall. We discussed perpetual or perp exchanges and the role they play in crypto markets, hyperliquids recent success, how perps could expand to other markets, and what makes Monad unique in the backdrop of many other new blockchain. I hope you enjoy our conversation.

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and hosts may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only is an expression of their personal opinion. This podcast is for informational purposes only.

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TVJ, great to see you. Thanks for coming on. excited to chat today. Thanks for having you know, Wyatt. I want to kick off hitting on some of the subject matter you spend a lot of your day on. To boil things down, I think a lot gets glossed over in crypto. People talk about different products, different narratives, and perps or perpetual futures have undoubtedly been one. Can you speak to what perps actually are and why people use them? What are they good for? Perps are basically a derivative instrument that allows you to speculate or hedge with leverage on the price action, an asset. But unlike Spot, you don't actually need to hold the underlying instrument. There's some stratify parallels like options and futures,

but those instruments usually have an expiration or it's take delivery. Perpetuals don't have an expiration, so you can go on holding the instrument as long as you have margin and are paying your funding. And why is that attractive to people, whether you're a frequent trade or a typical crypto user, what's the draw there? So one of the things that happens, and for example, options is they have expiration, so you'll have options for, let's say, every month. What happens there is liquidity gets fragmented. And perpetual, since there's no real options, you have a lot more liquidity in each of these instruments. So each of these markets have just one market for it. So you just have a better trading experience in terms of slippage and

execution. It's also a lot more simpler for retail traders to understand. You don't have to do all this crazy black shoals math and options math for it. It's just based on leverage and price action. You have a very easy understanding of what's happening with the product. So if price goes up and you have a 5x leverage, you have a 5x return on that and vice versa. It could go against you and you could get liquidated. So the simplicity and the liquidity being all in one market makes it a very retail-friendly product. And for folks listening, by proxy, how much of crypto trading is happening by a perps today versus via spot or options or any other mechanism? It's orders of magnetade more. I think Binance is a good proxy. I want to say 90, 10, or derivatives versus spot. Again,

And because you can take leverage and each dollar can go 10 to 50 times in notional, just that value transacted on derivative is just a lot higher than spot similar to traditional markets where futures markets are in trillions and equities markets might be in billions. And this is a good segue because I think if you look back historically at perps and crypto is a lot of centralized exchange usage, finance being a big one, obviously. But more recently, we've seen the emergence of Hyper Liquid as a major player. So on the back of that last point, how much of perpetrating today is uncentralized exchanges versus decentralized exchanges? And how do you think hyperliquid is able to enter this market so effectively where there was a lot of finance and

centralized exchange usage? It's still dominated by central exchanges. I don't have the specific numbers, but there's this great analytics dashboard that compares hyperliquid versus central exchanges and I think the last time I saw I was between 10 to 15% of finance and that's just a single central exchange. Herkiliquid has done a lot of great things. I've talked about this and some of my Twitter posts, but they were there at the right time. So what usually derivatives trading has happened on, let's say, BetMex, Biobit, Binance, FTX have

all big leaders there. And around 21, 22, when the FTX saga unfolded, people were just tired of trading on central exchanges and taking on this custodian risk. Hyperliquid founders have talked about that. There was just a missing part in the market where there was a decentralized exchange there to fill that void. DYDX was going through these numerous civets from Starkware to their own L1 and people were just lost in maze there.

So they timed the market really well. And then they really hyper-focused on the product. So they just wanted to be something where it just worked like failed transactions or gas bikes or needing to sign everything with a MataMass wallet. It just felt like it was trading on a central exchange. I think the really cool things that they did was because they had a background in parking making, they understood primitives that worked, which is a central event order book. I think if you look around in the space, there wasn't really a chain you can put that on that was a general purpose chain. You necessarily had to build your own chain and that's what they did.

So the other part that they included there was the HLP. Again, you can see GMX popularized out of the GLP. Jupiter also used that, but both of those products were for AMMs, and they're a lot more programmatic set it and forget it. HLP changed it a little bit with the fact that because they had this marketing experience, they were able to market Emily on their own club. They were using passive LP liquidity there. That basically short-circuited the need for market makers.

It allowed them to have deeper liquidity so people could trade in size on a decentralized exchange. And eventually, that also helped them list tokens faster, which is like a huge thing for an exchange to stay attractive. Again, to close out that point, they also made some really good decisions like prioritizing cancels on their blockchain consensus or having custom up codes for funding and solvency checks. Again, this is the kind of things and knowledge that they brought with their prior experience of, hey, this is stuff that we would like to have in our own decentralized exchange. And if we're going to be the de facto market maker, we don't want to get run over by professionals because of the lack of information or whatever else.

So we should prioritize cancels. And then I think the final stroke of genius was there were a perplex only. And then they realized that, you know what, we can't just be a single app blockchain. We've seen how that plays out with these L2 app chains and other products. They add the sidecar EVM, which allowed them to escape that glass ceiling of an app chain. So we'll see how that plays out for them. But I think those decisions that they've made along the way have helped them become as successful as they are.

Yeah, I think that's a great overview. I do want to circle back to one point you made. I think that in the wake of the FTX collapse, call it the six months after fall 2020, which was in that window hyperliquid launch. Like you mentioned, crypto was at its peak level of distrust of centralized financial institutions, which is saying a lot, obviously, for the crypto industry. And there was a great timing aspect there that probably allowed something like hyperliquid to get on that growth trajectory, which they've continued and exceeded.

Do you think that skepticism of centralized institutions and at the same time preference for decentralized finance? among a certain subset of crypto users is still present, such that you'll have more players like this potentially emerge? Or do you think there's been some sort of reversion to comfort using centralized exchanges? I think the world is more moving towards on-chain. I think the parity between centralized exchanges and decentralized exchanges

is going down significantly. So one of the reasons why most of this trading used to happen on these central exchanges were just, it was faster. You could actually market make there wasn't. the primitives that market makers expected, like a central limit order book or a blockchain that was fast enough to market market on these order books. So as these decentralized are being built on these faster blockchings,

you start to see even these central exchanges are like, hey, licensing, KYC, regulated exchange type of trajectory when we can also start our own decentralized exchange. So I think the world is heading more towards on-chain, 24-7 trading, where people, just wallet and a stable coin versus I need to submit my passport ID. I need to do X, Y, and Z before I can withdraw my funds. That's just, I think, a relic of the past and we'll start to see more volumes shifted towards decentralized. That's a great segue, though, when you're

speaking about better systems on better blockchains. Why are you building this product? Why now and why on Monad? I think there's been lots of great tweets about this, but the two things from crypto, that feel like how a definitive product market fit is perps and stablecoins. When there's a new one that launches, one of the things you need to make sure is it's either, you've seen this. There's a bunch of stablecoin L1s launching or HFT style L1s. On these HFT style all ones, you need a flagship product that brings user interest, capital, and trading activity to generate fees.

The best product for that is a perplex. So when we were initially thinking about this product, we surveyed the landscape to see what is out there. And there really isn't, or one, a clob on a general purpose all one. Any club that you see is on an app chain or an L2. And the second part being there wasn't a EVML1 that we could build us on. And that part is very important because no matter how you slice it, the EVM has become the JavaScript.

of blockchain technology. It's a good comparison. If you look at the number of assets, collaterals that are on EVM chain, the amount of developer support, the amount of infrastructure support is on EVM chains. So when you think about it that way, the only chain that this makes sense on is on Monad.

People have tried to do this on SVM on Solana, but there's some issues with Solana where it's constrained by accounts and the need for cranking on a club. And that's something that an EVM does not have. So we were like, okay, obviously Monad's going to be launching soon. We talked to the founders, and there is other EVM chains that are by high frequency all once.

But the way they go about reducing latency is by centralizing. And Monad did not take any shortcuts there. They were rebuilding the system from ground up. So they were talking about rewriting the firmware for their hardware, completely overhauling their database. So they were doing things the right way. And when we thought about building this, we're like, who do we expect to be around for the next 10 years? And it made perfect sense to build this on Monnet.

And to go into the guts of it, we think that the gas budget that it offers, the latency that Monad has, it was perfect for building a order book style perp decks. And that's where we're building now. It's very helpful. I want to get a sense of your mapping here. But who do you look at as the primary customer that you guys will be serving post-launch? is it folks who might otherwise be using finance or a hyperliquid? Is it EVM users who are going to be converted to bigger perpetrators or maybe perpetrators on the EVM using a product they don't love as much? Or who do you look at as being that target audience? When you're building an

exchange, you have to build for both market makers and takers. For us, it was very important when we're building this exchange to, one, build a very efficient exchange. I know we're getting into the weeds of but it's really important to make sure that you're making the right tradeoffs here because unlike building on an app chain or an L2 where you control the sequencer, when you build on a general purpose L1, you have to worry about the consensus and the gas budget. One of the things that we were very specific about is makers posting and canceling on the order book should be extremely gas-efficient.

If we're able to do that and MANA does its job, It should make it very easy for market makers to make on this. And that's basically how we optimize this problem, is to make it so that it's the most market maker-friendly EVM club out there. As far as our user base, I think there's already a hunger for perps. There's a ton of interest on hyperliquid lighter. There's honestly nothing about Perps chatter on crypto Twitter. Everybody knows and understands this.

One of the other benefits of building on an all one is that they come with their own incentivized community, they're day one users, and that's great. So initially it will help Monad community and users start trading with their assets on Purple. And eventually we're going to start attracting people outside the Monad ecosystem that want to come trade on our product because we offer a distinctive order feature set or different types of orders or different types of collateral. Yeah, understood. This is a blunt comparison, but you would want a Dex on an EVM general purpose L1 the same way that you want Apple pay. Like it's compatible with a lot of the other financial things you're doing if you're a

defy user. Exactly. When I think about if I'm starting a new L1, you need the PURP exchange, you need a spot exchange, probably in AMM, you need some sort of lending protocols. I like thinking of it in Dinkaseeb or Biology, one of those people talked about how blockchains are countries. You need these primitives there. You need the banking system.

You need the foreign exchange. You need a stock market. And these primitives have to be there at the beginning for any other type of activity to kickstart on that blockchain. Outside of the EVM, do you think Solana has gotten that ecosystem mix correct? Or would you have criticisms of what they've built or places where you think they could have a better experience? I think they are definitely the ones that have made the biggest impact. I think people have a very short memory. But Solana has done some incredible things as well.

They have Jupiter, they have Phoenix, Palm, recently. They have Camino and all these other products that are salon-specific. They're not just copy-paced from the EBM. So that's one of the things that they went through, which is a lot of road pains, where you needed to learn a completely new programming language, a complete new VM. So they had to really chew glass for the first four years. And of course, they went through the whole FTX debacle. So it's truly incredible what they have done and accomplished.

They seem to be going even stronger now with the Onza and FireDenser. So it would definitely not count them out. I think Hyperliquid has started pushing every off to move faster and focus on, you know, revenue generating products. And that's definitely a good thing for our whole ecosystem. Yeah, agreed. Going back a little bit to how people will use Purple and other PURP exchanges, what assets are heavily traded here?

I've been maybe a light user, so you see Bitcoin, ETH, unsurprisingly get a lot of usage. But will this be virtually any asset? Is it a fairly long tail? Or how do you expect people to use the platform in that sense? I think the majors are going to be there, obviously. And then, again, benefit of building an ecosystem is when those new coins launched there, we will have their listings and probably higher open interest and liquidity for those. Longer term, I think more and more assets will start getting weighted and deployed on chain. So obviously if there's an Oracle and market makers will end a quote. There's no edge in listing.

It's pretty much like a race to the bottom there, where you have to list as fast as possible if there's a token of interest. Whether that's going to be like the stocks or whatever, I just don't know. I think Osteum is doing a great job of that. But there's challenges there. What do you do in the weekend? So you have to wind down markets and start them up again. I don't think you can do a clob there.

But there's other products, I think Superstates doing a great job. they're doing primary issuance on chain. And I think as tradfai and more of finance starts moving on chain, those products will be available for trading 24-7. There will be oracles for that. And again, one of the really cool things that Hyper Liquid did was HIP3, allow anybody to like deploy perp markets. So eventually we would like to get to a study state where if there's a perp market that we haven't deployed and somebody else wants to deploy, they have an Oracle market maker service for that. They should be able to do that. want to provide that base level infrastructure for them and the order to be permitted, so they can deploy it and have trading happen on it. And to your knowledge, are most of these trader behaviors

on these perp exchange's fairly simple, one-directional leverage long exposure, or short on the other end? Or is there usually a more holistic or sophisticated strategy involved when you look at the typical user? Unfortunately, it's just so nuanced. It depends on the asset. It depends on the strategy. It depends on the market conditions. So generally, you can think institutions are probably focused on blue chips and the majors, and they're trying to hedge their exposure. Retail are probably more focused on these longer-tail assets where they want eye volatility, be up for your market listings, upside from those products.

So it truly depends on the market. And then, of course, if there's some Fed funding rate cut or whatever, then there's going to be massive volatility in the market where everybody's trying to get out position or get into a position. So it's truly nuanced. But the cool thing about this is it's globally participatable. Anybody can with a wallet get on and speculate or hedge their positions. And that's the beauty of decentralized finance. And to that point about it being globally accessible, is this mostly desktop behavior mobile or how are people accessing currently? Yeah, I think the power traders are all still on desktop. We've talked to a bunch of these traders. So one of the things that they would love on

mobile is a way to get notifications or closed position or add margin. There's lots of nice tools for the program bots and whatnot. But the newer people that are getting onboarded, the pvp.trade people, the Axiom, wallet traders, they're all mobile first. So again, I think Table Stakes is building a desktop interface and having different UIs for retail, professionals, and those type of personas. but eventually either that's going to be involving partnering with the wallet provider or building your mobile app because that's a crucial market base that is new and

interest in perps that you're not going to get from just desktop-based trading experiences. Yeah, that makes sense. Do you think over time, obviously we see that a large proportion of crypto trading is already perp-based, to your point, do you think over time we see that evolved to almost all of crypto trading? Do you think that the split between spot and perps changes in favor of perps, or do we see any other notable change to the market structure? You still need the spot price.

You just need two different prices for this whole thing to work, for the funding rate to be calibrated. But I think the split might continue to stay closer to 80, 20, or 9010. I think the time of the whole industry is growing. The perps trading, time is growing really fast, and alongside with that spot will grow as well, because you need that settling asset for the funding rates and the prices to track, it's not going to be 100% one thing.

Adirut inherently needs something to derive the price from. But I think just the general market's going to continue growing. More trading will continue to move on chain. Understood. I'm very excited for other asset classes to take on this form factor as well. Well, you're mentioning about what Osteum's doing and having equities, even if there's a growing period there. Yeah, absolutely.

I think, again, Robin Hood has. tease that a little bit. I think even those equity markets understand that if they can get this on-chain, some version of it, there's just a global capital market that is hungry to trade those assets. Today, how do you trade U.S. stock equities if you are in, let's say, India or Nigeria or China? If those people could somehow get exposure to that, that's just a lot bigger capital base, and I'm sure the people at those companies would love to have that access to that capital. Yeah, definitely not to mention the traders. I want to close on a couple points that I was keen to pick your brain about and get some insights.

First off, why should people get excited or care about Monad? I think there are reasons that are maybe a bit more obvious in the sense of a very fast EVM general purpose chain, close to Ethereum, but much more performant, obviously. but I'd love your perspective. There's anything you would add to that against the current backdrop of things we're seeing like hyperliquid plasma, other chains. I think it goes back to that point,

I mean, it's just not been possible to build a fully on-chain central limit order book on an EVM before. That's a very key point because if you just see what was possible with GMX

on Arbitrum, there were just all these nice composability benefits that came about with it. It's really exciting to see what will come about with what we're building in terms of the composability benefits and how people use it. Monat allows us to do things that haven't been possible before.

The other benefit of building on this L1 is this is the beginning of it. So they're going to continue improving the blockchain. They're going to make it faster. There's going to be more gas. Transaction costs are going to go down. And more excitingly, they're also going to, again, because of products like hyperliquid, pushing them, try to figure out how to do priority transactions. like how can we get purple to have cancel priority in our consensus, or do private transactions?

Because, again, PEMPO and these other blockchains are been talking about allowing people to do private transactions. So the benefit of building on an R1 is every EIP or MIP, if you want to call it, Monat Improvement Proposal, ends up helping every protocol being built on that chain. So in essence, we have 50 to 100 eye-level blockchain researchers at Category Labs working to improve the chain. And we can just focus on building the best perpetual exchange out there and get trading activity. And on a related note, from your view, looking at the community, what's gotten people excited about purple? Where is there anticipation and where is there the excitement? I think we've talked to a whole bunch of diverse set of users with us, retail users, whales, protocols, and whatnot.

For retail users, it's pretty simple. They're like, wow, I can have an airdrop on Monat. I can use those assets right there. I don't have to bridge it to another ecosystem to go trade on Hyperliquid, for example. For your advanced users, there's pain points. Hyperliquid's done a great job, but they're doing a ton of things. They're doing an L1, an EVM, a perfect change. So that's a lot of stuff that they're focused on.

We want to basically fill the gaps that they can't fill. So one of them is advanced features, like hidden liquidity, or iceberg orders. The other thing that we can do is allow for newer collateral type. So again, going back to the point of building on an EVM chain is it'll be nice if you can allow users to use a non-USDC collateral. So one of the easiest things that we can do is one-click basis trade. Let's just say Quito, for example, if you stay Quito and you hold it, you get these future airdrops. But the problem that you have today is Quito price, And the real benefit that you're looking to have is just these future airdrops and you just want to lock in the price of Quito.

If you want to lock that in today, what you need to do is get some more USDA, go to a Dex or Central Exchange that's Kito, open for 1X short. Now you have to maintain that short position, whether it's adding margin or funding or whatever else. What we want to allow people to do is use that state Kaito as collateral to do a 1X short Kito perp. What that, in essence, does is it basically gives you unlimited liquidation price because positions perfectly hatch. The underlying collateral balances out the perplex. Obviously, we're not going to allow you to 100% edge, but even if you give it 80, 90% LTV, that's still a huge benefit for most people because you get to hold a token,

between future staking rewards, air drops, and whatnot. So that's the cool thing about building on a general purpose of all one is there's going to be more collateral types. we can possibly allow people to do these types of one-click basis trading. And then the last thing I was going to say is we also have these vaults, similar to HLP. There's going to be TLP vault. But unlike HLP, again, because we're building on the general purpose of all of one, we get support from fireblocks. What that allows us to do is you can hedge your risk on central exchange.

Basically, a jelly jelly situation is a lot harder to happen on our product because let's just say there's a new listing. and the vault is taking one direction on our perplex, it would then take the opposite direction on a central exchange because we can use fireblocks. It just makes the product a lot more resilient, and there's not these issues of potential bankruns on the protocol. Completely understood. I like that Kyto example you gave.

It's like anyone who's tried to maintain points exposure, anything like that, has come across that scenario in crypto where you want to be exposed to that, but you don't want to have the full volatility, the underlying asset. Exactly. pvj man thanks for coming on it's been a pleasure chatting and hopefully we can do it again soon awesome thank you for having you thanks for listening to another episode of on the brink with castle island to learn more about castle island visit castle island dot vc and to listen to all of our

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