Unchained - CLOB Battles, Disclosure Fights, and the Meme-ification of Circle – The Chopping Block - Ep. 858

Episode Date: June 26, 2025

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. This week, we’re joined by Vlad, the leverage legend behind Lighter, a zk-powered DEX taking aim at Hyperliquid in the rising CLOB wars. We unpack the new Token Transparency Framework from Blockworks and whether self-regulation can fix crypto’s disclosure problem. Should VC wallets be public? Are market-making deals legally risky? And why do most projects still say nothing? Plus: Vlad explains how Lighter uses zero-knowledge proofs to enforce fairness and fight toxic flow—without harming retail. And Circle’s stock goes full meme mode, TikTok retail piles in, and Robert reveals he’s short. Is crypto finally growing up—or just evolving its chaos? Show highlights 🔹 Token Transparency Framework Debated – Blockworks’ 40-point voluntary disclosure system sparks industry-wide discussion on what teams and investors should reveal 🔹 Disclosures vs. Reality – Most projects don’t lie—they just don’t publish. The real problem isn’t fraud, it’s silence 🔹 VC Wallets Stay Dark – Debate over whether investor wallet addresses and cost bases should be disclosed; consensus: team vesting should be public, investor holdings still a gray area 🔹 Exchange Listings & Disclosures – Exchanges are considering using the transparency framework to prioritize listings, creating pressure for teams to comply 🔹 CLOB Wars Continue – Lighter joins the battle against Hyperliquid with zk-proven verifiability and zero-fee trading for retail 🔹 Lighter’s Architecture Edge – Built as a ZK L2 on Ethereum, Lighter pitches composability + security vs. Hyperliquid’s standalone stack 🔹 Fighting Toxic Flow – Instead of cancel-order tricks, Lighter adds subtle latency and fee mechanics to penalize HFT bots without harming retail 🔹 Dark Pools for DeFi? – Vlad teases ZK-based private order flow as a future feature, merging institutional behavior with onchain guarantees 🔹 DEX Future = Specialization – Vlad predicts no single winner: future DEXs will specialize in niches—memecoins, structured products, prediction markets 🔹 Circle Becomes a Meme Stock – Robert discloses his short position as retail pumps Circle to an $80B FDV off TikTok hype and the Genius Act tailwinds ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate⭐️Tom Schmidt, General Partner at Dragonfly  Guest ⭐️ Vladimir Novakovski, CEO & Founder of Lighter Token Transparency by Blockworks: https://blockworks.co/token-transparency  Timestamps 00:00 Intro 01:49 Token Transparency Report by Blockworks 04:17 Token Disclosures 08:52 Challenges and Future of Token Transparency 23:22 Circle Mania Continues 25:06 Circle Valuation and Market Reactions 30:15 CLOB Wars 36:52 Technical Architecture and Verifiability 47:04 Market Structure and Future of DeFi Learn more about your ad choices. Visit megaphone.fm/adchoices

There's fraud in the securities markets outside of it. Like, you're not allowed to lie when it comes to selling an asset. It doesn't have to be a security. It doesn't matter if it's a security. You're not allowed to lie, right? I think projects, rather than publishing incorrect information, will just not publish. I don't think the problem's going to be people lying in these disclosures. I think the problem will be, you know, 93% or something like that of projects not doing them in the first place.

Not a dividend. It's a tale of two fun. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. Unnamed trading firms who are very involved. D5.Eat is the ultimate problem. DFI protocols are the antidote to this problem.

Hello, everybody. Welcome to Chapman block. Every couple weeks, the four of us get together and give the industry insight of perspective on the crypto topics of the day. So quick-chon-chose. First, you've got Tom,

the Defi Maven and Master of Memes. Hello, everyone. Next, we've got Robert, the Crypto-Konisour and Tsar of Superstade. Welcome, welcome. Joining us today, we've got special guest, Vlad, leverage legend and the leader of lighter. Hey guys, glad to be here.

Excellent. And I'm Steve that Hightman of Dragonfly. We are early-season investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please, you shop and block to X, Y, Z for more disclosures. So it is extremely hot in New York. Yeah, I was actually, I was late here, so I had to run from Times Square, 42nd Street. And I am just like completely soaked through.

You're talking faster. Something about the heat is. It's an exciting episode. That's probably why I'm talking. fast. If you're listening via Spotify or an audio-only channel and you can't see Haseeb's forehead, just appreciate it. Is it coming through in the video? I actually don't know. It is a cool glass of lemonade on a hot summer day. Yeah. No, I could I could fry an egg on my head right now, actually. So right now is permissionless in New York, a bunch of people coming into town. This is the

big event thrown by Blockworks. And Blockworks is kind of at the center of a lot of discussion in crypto because of something they put out recently, which is the token transparency. report. So this is something that we've been talking about a little bit on the chopping block in previous months, this idea that tokens today don't really have a standardized way of doing disclosures. And the SEC, you know, has their purse put out a speech a little while back, talking about a potential path for crypto asset securities to have a disclosures framework. But there's nothing that's really been proposed concretely for how a token that's not a security is supposed to be doing disclosures in a standardized way. And so blockwork stepped into

the fray here and said, hey, we have. have an idea for a framework of how this can be done. So they created a 40-point framework where you get a score based on whether it's like a binary for each thing, based on whether or not you actually did these particular disclosures. So some of the disclosures include project and team, such as docks executives, clear equity versus token value accrual, advisory pay, where revenue streams are going within the protocol. And then they have the token supply and allocation disclosures. So whether there's on-chain investing, where the cap table, you know, the equity versus team, et cetera, et cetera, all that stuff is disclosed. CSVs of all the airdropped, of all the

air drops, as well as labeled insider wallets and disclosures of any future mints that the team does. Then there's a section for market structure, which involves any OTC deals that were done. They must be disclosed, I believe, within 30 days of doing the deal afterwards. Marketmaker deals, not specifically the details of those market makers, but who the market makers are, I believe, is what's demanded in disclosures, as well as any sex listing agreements. And then finally, financial disclosures, quarterly token holders reports, and on-chain treasuries. So the goal is to make everything as easy as possible to find in one place. The idea from the team has said, this is not a quality rating, but a transparency rating, right?

So they're not saying the quality of the disclosures. It's not like, hey, after this is disclosed, this looks good or looks bad. They're like, look, we don't care whether it looks good or looks bad. The same way the SEC says, we are, what is it, a value? They don't care if you're a good company or a bad company. They just care that you tell people the data behind your company. Exactly, exactly. So that's the goal here of this transparency framework.

It doesn't say this is good governance or bad governance. These are good deals or bad deals, good market makers, bad market makers. Just here's who they are and you can decide for yourself as an investor. So that's the idea. It's gotten a lot of people excited. I saw very positive feedback from this report. What were you guys thoughts as you went through it? Well, my thoughts are this idea is not new, right?

Like fundamentally, this was the original sort of idea behind Masari. Ryan Selkis used to get on stage and talk about this being the future of crypto, is that everybody would voluntarily disclose all of the stuff. It's just that that idea never really came to fruition. And, you know, I think Blockworks's approach here is timely because people have been talking about this. We're entering an era where there's all sorts of, you know, there's a new sheriff in town.

And I think there's receptiveness towards new approaches. And so the idea is timely in a way I think the idea wasn't timely before. And just because it never happened, let's say, Formas. Sorry, it doesn't mean it couldn't work now. And so I'm excited for this to come to the surface. I would love to see this succeed. I think the entire ecosystem would be better off if everybody had this amount where most of this information for most projects.

And it would cover a giant divide that exists today. I think there will probably be a lot of projects that don't ever achieve that standard. I don't know if retail investors will care. but we might over time start to see, you know, some sort of like separation between, you know, how projects are perceived, whether they're producing or not producing this information. But too soon to tell. Yeah, the first cohort, I believe, was seven projects, most of which were Solana-based projects. So I saw Gito was one of them, I believe Camino was also on the list.

And most of them were able to do almost all the disclosures. I think there was one that couldn't. Or wouldn't. Yeah, or wouldn't. And so for the most part, it's, it's. you know, it remains to be seen whether projects that have already been out for quite a while will be willing to do this. I can imagine new projects saying, hey, I need to build trust with the community.

I also need to build trust with the exchanges and with potential investors. And so it might be that you see the separator be just age. But Tom, what was your take seeing this? Yeah, I mean, that was very comprehensive. I feel like they kind of had all the components that I would be looking for in like a kind of disclosures framework. I think the question, I mean, two questions in my mind. One is just like, for everything like this, you need like a stick and a carrot to actually get people to adopt it.

And the question is like, what are those going to be? Right? It would be nice to see like exchange partners saying, hey, we'll prioritize review of listing applications. Yeah, yeah, yeah. Or, you know, something that actually incentivizes people to do it versus, hey, maybe the market will give me some reward. I think the other thing is just like how do you verify this information, which is another common issue. I mean, this was what I usually like the Trump and Melania tokens, right? is like they say, hey, here's actual team, you know,

or here's the pie chart and the ownership or here's the vesting schedule. And then people will be looking on chain and be like, okay, well, these numbers don't add up or why are these tokens moving? And it feels like there should be some way to kind of make some sort of automatic verification or like, frankly, if you probably even use like an LLM to like verify the data that you give someone actually matches up what's happening on chain. I'd love to see that be automated more. And you can imagine things can change over time too.

And so some way to sort of constantly re-verify this data or maybe offer new disclosures or something like that. Yeah. Right now it seems like it's all kind of blockworks. There's like a website by Blockworks where they verify this manually for the projects that go through them. And one can imagine maybe somebody will be a business model of different people who like each of them have their own way of like stamping. Yes, you did the thing. But at least right now, it's kind of just all Blockworks that seems to be doing this. But if we see a broader uptake, maybe there could be a bigger ecosystem of people. Well, in markets period, let's not even mention crypto markets, in markets period, there is the concept of fraud. And so, you know, the stick. Are you saying crypto? There's not the cause of fraud? There is.

Absolutely. Like, it's not crypto-specific. You know, there's fraud in the securities markets outside of it. Like, you're not allowed to law when it comes to selling an asset. It doesn't have to be a security. It doesn't matter if it's a security. You're not allowed to lock, right? And so there already is, in essence, a stick.

If somebody were to publish knowingly incorrect information, it could be fraud. Right? And so I think projects, rather than public, publishing incorrect information will just not publish. You know, I don't, I don't think the problem is going to be people lying in these disclosures. I think the problem will be 93% or something like that of projects not doing them in the first place. I see. So do you think, okay, to that point, you know, fraud in a sense, we already have, you know,

common law definition of fraud. You don't necessarily need the SEC to come in and create this big disclosures framework. If the industry ops in exchanges all say, hey, you got to do this stuff in order to get listed. do you think that's enough or do you think we need to go a step further and say, okay, maybe the SEC is like, oh, hey, this thing you guys made is cool. Let's adopt it and standardize it. I think if there was widespread acceptance, if exchanges started mandating it, I think rather than 93% of projects not doing it, I think you'd get 93% of projects doing it, hoping that they get exchange listed, right? And I think like a voluntary process would be extremely successful if there was widespread ecosystem buy-in for it. And you wouldn't need regular. regulator-driven standards. I think most likely what we see is that we don't get complete adoption. We get partial adoption at best.

And it informs the SEC and regulators on what things would look like, you know, in practice if there's rules. And they get inspired by it. And they say, oh, actually, we really like, you know, ABCDE. We don't love G and F. Parts of it get adopted. So, Vlad, as a token founder, how do you think about whether or not lighter would be comfortable making these disclosures. How do you feel about them as a framework? I think,

you know, I need to review the whole framework, but I think at a high level, something like this makes a lot of sense since, like, I think there's, there have been a lot of, you know, bad actors in the past. So like, as a pre-TG project, ourselves, like, we see a lot of kind of negative assumptions about how much of the token the community might get or if there's side deals. So, so I think like having, if this is like adopted, I think it would be a good idea to, um, for projects like lighter to to participate because then I think it would be like a better baseline instead of just like because I think right now it's like folks assume the worst right and so so I think it's good you know I think like to Tom's earlier point if some of this data

could be verifiable it would be better than if it's all self-reported but yeah I think this is a step in a good direction I'll have to review the details and yeah I think overall with something positive. Are there any aspects of the project you would be least comfortable disclosing? Yeah, I guess I haven't seen like the 40, you know, I've seen some of them. I haven't seen like all 40 points listed,

but I mean, I think for us, we're pretty, I guess it depends on like when it needs to be. Let's say the day before the token is distributed. Yeah, I mean, I think, yeah, that's, I can't think of anything specific that would be, uncomfortable with. So the one project, I don't remember what it was now,

but the one project that was in that initial cohort that didn't disclose, I believe the ones they didn't disclose were, I could be mistaken, but I believe it was around market making agreements. And I know from having spoken to some lawyers, the reason why a lot of projects have trepidation about disclosing market making agreements

is that there is existing case law that implies that if you are supporting the liquidity of an asset, that that makes it more security-like. And so now it's sort of become a norm in crypto that everybody does this for everything. And so it's always expected when you get a project listed that you're going to help with liquidity. Like the exchanges specifically will ask you,

if you want to get this token listed, you need to go and employ marketmakers. We're not going to go employ them. Whereas in the normal world of exchanges, normally the exchange is actually the one that is the counterparty to the market maker, is my understanding. So this is the one that I think

some people who have a very conservative legal posture might say, everybody kind of knows that we have market makers, but we cannot go out and have that be affirmatively disclosed. I mean, it's also possible that because those agreements were entered into before this disclosure regime, it's possible that there's like, you know,

non-disclosures, yeah. Terms in it and the projects feel like they can't, otherwise they're violating it. So I believe they're not disclosing the details of these agreements, right? And so one of the things that, so there was mostly universally positive response to this transparency framework.

But, you know, some people, were wondering if this goes far enough, right? Because a lot of these disclosures are binary. It's did you disclose it or not? And did you disclose like, oh, you know, who the market makers are? So, okay, you work with Web3 port. Okay, that's probably enough to know, like, hey, this thing is shady. But, you know, if you worked with, you know, winter mute, okay, what's the strike price? You know, like, how much is the, like, how much of the float do they have in their, in their loan call option structure? That is not disclosed. And what I think is, like, that's very, very important to disclose in order to understand the actual economics of this floating token.

Right. As an investor, it's relevant whether, you know, Wintermute has 1% or 5% or 25%. Right. And even for the investors, one of the things that they don't ask you to disclose is the cost basis for those investors, right? Did some investors come in at one cent, 10 cent, 25 cents? Like how much in the money are these different investors? In an IPO, you would know all those things, right? Every single financial transaction that's happened with this company is disclosed at the point of an IPO. But with a token, we don't have that conformity. Now, some of this, you know, I was talking to some of the Blockworks team, and they were telling

me that they're getting a lot of good reception from the exchanges about this, is that the exchanges feel the issue that, you know, we've been talking about in the past of people losing confidence in the token generation pipeline thing that, you know, retail kind of needs to have confidence that these tokens are legitimate and they're not, you know, getting swindled or dumped on. So exchanges, this is resonating with the exchanges, and I think they want to see if other people adopt it, they may consider adopting it as well and making it more legible of like how much of these disclosures have been done by the project that's about to get listed. You know, that, that being said, like, you have to play, you have to, you have to, one of the things that the block

coach team said when I was chatting with them about this is that, you know, with investors, one of the big discussions was how much of the disclosures fall on the team versus the investors, right? And with the team, the expectation is everything should be disclosed about the team, where the team wallets are, when they vest, you know, et cetera, et cetera. And like, their team is selling, everyone should be able to know. But for investors, they don't have that, right? So they know how many of the tokens are owned by investors, but where are the investors, which addresses belong to whom? That's not disclosed. And their view is that this is okay because investors are supposed to sell, right? The expectations that investors will sell, whereas the team,

if the team is selling, that's much more important signal to the market than investors selling. That was their view. Yeah, I mean, I think that's a little broken because if you look at like the traditional securities regime, that's true up to a certain point. It's like anyone over 5% has forms that they have to fill out and they have to say when they buy and when they sell and all of these things because they're considered important. And so, you know, if so-and-so venture fund owns 25% of a company that

IPOs, like A, you know it, you know exactly how much they have, and you know when they're buying and when they're sell, right? Just like the team. So the question is one of magnitude, not just like a binary, oh, investors are expected to sell. So like if I were to write this, I would say like, okay, maybe for anyone who owns more than 1% or 2% or some number of the token, then they need to disclose the wallet address and they need to disclose how much they own.

Otherwise, yeah, they're just small enough holders that it shouldn't matter because they're not large enough to really influence the project. Right, right. What's your take? Yeah, Geneagie, I was thinking, probably recently, I think there was like a money stuff thing about this where there's some company that sort of do share by backs. to like force some investor over the 5% threshold. So they have to do disclosure.

I don't remember the exact details. I wish I did right now. I wish Tarina were here, honestly, because I'm sure. I didn't have it. I didn't need that. I've skipped the last week of money stuff. Yeah. But yeah, no, it makes sense.

Yeah. Vlad, what's your take? Investor disclosures versus team disclosures. Yeah, that one, I think probably, this is probably an area where kind of Tratfi has maybe mostly gotten it right. So, I mean, I think I think I would, would kind of agree with the point there where it's not just about, are you an investor?

You know, it's like the magnitude. I guess one other point is like, you know, we're a perplex, right? But we're going to add spots soon. So at that point, this will be more relevant to us as like which assets to list. And I think this will help in filtering out some of the, you know, stuff like the jelly jelly, you know, those kinds of assets that might not kind of land in a good spot. I don't think jelly jellings filing disclosures. Yeah.

I don't think this is intended for the jelly jellies of the world. Something tells me these are not going to be listed on Blockworks. But, yeah, I, you know, when I heard this argument from the Blockworks team, I got the sense that this was a compromise. You know, it's like in order to actually get, because the reality is that, you know, there's no, this is not like security's law where this is being enforced from on high, right? This is ultimately, you know, sort of self-regulation that's a compromise between all the market players. And in order to get some VCs on board, which, you know, they had a small number of VCs that actually signed on to the token transparency framework. In order to get those people on board and endorsing this thing, you have to kind of take

in a bunch of voices and not come up with the most draconian version of this that you can contemplate. I'm on board with what you guys described of like, okay, if you're above a certain threshold, if you're more than 1% owner of the token supply, then your address must be doxed and must be disclosed in some way. Now, of course, there's a practical reality, which is that, you know, if you're an investor and you move something from here to there, you move from, you know, a custodian, from fireblocks to Anchorage or whatever or things like this, you know, those things are

going to now be visible on the market and they might be confused about what's going on. And maybe now you have to like start telling people like, hey, just so you know, I'm not selling, I'm moving to do, da, da, da, da, and so there's a lot more that will become not legally expected, but practically expected or necessary from funds in order to signal to the market, hey, FYI, we're doing some custody operations or something like this. Right. Well, it's funny because A, in Tradfai, everything is opaque and you don't know who's moving stock unless there's a specific disclosure. Right.

But B, it's possible that we could learn from this and say, like, maybe this closure is just around you getting rid of your stake. Not like, we need to know the exact wallet. You're just like saying, okay, I, you know, my venture fund owns 1.9% of this supply. And, oh, I sold it. I now own zero. Like, or I'm no longer above the 1% threshold or whatever the thing is. But without disclosing the address. Because, like, I agree, like, there's a lot of noise that comes from the address of being known.

You know, I used to get people yelling at me, like, whenever I bought or sold tokens at all, like, because my wallets are all known. So it's like, oh, Robert bought chain link token. Like, what's up, you know? Or, like, Robert sold a cross token. What's up? And it's like, it's incredibly annoying to have this, like, AI written content on Twitter. Yeah. Constantly.

There, I remember, maybe this was more of a 2021 thing. There were teams that would make tokens with, like, implementations that would emit, like, a swap event to your address. So it's like, yeah, it would look like, oh, Robert's buying this thing. But it's actually like, no, they just made it a swap from Robert's address. And people are like, oh, my God, Robert's buying Jelly, Jelly, Too, or whatever the token is. I've never bought Jelly, Jelly, too. Okay. Yeah, it's like, I think that, look, we're never going to get to the world where investors affirmatively have to declare,

I'm now above 1% of this asset or I'm below. I just got below this because who's going to police that, right? Blockworks is not going to give a shit. Right. Like, they're not going to go and like, hey, did you sell your, do it? hypothetically the SEC would if that was like the thing or some other national securities regulated. Right.

But in a global market, like that doesn't sound like it works, right? Like because crypto, like, you know, maybe if you are SEC registered only, you have to make these disclosures, but then that's that just sounds like a kind of undue and unhelpful burden that only these actors can be monitored in the markets and everybody else. It's like just, you know, dark, you can't tell who's accumulating who's not. So I don't think it's practically possible except at the moment of TGE. Right. At the moment of TGE, you can get the issuers to disclose all this stuff such that the market can then watch from there. From that point on, it's really up to market participants.

I think that's the only really practical way to do it. Yeah. So, well, I'd say it seems like a good step. And I think the market's looking forward to seeing how this evolves. I think the idea is that this is a V1, it's likely going to iterate as we start to see again and get negotiated a little further by maybe some of the exchanges or other market participants who start to say, hey, you know, how can we leverage this and kind of make it more clear to everybody what's going on with respect to these new token launches? And, you know, maybe there's some version of this for meme coins that's a transparency light framework, you know, like maybe not all these things because they're not necessarily all relevant, like things like revenue, obviously are not

going to be as relevant to a meme coin. But I think it's very much a good step in the right direction. I would argue, actually, ironically, that it's more relevant. for meme coins and the way that they're launched than it is for projects that are launched by teams at companies or development things what what yeah because the meme coin origin stuff is so opaque it's like oh we created a token and then it got sniped by 14 wallets yeah but the velocity like they're not listed on exchanges right they're mostly just listed on pump and then their life cycle is like every six hours no but there's a lot of meme coins that don't have six our lifestyles, and no one knows what the ownership is and where it came from and how it works

and who is affiliated with it. I mean, like, there's no understanding of the meme. Right, but my sense of meme coins, it's not like, like, so in a normal venture style token, right, it's sort of like, so in, in, I'm a little bit of a tangent, but in, in biology, there's this, there's these reproductive strategies called M selection and it's case selection. So like if, like bugs, for example, do what's called case selection, which means you have like a shitload of kids and you invest very little in any of those children, right? So you have thousands of eggs

and most of them are going to die, but you don't really care, right? And you invest almost nothing in each of your children. And on the other hand, you have M selection, which is like what mammals do, where we have a small number of kids and we invest a lot in them individually and it's very difficult for them to survive without support.

Venture is M selection. Exactly, exactly, right? So it's like you have a thousand children and you're like, look, I'm going to invest almost nothing in any of these. It's just like a, it's like a sweatshop of meme coins coming out. And if one of them hits,

amazing, then I'll worry about it. Right. But if one of them hits, and then that's when everyone wants to know who owns this thing. Not like,

oh. Isn't it too late to like give transparency? Right. You've already sniped it. Maybe. Yeah. I mean, like that's like that's the point of which the sniping is done.

All right. We'll just have to wait and see. Yeah. You can start for your next meme coin launch. You know, we're looking forward to the lessoners. Never launched a meme. One point I'm going to launch a meme coin.

Yeah. You're rating for an appropriate disclosure. standard. Exactly. Yeah. Once the disclosure standard is ready, your meme

is coming. I can feel it. Cool. Okay. So the other big story of the week that we wanted to touch on was CircleMania continues.

So Circle, you might have thought that after six-axing from its IPO, probably that's the end of the story. Well, it is not. If you remember, Circle was initially

struggling to IPO in the range of like $5 to $6 billion for a very long time, very long time. They tried to SPAC originally, couldn't SPAC, got Smackdown, went back into private markets, struggling, maybe there was going to be an acquisition, maybe not, eventually finally IPOed,

and the IPO went up more, like at this point, it's gone up more than 10x since the IPO. From where they originally set the IPO pricing, it actually debuted less than a 10x, but yes, from where they originally went out to price it. Right, right, where they raise money in the actual road show, it's gone up more than 10x. Slightly less. Is that right? Okay, because I thought it hit 60, 60 billion. Oh yeah, no, the total peak FDV of Circle was like 80 billion.

80? Yeah. I did not realize it did 80. FDV. FDV. Yeah. So like this, so Circle very briefly overtook Coinbase in total market cap. That's correct.

It has come down a little bit today, but right now it's very volatile. It does not seem like this is going away anytime soon. Full disclosure out of transparency. I'm currently personally short. a little bit of circle, not through Roblo Adventures, but personally. So anything. Really? Yes, yes, yes. Okay. As of when, when did you end up that short?

As of $162 or so, which was... What is it now? Last I looked today, 230 something. Okay, got it. It was 299.8 yesterday. Oh, wow. Wow. Okay. Yeah. I mean, but these valuations are hilarious. For a company, it gives half of its revenue.

Okay. Can you look into the camera and tell Jeremy why you're shorting his company? Jeremy, I loved the company. billion. I hate the company at these prices. No offense. Okay. Beautiful. It just feel like I can't remember the last time there's an IPO that was so mispriced. Like I have to wonder what their bankers were thinking or frankly like wondered what circle exec team is thinking. Like this is so clearly nobody knew. No one. Nobody no. I'm surprised. Private markets didn't know like they were they were trying to raise money at this price in private markets. Everyone in crypto surprised. Yes.

Like clearly like this was clearly on some deep level unknowable. because of the fact that, like, the road show was not that crazy. Obviously, eventually, like, they were over subbed. But, like, initially they went out earlier. They tried to SPAC. They tried to raise money in private markets. Like, everywhere they were going, they were getting the same reception of, like, hey, four to five, right?

That's what they were being told pretty much everywhere. And obviously, it fluctuated. It got even lower than that depending on where we were in the market cycle. So I don't think it was like, clearly the bankers were out to lunch. You know, they were just totally, you know, delinquent in their jobs. It was something about the moment changed about stable coins in between when they started the road show and when the IPO actually came out. I think the gap here is the fact that there was a lot of very, quote, smart Wall Street

professionals trying to use valuation metrics for Circle when it was still private. I think a lot of this is actually retail driven. I've seen some TikToks of some crazy people that don't seem like they know what they're talking about. Tell us about the TikToks. I've only seen a couple TikToks. that have made their way to like Twitter slash X to make it into my feed. But there's like TikToks of people like I think it's like the GameStop crowd where it's like there's people jumping up and down on their like desks and their beds and stuff being like circle

to the moon like stable coins, you know, like kind of stuff like that are not talking about valuation. They're not talking about earnings. They're just like it's the only stable coin company like like doing backflips on camera and stuff like doing backflip. Yeah. I saw a TikTok of someone doing a backflip, I think. You know, you're in TikTok now? No, the best TikToks make their way to Twitter.

Okay. Okay, okay. I do not have a TikTok. Got it, got it. But I think it's a retail crowd that's like eating this up and it's like momentum driven and it's just like plowing capital. Okay. Yeah, I mean. What's your TikTok feed look like for Circle?

Oh, I'm not. I'm not. But is it surfacing in your X? No, I've actually never seen. You've never seen a circle? I mean, I've not seen any backflip videos. No. No.

About stocks. Yeah. Somehow my feet is not the same as yours. I don't know what we're seeing. Yeah, I'm deep. Okay. Okay. It does kind of make sense why that bit obviously would have been showing up in the roadshow.

I mean, obviously materially too, obviously genius act passing the Senate. And like overall, it feels like there's a break in the, you know, regulatory clouds. And there's a light at the end of the tunnel. And so I might be booing some of it. But yeah, I don't know who's going out and buying circle stock. Glad, are you yellowing circle stock? No, I mean, it seems like there's a disconnect between the public markets and kind of the crypto markets here, right? Yeah, I also, like, I haven't really like seen much about this from kind of within our space.

It's more like, yeah, I don't know if it's, yeah, like to your point, like the GameStop crowd or all my friends are sorting it now. Yeah, yeah. Yeah, I have to imagine. I mean, it must be interesting if you're running a decks and, you know, once in a point of time, people are like, oh, well, you list, you know, Neme coins and the new, you will. list hype, list this. Now it's like, oh, list circle stock. That's what all the Gen Z wants to trade. Right.

Maybe it'll be the first real world asset, you know, listed, right? Well, you were trying to list sole strategies and get it traded on chain, right? Maybe it's time to pivot and do Circle. Yeah, yeah. Circle is the company of the future. That's right. Circle's the new meme coin. Yeah.

No, I mean, it's, well, I think it, in a sense, couldn't have happened to a nicer company. Agreed. Like, I mean, it's kind of nice to see a meme stock actually. represents something quite meaningful in the world, but it is crazy this level of volatility to see this. The options market is valuing its implied volatility like 200% on a go-forward basis.

Like the volatility in Circle is bonkers. Yeah. I mean, they've come a long way. Like, if you guys remember, I think a little over two years ago, they, like the whole SVB thing, like Circle, like USDC was trading at 88. They kind of like had to be.

Yeah, that's right. A lot of people were clapping when the Circle Market cap cross the USDA market cap. There's more circle stock than there is actual stable coins that they're circulating. Yeah, I saw some people say,

oh, they should be aping into USCC. The USC bowl, now is your time to shine. Yeah. I don't know USC bowl, but that's vintage. That's right.

It's vintage. All right. Well, this is the part where actually I have to leave. Okay. Well, good. I know you got to go watch a short. Yeah, yeah, yeah. I got to go watch circle.

I got to monitor the situation. Exactly. All right. Well, we'll, good to see you, Rob. We'll see you around town. And so we'll continue on with Vlad to talk about what's going on in the decks world. So last week we had on, of course, Jeff, the founder of Hyperliquid.

Hyperliquid right now is a dominant decks. But there's this new thing that people are dubbing the Klob Wars. So Klob's stand for Central Limit Order Book. Basically, you know, AMMs are these automated market makers like Uniswap. And Klob's Central Limit Order Books are the classic way that normal exchanges in the old world. like Coinbase and finance, the way they trade on an orderbook. So there's now a new generation of these clobbs that are coming to market, one of which, of course, is lighter.

There's a whole generation of these. So there's folks like Hibachi. So we're investors in lighter. We're also investors in Hibachi. There's also other ones like there's GTE on Mega ETH, Bullet, Fuel Network, Injective, a bunch of these. And all of them are setting their sites on the market that's been opened up by Hyperliquid. Hyperliquers can prove that this type of trubleau.

trading once upon a time was dominated on chain by MMs. And now we're seeing Clubs to make a comeback. And so I want to get your take, Vlad, as a, you know, Leiter is one of the leading new Clubs that's in the game fighting for supremacy against the incumbents today. Why did you get into this game and why do you believe that it's time for Clubs to become ascendant? And what is it that you see with the market structure today around Hyperliquid that you think is vulnerable?

Yeah. So actually, I wrote a post on X like, I think, Two weeks ago we're just saying, like, I think it's crazy that people are using this term club. Like, it's actually even, like, TrotFi hasn't used this term in 20 years. Like, I don't know who brought this term to crypto and why, but like, like, the C and club makes no sense in the defy world, right? Like, and it's like, if you look at anyone who's building any of these products, like, if you go to, you know, like the websites for like any of these products, like no one actually calls it that, right? So that's, I guess that's just terminology, but I think it's kind of, sometimes it's kind of weird that, like, terms from, like, Tradfi a long time ago, somehow, like, make their way into Cryptovia. If, like, somehow, like, a new EV company, like, brought back the term motor car or something.

It's like, where, you know, but, but in terms of, like, yeah, I think for kind of the, the perp deck space in general, like, yeah, hyperliquid has really shown that there's, because I think, like, you know, we started building lighter. almost three years ago now, right? And it took like, for us, like, we have a very specific kind of vision on what the technical stack should look like in terms of, you know, verifiable, you know, making finance verifiable using ZK. And it took a while to kind of build that out. And we launched our test net like a year and a half ago and launched our main net five months ago in private beta.

But anyways, I think since kind of while we were doing all that, you know, a lot of changes in the market. like I think we started out the lead leader was DYDX and even then there were a lot of players they were just kind of smaller like the whole space was small and I think Hyperliquid has like grown the pie a lot and proven that what kind of dexes are here to stay and actually are eating into the market share of crypto exchanges in general I think it went from like like it used to be like low single digits compared to like the centralized exchange space and now it's like well into the double digits.

And so, so, I mean, I think that's, that's been great. I mean, I think it's like, from,

from our perspective, like, I think there's a really compelling reason to build it, to, to build things on top of Ethereum, like, as we are, because then you really inherit the,

the security aspects of it, and we've kind of made it work in a way. That's very low latency, low cost, and verifiable. So, so we're kind of very happy about the adoption and the growth. But,

It's been great to see what the market, kind of the size of the market has grown while we were building. And, you know, so really, you know, we're like, we're big fans of hyperliquid and kind of. But you guys are also direct competitors. I mean, in a way, but I think really like the competition is. I mean, you guys are, you guys are proof decks, right? Like there's, at the end of the day, you know, you're, it's like Binance versus, you know, an arrival exchange or challenger exchange. What do you see as the vulnerability right now in hyperliquid, if any? Well, I mean, I think I say in a way just because I think still, you know, most of the market share is centralized exchanges.

So that's really like where I would say a lot of the competition is. And, you know, we're, you know, we have like a different approach to our infrastructure from projects like hyperliquid. and I think kind of time will tell which approach. You know, I think right now it's still like very early days, right? So I think time will tell which approach wins out in the end. I think for us, like the idea is we build on top of Ethereum, we inherit the security, then we have kind of verifiability. But then once we have that, we can actually run the L2 in a way that's like as efficient as a centralized exchange.

Because if everything is proven, then, you know, you don't need to wait for consensus, like at the time of the execution. So you can actually like compete with centralized exchanges on cost and latency and yet still inherit the security and like the verifiable is kind of the hard part that took us a while to build. And so we'll, you know, what that also gives you is it's composable

with the rest of defy, right? Like I think and hyperliquid has done a great job of like building their own ecosystem. That being said like Ethereum, you know, there's still 80 billion of TVL on top of Ethereum and a lot of different projects that later can kind of naturally compose

with because, you know, because it is on top of Ethereum. So like the next step in that is adding spot and adding kind of multi-assad collateral and then kind of going from there, right? And so there's there's a lot to build and we're still very early days, right? There's, I think, kind of growing within the kind of this Ethereum world and then kind of there's going to be milestones of like Dex's kind of taking over centralized exchanges and then even on top of that, like, kind of triadfi and defy kind of meeting somewhere in the middle. Like, there's probably like five to ten years of growth to go here.

And we feel very good about the technical decisions and product decisions we've made, but certainly a lot of respect for hyperliquid and other projects that are, they're trying to build cool stuff. So speak more to the architectural side. So lighter is set up you mentioned as an L2 on Ethereum, so you can interoperate with. That's right. Ethereum's TVL much more efficiently than hyperliquid cam, which is kind of its own ecosystem. And you guys said everything is verified in ZK.

Can you spell out what that means and why it matters? Right. So I think kind of like why does verifiability matter? I think that's kind of what, like, if you answer the question, like, why do you want defy as opposed to CFI in the first place, right? It's like well because defy like the decentralization kind of, gives you verifiability, but there are other ways to get verifiability, right? And that's what I think, you know, the huge innovation with zero knowledge proofs. And, you know, I think there's like,

the technical term for the stuff is, you know, there's like ZK Snarks and ZK Starks. And I guess what all that means is there's the actual kind of ZK part, which is privacy, but the more important part, like the S and Snark and Stark is like succinct, right? Which means that you can compress a lot of information and, you know, very small amount of kind of block size on the L1. So what that means is you can have millions of orders all matched correctly, and proof of that all of that happened can be very small, right? And so instead of like operating the whole exchange through a smart contract, you can actually kind of operate it in a very efficient L2

and then only prove the stuff that has to do with the exchange. So you don't need a full ZKVM, like you don't need a full computer that can like do arbitrary programming languages. you can just prove that all the orders were matched correctly, liquidations happened correctly, et cetera. And like, I guess if you don't have that, that means that the core operation of an exchange is a black box. Right. And so then, yeah, we can, then we're kind of back to kind of trust me, bro, right? Well, like, like there, of course, if you have the ZK approach isn't the only approach, right? Like you can have a very efficient L1 or, you know, you can have kind of their optimistic role of

I mean, there are other approaches to this, but we certainly believe that, like, the scalability you get from ZK. And we actually think this might be maybe an even better application of ZK than ZKVMs, because it's, like, very natural to fit the form factors of kind of finance within these ZK circuits as we've found. But, but, yeah, so essentially you can, like, like, the verifiableity matters because otherwise the core operation of the exchange is the black box. And then you get things like, you know, the classic example in Trotifies the flash crash, right? where like even to this day, this was like when the stock market was down 20% over 10 minutes, we came back, no one still even knows what exactly happened, right? So it's like, and if you have an exchange where the matching or the liquidations are a black box, the same could happen in the crypto world, right?

And that's kind of, to some extent, a lot of this technology on blockchain and cryptography was built to avoid. I think crypto exchanges have definitely suffered more aggressive flash crashes than, you know, But yeah, I agreed. But I think we know at least the decentralized ones, at least we know why, right? The decentralized ones, yes. I think, you know, there's obviously always conspiracy theories around the centralized ones or have been in the past.

I'm curious. I don't know if you watched our episode last week with Jeff or kind of read some of the Twitter battles with like him and CZ about like L4 order books versus like dark like how do you guys think about market structure and litmus and yeah. Right. Well, I think to that point like the, you know, right. now the part of ZK Snarks that we've leveraged is like the S part, but actually the ZK kind of what the ZK part is actually supposed to mean is like being able to do the privacy for those blocks.

And so then we can actually like this architecture would allow for a dark pool in a very natural way, right? Because you could have like on lighter, right? Like you can imagine pools where the trades are actually not published on the L1, but kind of the proofs, you know, the positions in the trades are not published. but like the proofs that everything happened fairly are and so the only thing that would be published is like deposits and withdrawals right like and everything else is private now That that that's not our current architecture just because like I think in the defy world We haven't yet seen a ton of market demand for that like when we ask

Our early private beta users like what do you want? What features do you want next? That that's not at the top of the list, but it certainly Especially as like institutions start to adopt defy I think this will be important. I mean, I think to the kind of the specific debate between Jeff and CZ, I mean, I think it's like, I think that there's, there's an interesting point around kind of, I think that Jeff made there, which is kind of like this like general equilibrium idea where like in a partial equilibrium setting, like any one participant, if they have more information than others, then that's kind of unfair.

But like if everyone knows, you know, if everyone has all that information, everyone knows that everyone has that information, then it's like maybe a market that's more fair. And I think there's merit to the argument. At the same time, I think there are like larger institutions that have historically operated and kind of with more privacy and, you know, whether because of like legacy reasons or regulatory reasons or other fiduciary reasons, like have to continue to operate that way. So I think being able to do both seems like a good thing, right? And I think ZK allows you to do both.

So one of the things that we discussed also in the interview that we did with Jeff was, you know, Jeff's contention that you really want to distinguish between the kinds of users who are on your platform. And some of those users are more valuable than others. And specifically, he was sort of protesting the term user, but thinking about flow. So obviously toxic flow is kind of flow almost by, you know, it's named in such a way that you know you don't want it. And a lot of this toxic flow is basically.

these high frequency takers. And they really designed hyperliquid very intentionally to handicap high frequency takers by allowing cancellations to proceed any other trades in a block. So like a block ordering mechanism, it self prioritizes that. And you can imagine this sort of like kind of poor man's last look that's effectively implemented if validators can actually see the mempool and they are themselves makers. You know, they can they can sort of look in the menpool and decide, hey, do I want to cancel this trade before this pending transaction is actually confirmed? How do you think about that, because you're a layer two, you have the ability to modify the block packing algorithm. What have you guys done in order to optimize the market structure?

Well, we have the ability, but we like our circuits prove that we're not doing that, right? Like that's kind of, that's kind of the point of these ZK or one of the points of the ZK circuits, right, is that once your order is acknowledged, that it's in the order book, like anything that happens from there has to follow the rules of the circuits, which include things like kind of first in, first out or like, you know, the kind of the time price priority. And so for example, if we were to introduce like a last look kind of thing, that would be in the circuits and everyone would know that that's happening. We have a different approach to the toxic flow issue. And I mean, so I agree on the high level, right, that like you kind of want, like our view is actually like

retail should have zero fees, right, which that's what it has been on later. And that's what we intend to do the hard part about that is like, okay, how do you separate out retail from toxic flow. And I think the approach we've taken so far is to be able to essentially like start, we're going to start charging fees only on the toxic flow. And then the way it would be separated out is kind of like if there's some form of rate limiting or some form of speed bumps that would not really affect retail at all right. Like retail, if their execution takes 50 milliseconds more like, like, you know, if you're just like, hey, like I, I think. this is, you know, I want to get into a BTC trade right now.

Like, you don't care about the 50 mils like that thing, right? If you're toxic flow, you do care. So, because those guys are doing the toxic flow, like they're very, very latency sensitive, very like rate limit sensitive. And of course, you have to worry about other things like civil attacks. And, you know, this is a hard problem. But we've, I think we've kind of have a good, pretty good handle on it and we'll be rolling out more. So the idea, if you're retail, you're just, you know, noise trading.

There's no signal whatsoever in what you're doing. then you're willing to tolerate some delay in actually executing your trade. If you're toxic, then you're like, I know this is misprice on finance right now. I need to go make this arbitrage atomically. And I cannot wait 500 milliseconds or 100 milliseconds or whatever it is. That's the idea. That's correct. And if you want to execute it without that delay, fine, but then you pay a fee.

And so then I think that's a way to. That's very clever. Does that exist on any other exchange? Is that a thing? I mean, there are some TratFi platforms that have some versions of this and kind of currency trading. I mean, like I was kind of early at Citadel doing HFT stuff and currency. So there's some version of this. But I think the thing about it here, right, is like we can introduce all these things in a way that are verifiable.

And it's like, so it's not just like, okay, we because, sorry, the thing you don't want is that we say we're doing this, but actually in the background, like, this like market maker. actually doesn't have to pay the fee or whatever. Like that's the thing, like that's where the verifiability comes in, right? Is that to prove that like this system that's designed to be fair to retail and kind of protect the little guy is actually doing that. Yeah. That makes sense. That makes sense.

And so as we roll it out, we kind of like, you know, we're building and open obviously, right? So like, well, we welcome to like if, you know, for people to see how it works. and, you know, I think it's interesting to like experiment around this, right? Because I think where like the cost structure of running the exchanges is so low that like we have the ability to experiment with different, different fee structures. So do you think the end game is that there's going to be multiple large dexes that have these different market structures that, you know, can maybe benefit different players or different tradeoffs? Do you think that it's likely to be winner take most, you know, the way that, you know, once upon a time, finance had like 60, 70% market share. Is that the equilibrium?

How do you imagine this playing up? Right. Yeah, I mean, I think it's, if you look at TratFi, right, like they're, depending on, like, for stocks or like, I think they're like 14 exchanges for your stocks. On the other hand, for, you know, for commodities, it's much more winner-take-haul. So I think it kind of depends on the market structure a lot. Like, I think DeFi is so, there's so many different. things you can do with defy and there's so many I don't know you can imagine maybe

there's like one exchange in the future that's really good at combining traditional markets and prediction markets or something like I know maybe there's going to be I'm just kind of imagining things here right but like I I my sense is that because there's so many different things you can do with defy it's not going to be like winner take all and there there will be a few different kind of large ecosystems but but you know I think that there's like still a long ways to go to that's already we're starting to see that but there's still a lot more to go there

but yeah I think because of there's so many different things you can do with defy or even like we're talking about earlier like maybe there's going to be some exchange that's like particularly good at meme coins or something right and so which I guess

some extent already exist with some of the Solana ones right yeah yeah that's kind of true I mean do you I guess there's sort of this weird shift in like centralized exchange architecture that looks more like

TradFi over the past few years, moving towards like separating exchange from custody from clearing. It feels like in Defi, kind of the equivalent is almost like there are interfaces

that almost act kind of like brokers, but then like those other sort of exchange functions are still kind of through this one main product because there aren't that, they don't have the same issues that you have in NCFI right? Like, okay, what does custody mean? What's a smart contract?

So like it can't run away with the funds. So like there is that sort of strong need for like separation, which has been driving this sort of C-Fite market structure shift, I guess, how do you think about the future of lighter and maybe like perps overall? Do you think they're going to look more like, hey, there's a localized interface

that you're going to be swapping through in the future, or do you think it's going to be, hey, there's maybe we have more like infrastructure or like an order book that anyone can kind of act as a taker on top of or like, yeah, how do you think about it? Yeah. And I mean, you're referring to terminals like in silico, right? Kind of on top of. Yes, yeah.

Right. Yeah, I mean, I think that, right, there's probably, like, I think the value there in Defi is more around, like, kind of aggregation as opposed to separating out the, kind of the custody aspect. But, I mean, I think, like, ultimately, there's, like, a few things you want from an exchange, and they don't necessarily have to be, it's not black and white. Like, you can imagine that, like, a centralized exchange can add a verifiability layer. right or like you can have you or conversely right like you can have something that right like you can have an exchange of that what that mostly operates in a decentralized way but actually has KYC like so all these things don't necessarily have to be black and white so but yeah I think there will be depending also on where kind of like there's a lot of positive movement on the regulatory front now I think depending kind of

where that lands I feel like there will be a lot of experiments and so I don't my sense is that be like something that has kind of aspects of both, like kind of like meat in the middle. I don't know exactly where that will land, but, but my general view, it's not, it's not going to land in one of or the other extremes. Fair enough. Okay, well, we're, we're up on time. But where, where should people go to find lighter and where should they go to follow you? Sure.

Yeah. So lighter. XYZ, it's, you know, it isn't private beta, but they're, you know, you can, uh, definitely, ask around for an invite code and then... Topping back listeners get extra invites. Okay, well, we'll try to make that happen. Yeah, my Twitter handle is V. Novakovsky, so yeah, it's kind of...

Try your best. Yeah. If you can spell that. Good luck spelling that out. If you do, you deserve to follow him. That's it for us. We'll see you all next week. Thanks, everybody.