Unchained - The Chopping Block: USDH Bake-off—Native Markets, Validators & the “Beauty Contest” Debate - Ep. 903

Episode Date: September 13, 2025

Hyperliquid’s USDH ticker set off the most dramatic “RFP” in recent memory. The crew breaks down why Native Markets ran away with validator support, whether the process was theater or strategy, and how the Bake-off became a marketing masterstroke—and potential leverage on Circle. We dig into Polymarket odds, the last‑minute Paxos bribery allegation (denied), and what this means for future “native” stables on Solana, app chains, and beyond. 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 Guy founder of Ethena as a special guest, as a single ticker (USDH) sparked a weeklong spectacle: Hyperliquid’s “Bake-off” to award the USDH stablecoin brand. Native Markets surged ahead as validators signaled support, Paxos rallied late with partners and incentives, and Ethena ultimately withdrew. Was this always a vibes‑based beauty contest, or a deliberate move to pressure Circle and re‑route bridge yield? We parse the incentives, the governance, and the market microstructure — and peek at what happens if every big chain/app tries the “native stablecoin” playbook. Show highlights🔹 Hyperliquid RFP, Explained — Validators signaled early; stakers could migrate; the USDH “ticker” confers no explicit fee rights, yet bidders offered huge economics. 🔹 Why Native Won — “Vibes-based beauty contest”: homegrown team fit the HL ethos; speed, alignment, and community trust trumped external credentials. 🔹 Paxos Allegation — Late claim of validator bribery surfaced; Paxos denied; no receipts provided; underscores governance fragility to extra‑protocol incentives. 🔹 The Real Prize — Bridge control & yield capture (+ tail‑risk management) mattered more than a brand: even a “just a ticker” beachhead can evolve to real economics. 🔹 Masterstroke Marketing — The public Bake-off dragged every major issuer onstage, boosting HL mindshare and potential leverage in any USDC negotiation. 🔹 Open vs. Closed — If you want a native team, say so; calling it an “RFP” for service providers while preferring insiders created dissonance and drama. 🔹 Odds vs. Votes — Polymarket odds rapidly converged on Native despite splashy rival bids—perception and validator reality diverged from Twitter takes. 🔹 Issuer Margins Compress — Public bids commoditize stablecoin issuance; expect 5–15 bps “asset‑manager” style economics unless you’re Tether‑scale. 🔹 App/Chain Rent Wars — Who captures the float? Apps, wallets, and chains will increasingly demand economics for distribution; UX and liquidity fragmentation loom. 🔹 Liquidity Gotchas — Forcing a nonstandard stable can impair quotes vs. USDT pairs elsewhere; exchanges risk killing their golden goose to save a few bps. Hosts⁠ ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Tom Schmidt, General Partner at Dragonfly  Guest ⭐️Guy Young, Founder & CEO of Ethena Labs Disclosures⁠⁠ Timestamps 00:00 Intro 01:27 Hyperliquid USDH Stablecoin Proposal: Setup & Stakes 03:25 USDH “Bake-off”: Native Markets vs. Paxos, Ethena, Frax 06:21 Early Signals, Rumors, and Bribery Allegations 13:33 Validator Decisions, Community Reactions & Market Fallout 28:53 Polymarket Odds & Onchain Sentiment 29:47 Liquidity, Bridge Yield, & Market Microstructure Explained 31:46 Hyperliquid’s Strategic Playbook 34:28 Governance Design 37:45 Stablecoin Ecosystem 39:25 Exchange Liquidity Challenges, Maker Behavior & Fee Dynamics 55:28 Final Takeaways & Lessons for Chains, Exchanges & Issuers Learn more about your ad choices. Visit megaphone.fm/adchoices

It just makes me mad to see this just like bullshit narrative that everyone's like, oh, there's this really close competition and everyone's bidding for this thing. If all the validators are kind of like, hey, we all know who's, you know, we're all going to vote for our man. And look, again, if this were just framed that way, like, great, that's totally fine. There are a lot of good reasons why you should give it to a native team. But when it's just kind of when it's when it's theater and no one's willing to call out that it's theater, that's what pisses me off. Not a dividend. It's a tale of two pawn.

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. Delic.Eight is the ultimate. DeFi protocols are the antidote to this problem. Hello, everyone. Welcome to the chopping block. Every couple weeks, the four of us get together

and give the industry insider's perspective on the crypto topics of the day. So quick and join us. First, you got Tom, the Defy Maven and Master of Memes. Hello, everyone. Next we've got Robert, the Crypto Gronosur and Tsar of Super Bowl. State.

Good morning. Then we've got Tarun, the gig of brain and grand poohba at Gauntlet. Hi, I'm Tarun. I'm late. Aloha. Aloha. I'm late. And then joining us today, we have special guest Guy, Emperor at Athena.

Hello, everyone. And I am a Steve, the head hype man, a dragonfly. We are early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see Chopin Block that X, XYZ for more disclosures. So it has been a drama-filled week in Cryptoland, and at the center of this drama, and so I thought there was already a lot of drama at the beginning of the week, but now we are here in the late portion of the week, and the drama has hit kind of p almost like 20-21 levels of drama. So let's talk about some of that drama, and it centers once again around the decentralized exchange hyper-liquid. So hyper-liquid, for those of you who don't know, it's the number one trading venue on-chain, period, one of the largest exchanges in the world at this point.

It's a top 10 by total trading volume. It makes over a billion dollars a year. And Hyperliquid decided that they were going to launch a hyperliquid native stable coin. And this hyperliquid native stable coin is going to have a ticker called USDA. Now, the way that it was announced is the foundation decided that they were going to create a request for proposals. So that anybody could decide that they wanted to take control of the hyperliquid native stable coin ticker, USDH. Now, getting the ticker doesn't actually give you any specific rights within hyperliquid. So there's no special trading fees, you don't automatically get all the USDC in the bridge,

of which there's $5 billion of USDC in the bridge. It doesn't automatically convert into USDA. Ostensibly, it's just a ticker among many other tickers. And normally, tickers are just auctioned on hyperliquid. There's daily auctions where you can just auction and decide to get a ticker and then be the next thing listed on hyperliquid. But they decided there was going to be a special process for this. it was all going to take place through governance. So the idea would be that all the validators would each signal who they were going to vote for

among all the proposers. And after basically yesterday, as of when they were recording this, those validators signaled who they were going to vote for, those would get locked in. And then the voters themselves, which are the stakers, they would have the ability to move their stake if the validator they were currently staking to was voting for someone they didn't like. They could move it over to somebody else based on who they wanted to win the USCH ticker. Okay, so that's the setup for this whole bake-off, basically, the USDA-Tickr-R-Bake-off.

So initially it started with the single proposal for this thing being this group called Native Markets. Now, Native Markets is led by this guy Max. Max is an early hyper-liquid, long-time DeFi player, early Hyper Liquid community member, somebody very well-loved and respected in the Hyper Liquid community. And he was working on a startup called Native Markets. and they basically came out within a few hours of the proposal coming out with a proposal that we're going to be, we're at native markets, we're going to do this USDA proposal. And this USDA proposal came out, I believe on Friday, it was last Friday, that this

USDA proposal was announced by the foundation. Within hours of that, they came out with the very first proposal. Then later, Paxos was the second player to come in. And before you knew it, everybody of any significant size, as a stable coin player came in with their own proposals. Except for Circle. Except for Circle. Well, Circle kind of had their own little thing.

No, they came out and said, we're not doing this, you know. Have fun. No, sorry. They said we are, we are long-time hyperliquid supporters. We love Hyperliquid and they posted like a link to an old blog post. They said, don't believe the hype. And they said that they were not submitting a proposal. Right.

Yes. But it was a very, basically, hectic weekend. where almost every major stablecoin player in the industry came out with some kind of proposal to become USDA. So that included Athena. Of course, you guys are here. We're investors in Athena caveat. So Athena, Sky, formerly MakerDAO, the Agora, Paxos, of course.

Apexos ended up teaming up with PayPal. There was, Bridge was working with native markets. Who else was in the running? There was a bunch of other groups. Yeah, that's right. Bastion. fracks, and then Agora in which were also investors. And yeah, okay, I think that was all the seven major proposals that were made.

And then people had other people coming in and backing their own proposals and blah, so it was proper bake-off. Things got really crazy. And then by Tuesday, Tuesday, Wednesday, it became very clear that Native markets was basically winning. And Native markets became increasingly clear that Native markets was the hyper-liquid homegrown hero. and most of the validators that started signaling who they were going to align with,

signal that they were going to align with Native Markets. And today we are now pretty far into the signaling. I think almost all the stake has now signaled. And Native Markets is far in a way the winner. There's only a few votes respectively for Paxos and for Athena. And Athena has now since withdrawn their proposal for USDA, basically meaning that Paxos is the only other player of any meaningful size. So in proper crypto fashion, it's not just that there was a bakeoff.

There was also a lot of drama about the bakeoff. So pretty quickly, there were a lot of rumors that started to circulate about, hey, did native markets have advanced notice of this whole proposal? Because, of course, their proposal came in within hours of the foundation announcing the USDA bakeoff. Not only that, but their wallet, which they used to say, hey, we're actually ready to deploy on hyperliquid immediately if we win this ticker. their wallet was funded a few hours before the proposal dropped,

kind of seeming like they sort of put everything into place in order to make this proposal ready to go on time. And there were rumors that had circulated that I think many people have seen some of those rumors circulating, that the USDA sticker was all but promised to native markets or that maybe in some way this RFP was kind of created for them given that they had deep relationships with the hyperliquid community and that this was sort of expected to be kind of a process that Native Markets was supposed to win.

And then when all these new players came in, these proposals started getting better and better and better. So just to give you a sense of it, Haxos, which was the first major proposal that came in after them, Haxos basically promised that they were going to give 90% of the revenue that they made from USDA back to hyperliquid buybacks. and other people started coming in and offering 95%, even 100% of all the revenue. Now, to be clear, part of the reason why this is such a big deal is that there's billions of dollars currently sitting in the bridge of the hyperliquid bridge, and all the collateral and hyperliquid is USCC, of which right now ostensibly hyperliquid makes nothing. And so if another stable coin were to go and claim all the assets that are sitting in the bridge,

which, to be clear, USCH is not claimed that that would happen. But if that were to happen at some point, that would be. hundreds of millions of dollars in yield that is currently going to circle. And so all these proposers came in thinking that that was basically the prize they were competing over, billions of dollars in potential circulating supply that they could potentially win by getting the USDA ticker. So fast forward because I know there's a long-winded story. There's now been increasing calls that maybe this was all a little bit of a farce and that actually the expectation from the beginning was that Native markets were supposed to win. And things got kind of out of hand when

every single major stablecoin player came in with better and better and better proposals. Then in the, so I got kind of got wrapped into this a little bit in that on Wednesday, I sure did. Yes, I sure did. So on Wednesday, I had heard from multiple players. First of all, when this all started, I was just kind of watching just like everybody else. But when this stuff got really big and crazy, I started hearing from a bunch of the proposal, from the bidders, that the validators that they were talking to, because of course, the validators ultimately are the ones who signal who they're going to vote for, and then the stakers going to shift around their money. The validators, what I'd heard from the bidders,

is that the validators were basically kind of locked into the decisions they'd already made, and they were all going to go with native markets, and that they were not even really seriously considering any of these proposals. And that didn't matter how big the coalitions got. So Paxos in the 11th hour brought in Venmo and PayPal, to their proposal and that, you know, USDAH was going to be integrated into Venmo off ramps. And still, the vast majority validers kind of shrugged. And, well, you know, it's not. And $20 million in incentives, too.

They're getting paid to get listed. That's right. That's right. And basically, what I was hearing from the bidders is that this is kind of a, this is kind of, this doesn't feel like a serious process. It feels like the validators had a deal or they are just decided or maybe it's because they're friends, right? Or maybe genuinely, truly, they believe that the native markets team, despite

the fact they're a brand new startup that announced five days ago. Obviously, they have a stack team, right? So it's not just Max, but also a niche, formerly a paradigm, and then MC, who was a COO at Uniswap, all fantastic people, very, very capable team. But they have nothing right now. They have no stable coin. They have no TVL compared to some of the biggest issuers in the industry. And so I noticed this.

And everybody I spoke to was not willing to talk about it publicly because their perspective was like, look, what's the point? I'm just going to get shredded to bits. And I was like, that seems kind of bullshit. Like, I mean, we should at least be able to talk about it if that's what's going on. And so I posted something. I basically said, look, I've been speaking to these bidders. They're basically telling me that they're getting stonewalled by the validators and that this doesn't feel like it's actually legitimate bidding process. And after I posted that, even more bidders came to me. Of course, nobody said anything publicly. Even more bidders DM me and saying like, yeah, yes. And we had heard, I think Friday,

that we'd heard from a validator on Friday when all this started. Basically that there was an understanding that this was supposed to go to Native Markets before any other bidders came in, that this was like four Native Markets. And we'd heard that Native Markets was pitching months ago, that that's what they were building,

that they were building the canonical stable coin on Hyperliquid. Now, all this being said, my posting this has caused the entire Hyperliquid community to just fucking crucify me. So they absolutely hate my guts and they basically are,

they think I'm a, I don't know, turncoat something. They think I'm a terrible person. They just think you're a VC shilling your VC bags, as Eve. Yes, yes. Exactly. Exactly.

So we are, to be clear, investors in Athena, Agora, fracts, we own some fracts. We own some MakerDAO slash sky. So absolutely 100% I'm investor in most of these.

basically today, the only remaining player is Paxos, right? And Paxos, like, overwhelming what I have seen in terms of, like, if just read Twitter comments, not looking at the actual stake weighted votes, if you just read Twitter comments, overwhelming people are like, clearly Paxos is the stronger player. And now, you can dispute whether or not it makes sense to have the hyper-liquid native guys. Maybe there's value to that, and I don't, and I think that's a legitimate argument. But what's interesting that just happened today, right, final innings of the signaling votes

coming in is a CL who is affiliated with Hyper, Hyper, I think, which is the largest validator. He basically came out and said that, look, Paxos, good proposal, but I have it on good authority that Paxos is trying to bribe validators. This came in basically 11th hour, that there was a claim that Paxos is trying to bribe validators to support the proposal. Hyper Liquid, I'm sorry, Paxos immediately said, the CEO of Paxos Labs said absolutely untrue. No evidence of this. If you have receipts, bring them on. No evidence brought. And NCL clarified and said, look, I've spoken to people who have confirmed this, but I cannot

present evidence because I don't want to deanonymize the people who I've spoken to. But take me at my word. Last minute, there are claims that Paxos may have bribe validators. There's no evidence of this. Paxos denies it. Nobody's willing to reduce evidence of this. All of this just leaves a sour taste in many, many people's mouths. I will stop there because that's a gigantic brain dump, Guy, given that you are one of the bidders, and you guys recently withdrew your bid as of, I believe, you know, 10 hours ago. What's been your take on this whole USDA drama? Yeah, I think hard to start after a 14. Well, I think the first thing to say is I think it was like a pretty genius move from hyperliquid. I think has there ever been like a better marketing play that's

ever existed where you've got basically every single large issuer entity in the space to publicly get up on stage and basically chill you and sort of write about why they think this is an incredible opportunity and all of the sort of growth that they sort of see ahead. So I thought that was, yeah, I thought that was just incredibly smart. I think, and I hope it came across in the message that I put out today on my tweet, but I think I think I felt slightly less offended than other bidders who are in the process. I think I understand the fact that there are qualities to the native markets team that just others didn't bring to the table, which is we were not here when those guys were in the room

in Hyperliquid, you know, in the very early days and sort of helping them out from the beginning. And I think that that is actually very core to the ethos of what makes Hyper Liquid very different to centralised exchanges, other projects in the space. And I think the honest feedback that we got was basically it's evident that you're bringing more to the table. You have more experience, better track record. And I think the upside of what we could bring when it comes to like the Athena balance sheet and everything that can be built on sort of like HIP3 going forward.

I think that that obviously looked quite different, but we were not a native team. And this is actually understandable. Like if you went to Coinbase or Binance and said, open this up, and any stable coin can basically just come in and be integrated within your exchange, there are sensitivities to these kind of things because it's like very crucial to sort of the functioning of the entire exchange. And so I think we understand the position that you might want a team that is just 100% focused on delivering this one product. They don't have ulterior motives. They don't have other agendas. there and have other product lines that they might want to push.

And you just want a team that you can have a bit more control and I think certainty that they're just going to do that one job. So I think we just accepted that position and just understood that that wasn't the position that we're sitting in. And I think we have ambitions that are much higher than just producing one stable coin for one exchange. And I would never sign up to doing that with anyone. And so, yeah, I think we just sort of acknowledged that the fit didn't make sense that, but still kind of want to go and do all the things that we described within our proposal.

Well, let's get reactions from the guys. What do you guys think about this whole situation? So I think it was a vibes-based beauty contest, personally. And I think Native markets had the closest vibes to Hyperliquid. And I think, Guy, you touched on a bunch of pieces of this, given that they've been operating there for a while. But Hyperliquid is kind of like an insurgent blockchain in a lot of ways, right? Native was the only team that's not venture-backed. So-

Because I've heard conflicting things. Thanks. I've heard conflicting things. Okay, that's fine. I could be misled or whatever, but I believe, based on speaking to members of the team, that they are not venture backed. So I think in this vibes beauty contest, it's like, you know, people on Twitter said it best, it's like, do you want hyper liquid stable coin brought to you by PayPal? You know, or do you want, you know, an insurgent, very hyper-native, specific thing that grew up there and is only there, right? And so I think I don't know the validators, you know, I'm sure there's like hard economic logic that they're using, but I also think there's a lot of vibes logic. You know, almost every post ended with just the standard tweet ending like hyperliquid, period. And so I saw it from afar as a beauty contest and I think people liked something that fit closer to their image of what hyperliquid was, which is like it's small insurgent.

It's not venture backed. it's like more akin to how hyperliquids started it in the first place and that's what we want. To remember, what's your take? I mean, I think kind of the analogy that maybe will resonate for the Paxos PayPal side is like open contests for build versus buy versus partner work very differently than closed. And I think like the tactics are obviously very different. And yeah, I feel like the winner was already chosen before. Does that make sense? But I do think from a marketing standpoint, like...

So you think it was not a... You think it was kind of a... Well, not... Okay, chosen before is the wrong. It was, yeah, Keynesian Beauty Contest type of thing, except the beauty... There was only really one person whose beauty was considered high enough,

whose virtue was considered high enough, you know? Like, the virtue was already... The virtue is the most important part. And... But I think it was, like, kind of the most genius, low... low resource highest marketing value thing you could ever do. I mean, literally fortune wrote an article calling it like Crypto's Bachelor. Like how like you can't pay for marketing like that. Like that is like, you know what I mean? Like it's incredible. And all you were doing is offering a ticker. I could literally

just go, you know, back when they were, especially when they're in in the beginning, Dutch auctioning whatever tickers you wanted and then like around the TG post TG, you could have easily got gotten most of these tickers at that time, actually. That was like the other thing that's funny is like they now got reserved later. Right. And just to interject, Taron, I don't know if it's even been clear that the ticker is giving them any special rights to like do a hyperliquid stable coin. They've explicitly said it's not.

They've explicitly said this ticker has no special. Yeah. So like that's the thing. Everyone's going Gaga over a ticker that maybe we're all just like overestimating what it's even for. Again, to the genius of hyperliquid creating this beauty contest in the first place over a ticker, right? Yeah. Somebody made the point that, like, look, on NISI, tickers can go for hundreds of millions of dollars.

Tickers can be very valuable. So it's not true that it's just a ticker, quote, unquote, in the sense that, oh, well, tickers obviously are meaningless. I don't think that's necessarily true. At the same time, I'm also very skeptical of this story that, oh, it's just a ticker because of all of this process, right? Like if it's truly just a ticker and there is this like, oh, we had JK, you know, there's nothing special about this. Then why this special process, right?

Why the foundation announcing this, doing this weird governance thing where it's not an auction, you cannot pay up and show that you have the highest willingness to pay for this sticker. There's a special process that has never been done before for anything on hyperliquic. Look at unit, right? Unit runs the spot markets for hyperliquid. There was no RFP. There wasn't even an auction. It was just they decided we're going to give it to Shoku.

But couldn't they have done that if like if there was something that was pre-chosen, wouldn't they have just have done that? Like why? So then so then, but the point is that like this is clearly not just a ticker. Right. It's a marketing stuff. So that story of it's just a ticker. So I don't know what it is. That's the problem is that it's there's a deep dissonance here because they have said very explicitly, we're not pushing the money in the bridge into USDA.

We're not giving you special fees. We're not doing, we're not doing anything. It's just a ticker. but it's sort of like what they're saying and what they're doing are sending two very different messages. Otherwise, why are people offering such big incentives and like tripping over themselves? It's almost as though there's something unspoken here that, yeah, yeah, it's just a ticker. It's just a ticker. But like, we all know it's not just a ticker.

But like what does that mean? Yeah, I think certainly there's a path with this. It's just like the beachhead, right? It's like, it's just a ticker today. And then tomorrow you get discounted fees and down the road, this gets sort of coalesced down. and like, and kind of like, frankly, like BUSD started the same way where it's like, oh, it's, you know, BUSD. And then it's like, oh, actually, this is going to be really discounted. And actually, if you want to withdraw, you're going to swap into BSD.

And it's like you can kind of close in the walls a little bit. But obviously, this is the most palatable thing to start is just a ticker. But yeah, I mean, I agree. Like the fact pattern is like silly, right, which is clearly this was like kind of known in advance. Again, which is fine. Like, I think that's kind of the weird thing is the distance between hyperliquid is decentralized and it's this open sort of process or, you know, no, it's not. frankly even like the Paxos validator thing bribing, even if it's not true or even if it were true, which maybe isn't, like if you can't build a governance process that can withstand extra protocol

bribes, like you did a bad job, like it's bad governance. This is kind of what the entire industry's been working on for, you know, the past two decades is like how to build good governance and consensus. You're like, oh, if someone offered a few million dollars to a validator, the whole system doesn't work. I'm like, well, that's a shitty system. You should have fixed that from the beginning. So I think that's the whole point is it's like, it's not really that, you know, decentralized. There's kind of this bigger administrative force on it, which is okay. It's still an early stage startup. You don't want sort of product design and product decisions made by consensus. So that's kind of the thing that I think has left like a sour taste in a lot of

people's mouths, like the kind of two-facedness. We should we have someone here who bid in this auction. So they must have had a private valuation that was greater than or equal to the value of the ticker. So. What do you think the ticker was worth? I'll need an Excel sheet to give you like a proper answer to that. Give you a vibes-based valuation. I think the way to think about framing it is basically you know that the relationship between Circle and Hyperliquid is not where Hyperliquid wanted to be,

i.e. they would want more of that income that's sitting there, and they would likely want more control over the bridge and USDC sitting there for like a tail risk event, right? If there's a hack within the multi-sig, you don't want to be relying on Circle to be able to freeze, reissue all those different pieces. So I think there's actually a huge amount of sensitivity of the USDC that's sitting there from lost income, but then also tail risk that sits within the whole of hyperliquid because of that. So even if you didn't believe, even if you did believe that USDAH was just a ticker, there is some probability that they would be wanting to use this as leverage against Circle

to negotiate something that's better on the other side. And in the event that they don't, there is a scenario in which they could actually just pick up the USDC, throw it all into USDAH and redenominate. the entire exchange. If you did get into that scenario where you're redenominating the entire exchange, that's incredibly valuable because it's sitting at five and a half now. I think most people within the spacing that number is going 10, 15, 20 billion as this thing continues to go through the years. And that's an incredibly valuable income stream that sort of sits within there. So I think the reason that you saw the sort of force of proposals that came through as strongly

as they did is that it was almost costless to put a bit in, right? Like the EB of what I've just described to you there is actually extremely positive, even if you think that's a lot of the probability of like them just jamming all the USTC into that is low. But as like the cost of putting a proposal forward was just a weekend's work, basically pulling together a Discord post. So there wasn't really like enough cost to do it, but like the tail EV of that stream of income, I think is actually pretty valuable. Yeah. Yeah. No, that makes sense.

And it's a very good point about control being another element of why having a native stable coin is attractive beyond just the economics. And look, at the end of the day, I very, I very, I'm very much agree with Tom is that like this feels like something that hyperliquist should have just done. It should have just done, did it the way they did with Shoku because like, yeah, it's a startup. It's an exchange. Why would an exchange be run by committee? Like people on hyperliquid talk all the time about how Jeff is like this benevolent dictator. He's obviously a great entrepreneur. He knows how to build an amazing exchange. And like most of the product side of hyperliquid

is Jeff and the team. Right. That's why it's so good. That's why it's been so successful. So them just picking somebody, like I would be fully supportive of that. If them just like picking is like, yeah, we're going to work with these guys and they're going to build our native stable coin. Yeah, I think that's fine. But I guess the question is how much like negotiating leverage do you have with USC if you've like handpicked a team that he doesn't know, no one sort of heard of until now? That's a very good point, actually.

Because when you open it up to the entire space, then you go to Jeremy and you're like, well, you can read it for yourself in the forum and you've got everyone else who's competing with you there. So I think it just makes his like negotiating leverage with circle like fundamentally completely different. That's not an excellent point. If you think that what's going on is he's sitting down with Jeremy Aller, while all this is going on and he's like, look, motherfucker, like, I've got the entire industry on all fours begging for my stable coin, you better cut me a deal. If I'm, there's no way I'm getting zero. Like all these other guys are getting 50-50 or even a majority of the yield. And Hyperliqu is getting zero, no way. I wouldn't be surprised if in the near future we see that basically like the USGC is, you know, in the bridge, a big part of the float starts going to hide buybacks or something like this. Because obviously, in a way, like, that is kind of just an ideal outcome, is that no one has to do

anything. And you don't have to push the users. You don't have to like get liquidity on a new asset. All that stuff is costly and difficult. And so if you assume that that was the master plan is just like, let's get this big bakeoff as a way of showing leverage to circle. That makes perfect sense. The thing, here's the thing that really bothered me about this whole process is that the way that was framed is an RFP. It was not a request for teams. It was a request for proposals. And a request for proposals is basically saying, look, service providers, assemble, bring me your best proposal, and I will evaluate it. If the call was, hey, startups, we only want hyperliquid native teams. If you're a hyperliquid native team, assemble a startup and like come bid and we'll decide who to

give it to. Right now, native markets is the best that we've seen. But if there's a better one, show your face. And now I think it's implausible that there could be a better team the span of five days. Like obviously there's a very short RFP. Like you have five days, nobody's going to come up with a startup that's better than, you know, Max and MC and they've partnered with Bridge

and blah, blah, blah, obviously they had everything in place. There's no way they're going to lose that. But if that's what they wanted, they should have asked for that. If what they wanted was, I want service providers to come and bid, that's the way that it was framed.

But then every single service provider is basically told, you're not hyperliquid native enough. Well, obviously there's service providers. Like what service provider is going to be hyperliquid native from day one? that's a set of zero.

You know all the service providers. You know none of them were hyper-liquidated from day one. So it's sort of like, look, if you built a criteria that excluded everybody you're asking for, it just kind of feels like,

okay, I mean, this was the thing everyone was talking about, right? And to me, I just, like, it just makes me mad to see this just like bullshit narrative that everyone's like, oh, there's this really close competition and everyone's bidding for this thing.

If all the validators are kind of like, we all know who's, you know, we're all going to vote for our man. And look, I, like, again, if this were just framed that way, like great, that's totally fine. There are a lot of good reasons

why you should give it to a native team. But when it's just kind of, when it's when it's theater and no one's willing to call out that it's theater, that's what pisses me off. I don't we learn this less than every cycle. Like,

I feel like, I feel like I've seen the same shit multiple times. Like, of course. At this point, who cares? It's just that this one was,

this one reached mainstream news outlets. It's big. It's really big. It's really big. Exactly. Exactly. Exactly. And look, I just have like a constitutional distaste for this kind of thing happening

in front of everybody. Because like almost everybody I know who's deeply connected has heard this shit. Nobody knows. It's not in your telegram chats and in your whatever. That's heard of like, oh yeah, Native market is going to win. Everybody kind of knows, right? And people can see it play it out on Polly Market. So I posted the Polly Market in my tweet that like the moment that, like,

Ever since the beginning, Native markets has been at the top. Even before anybody started signaling, Native markets was at the top. People were talking about, oh, Paxos is so strong. Athena's proposal is amazing. These guys are doing, you know, they're giving back more of the money. They're bigger issuers. They have more distribution. They have other advantages.

But for the entire time, Native markets has been on top. And why? Yeah, I was just going to correct. Like, when Athena put out our proposal, we did, I think we're like twice the old. Yes. I pointed that out. For like about an hour, the moment that you guys launched, proposal, Athena was number one, 70% to win. And within an hour, it cratered. Now, within an hour,

nobody signaled. Within an hour, how many people even read that? Also, the market on polymarket was like $12,000 or something. Like, the slippage was like absurd. No, no, no. It was hundreds of thousands of dollars. Oh, sorry, the total volume. Total volume is in the hundreds of thousands. Yeah, yeah. The liquidity was not that big. Someone moving at like a $500 trade would move the price like 30%. I mean, It was nothing. Sure, fine. Now there's a lot more liquidity on that. But the, yes. But, But like long story short, the point, I mean, yeah, yeah, that's fine. But it is the only indicative measure we have of what people who actually know shit think is going to happen.

And the answer is that very quickly people realize, yeah, Athena, Athena is not going to win. Paxos is not going to win. Even when Paxos came out saying, we have just partnered with PayPal, Paxos still never got above 50%, which means that like people kind of knew that they were going to lose, that Native market is going to win. Now, look, I could be overreading into this, but it's just one of these things like so many people have spoken to it. We're, yes, you're right.

We can't talk about this publicly, but yes, you're right. This is like the first episode that we've had in a while where I have like zero, epsilon emotion. I have like zero emotion to this. You just don't care. Usually you get most insensed about it. Infinite emotion. Well, I was in the crosshairs.

Like a tale of two, tale of two. Yeah. Haseeb's dealing with the fallout from Twitter on this one. Look, I'm, I'm, here's what I was thinking as well. is like, look, what's the point of having a platform if you don't use it to, like, do the shit that no one else is willing to do, which is just like, call a spade to spade. That's, like, it sucks to have everybody dunking on you and being like, oh, you piece of shit. How could you spread these rumors, blah, blah, blah, blah. But it's just like, yeah, you VC asshole, blah, blah, blah. And it's like,

okay, yeah, fine. You don't like because of a VC, cool. But to my mind, like, that's the reason why you have a platform is to say unpopular things, at least once in a while. So anyway, now I feel like I'm a little bit vindicated, but the hyperliquipal people also hate me. But after seeing all the stuff in the 11th hour with Paxos, which like, look, I don't want to reiterate this very clearly. I think that hyperliquid probably did the right thing. And that this thing probably just exploded way bigger than it was supposed to be. I don't think they expected this bake off to get this big. I think that's why they had it so short.

I think it's 4D chess. No, no, no, no. If you did five-day, no, no, if you do five-day RFP on a Friday, that ends on a Wednesday. You are not doing it to maximize the number of proposals, period. You cannot convince me that that's not true. That's ridiculous.

Obviously, like every other RFP I've ever seen that was really seriously trying to get a lot of proposals, it's like a fucking, it's like weeks. Right? I know. Why would you launch an RFP on a Friday? But it also... And end on a Wednesday.

To Guy's credit, to Agora's credit, to FRAX's credit, okay, people put together remarkable proposals in like 24 hours, okay? I can't even imagine the hard work going on behind the scenes, okay? Because like people jumped off the couch to do incredibly well thought out, well crafted proposals. Totally. And like the five day thing, it could have been 30 days.

And I think we would have gotten probably the same teams, give or take. Like how many other high quality teams are there that like could have competed for this? Not that many, right? We got the teams that would have been a part. You really don't think they could have gotten more resources. If it was 30 days, you would have seen like a Bank of America proposal. How many other people are you expecting a bid here? Like that's like, I actually don't know.

Literally Paxos and PayPal just partnered up yesterday. So the difference between three days and four days and five days is clearly significant. If in the last day, one of the proposals brought in a public company. I know, but I had the same vibes-based reaction that people on Twitter did, which was like, you, PayPal like chain, like hyperliquid is like the exact opposite. To be clear, every vote that I saw on Twitter. Twitter was like Paxos is now in the lead. Right.

Now the hype, look, if you look at the validators, right, the way the validator, because they all drew like little matrices of like, oh, you know, this, this many points for this, this many points for that. And every single one of them, there's like some crazy gymnastics they do of like alignment, 37.5 points for alignment. And like, oh, Native markets wins. By the way, by the way, I'm saying this, though, I don't own any hype. I own Ena.

I own FRAX. We own hype. We own hype. We're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're Polish hype. We think Hyperliq was great. Yeah. Yeah, okay. I think it's genius. I think they played the entire internet. The best thing about this entire episode is Haseeb is more emotional than the person who put together a bid. I think guys is probably more exhausted than I am. I think that's what that is. Right. Exactly. He was up, he was up all weekend working on the fucking

proposal. But I think he wrote out a like long, thoughtful post about, you know, remnants of being a governance operator instead of being a stock operator. And, you know, then he said it was over. Whereas the scene is like ready to litigate this as if there's like, look, somebody's got to be the voice of the people on this one. And yeah, sometimes that's just how the cards play. So anyway. So you're saying you want to be karate combat with who?

Like, are you volunteering yourself for karate combat with someone? Let me say this. That's what I'm here for. The native markets team is very, very good. They also stayed above the fray in a very respectable way. And to be clear, I think the way this all started was basically innocuous. I've seen it a cajillion. I mean, all of us are VCs.

We've all seen portfolio companies run something through governance and it just goes through because like nobody fucking care. Yeah, because like nobody cares. It's just, you know, a project doing governance. So this kind of expecting a rubber stamp through governance is very normal. There's nothing malicious or weird about that, right? What made it weird was all of the biggest companies in the space, like bringing out the big guns and not being able to pull the brakes and say, oh, shit, we were planning to just be a cakewalk for native markets. And now maybe we need to reconsider that because these proposals are really economically serious.

And I think, like, it happened on some level. There were about four validators, all of them relatively small, that did vote for non-native markets. but Native markets already is like above 50%. They're going to win. There's no question they're going to win. They're like 97% or something on Polymarket at this point. So congratulations to Native Market. Wish them all the best.

But I think like the level of drama around this could have been avoided with a better process. I think you could have gotten all the pageantry without the drama. I think that was very possible. But I actually think the process, if you're looking at it from the perspective of hype, was maybe the perfect process again. Like hype is up.

The community is like so happy. Like this has driven so much attention. It's brought everyone out of the woodwork. It's put the world's biggest spotlight on the fact that they're going to do a stable coin at the guy's point. Maybe it helps them negotiate more aggressively or whatever against circle. Like it's given them so much of a tailwind for like hyper liquid stablecoin stuff that this wasn't a conversation a week ago.

And now it's the conversation. So just kudos to them. Like, I think it was a success. Look, and if, if in fact there's a negotiation with Circle, then this whole thing was a masterstroke, regardless of- I agree. I say 40 chess, okay. Look, as a hype token holder, I'm ecstatic to see the price go up. You know, like, that's what am I supposed to say beyond that?

Yeah, I mean, look, I will also say this out of like, again, having seen a cajillion projects to a a cajillion governance, big, gigantic things, it's never 40 chess. It's just never 40 chess. It's always like, we had a good idea, some crazy shit happened, and we made the best of it. That's always the answer in all the same situations. It's like one day, yeah. Yeah, you're literally just moving a pawn down the thing. That's literally one D chess.

Sick. Very good. So this also connects to one of the other stories slash meta narratives going on, which is, I think hyperliquid and the USDA auction bakeoff has galvanized this idea. of, hey, maybe there should be more ecosystems doing something like this. So Guy, Athena recently announced his partnership with Mega-Eath, which is also a Dragonfly portfolio company, that they're doing their own native stablecoin USDM

that's going to be backed by Athena. And then recently, Mert, who's very deep in the Solana world, Mert announced like, hey, looking at what's going on with Solana, why doesn't, or sorry, looking at what's happening with HyperLiquid, why doesn't Solana have its own native stablecoin? you know right now usdc is dominant on salana we're not getting anything for that there's billions of dollars on salana why don't we have you know usd manlet he called it manlet is the term for salana bros you know people love salana why don't we have like manlet coin and manlet coin is enthrined or maybe

not enthrined and it just burn soul and like we get it into all the protocols and like why why don't we do the same thing that that that they're doing so it seems like there's all of a sudden a vibe shift that this strategy that hyperliquid's doing why just hyperliquid why not why not why not more people. Curious to get you guys thoughts on if this is just a new shift in the meta, that just means that issuers are not going to be able to get a free lunch of keeping assets on chain passively. Well, I think over time what this does is if you have more hyperliquid bakeoffs like this,

like the outcome for hyperliquid is all of the upside of this goes to hyperliquid. And this is such a flip from the way stable coins work today, which is 100% of the benefits go to circle and 0% of the benefits go to hyperliquid. They literally flip this from like 0, 100 to 100. zero okay and to be clear this is pretty normal for exchanges right so like usDC has deals with exchanges totally like finance usd was literally this right it was like moving the benefit of it to binance the exchange by like trading the stable queen out for finance USD totally agree with you but from a chain perspective from a bridge perspective like I agree I think this is going to be

the norm which is by having a competitive process you know a commodity commodity modifies everyone competing in it, right? It turns them into a commodity. And that's great for the one who benefits from this. It's actually bad for the ones participating in the RFP if it becomes too competitive. Like, people are willing to do it for zero economics, right? And I think if this does become the norm, then I think it's going to lead to like just a different equilibrium state. And I'm actually curious to see what the world looks like because it's not necessarily sustainable. If everyone's offering to do all the things for these chains for free because it's like, oh my God, it's a huge logo. that's not necessarily super sustainable.

And so I'm curious to see what this looks like in two years when the first one of these, they have to switch out the service provider or whoever's powering it or how it works because it no longer works at the economics that the chain has grown to. Only the smallest guys were doing it for free. Everybody else had some economics.

I mean, they were like razor thin though, like anywhere. Like it was I think even... Yeah, yeah, yeah, that's true. they were they were they were like 10% or 5% or something like this the only thing I'd add is all this is doing is hastening what would have happened at zero percent interest rate effectively so it's like we're just like we're just speeding up time to like rate cuts that's like that's how I view right like in some ways that this would eventually have been the thing issuers would have to grapple with hey bullshitina yeah well i do think there's actually like a down-thream impact

of this or like second question that pulls out which is Clearly what's happening here, right, is someone who thinks that they own distribution is just trying to capture more of that distribution, like value to themselves essentially, like whether it's an exchange, whether it's an app, whether it's a wallet or a chain. They're all basically saying, we think we own the user and you're going to have to pay us to basically get access to them. I do think there's an interesting question, though, which is like, if we think of those different layers of, you know, you mentioned Solana, does a pump fund want to do that? So every time that they're putting a dollar into an L people, that could be money that's actually coming to a pump fund instead of having it locked up with Seoul. You could lock up. one and a half billion dollars, you know, in the lifetime that pump has been out in dollars where they're actually just getting an income stream off as that. And then there's a question of like, what about Phantom? Because MetaMask has just done that on Eath. Obviously, the end state of what we just described here is an extremely like suboptimal user experience, which is like every single fucking layer of everything, thinks that they need to have a different sort of token representation of that, which breaks liquidity in all those different pieces. So I do think this is

direction where things are going. And I think actually this week was a perfect confluence of like three different pieces all coming together where the entire space is now taking a step back and going like, is this fundamentally a different direction that we're all going in? And I do think that there are actually very serious questions to ask like, what does this actually look like for the sort of go forward economics of normal fit back stable coin issue is going forward? Because in a sense, all of them have just displayed, and this includes like the USD TV piece that we put forward, that this is going to be an extremely, extremely different, like difficult business to actually extract a margin going forward.

And I think, you know, people sort of paint stable coins in the, I think they've over-indexed on Tether essentially as being like the most incredible business that's ever existed. And I think every other Fiat Stablecoin that's ever come after Tether is definitely not like the best business that's ever existed. And I think we're going to start to slowly see this because how does anyone who's just gone to hyperliquid and sort of put the economics out in the open,

how do you ever have that conversation with someone else who you view to be sort of like inferior to hyperliquid and say, well, actually, I think like, I should get like 80 here instead of 95. How do you even have that like initial, you know, conversation with them when you're pitching them to say, I don't think you're as important as the person who I've just displayed. I'm willing to give away all of the economics too. So I don't know, I think normal feedback stable coin issuance is not going to be as good of a business as people think it is at the moment in a few years time. And I think it sort of just basically converges to like an asset management type business where you're taking 10, 15 basis points of AUM, and you need

to be doing that at like $100 billion size for that to be like a venture scale outcome. That is a very deep point that I had not considered that the negotiating power, I mean, one of the reasons why these RFPs, like if you think about, you know, the Reddit RFP back when they were trying to do their own chain and all the stuff, like one of the reasons why these RFPs are generally private and why people prefer them to be private, especially the people bidding in the RFP, is that people don't see their pricing. They don't see like, hey, here's how much I'm willing to give you, or just give me. Because this was in the open, it has really impacted the negotiating ability for a lot of these actors when they're doing these private bids.

And it's going to make it a lot harder for them to say, like, hey, we should go 50-50 or we should go, you know, 30-70. I get 70, you get 30. It becomes a lot harder once you're like, oh, yeah, I'll do 95 to hyperliquid and keep the five. Now, I mean, you can say like, well, you know, hyperliquers got $5 billion and da-da-da-da-da. But that is a very, very good point. is also very true that, you know, in a way, we were talking about this a little bit with the idea that, okay, maybe the hyperlick was negotiating with Circle on the back end. The Kosian kind of optimal outcome is that there's not a different stable coin on every chain. The optimal

outcome is just that you threaten to launch a stable coin in your chain and you use that threat as leverage against the one stable coin to get most of the yield, right? So, you know, maybe it's Circle or Tether or whatever and you say, look, if you don't give me 80% of the yield, I will go to this guy and get 90% of the yield. And maybe that hurts me a little bit, but it hurts you a lot more if I go with this unproven player. And once that becomes the norm, maybe that does just totally eat into issuer economics, but for Tether, which is actually just, you know, used kind of organically, as opposed to

through these distribution agreements, the way that USC and many of these other stable coins are. But even in that state, right, like look at it from Circle's perspective, fine, even if Hyperliquid negotiates aggressively against Circle, even if every person, platform does, right? Those platforms are the marketing for why to have like USDC in the first place and it's the like network effect of like USDC and all of these things. You know, if they're making 20% on the platform is and 100% on the retail or everyone's wallet balances or everything that's like sitting inside a defy protocol, right, that can't negotiate against circle, then it's still in their interest and it's still a good business to give 80% the platforms that can. I mean, if the alternative is

nothing, then obviously it's in their interest to do it. Like, they should sign every deal instead of losing one. Even if they get zero, it's still possibly in their interest for building a like impenetrable network effect, honestly. Like I can see a model of which circle literally does go to zero or whatever, basically zero costs to run it for everyone they have to build out this like impenetrable distribution. Well, the difference, of course, is that like Tether is not willing to do that, right? Tether has famously been unwilling to cut these deals.

It's the best business ever made. But part of the reason why they're there is the game theory of Tether doesn't cut deals or, you know, Tether doesn't cut deals below some certain level, let's say. And for Circle, like there is a cost to them saying, you know what, we'll take zero. That cost is not in that direct deal, but in the game theory of the next time that they're negotiating, a negotiation. Right. And it also shows up in their 10 Q's and people can analyze exactly what their revenue looks like, you know, across everything. And Tether is private. So we don't even know what Tether's doing.

Maybe Tether is cutting deals and they've just built a brand that they don't. We don't know. Tom, what's your take on the end game here? Yeah, I mean, I think there's actually probably some equilibrium in between. I mean, I guess I think of it a little bit honestly like, like I think of like brick and mortar stores in the U.S. that have their own kind of app. Like some of them, you have to pre-deposit and prepay because they don't want to be paying interchange fees numbers transaction.

And some of them don't. Some of them are just going to eat that because that's what it takes. And I think like four apps, I'm to you guys point. for apps that actually end up having material user distribution. And I think also most importantly, are not solely used for transfer and payments, but are basically used as like a sync and sort of like as a banking product,

they will have a lot of leverage. For everyone else that basically doesn't have that or stable coins only enter their sphere for transit purposes, and therefore they do need to have, be sort of on the same standard and use the same asset as everyone else. They won't have that point of leverage.

I think the actually interesting thing that's happened is just an overton window has opened so much on what an acceptable stable coin is. I mean, if you remember, there was like a true USD and there was all the fud around, you know, them, and there was like the DPEG. And like, people have tried to do this in the past. And it was either, okay, you can't stand up a new stablecoin company

or consumers who are rejected or, you know, there's a lot of reasons why people see off-brand stablecoin, they'll go, ugh, and they don't want to touch it. Now I think people are much, much more open. These things are always more transparent and robust. You don't have this sort of like sketchy offshore Delltech bank shit that you had with, you know, people that to others were going to collapse five years ago. And, you know, now they're in D.C. and, you know, so I just think the industry is so much more

acceptable to consumers now than it was, you know, even a few years ago. And that's why you also see, again, also to your point, sort of commodification of the different components that go into a stable coin. So I guess maybe the end state is that if you're big enough to sort of collectively bargain, or maybe not even collectively, but you think about Salana, right? Salana, what murder is proposing is a kind of collective bargaining, which is that all of Solana kind of comes together, the whole Salana cabal, let's say the big protocols and whatever, you know, all the big guys, they come together and they say, if you create Soul USD, which is just going to burn Soul using, you know, majority of the yield, then we'll incorporate you and we'll just kind of subsidize you

or just bake you into the fast lane in our protocols. And if you're big enough, you can use that as a threat to go negotiate with USC. If you're not big enough, or you just have, you just have too little flow going through your protocol, then it's like, they're not even going to bother talking to you, and you get nothing. Yeah, I think that's right. There's always going to be a clash at some point, right, even between, you know, the whole app chain thesis or like when apps start to outgrow the infrastructure that they're sitting on, even in another example that you gave there between like Salonra and Pump, who do you

think should capture the economics there? Let's say you're splitting, like, how would you actually apportion the economics if the issue it took zero? How would you think about that between Pump and Solana? You're saying, like, a Solana took an idea. would include pump, but pump is so big themselves that they're like, hey, why don't we have our own deal? Why should our deposits be used to burn soul? Yeah, correct.

Like, I don't know. There's whatever, five bill of this dollar sitting on Solano, three of it sitting in pump. And then Solana's saying, like, this is the stable coin that we've told you you should use, but we're keeping 100% on five bill. How does that actually work between gaps and like the different layers that sort of sit beneath them? And there's always going to be this complex who, who, who, who, actually owns a user and who perceives themselves to be in like a stronger position versus the other. No, that's also a very good point, which is that there's a principalation problem all the way down.

Is that like nominally we talk about, oh, are you hyperliquid aligned, are you Salana aligned, or you Ethereum aligned? But the reality is that each individual player is not fully invested in that asset. So like if you're on hyperliquid and but you have your own token, you have your own project. Yeah, you're hyperliquid aligned, but you're also your own project aligned, right? and say the thing on Solana, all these people own Soul, but they also own their own token, and they're kind of like, well, look, I like Salana,

but I'm not running a charity. You know, if you're Drift, let's say, you're kind of like, well, you know, it's nice to have Soul USD, but I really want Drift USD because that's going to accrue directly to me. Why should I give, you know, why should I make this, this, this, this propitiation to Solana? I'm already here.

What more do you want for me? So that, that sounds right? Is that hyperliquid as an exchange is a singular entity and can bargain purely for hyper liquid deposits. But that's not really true for a chain. It's maybe true for a chain at the very, very beginning when the ecosystem is nascent and all the liquidity is getting seated

in the very, very early days. But Salana is kind of too far gone. I don't know. I don't really see how you could get all those players get, you know, drift and Jupiter and, you know, a pump and all of those people to all say, yes, we all agree that the value accrues to Seoul, not to us.

or even to switch, right, because someone can stand up and say that that's where you want, but it's ultimately the users who are holding USDC and USDT in their wallet. You actually have to pick that up and then go and change it to something else. So I agree with you. I think the hyperliquid one was a pretty unique case where kind of like all of the value, the app and the chain was all sitting together in one place, and actually all the stables were controlled by basically one entity. And so I think your ability to exact the amount that they were able to sort of,

you know, extract from the stable coin, I think was like out of market, basically. Yeah. I mean, it's analogous to any other exchange. One thing, yeah, one thing I will say is, like, if I look at a lot of the exchange table coins, there's a ton of exchanges whose stable coins have been quite crappy and, like, haven't grown, right? They've made them, they've launched them, whatever, but they weren't able to get distribution with them beyond their exchange. So, like, no one who didn't use their exchange held it. And then they were just, like, kind of trapped in the island. I'm not saying that will or won't happen here. I'm just saying it's not a riskless endeavor to,

do this thing also. Like, you are taking, you are taking a bunch of risk on your users and, like, whether they will vote with their feet to go to another exchange because it's, like, annoying to use an on-chain app in Solana, right? Like, like, the U.X, you know, you, you mentioned the Kocyan thing, like, the Kost theorem thing of, like, transaction costs have to be included, but bad U.X for your users is sort of, like, a transaction cost you bear on their behalf. And, like, if you make it too high, like, they're not going to stay, right? And I think, I think you've seen this with the optimal outcome is just striking a deal with circle. Everyone strikes a deal with a circle as the optimal outcome from a Kocene perspective,

is that there's just one firm and one token that everyone uses as a stable coin. I was just going to add, I think, on the exchanges as well. It felt like one piece of market microstructure, which people didn't pick up on as much, which I think is important here, is basically you make liquidity, like, impaired going forward when you try to force your own stable coin in, because every market maker basically has to arbitrage between your USDA, now that's sitting on chain and the USDT denominated pair on Binance, OKX and all these different places. And that's actually a very big reason for why even like FDUSD, for example, in Binance,

sitting at like a bill, like clearly subscale relative to the size of their business, it's because people, you know, HFTs, market makers, all the largest funds, don't want to have to hold something on one exchange, swap it to something else and then move it to another venue. It's just completely inefficient to have to do that. And the ability to actually quote, quote, tight is actually impaired when you have to sort of account for the difference between two different stables on different venues. So I think it does actually impact liquidity by trying to force this in. And I think ultimately this is actually tethers moat on finance or why can they extract 5%.

It's because like the BTCUSD pair on finance prints them literally billions of dollars at one pair a year. And if you're going to try to rip that up and then build liquidity on a new pair, you run the risk that that's not as liquid as it was before. That liquidity moves over to OKX or buy bit or whatever it is. And then you might have killed like the golden goose of your entire business by trying to squeeze like 4% out of a stable coin on the other side. And so I think the rational like response is actually saying, fine, you can take your like 4% rent because I'm not willing to risk

like the liquidity of my entire business, which sits on that pair that we built up through the years. So I think that is like a bit of a risk when you're trying to force these sort of native stable coins into exchanges. Yeah. Yeah, that's very true. Okay. So we wanted to cover tempo, which is Stripe and Paradigms new payments blockchain, but we're kind of out of time. So the one thing, One thing I'll just say about tempo before we're related to his point. We got to save it for next week. A lot of the L1 stablecoin blockchains have made their value prop as far as I can tell in some ways. Like, oh, we have very good FX market making.

It's like easier to do RFQs for whatever currency in your stable. And I would argue they will have the same network effect problem. But we can talk about that next episode. I don't think that's like enough to bootstrap a stable coin L1. I don't know. Guy probably we're going to try to get somebody from tempo to come on so we can chat about it. But we'll cover tempo fully in the next show,

assuming nothing else crazy comes up in the interim. But thank you Guy for coming on, sharing your perspective. Always great to have you. And to all the hyperliquid bros who plan to tear me up in the comments. Salute all of you. Love you guys. Honestly, honestly,

it's been fun to watch as someone who has negative stake. Like I'm just like, oh, great. hype is a hype woman you're short you've negative steak no no no as I have I have negative steak in this office for hyperliquid broza tear up now tear up to ruin

no no no thanks everybody see you all next week thank you all next week