Unchained - Toxic Flow, Cancel Wars, and the Unstoppable Rise of Onchain Perps – The Chopping Block - Ep. 854

Episode Date: June 20, 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 Hyperliquid founder Jeff Yan, the quiet powerhouse behind DeFi’s fastest-growing exchange. With 75% of onchain perp volume, no VC money, and a $1B airdrop, Hyperliquid is rewriting what crypto protocols can be. We dive into Jeff’s minimalist strategy, the cancel wars with toxic flow, and the JellyJelly controversy that sparked a feud with CZ. Plus: HIP-3 and the future of permissionless perps, SPAC-style hype vehicles taking over Wall Street, and why stablecoin regulation just triggered a 40% rally in Circle stock. Is crypto evolving—or just getting financialized to death? Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform. Show highlights 🔹 Jeff’s $1B Airdrop Playbook – How Hyperliquid bootstrapped dominance with no VC, no marketing, and the most beloved founder in crypto 🔹 75% of Onchain Perps? – Hyperliquid now controls 3/4 of all perp volume across chains—Jeff explains how they did it 🔹 Cancel Wars & Toxic Flow – The inside logic behind prioritizing cancels over taker orders—and why HFTs are mad about it 🔹 CZ vs. Jeff – JellyJelly drama, transparency debates, and a subtle protocol war with Binance 🔹 HIP-3 and the Future of Markets – Perps on anything? Jeff breaks down why HIP-3 is the biggest unlock yet for Hyperliquid 🔹 “We Don’t Track KPIs” – Jeff’s radical philosophy on metrics, token price, and building products without back-propping for growth 🔹 Real Users vs. Predators – Who Jeff thinks actually matters onchain—and why some flow shouldn’t be welcome 🔹 Crypto SPAC Mania Begins – Tron, Tether, and Trump-adjacent vehicles bring public market chaos to token land 🔹 Genius Act Passes, Stocks Explode – Coinbase +20%, Circle +40%—but crypto tokens barely move: Why is Wall Street frothier than DeFi? 🔹 Are Perps the New Casino? – The crew debates why people love zero-DTE options, and if perps can replicate the lottery thrill ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Tarun Chitra, Managing Partner at Robot Ventures⭐️Tom Schmidt, General Partner at Dragonfly  Guest ⭐️ Jeff Yan, CEO and co-founder of Hyperliquid Timestamps 00:00 Intro 02:51 Hyperliquid's Market Dominance 05:14 The Philosophy Behind Hyperliquid's Success 07:44 Challenges with Decentralized Exchanges 09:34 Metrics and Success in Hyperliquid 12:59 Addressing Market Dynamics and User Types 22:50 Competitive Pressures and System Resilience 25:28 Exploring Hyperliquid's Future and HIP 3 36:08 Complexity in Zero-Day Options 38:40 Perpetual Contracts vs. Options 41:24 The Role of User Interfaces in Trading 45:08 Crypto SPACs and Market Trends 57:21 The Genius Act and Market Reactions HostsDisclosures Learn more about your ad choices. Visit megaphone.fm/adchoices

Like, as a user, what you want is you want to either have zero money left or you want to have a lot of money, right? That's kind of like what you care about. So I feel like that payout, you're not super, you don't really care exactly that structure. No, that's, here's where I think that's not correct, right? Is that it's not just that you want to construct a lottery ticket because there are infinitely many ways to construct lottery tickets, right? But it's that you want a lottery ticket that corresponds to this subreddit really happy at the same time that I am. Not a dividend. It's a tale of two fun.

Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. I'm named trading firms who are very involved. D5.E.5 protocols are the antidote to this problem. Hello, everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider perspective

on the crypto topics of the day. So quick intro, this first you got Tom, the defy maven and master of memes. Hello, everyone. Next, you've got Tarun, the Gigabrain, and Grand Puba at Gauntlet. You. And joining us today, we've got special guest, Jeff, Perp's Pioneer, and the People's Champ at Hyperliquid.

Hey, guys. Thanks for having me on. Thanks for being here. And I'm Steve, The Headhipe Man at Dragonfly. We're early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see Chopin Block. That, XYZ for more disclosures. So, Jeff, for anybody who does not know you, you are the founder and CEO of hyperlicic... Oh, I don't know.

It's CEO, but whatever. You're the founder of Hyperliquid. And Hyperliquid, of course, is the fastest growing Perps Exchange on Defi. It is rocketed to become a top 15 token. You're now, FTV is something like $35 to $40 billion, with $12, $15 billion circulating depending on the day. You guys have now completely crushed all on-chain trading to become the single most dominant venue. You're kind of the man of the hour.

How does it feel to have basically crushed it as an entrepreneur? Well, I'll first caveat up by saying there are a lot of people working on hyperliquid. It's not just us. I lead a small team. We're 11 people, Hyperliquid labs. We're developers, the founder, CEO of that organization by Hyperliquid is so much bigger. And so when people say, oh, you know, your team is so small, I usually say, well, I don't think the core team is the right unit to think about.

It's all the, like, really smart and talented people, whether they're developers or community members, marketers, like, know that we have zero marketing team on the core side. All these really smart people coming together, spending their valuable time working on sort of ad-jason and synergistic things that collectively become hyper-liquid, the ecosystem, the protocol. And so I wouldn't take that much credit before. All right. So you're very humble. Let me just list some top-line stats so people can know how much you are crushing it. So right now, Hyperliquid is dominating on-chain. perps volume. On any given day, they're roughly 75% of all volume in on-chain perps. You've peaked

now to all sexes, all centralized exchanges. Hyperliquid is something like 5% total market share of volume. And of open interest, you're something like 14% of all open interest across all chains. Among all exchanges globally, on any given day, you're something like seventh to eighth, depending on how you count the volumes. And you guys are rapidly gaining on many of the biggest exchanges in the world. You're currently something like 5 to 10% of finance perps, depending on if you're looking at volume or open interest, but you're gaining on them. These charts have all been moving up into the right. And you're now something like on the order of, what is it, roughly like a billion dollars of annual run rate for the fees that are being generated by

the protocol, which are being used programmatically to buy back the token. So this is a big part of why everybody is so galvanized by hyperliquid. And then, of course, you've done all of this with no VC backing, so completely self-funded, and with one of the largest airdrops in history over a billion dollars, at present values even more than that, but at the time of the air drop, over a billion dollars that was distributed

to early users of the protocol. So you're very humble, and I think this is part of the reason why you're so beloved. I will say this, I have never seen a founder in crypto whose project was at the center of the mine share in crypto. Right now, I'd say hyperliquid is squarely at the center.

who is universally loved. Like even if I think back to like previous main characters, I don't, I think like your favorables are like probably like plus 40. I'd say more than any other person I've ever seen as a main character. Like just people do not say bad stuff. They might say stuff about hyperliquid, but they do not say bad things about Jeff. Appreciate it. Everyone's on easy mode for me.

Is that not your experience? Well, I'm not as plugged into the like day-to-day dialogue. and gossip and whatever. So I just always assume that stuff is being said. And historically, it's not been our strength, which is like navigating the perceptions of things. And so I think as a result, a lot of fud is often spreading. And we do want to get better about that.

And part of that is kind of coming on these podcasts with great hosts like you guys and talking through some of the misconceptions. But now, I think hyperliquid is viewed favorably mainly because it's something new. It represents something new and something that kind of, in some ways, has already pushed what people thought Defi could do and in other ways represents what we think Defi can be. And I think everyone can rally behind that.

And I think the sort of like community in some sense, like in many senses, like owns a lot more of it, right? And like the literal sense of like the platform, but also in terms of like what what the protocol needs to do, I think it's more reliant on the community than maybe some other protocols where it's more like top down, right? Like a centralized exchange is another, is a good counter example there. So yeah, I think for all these reasons maybe, people feel good. But I think, anyway, it's, it's, this stuff's often temporary as well.

Like, I think there will be like rough patches. There were rough patches in the past. And I think for us, it's, yeah, it's good to stay humble and kind of just keep building and not really like rest on the laurels. And I can tell that's very core to how you operate personally. And it's admirable the way in which you kind of stay above the fray. And I think it's kind of typified in many ways part of Hyperliquids brand is that they don't do the things that most crypto protocols do. Most crypto projects, they're out on Twitter every day. They're making memes. They're doing this stuff. And you guys are, you let your product do

the talking. And I think that's very powerful. They're very good memes. They're just not made by us. There are. Yeah, exactly, exactly. It's like you're not stoking the flames. And you sort of, you sort of let the product do the talking. And I think that in a way becomes its own brand, right? The brand of hyperliquid is the sort of negative space of the team is not the one telling you this. People are using the product and they're telling you this. I think that's really powerful.

Yeah. I think this is kind of how crypto was originally meant to be. I think like I have immense respect for Satoshi, right? And I think that's like a much better example of all these things you're saying. We're just, we kind of, we also have to be practical, right? I think if people need to kind of know who's behind it, just that there's like element of trust. I think in crypto at this point is like they're much more eyeballs on it. So you can't really take the completely like clean approach.

But I think, yeah, it kind of harkens back to that. And I think I don't know. I don't know why more teams don't do this. I think because nobody would care for most teams if they weren't trying to force people to care of themselves. But but I'm curious for you. So, okay, you're building a descent. centralized exchange, right? The protocol itself is open and permissionless and so on. Do you ever envy founders of centralized exchanges that can do things that you can't necessarily do?

No, I very rarely envy them. I think we're, I think people have this misconception that Hyperliquid is a centralized exchange kind of, like that is like the end goal. But from our perspective, like day to day, we think we think of hyperliquid as something completely different. It's like a platform to house all the finance. It's kind of like the tagline that the community has kind of converged upon. And so maybe I envy them in that they're building something a little bit more well defined. So it's a bit clearer. And I think you can kind of go for more like metrics optimization.

So if you know exactly what you care about. You know exactly what your product is supposed to do. It's a very important product. And so maybe that aspect is someone enviable. But I wouldn't I wouldn't trade it by a lot. I think like for us, it's what brings us sort of day-to-day excitement and what gets us out of bed is building something that doesn't exist. And we're like not exactly sure even what the right solution to these problems is. We just know that they're like in the future, this thing is good for the world. And like finance should be coordinated on this globally distributed like permissionless ledger, like, et cetera, et cetera. I can talk more about that stuff. But so when that's the vision, yeah, we don't. Don't think about the centralized exchanges really as competitors. Like the stats you mentioned, it's like we kind of, yeah, we track them,

vaguely are aware of them. But ultimately, I see a role in which centralized exchanges, like, always have more volume than hyperliquid. And that doesn't mean hypercuit has failed. And I also see a role in which hyperliquid does, like, orders of magnitude more than centralized exchanges. That doesn't mean the centralized exchanges have failed either. So you mentioned that, okay, it's easier to optimize for a metric to A-B test if you're

a centralized exchange. What are the metrics of hyperliquid? if you're not looking at the market share or volume or whatever what are you looking at how does the team orient itself when we started i always pushed back on trying to define these metrics or kpIs or any like number that you attempt to use to tell the whole story i always said this is this is for big big projects big companies mature organizations that wanted incremental steps with high confidence it's like numbers are good for that and but even at this one you might you might I might argue that hyperbook is kind of big in that sense.

But we, yeah, we still, I still don't think there's like a well-defined quantitative way to measure success. And I think that's good because I think once there is, like I'm a bit cynical about this, like once there are numbers and everyone like stares at those numbers all day. Like a really bad example would be like token price, for example. If that's what you're optimizing for, then you start doing things that are actually good long term. I find that very surprising. I don't know, Tom, what's your take on this?

that like I would think in exchange would be one of the places where metrics, like the tie between metrics and success are extremely legible compared to a lot of other kinds of products. Yeah, I think, I mean, I think I agreed like token prices probably to Lossi and not accurate of a metric to like be your North Star. But I mean, for you guys, maybe, you know, obviously KPI's feed into a product roadmap. How do you think about what to do next? And I think also, like, what do you include hypercore versus what do you want to see someone else build?

Someone in the community build and say, hey, no, this is, we're going to be a platform here and sort of let other people build on top of us and create value some other way. So the first question around, like, it is surprising. I think there's like a distinction. I think metrics are good to track, but they're not, they're not good to be like objective functions. So like, like, I think when you convert something from like an indicator to something you're like literally kind of like performing back prop on, for example, that changes things a lot. I think there are many healthy things you can, numbers can look at, kind of like the things that have seeps out at the beginning. Volume as a percentage of total volume, for example, is a good one.

I think that does tell a lot of the story. But if you, you kind of like change your perspective and say, now I want all I care about is this metric. Or like I significantly like care about this metric. You can do things like there are ways to increase volume. Yeah, yeah. Even less extreme example. Like on hyperliquid, there's this thing that is kind of well known now where the protocol

kind of like prioritizes cancels over take orders. I think many new things in DFI and even blockchains themselves are kind of like using this into their like sequencing logic or or if they're now one kind of like block building logic. If I think if hyperlocut were like, we're like, we care about volume above all else. You actually wouldn't make this change because the net effect of this change is to decrease volume. And like maybe someone, maybe a central exchange would would take this on or maybe like a stock exchange like would take this on. But like if you're if you're optimizing for like fees in some sense, like in some like local sense, then. you look at this change.

I lost like terrible change. But if you're a little, if you're a little bit more like first principles about it, and you think like, who are the real users of this platform? Like, let's improve execution for them. Then all of a sudden,

this change looks very good, even though no one's doing it. Who are the real users? When you say the real users, who are the real users? That's a good question. It's hard to define, but I can tell you who's not a real user.

And that is like, who's not a real user? Like toxic taking flow. I think this is a big, controversial and so like I understand like I wrote those two long tweets and this is sort of at the heart of that whole discussion which is a bit nuanced but I do think well let me let me maybe for that kind of subtract value yeah let me let me set you up for that because we talked about it actually on our previous show so there is a sort of dueling threads going back and forth between yourself and

CZ where you described the way in which hyper liquid is transparent and allows everybody to see everybody's positions, everybody's stop losses, everybody's liquidation points. That is actually beneficial in some way to certain market participants and not to others. In particular, it hurts high frequency takers, people who are kind of arbitraging orders very quickly and stuff like that, but it benefits market makers and kind of creates healthier liquidity for for uninformed traders or people who are just kind of normally trading without having any advanced information. And CZ, and of course, all centralized exchanges don't operate in that model. In the centralized exchange world, that's absolutely not the way it works.

You cannot see other people's positions. You don't know who owns this order on the order book. It's all opaque besides just the order book itself. And CZ's claim is that this is bad and that we have to move towards some kind of privacy preserving ZK, something, something, something. And then you were called out by James Wynn, this viral trader who has just been kind of a phenomenon

in crypto trading circles, who is this crazy leverage trader who got repeatedly stop-loss hunted, on hyperliquid. And he claimed that like, oh, there's a cabal that's actually and blah, blah, blah, blah, allegedly, allegedly, alleged that there's a cabal that's after him trying to hunt to stop loss and so on. And so given that context, I want to give you the opportunity to describe, like when you

say there are real users, right? There's sort of different categories of users. There's head funds. There's high frequency makers, like, you know, market makers. There's people like James Wynn who are just, you know, yoloing, huge gloves of money. who are the users of Hyperliquid that you really care about and who don't you care about and why don't you care about them? Yeah, so I do think it's hard to define exactly who the real users are.

I think like markets, markers are basically ways to kind of move risk around, right? Like, that's kind of like the general framework to think about it. So like in some sense, everyone's a user. Like everyone is who makes a trade like helps move risk from, like allocate risk in like a better way than the previous states. Like everyone, you can imagine like all actors as little like, inputs into this chaotic system that ultimately like sort of like maybe maybe that converges on a

better state of the world. So like every trade is like supposed to like kind of increase total utility if that's like how you want to measure it. That's like the theoretical description. But I think I'm not super, I don't think it's super strong about like who the exact set of users are. Like I don't think that's an important question to answer. There are a lot of interesting questions that are not important to answer. But I think one important answer is like are there subsets of users that are kind of like predatory on the system? And I think this is, a hard set to like find exactly but once that I'm relatively confident on is so like like users who trade whose counterparties regret trading against them like very shortly after making the trade

which is to say like you're extracting value in a way that you're taking advantage of of some sort of like usually technological asymmetry and as a result you make money but you're not actually like pushing risk in a better way because your counterparty immediately regressed making that trait. And the chance that, like, you know, they actually changed their mind is very low compared to the chance that you actually just picked them off because they weren't as fast as you to be able. I'm so like, I think that subset of users, like, they add very little. They actually, like don't improve the market. They just kind of like extract money from it.

They're kind of like another, they're like another exchange that is just like skimming off the top of like general volume. And so if you're, if you're like mental model is like a bunch of makers, you're very simplistic model, not actually accurate, but if your model is like a bunch of makers coming in, being very, like, smart, having really sophisticated algorithms to like manage risk and then offer these like great quotes to takers, like maybe retail and maybe like institutions coming in and trading. This is all fine. This is great. And then the exchange kind of like charges a fee on top, like arguably like you have that fee should be as low as possible, I think. But, you know, exchanges building a platform by valuable service, etc. And then these takers come in and

just start like picking off the makers. So the makers say like, I still need to quote because on average is profitable, but I need to like, widen my quotes so that like retail gets a worse price, just so that these takers can come in and like skim their bit off the top. Like I think that it's a very simplistic model. I don't think it's this, it's this clear cut. But so I can go into more detail, but I think like the simple change of just prioritizing cancels about takers, like basically like cuts out a ton of this toxic flow and like doesn't actually impede price discovery because like no one really cares if if like the price is like slightly inaccurate for like whatever, like less than a second or whatever times.

you choose. No, like, real users in some sense care about that. The only users we care about this are the toxic users. So I don't know if that explanation means. No, it does. It does. If I can maybe summarize the smart money, you know, the ones who are the sort of high frequency, fancy infrastructure that are picking off these like real-time quotes and arbitraging. Screw those people. We don't even know. Don't screw them. No, no, don't screw them. But. Not prioritized them. No, no. Maybe I'll provide a bit more nuance here. Like people running those strategies, I don't think they even realize, like they will make many trades. Some of their trades are toxic. Some of them are not. I

don't think they actually care. Like they're not malicious. They're just making the trades that make the money. So it's the system that is flawed. The so like when you when you turn on a, when you turn on like a slight cancel prioritization, these takers still make money. They pick, they trade against the orders that actually want to be filled. Like when when a user places a limit order, they, they're very happy that they're many takers competing to trade against them as soon as possible. Like they choose to execute through a maker order. I think that's that's great. That's like, that's a great value. So I think it's not that sophisticated takers are bad.

It's that takers, sophisticated takers picking off sophisticated makers, like that flow as a category. Okay. I didn't mean to interrupt. I just wanted to guide a little more nuanced. No, no, no, no, that's great. And so, okay, to add a little bit more nuance

and kind of bring it back to the conflict between you and CZ, part of the point that you made in your argument is that, look, in a fully transparent system, one of the advantage is essentially a kind of price discriminatory. or a kind of user discrimination, which is that I can say, look, this guy looks like James Wynn, this guy looks like a Yolo crazy guy.

And like this, if you're a cowboy, I'm willing to quote you really tight spreads because I know that you have no idea what you're doing. You're just throwing around crazy amount of money. You have no inside information. But if you are this kind of high frequency, toxic trader maker,

a taker type person, I don't trust you. Like, basically I don't know that I want to fulfill your quotes as often as others. And in a finance style world, I can't tell who is asking, you know, basically who's hitting my bid. But in the hyperliquid world, I can't tell who's hitting my bid. And because of people have persistent accounts because they have fee discounts and all that,

over time you develop a reputation among the makers in hyperliquid of who's good flow, who's bad flow, who's here kind of earnestly trading and who's here running a sophisticated strategy that I don't necessarily want to be on the other side of. Is that a fair summary? Yeah, I think. So one sort of nuance I would add there is that, It's not about whether you're smart or dumb. For a market maker, what you care about is that you're not toxic.

So, like, you may be really smart. Like, I think, like, maybe James Wynn was making a very high EV bet. Like, he was really hard to tell because trading is, you have so few samples. It's so noisy. Yeah, really hard to tell. Sorry, sorry. So, like, just in general, like, take any trader. I think you would be hard pressed, even if you were, like, the smartest person in

role to, like, to tell whether, reliably whether, like, it, random traders getting lucky or they're making money or they're getting unlucky or just like consistently have a losing strategy. I think that's like kind of the beauty of market. It's kind of like poker, right? It's like you actually have to, you need a lot of samples to get significance. And I think like that's it. You need even more samples if your strategy is kind like changing at all times or like your inputs are like real world events. It's not even like a black box kind of game in that sense. So like that's like one nuance. And so like for market maker, all you really care about is like as a broad category of like market makers. Like if you can hedge

the flow coming in, like on some other venue, then you're like, that's kind of like a lower bound on like, you're good. Like maybe you could be the smart like smartest person has like a great signal that realizes, you know, like you know, like, you know, there's going to be some crazy world event that like some butterfly effect and like Bitcoin goes up. Like you may be like smartest person in the world. Like you can make that trade. Like market makers will still quote to you. So they don't care that you're smarter dumb. They can, they just care like, oh, this guy's not like a toxic taker. So I can, worst case, I can just like move my quote a little bit. And, and then like hit like whatever by hand.

So like any other venue like hedge it out, collect the spread. I'm good. Jeff, you are such a nice guy. That was such a gentle clarification that James Wynn is not dumb. I'm sure. I don't know. I mean,

I'm being genuine here. Yeah. No, no, no. I look, I appreciate that. Okay, well, let me bring you back to one more point.

The backdrop of this also discussion between UNCZ was a previous episode that we also talked about in the podcast about jelly jelly. So jelly jelly was, was, of course, this token that was like this random shit coin that got listed on, you guys listed a perp through Hyperliquid, and somebody basically performed, call it an attack, for lack of a better word, against HLP. And it's,

judging from the timeline of events, Binance listed the Jelly, Jelly Purp at the time that this episode was taking place, leading many people to believe that this was basically an attack from Binance on Hyperliquid. So I don't know how much you can or want to say or don't want to say, but I'm just curious, how do you think about the competitive pressure that you're facing from the incumbents today? Because I know just reading tweets and reading the tea leaves, it's very obvious that the big players

out there, the big centralized exchanges, you know, they don't like you. They don't like what you're doing. And I don't know if you consider it to be a declaration of war. How are you thinking about how you have to position hyperliquid against this environment? Yeah. I think I don't really know how various people think about. hyperliquid, like you said, can guess. Like, you probably have a better idea than I do because you're reading the tea leaves more than I am. But I think it's good to have sort of like an adversarial mindset. Like the things should still flourish even if all of these worst case scenarios are true.

So like the solvency of the system should not depend on whether other people are malicious or think you're cool. Like that should not be an input into funds kind of like adding. up to like the right number right like so for me that the focus is always on designing the system but like thinking a lot about the system and how how it can be guaranteed to work so like guarantees a strong word and i think there can always be bugs i think in any complicated system it's not like a one shot like you're done kind of thing but i think it's important to have like a strong mathematical foundation and i can i think it's important to be able to write out and say like look like no matter what happens, I can prove to you that, like, this complicated state machine, like, has these properties.

And, like, one of those properties is that, you know, it's all. And I think that is, that is true for how hypergood is written. So, like, the jelly jelly thing was unfortunate. I think it was, the fundamental flaw, I think there's, like, a bit of misunderstanding here. Like, it was not a flaw in the margining system. It was a flaw in, like, how HLP kind of, like, chose to collateralize one liquidation with, like, too much capital. And so, like, all these changes have been made. The margin system has also been improved in various ways. Like margin tiers have rolled out. They're basically like at least five sort of like learning points.

And I think it took several months to kind of fully, fully implement all of them. But at this point, I think it's like the system is a lot stronger. And I think that there will be attacks in the future. There will be, there will be issues. But I kind of like have confidence that the protocol can kind of like rebound and generally learn and grow from. anything malicious that happens to it.

Fair enough. Okay, so I want to transition into some questions that we solicited from the folks out there because you're famously very reticent about going out there and, you know, kind of doing the whole podcast circuit. So we wanted to make sure that we made the best time of having you here. So one question we got from the audience was, if you weren't building hyperliquid, what would you be building instead? I really don't know.

I've always been fascinated by markets, I think. So I've kind of like made a journey through, I got into physics in high school. I was, it really spoke to me. It was like math was always cool, but then physics, it was like, you could kind of take,

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

that kind of stuff very beautiful it's like it's like kind of messy systems but you can still like say these very powerful things about them and like incentives can really shape well-designed incentives can like shape a lot of behavior like coordinate a lot of behavior to like just generally improve the world I think that's like really powerful. And so like for me, like markets have always been super beautiful. And like trading was a way to kind of basically just like an excuse to like study these things, like mathematical patterns and these like complicated noisy systems. And that's what drew me to trading initially.

And yeah, so I don't know what I'd be doing. But I think I feel like it just felt like a supernatural next step, which is like once you really understand a system, like you can kind of participate in the system and maybe like profit from the system. But if you really want to make the system better, you kind of have to, like, improve the system itself. And so hyperliquid is like, like, it's what I feel like the best way to do that. It's like, once you see enough problems in the world, then you kind of like shape your worldview. Often, I feel like many people would just like take a stab at making the world better. And hyperliput is kind of that.

So, yeah, the answer to the question, like, I don't really know. I think I can't imagine doing anything else. Hmm. Before you built Hyperliquid, you were a trader, correct? Yes. Yeah. And so... Oh, go ahead. I was going to say, yeah, was trading on my own crypto exclusively. Were you trading on dexes, on sexes?

And was like, was the animating energy behind building Hyperliquit was like, oh, my God, these decks is all suck? Like, I need to build this the right way? There was a bit of that. So it was doing both. So centralized exchanges the majority of the volumes. I think everyone was looking at them as like the pricing source and the just like general like flow. By 2022, we had we had turned towards dexes just as like a just as like a casting of YNet in terms like what might be worth looking at. And my general reaction was not just that they sucked, but that there was potential.

Like they did they did suck. I think they were all like really, really poorly designed things. things back then. I think just people kind of learning from learning firsthand, like the lessons that like finance are kind of like already learned. So there are a lot of like really dumb systems, but like... Can you give an example? I think like

non-KYC like RFQs is like a pretty bad idea. And I think many teams are working on this back then. Maybe it was like some, maybe it was like a mini narrative or something. But like I just think the idea fundamentally doesn't work. It kind of ties back to this whole like when things need to be. When, when, when, like, permissionless anonymous works and when it doesn't, I think our few is a great example where it doesn't.

And you really do need, you do need a gatekeeper to like, like, an OTC desk would never accept, like, anonymous flows, right? So that's one example of, like, kind of an obvious thing, but was prevalent. And, but I think the more important thing is, is that we, we saw the potential of Defi that, like, all the right pieces were there. And the only reason it wasn't taking off was that nobody was building, like, exactly. Like, people were trying, but, like, nobody. had really hit the like exact like the correct combination of design decisions to build something that users can like that will convince users to actually use it. What do you think that combination was?

What was the sort of minimum viable version of hyperliquid that was necessary to crack things open? Like obviously people talk about it's a great product. It's very fast. It's very, very clean U.X, great liquidity. But like what do you think is that necessary ingredient that separated hyperliquid? I don't think it was one thing. So I always say it's like a combination.

It's in exchanges, it's kind of like a weird product because so maybe this is me speaking from ignorance about products in general. But I feel like many products, you kind of like get one thing right. It's like a net new thing. And everyone's like, wow, that's amazing. Like maybe like TikTok, you're just like, oh, you just like an endless feed. Like that's like that's so cool. And like yeah, you can improve algorithm, etc.

But like there was kind of like a step function like product thing that you did. But I think exchanges are not that. It's like traders expect a lot of things. And there are many different types of faders and kind of need to like compromise on this like set of 100 features so that like most people are like mostly happy. Like some people want more complexities. Some people want simpler interfaces and kind of just have to like compromise on everything. And so it's just like kind of multidimensional optimization problem. And I think it maybe like back then people in defy were too focused on just getting the defy part to work like all like how does blockchain need to work. like composability was like big thing. It was like really hard to get right and just like I think it's

easy to get distracted and just not realize not respect the core problem enough, which is that like it's actually very hard to build a good product for traders. So one thing that a lot of people have been talking about is this new feature in hyperlocal called Hip 3. So let me let me see if I can explain what it is briefly and you correct me if I get anything wrong. So Hip 3 is a new protocol upgrade that's going to go live soon. And what Hip 3 allows is for external parties. to create their own purpose markets. So they have to stake some hype. They have to provide an Oracle.

And this perp market is not necessarily going to be listed on the front end, but they can kind of use the infrastructure of Hyperliquid to basically tap into the overall ecosystem of Hyperliquid to launch a perp on anything else. And this anything else can be literally anything else. As long as it's got an Oracle, you can do a perp on it. Is that a good summary? Yeah. In fact, the Oracle part is also abstracted away.

So it's sort of like up to the deployer to figure out how the Oracle works. So it's very general purpose. It's almost like you could even not have an Oracle, right? You could even make like a contract that kind of like doesn't have funding. It's more just like a future. Or like you could like turn funding off and just like making more like a like a prelaunch style features contract. So it is it's sort of like I view it as yeah, like HIP one and two sort of way back, you know, maybe almost a year ago. more than here ago, was like permissionless spot trading and like leverage these,

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

So it's like use this. uses like a complex infrastructure, but kind of like expose like a super nice API. The users already used to their nice API of like interacting with trading on it. And like now like builders have a simpleish API. I mean, it can probably be improved, but like relatively simple way to just plug your what you want in, which is like, yeah, like he's like Oracle. So like contract specifications and then focus. So you can kind of like trust that the system does what it does.

and you can understand that and like tweak that with these knobs that are exposed to you. But then after that it kind of works. And then you just go and find the users, build the interface, get your licenses, like, whatever, like you need to do to like the ultimately. Get your licenses. Yeah, that's right. Get your licenses, kids. And so one of the questions that I kept getting is what are the markets that you're

most excited to see people develop using Hip 3? Like it's almost like he says like everything. I think perps are just a super good innovation. I don't think everyone, I don't think they're like a replacement for futures, but I think more than half of the futures flow would prefer perps. And it might be closer to like 80 or 90%. I think there's a part of like education,

just like people don't realize you can do with perps, what maybe you kind of traditionally associate with futures and options. And another thing is that I think that perp markets haven't achieved the liquidity of like stratify futures markets. And like when it does, I do think the product offering is like, even more compelling. So in that sense, it's like, it's more just like making this,

this very crypto-native, like, innovative instrument and like an on-chain crypto-aligned implementation of it available to anyone. So I don't, I'm not particularly excited about any one thing, though I think, I think like TradFi as a whole could benefit from PIRPS. And I think U.S. regulators are coming to terms of that and like drafting legislation around So it's like a positive step. I do think it just makes markets better. And I think this can be...

So you're not going to say perps on stocks. You're not going to say perps on stocks. I think what everyone wants you to say is perks on stocks? The question is which stocks, right? Like, if you're telling me, yes, could be in a perp, sure, right? But if you're telling me random biotech with 50-mill market cap should be a perp, probably not, right? I will say that there's options on all these things, right?

Like options are really big for retail. And one point I'd make is I think perps are should be basically preferred by all retail. Because when you're trading options, you kind of care about two things. You care about volatility. You're kind of trading volatility. You're also getting leverage, right? And I think very few retail traders like actually want to trade volatility. They actually just want leverage.

And so perps are just like super easy to understand. And it's actually better. Because I think on options, one, it's like very hard to quote and very few people are set up to quote it. And the effect of that is you just get a worst price as a user. Like if you're the only one trading, like random, like out of the money, like elongated. It's just like too, there's too many. But one counterpoint to that is that users who don't want to have constant interaction and keep checking their funding, checking their margin position. Like users who want to just buy it and forget about it.

and like hopefully it's a lottery ticket that pays in the money, which is a lot of the zero DT users, they, I think there is actually excess complexity. So there is, there is reasons for that market to be as big as it is, especially the zero day, the way the zero day options kind of blew up.

A lot of it, if you look at the holders, they're not actively trading. Like the, you see market makers like flipping the spread, but then you see these people who just buy huge positions and then forget about them. And I do think there is an interesting tradeoff between like,

these continuous pricing, but like dynamic price so you can get blown out type of things versus these like set it and forget it. And for some reason, traditional finance does have too many of the latter. I definitely agree with that. But I don't think you can like totally replace them. I think you're always going to be racemic with both of them. Yeah, I would I would push back a bit. Like I think it's very, I think you can, you can choose to not look at your proposition. And I would argue that that's quite similar to the payout function you want. Like if you set a high leverage position, so this is not, this is maybe not. So we know people can choose not to look as we talked about James Wynn.

Isn't it better, though? You can always sell your option before it expires as well. I think it's an equivalent payout function. It's just a better liquidity. I think to run the point is like there's path dependency, right? The path of the price between when you purchase the zero-titty option and when it expires, like it's kind of irrelevant as long as it hits, like to To Rune's point around this lottery ticket versus like, yeah, if you're James Winn, you might be maybe long-term right, even on the same time period about the price of Bitcoin,

but you can still get liquidated. And that's like a weird concept for a lot of retail traders. I think it's like, you know, you don't see these like exotic options like Bermuda options or Asian options really that popular for retail. Even though like they give you more of this continuous, you have to adjust more frequently payout. And those are only used in these kind of like large currency trade. So I guess all I'm saying is like there's obviously. obviously a huge market for perps. I just think like there is also still this market for these kind of things where people don't think about them as like one touch hitting type of thing versus like thinking about

the whole. Yeah. I would just think you can build quite a good product here with with perps though. Yeah. Yeah. I'm not saying it's not possible. I'm just saying like I do think like retail investors do also love lottery tickets in a way that I can construct a lot of, you can construct a very good lottery ticket with perps,

I guess is what I'm saying. Because like you can. Go ahead, go, good. Finish with that. Like as a user, what you want is, you want to either have zero money left or you want to have a lot of money. That's kind of like what you care about. So I feel like that payout.

You're not super, you don't really care exactly that structure. No, that's, here's where I think that's not correct, right? Is that it's not just that you want to construct a lottery ticket. Because there are infinitely many ways to construct lottery tickets, right? But it's that you want a lottery ticket that corresponds to is this subret, this subreddit really happy at the same time that I am. Like that's fundamentally, it's like a group activity, right? Why are we buying lottery tickets on this random stock?

Right? The reason why we're all buying lottery tickets together is so we can celebrate together when we win. If you buy a perp, you might not get to celebrate when everyone else is celebrating because you got stopped out early. Whereas if you buy an option, if Tesla, if Elon Musk does this or whatever, Trump does that and you bought some out of the money options

on Trump media or whatever, it's a very simple function of I have a lottery ticket that is branded with this person's rise and fall in the overall world. Do you think it needs to be tied to their contract specification, though, because you could create an app that does this. Everyone who uses the app, like their perps are closed at the same time so that everyone is aligned. Like if your purpose and profit on my. Sure, sure, sure. But not everyone on the subreddit, right?

Not everybody in the world who's experiencing this ride with this character or this talk with you. I also think there's another interesting part about perps, which is like, The price impact curve is like more continuous, right? You have to think about how much leverage you're putting and how it impacts the funding rate and how the payouts work versus an option that's like, okay, the market maker quoted me a spread. And I kind of don't have to think about these other aspects. Now, in these continuous products, obviously in some limit, you can replicate the discrete thing up to some amount, right? But it's just more like, I do think there is this weird sub part of the world, like every Robin Hood user or something, like, who really loves these weird discrete things.

And I think like it's cool that there's two worlds and that they both can coexist. And I think they will coexist. I think the more interesting thing is what does an exchange look like that offers you both types of products? And like, how do they interact with one another? And like, yeah, how do you build the thing you just said? like that with friends or whatever. Yeah, I think there will be a lot of interfaces built on top of perps. And in the same way that Robin Hood abstracts away a lot of the complexity of interacting with options.

So, and I think like Hyper Liquid, one thing is like we're as a core team where we actually don't want to, we both don't want to and are not, don't have capacity and are not the best people to build this like, ultimately like slick UI for whatever user group needs to use it. So I think there's like a lot of incentive for people to come and build these kinds of interfaces on hypercote, especially as the like the universe of tradable things expands. And the, so like builder codes are very intentionally meant to let people run an exchange scale business, right? Where your upside is literally proportional to the volume going through your interface. I think builder codes are basically, I think we'll push people to build these interfaces like from a practical level. And maybe, you know, maybe when, maybe we can revisit this, it's a bit of a bit of a bad, I guess,

on like whether these, whether perps can appeal to the, you know, what people are used to right now. My takeaway from this is that, look, the menagerie of ways in which people will gamble has always been infinitely big. You go into a casino and what you notice is that there's this stuff over, there's blackjack over here, there's roulette over here, there's a lot machines over here. And like at the end of the day, like they're all just skins on a skinner box. You know, like there's all just different ways to lose your money. And some people like these, some people like those.

And the right answer is that you have enough for everyone. So I can imagine a world where obviously it exists that there are many people in the world who want to trade perps and don't want to trade zero DT options. And there's many people who are like, no, no, no, zero DT options are my thing. And, you know, perps, there's too many buttons or too many decisions to make. Like, you know, I don't want to think about all that. So the answer is yes and. I mean, almost certainly that's the answer because that's what casino tells.

And the important thing, though, is that one thing to think about is, like, when you, when you go into a casino, like, some, I assume that some games, like, massively ripped you off and then some are, like, much closer to basically break even. And, like, I would argue that there's, like, there's, like, there, it's not just about, like, diversity. It's also about improving liquidity and reducing the spread. And I do think purpose, like, uniquely suited to that. I don't disagree with that.

I'm just saying that there is a part of the world that, like, enjoys this other. thing also. Right, right. Okay, so one last, one last thing that I wanted to share with you. So we got one tweet or one commenter, this guy, NVPplus.h. And I'm just going to read you his comment. His comment is, tell Jeff not to fuck this up. He got it.

Hyperliquid got it. Just continue building the house. No crack, no Coke, no whores, no gambling. If he ever feels the need to feel the dark side of the force, he should contact me. We will find a way to save the house. Thank you, Jeff. So that is MVPplus.h.l in case you want to get in contact with them, Jeff. Thanks, yeah.

Okay. None of the above right now. Okay. But just in case, I thought, I thought just you two should have a connection because I know you don't read Twitter a lot. A lot of good community members out there. How do you keep it? Like, do you just like not know social media? Like, what's your information diet?

No, I read Twitter just to stay. up to speed on what's going on, but I kind of trust the Twitter algorithm, which maybe is not the best. I'm not sure, but like, I guess I don't like interact too much with things on Twitter. I kind of just like quickly school through and like I trust it kind of like bubble up the most important things. And I think it sometimes doesn't, sometimes doesn't. So yeah, I haven't, yeah, I haven't made much progress optimizing this. Okay. Well, because we're, we're about to pivot to talking about some of the news that's happened in the last week and you forewarned, or your team forewarned us that you have no idea what's going on in the world outside of Hyperliquid.

So with that as a preface, let's jump into it. So some of the big stories gone on in the last week. First and foremost, we've continued with this SPAC, you know, treasury company, micro strategy for X mania that's been going on for the last few weeks. So the big story so far has been Tron. So Justin's son, of course, the founder of Tron, is sponsoring a company that's doing reverse merger with a NASDAG listed company called SRM Entertainment. There's going to be a $100 million private equity investment to acquire TRX tokens, which is Tron. It was rumored that Eric Trump was involved in some way and then Eric Trump denied that he was involved.

But then the, was it the investment bank has some ties to the Trump, so it's all very unclear and vague. Clearly, the Trump's like, they like Justice Sun quite a lot. They described him in some tweet as a great American entrepreneur or something. I don't know, which is not true. He's obviously not American. Yeah, he's not American anyway. He's extremely Chinese. Gemini has filed for an IPO.

Bullish is filed for an IPO. There's now, actually, there's another one of these pipe companies that's doing hype now. It's called Lions Group. And there was announcement that they may acquire up to six or six or six or three. a million facility, but I think that the actual amount that they'll be acquiring is like in the tens of millions. So we just have this stuff kind of going everywhere at this point. Turun, what's your reaction to seeing the growing emergence of not just the IPOs being super hot, but now all these pipes taking off everywhere? It does really feel like the SPAC boom,

just except it's a SPAC that's more efficient because you don't have to buy a company, you can just go buy the token. And again, I just think there's like a liquidity cap. There's like only so many people who want to take the other side, like the convertible side or the lending side. Do you think that's true across assets or for a single asset? Okay. So I think Bitcoin obviously has the largest capacity. That's sort of an undoubted thing. Micro Strategy has proven it out. People understand how to think about pricing the convertible notes. They're fine with certain duration risk. I think, you know, if you look at the volatility of the non-Bitcoin stocks, forget about the debt, like the selling shares and issuance and buying.

the actual assets. I think that there's so much more volatile. It seems like the market does know how to price them. And then there's also this kind of weird thing where they all, I forget exactly where this was, but someone was comparing the compensation structures of the different salana purchasing companies. It was Laura. Oh, yeah, it was Laura. Exactly. Sorry. It's late. And I just was like, it actually does really feel like SPACs or it was like, your principles are only paid when you actually complete the acquisition, but not about the quality of the acquisition. And I kind of think like if that boom, and SPACs are also back apparently, as I constantly keep getting all these emails from investment bankers being like, hey,

we're making a SPAC to buy X, Y, Z crypto thing, which they're all crypto specs. Or like, they're all people who are like, I'm going to buy, I'm going to raise one, whatever. It feels like we're back in that 2021 kind of era. It seems like there's also this funny thing where like these kind of products become in vogue when there's like some macro calamity you know,

it's like COVID macro calamity, tons of these like weird products. You know, current macro calamity. I don't know what it is, but maybe it's like people get distracted just like gambling and they're just like, okay, yeah, let's just like do this type of stuff.

I find this whole thing like there's a capacity to this market. There just can't be. And I'm actually more curious what happens when you saw what happened with SPACs, right? Where like the sponsors would be like, okay, no, actually fuck this. We're not going to like buy a company and then they return the capital or whatever minus expenses. What's the equivalent of that for these crypto SPACs? Like they can always go buy the token.

There's no like return the capital type of thing as much. Like it's pretty easy to do the acquisition part versus like a SPAC has to go find the company and diligence and whatever, right? there's no diligence here. You said you're just buying hype or soul or Bitcoin or whatever, right? Like there's not much else to do there. And so I'm kind of curious how it ends because it feels kind of weird because like they will have bought the asset. You know, you don't have this like SPAC like thing where it's like, oh, maybe it's like a sort of convertible option. And in the future it like gets exercise.

Like it is you are actually buying the underlying. And so I guess the real question is like what is the distribution of PREMIA, right? Like, is this going to be like corporate bond premium where like there's this like huge fat tail of C companies or is this going to be like super concentrated in? Like there's micro strategy and then everyone else. And I'm sort of biased to believe the latter, but maybe that's me being an old curmudgeon. Maybe I'm not seeing this new paradigm. Tom, Mr. Dick. Yeah.

I mean, within an asset, I kind of agree with Trem. I'm more just surprised there's like actually demand for a lot of these long tail assets. But it does just rhyme with me so much of like. when a trade just gets way overcrowded and like every random celebrity in person is coming out of the work and also doing the exact same thing. And like trade here being very liberal. It could be like every celebrity is going to and has their own alcohol brand. Okay. And then that guy way too crowded.

And then there's no more alpha. And wherever you see is backing like a DTC, the CPG company. And then that got really crowded and that one didn't work. And so like it feels like it's going to stop working. And then when it goes in reverse, I don't really know what happens. Actually, you know what's funny is, is, I saw this. Bitcoin and Maxi from like 2015 whose like name I hadn't heard forever like it to give you a word association she would probably be with like tone vase from back in the day you know you know

like that's a it's a throwback to like 2013 or whatever but Leo Wald filed a salama ETF filed for a salient and she was like super Bitcoin maxi you know like seed oil red meat whatever person and I was like wow it's like crazy how fast you can flip Bitcoin maxis in 2025. But ETF feels like kind of off meta. That was like a year and a half ago. What are you doing launching an ETF? But launching a Solana ETF, like a Bitcoin maxi.

No, no, true, true. I know, but it feels like you're a step behind if you're launching ETS now. Yeah, fair enough. Fair enough. Jeff, what's your reaction to pipe mania, spac mania coming to crypto? I think I have much fewer thoughts than you guys. I will say with the hype vehicles, it's maybe actually practically speaking, like they get actually had some value, which is that it's a bit harder to

buy hype for some people right now. It's on chain. I think people don't really know or want to figure out how to deal with that stuff, like custody, etc. So these vehicles may provide a way for different people. But I mean, the inevitable result, if that vehicle gets big, is this going to trade a huge premium to NAV? And then it's kind of like this GBTC style trailer. It's like, okay, you're betting on how much this premium is going to move. And some people are buying in and like, you know, if you, these don't have like a mechanism where someone can, someone can kind of do the ARP and like buy and then contribute.

No, no, no, absolutely not. No, not at all. No, these are just, these are just buckets of, of crypto that are trading on the stock market. And they're, you know, issuing debt to go buy more crypto. To be fair, micro strategy has a little bit of an ARB because you can buy the convertible data to fix strike at the offering and that you're now, you're at least kind of of, you know, you are taking some price bet on that, but it's not a, it's not a, it's a saddarb. Like, you're betting that, you're betting something about the asset price relative to

this underlying. Yeah. But if there's a huge premium, someone else can come in and like, raise another one, right? Well, that's what's happening right now. Yeah. Kind of, kind of. But I mean, like, that's the thing. You're not going to knock down because microcharty is so much bigger than all the rest of them, right? And so if you are, if you are the biggest and you just have the most liquidity, you just kind of have this runaway effect, you know like gbdc was not the only bitcoin trust but it just had this crazy premium that persisted and then it collapsed and then you know whatever it did what it did and so if there's one hype vehicle and it just goes crazy and it gets all this liquidity or there's only one that's on the nasdaq and there's

some other ones that are in these weird markets you know there's one in japan or whatever and you know people like who cares that thing is going to just glom all the demand and uh if you look at sbed right sbet was the Ethereum one that that consensus uh backed and sbet it popped up to like like, what was it, like 10x nav and then collapse down to like 1.8x nav where it's sitting today. Something like this. I'm kind of fudging the numbers. But that all happened in the span of like three days. So depending on, you know, somebody was like, I want to buy Ethereum in the public markets. And okay, you're just buying this like crazy vehicle that like has very little resemblance to the underlying. It's not so different from like spot futures of ARB, right? Like ultimately it converges. Like someone can come and

like assuming you can borrow in short like it. There is. price discovery here right there's an expiry though for the for the spot futures right here it's you don't know yeah well you need a funder grade that's another problem yeah there's no fun zero eventually right like well that's i think i think the question i think carl icon is betting this yeah exactly i mean carl i can is very much betting in this direction because he's very publicly shorting micro strategy and like people have been shorting micro strategy they just been getting but you know what the irony of carl icon doing that is is he did the same type of shit with icon enterprises where he kind of ran this weird Ponzi scheme where he would like

basically pay out more than the actual interest in dividends except and he would come like say he was like I'm going to pay 10% dividends and you only had earnings that were 8%. He was just inflating the stock and paying the other 2% to true up people. And the reason he did that it was getting added to all these ETFs that were like high dividend yield ETFs. And so like it created order flow for like each new issuance. SEC like kind of went after him for this. But it

has a flavor of micro strategy and that there's this constant issuance process to like buyback. And like it's funny he's shorting. That's all I'm saying. There's some huge irony to that. Well he's obviously he learned his lesson and now he is inflicting he's trying to inflict that lesson

on Michael Saylor. That's one way of looking at. Yeah, yeah. But so far with limited success, right? Because, like, the micro strategy premium has just been extremely stubborn, right? This thing is kind of stuck at, like, 1.7, 1.8, and just will not go down. Yeah, why is it all the, everyone I ever hear who is, like, I'm shorting micro strategy. He's like someone who is like a big hedge fund manager in the 2000s. Like, like, it feels like it's like a, like, like, you have to be old enough to be, like, trying to do it and tell everyone.

It's a good, I don't know. I don't know. I don't know, just kind of a boomer thing that you're like, look, these kids on my lawn talking about Bitcoin, you know, like they don't understand how finance works, something like this. But fair enough. I mean, I'd love to see this trend rationalize, judging for everything I know about crypto, that is not happening anytime soon. And I posted it the other day that like every cycle, there's like this hot fireball of retail

money that everybody's chasing. And right now, very clearly, it's not in crypto alts. it's all in public markets, right? That's where you see these crazy valuations and all this froth. And that's why everyone's trying to take the, like, hey, we've got the speculative stuff. Can we give it to you people on the stock market? Will you buy our stuff? And the answer right now is, yes, absolutely, they seem to be very happy to do that. So as long as I could do it's working. That's just trading hands, you know. Yeah, it's all zero sum at the end of the day. Okay. So one last story that I want to address is we just saw the passage of,

of the Genius Act. So to reiterate, the Genius Act is a stablecoin bill that's in the Senate. It is now passed a Senate by a bipartisan margin of 68 to 30. So once again, this is the very stablecoin friendly version. There's another version in the House called the Stable Act, which is a little less friendly than the Genius Act. But so now it goes to the House. There's some negotiation that's going to take place.

But Trump just truth-socialed that he is demanding no changes to the bill. Bring it to my desk as soon as possible. I want to get this thing signed. no writers, no extra additions, no, you know, game day shenanigans. So TBD, whether or not that's going to happen, but the expectation right now is that this bill is going to get done and signed. On the back of that, today we saw massive rallies in Coinbase stock and Circle stock. Coinbase is up 20% today, including after hours, and Circle is up 40% including the after hours

trading upside. So Circle is currently trading at something like $40 billion. So absolutely massive rally on the back of the passage of the Genius Act. Quick thoughts all around, Genius Act, stocks rallying. Terun, you look like you're about to jump in. I mean, the Circle thing was actually kind of crazy. I just have never seen, I've never seen like this type of behavior in a stock in a long time. Like it was kind of, it felt like it was like it was like it was like I thought that's why it already rallied so much. I know. No, but it felt like it was like one of those weird, like crazy ETF rebalance trades

where like, oh, something got removed or added to spy and you saw this huge move because like people didn't expect that or removal. And this felt like something like that where it was just like nonstop demand all day. I mean, you just like looked at the order book. It was like lopsided all day. I was just like kind of, but it's both kind of crazy. I mean, also, by the way, isn't it truth, not truth-socialed? I refuse to say.

I'm not. No, I'm not. It's definitely truth. That's the verb they want you to use. I am not going to call it truth. Okay, okay. I was just double-checking. I mean, I do think the, you know, as kind of as we discussed, I think the current act

really favors the incumbents, right? So it seems like it should be great for them. So, I mean, obviously, there's a lot of ebullience, but does this abelians look that different than Correve, not really to me, to be honest. What's just that it's frothy like Corrieve? Yeah, yeah, yeah. I mean, I mean, I just kind of think like the, there are a lot of stocks that are not at all like are trading like crypto and it's like this doesn't even seem that crazy in

that light, right? Like Palantir and Correve being the craziest. I mean, Palantir being at 300 billion is just like insane to me. It's like Ethereum and Palantir. here at the same market cap, which is like kind of, you know, I would never, I don't know. I don't know why, but to me, that's kind of like insane. Jeff, what's your take? Stable Act passing?

So I actually didn't, I realize it was passing, but I actually don't know the final form it's in. So I would have to read a bit on that to form an opinion. But generally speaking, I think institutional acceptance of crypto, even if incremental is is always good. I'm curious. I'm constantly tickled at how little aware you are of stuff going on in the crypto industry. Well, did you read the bill?

I think it's just like, I think headlines, headlines often also don't tell the whole story. That is true. Read the bill and like just, yeah, maybe. You can read the bill. It's not that long. You can do it today. Yeah.

Yeah. Yeah. Yeah. It's just really like I would like to spend more time reading these things. But unfortunately, there's just so much stuff tugging at. So no hyperliquid stable coin coming soon, I guess, is what we can infer from that. Well, I think hyperliquid is a great platform for stable coins. Maybe it's not like an intended use case, but as like a byproduct of everything that goes on.

Right. I don't know if this acts changes things on this front, but I feel like the fundamental problem of stable coins is still distribution. Even if it's like zero cost to spin on up, it doesn't mean you get a bunch of competitors to circle, unless I'm misunderstanding something about this market. I guess I suppose like you guys as investors probably think a lot more about this. But naively as like an outsider, it feels like thus far as the stable coins that have succeeded, basically succeeded in spite of all these other things just because they had like a unique distribution channel.

So I'm not sure how much that changes. But I think Hyperliquid has a bunch of users, a bunch of finance happening on it. Hopefully all of finance at some point. And I think I think that's a great, a great ledger on which to mint stable coins for people who genuinely need tokenized dollars. Fair enough. Tom, what's your take, Genius Act? Yeah, I mean, great.

Like anything is better than what we have right now. And I think the Genius Act is actually pretty sound as far as, you know, the legislation goes. So I'm excited to see something happen. I mean, what was most striking to me. So obviously it's great. You know, we'll probably do this again once it actually gets signed into law, assuming that it does.

So, you know, there's like, it's one of these things where there's like, okay, there's like three celebrations. So I don't want to do this three times. but the thing that's most striking to me that is very emblematic of this moment, at least in crypto markets, is how just absolutely crazy the activity in the stock market was.

And if you had looked at crypto markets, you would not have known anything happened. Right? Like to me, that is the most striking thing about this whole moment is like, crypto market is just like another day. You know, things are all slightly down today or something like that.

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

To me, what is telling me is that, like, there are very distinct pools of capital right now operating in public markets versus crypto markets. And I have never seen the directionality be that the stock market

is frothier and more, and crazier and more retail driven than the crypto markets. Actually, I feel like 2018 was like that. where like the markets were crazy venture market

tech venture was crazy what equity there was no public companies at that time I mean crypto in crypto oh no I don't I don't just mean crypto equity

I just meant like fintech equity like the fintech equity boom in the late 2010s had this thing whereas like the fintechs were roaring and crypto

was kind of like flat to nothing and it that sort of feels a little bit like that like this feels more like well I think like equity boom well starting in 2020 we started getting some public markets stuff.

Even before Coinbase went public, you had like Long Island blockchain and all these companies being like, we're doing a stuff and they'd get a spike. Well, no, but like you'd see how public markets responded to like blockchainy stuff. And it was meaningful, but it was never crazier than what was happening in crypto,

right? Crypto was always crazier than what was happening in public markets, right? Like if somebody got a whiff that like some normal, like GE was doing a deal with like iota, iota would just go absolutely fucking bonkers. You know, like this thing would go up 30% in like two minutes. And now it's like GE announces anything with some crypto thing. I don't even know they would move a chart.

And in the other hand, GE is like buying Bitcoin. That's also the other question. It's buying Bitcoin. Like GE would go absolutely bonkers right now. So I've never seen that asymmetry. That's the point that I'm making. So I don't know how, like this can't survive that long.

Right. Like this has to revert at some point. I just don't know when and how. But to your point to ruin, like maybe it's because something really bad happens and that's why people kind of back off. Yeah. I don't. It's, it is weird to see all these companies happen. But then I look at the rest of the normal equity market and like, this is why I'm bringing up to Corrieves and Palantir.

They look like 2021 SPL tokens. You know, like they really, it's like the valuation versus usage. being out of whack was like, it is like a little bit like that. Be careful, man. I know, I know. I'm not trying to get the Palantir or subreddit to like attack my house. Please. Yeah, yeah.

I'm giving you guys props for getting to 300 billion. I'm getting, giving you props. Do not egg my, do not do not, do not egg my house. Yeah. No, they're not going to egg your house, dude. They do a lot of scarier stuff than that at Palantir. Hey, actually, didn't the CEO say he would like, he wanted to like, like have people get pissed on or something who are like shorting the stock.

He had this like crazy ridiculous rant. Yeah, yeah, yeah. Like it was it was like some very crazy statement. So like, yeah, Palantir people. I'm not saying it's bad. I'm just saying it's congratulations for getting to Ethereum size. First off. That's right.

I just think like. Congratulations to Ethereum for getting to Palantir size is what you mean. Well, Ethereum was already at that market cap. Yeah, yeah. That's how we. But I, the reason. I'm saying the only reason I'm bringing this up is like the the kind of retail fervor in this in equities overall that's like frontier tech equities is like is like what crypto in 2021 early 2022 felt like it's like

it seems they're kind of similar structurally for some reason and and and again I don't know why this macro doomsday thing seems to be the common thread but there it does feel like there's there's there is something well you're not you're not wrong. So, Jeff, as we wrap up, going into the end of the world, what do you want people to do? Where can they find hyperliquid to make their final trades in the last, the last long days that we have left? That's bleak. Anything you want people to check out or how should they follow what's going on in Hyperliquid land? Yeah, you can follow Hyperliquid on Twitter, Hyperliquid X.

I'm Chmulean underscore Jeff on Twitter. I occasionally post very long blocks of text. That's right. That's right. And he does not, he does not read your tweets unless they come on his timeline. All right. With that, we got a wrap. Thanks for coming on, Jeff.

See you all next week. Thanks for having me, guys.