Unchained - Uneasy Money: Hyperliquid's Dilemma After 10/10: Protect Itself or Its Users? - Ep. 954

Episode Date: November 21, 2025

In this episode of Uneasy Money, hosts Kain Warwick, Luca Netz and Taylor Monohan explore how the recent ICO boom compares with the 2017 era.  They share stories of some of the big names from the past, including Kain's struggles after raising 30,000 ETH at the cycle top. Plus Luca shares what it takes for founders to thrive in crypto. They also unpack the “FUD” surrounding Hyperliquid following the infamous Oct. 10 crypto crash. Moreover, they discussed what Multicoin's investment in Ethena revealed about Kyle Samani, and potential black swan risks facing the project. Hosts: Luca Netz, CEO of Pudgy Penguins Kain Warwick, Founder of Infinex and Synthetix Taylor Monahan, Security at MetaMask Links: Unchained: Monad ICO on Coinbase Fizzles 12 Hours After Launch Uneasy Money: ICOs Are Back and Why Airdrops Are Instantly Dumped The Chopping Block: Tokenomics Reset — ICOs Rise, UNI Turns On Fees, MEV Goes to Court Hyperliquid Founder Denies Claims That DEX Prioritizes Revenue Over Traders The Chopping Block: Inside the $19B+ Perp Crash, ADL Explained, Binance’s USDe/Staked-Token Depeg, and the Hyperliquid Whale Debate Ethena Labs Expands to Support Two New Products Timestamps: 🚀00:00 Introduction  🎞 1:12 How the new ICO meta compares to the old days ❕️13:48 Why Luca would still airdrop PENGU despite the ICO craze 📽 16:19 New v. Old ICO meta cont'd 😬 26:00 Kain talks about raising 30,000 ETH at the 2017 top 💡27:49 Luca explains what it takes for founders to thrive in crypto 🤕 31:01 Hyperliquid “FUD” and why some of its celebrity whale traders are leaving ➰️45:18 The tension that Hyperliquid faces: protecting the protocol over users 🤔 47:32 Will a new perp DEX champion emerge? 📈 54:03 Multicoin goes long Ethena 🥊54:27 Kain's beef with Multicoin  🎞 59:52 Luca's history with Multicoin  ⚠️ 1:01:43 The real black swan scenario for Ethena Learn more about your ad choices. Visit megaphone.fm/adchoices

Someone's on the other side of this making money. And so you have to make a decision between whether or not you want your venue to be perfectly efficient or whether you're willing to take some risk to tamp down the volatility a little bit when it comes to liquidations. And it seems like hyperliquid is saying, like, too bad, so sad. We're not doing that. Hey, everyone. I'm Kane Warwick. And welcome to the second episode of Uneasy Money, because what happens on chain never stays on. chain. This is a show where we dig into what's really happening on chain, the experiments, the

incentives, the chaos and the innovation driving the next financial system. Each week I'll be joined by Luca Nets and Taylor Monaghan as we talk to tokenomics, Dow's, yield, security, and everything in between from people actually building in the space. One quick thing before we start, nothing you hear on easy money is financial advice. We're just three builders talking about what's happening on chain, and we want you to always do your own research before aping in. We can find all our disclosures at unchaincrypto.com slash uneasy money. All right. Hey, guys. How are we doing? Hey, hey.

Hanging in there. I wonder if we're going to do that in the intro, which episode it is every time. This is episode 386. At some point, we're just going to forget to update it, though. We're going to have like four fourth episodes. Yeah, exactly, exactly. So let's talk ICOs quickly. So we've had a very interesting few weeks for ICOs.

The ICO meta is back. I think there, you know, we had the Mega-Eath ICO, which we talked about last week. This week, Monad and Aztec are doing ICOs on different platforms. So Mega-Eath was on the Sonar platform. Monad is on the new Coinbase platform, which you could be forgiven for being confirmed. fused about because Coinbase also bought Sonar, but this is on a different platform that Coinbase built independently. It took me a couple of days to unpack that one myself. And then Aztec is running their own ICO, which is like a node sale or something like that.

So yeah, let's dig into that. I think the Monad ICO has been interesting because the price was, I think, maybe relatively high, given market sentiment right now at 2.5 billion. million versus mega-eath that was one billion. So, yeah, it's taken a little bit of time. It's still not fully sold out. Yeah, what are our thoughts on this new ICO meta? Super bullish on the ICO meta, because I think this idea of not putting your money where your mouth is and expecting huge upside, I think, is a fallacy.

that I think Web3 ran with that I think was not healthy. So I do like this idea of ICOs in general. I like the idea that Coinbase is doing it because you kind of have that Legion and CoinList and others have been doing it for a while. But Coinbase doing it feels like you're safe and that you're not going to get like popped four years from now or two years from now for doing it. It feels like, dude, it's publicly traded $100 billion dollar company empowered me to do this. So I'm doing it now. And like, you know, like if I'm not allowed

to do it, then like, what are you doing letting this huge $100 billion publicly traded company, you know, enabling me to do it. So I like that. Well, at least, at least if, uh, you know, Gensler v2 comes, uh, off to someone, they'll come off to Coinbase, right? They're probably not going to come off to you, uh, personally. So, um, you know, it's a bit of cover fire, I guess. A little, little bit of cover fire. and I like it because I think we might have spoken about this last week, but this is the idea that, you know, like getting huge life-changing generational returns in public markets just aren't there the same way they used to be.

And one of the beauties about crypto has just been that ability to allow people to get in really early, which I think would be like my only reservation with the Monhead ICO is like, is the prices. Yeah. It's too high, man. You got to do these prices where it's not just an easy double, right? Like it's an easy four, five, six, seven X. I think like I think we're kind of misconstruiting the beauty of, I think,

the ICO mechanic if it's done at those type of prices. But I do understand community alignment. And if it's going to fill, it's going to fill. It probably will end up filling. Well, there is, there's a, yeah, there's an argument that like the way that the Coinbase, Phil from the bottom setup has been done. It kind of encourages people to wait, which people wait anyway. Like I, you know, I think Mega-Eath, I looked at it and there were like 20,000 people that

have gone in. And then in the last like 24 hours, it was like another 30,000. It was like more people went in the last 24 hours and went in the first like four days or something. So I think people in crypto feel a, you know, very high opportunity cost of having capital locked up. And so, actually, maybe the Meggie's money still locked up. I don't know.

Have they released that yet? I don't think it's all really. I think they're on the precipice of release. It's like on the verge of there. I saw a couple jokes of they might just hold it until the Monad sale is over, which feels very adversarial. Yeah. I also, okay, do you guys understand?

I don't understand there was drama on the timeline. I think like the other. launch pads or whatever, we're kind of like ragging on the monon sale for not selling out instantly. Yeah. But then there's other people saying like, oh, no, but it's fine. And this is like why, like the way that the mechanism was designed was not designed to like, FOMO everyone and sell out and you're actually better waiting. Is that right?

I think that's right. I think, but you know, to Lucas point, the price is the price though, right? Like 2.5 billion is pretty high. Like, you know, go back to the. EOS ICO, which is my favorite ICU of all time, right, that went on for a year and raised $4 billion. You know, there is a point where I think to, you know, as you said, Luca, like there isn't really the potential for, this is the equivalent of like an IPO that, you know, some like open AI

IPOs at a trillion dollars. And it's like, cool. Okay. Like, thanks, I guess. Like, hopefully it goes to $2 trillion. But like, you know, there, there isn't. that kind of early stage sense of, you know, you're getting in at a cheap price, right, where there's a lot of up.

I do think it'd be great for listeners. Can you actually like explain the EOS, ICO, like how that worked, how they were able to keep going for it. Sure. It's actually really good for that you do. Okay. So back back in the ICO era, right? EOS turned up and said, we're going to do an ICO and people were really excited for this, right? like this was a new network this was like one of the first post-etherium alt-l-1 kind of projects that people were really excited about before like bc before salana before a lot of

these things and they they were going to take a different approach be more centralized shockingly that was the different approach have have fewer validators it was going to be proof of stake and you know there was there was this people through like 2018 where it was one of the hottest projects, right? And so the ICO meta was everyone does an ICO through 2016, 2017, 2018. So I think the ICO for them started in early 2018, but they did this mechanism. And there were, it's funny, like ICOs back then, there was actually quite a bit of innovation in the way that the ICOs were designed, right?

Their innovation was how can we max extract? And so they did this ICO where every week there was an auction for EOS tokens. And so the auction would start. It would run for a week. People would place bids throughout the week. And then the auction would close and then another week would start. And it ran for a year. It was insane.

It was insane. Prior to this, the way that it worked was that you would have this up-and-coming project, they would start getting their name out there. people would start talking about them. They would start shilling themselves and, you know, you figure out whatever the hell they're doing. And then they would, they would based on like, you know, a variety of factors, they would then sort of figure out how much they wanted to raise. And that was like the defining thing. And so it was like, oh, we're going to do like a $5 million or a $15 million or $100 million or whatever it was.

But there was always like a cap on it. And so like in in mid 2017, it was like, you know, like brave and like status and all these like big ones. But the big ones were still like $100 million. And they would like sell out like. $500 was like the max that that people could pull off, right? Yeah. And it would still sell out instantly like or nearly instantly. Like we're talking minutes to hours.

Minutes to hours. Yeah. Exactly. Yeah. And then EOS comes along. It's basically like, wait, why is that even capping this? Yeah. Oh, so I think there's two, there's two crazy outliers in this era, right? Nosis is one. Maybe Pocodot you could throw in there, right? But Nosis is one. And Nosis is another

outlier, not because they were trying to max extract, but because they kind of hit the peak of FOMO and they created this reverse Dutch auction where the percentage of the supply, this is like classic compliment. Like, we're going to solve this problem through math and, you know, incentive design. Martin Cobblerman's a founder of, knows this one of the founders. Stefan George is the other one. And so they designed this, this system where instead of, to your point, Tay, having to decide up front how much to sell at what price, they would have this reverse Dutch auction. And it basically sold out in like two minutes. They raised. Yeah, because in theory, in here you're supposed to wait.

The whole mechanism of design is forcing people to wait. I know waited. And it was like one of the most peak like genius cryptographers meets crypto hymn because the cryptographers DGens and the cryptographers they're like rationally

you have to wait. And then the DGens were like everything goes offline. it instantly. And like that theoretical researchers are like... They raised 400,000th. Yeah. They raised 400,000th and they sold like single digit percentage of the network or something

like that. And then I think everyone was like, all right, we're never doing auctions again. That was a failure. But they still have like 300,000 eats. So well played. So EOS goes, okay, what if instead of doing one ICO, we did 52 ICOs? and made them a week long. And then they raised $4 billion.

And I don't even know what the implied FDV was by the time it finished. Everyone was just over it. Like, it would be like every few months, people would remember that this ELS ICO was still going on. And so the other thing that was really interesting about it is people were like, because we didn't have the technology back then to track anything happening on chain. And so people were like, they're just putting their own money back in because they could pull the money out every week. So every week the auction would finish and they could withdraw the money. And people were like, is this just them rebuying the same tokens like over and over and over?

Because sometimes the price would go down for the auction and then it would get bid up at the last minute. Anyway, ICOs, crazy times. Okay, but wait, hold on. Today it's better though, right? Like we're... It's way better. No, way better. It's definitely better. We've got better ICO technology. I think, you know, the thing that was really interesting to me about both, Echo and Sonar is Kobe designed both of those systems with ICOs in mind.

Obviously, he was there throughout all of ICOs. And he was like, I'm trying to build a system that is going to actually make it more accessible, right? Like, I'm going to try and, you know, remove some of the perverse incentives in here. And yeah, I think, you know, that kind of worked. Yeah. Yeah. Well, and like Kobe, I mean, he really lived through.

itself. I am excited for the continued, I don't know. We do this thing where we like go all the way to the moon and it's insane and bad. And then we like forget about it. And then we come back in a more stable that are like actually solving problems. I could take time. So, Luca, I have a question for you. You did an AirDrop launch of the Pengu token in 2020. early 24, is that right? End of 24. Oh wow, okay. Wow, it feels like it's a lot longer than that.

So if this ICO meta had returned, would you have considered doing an ICO instead of an air drop? No. No. It's not for the story that it's trying to tell. The story of Pudgy Penguins is that it's the mascot and based crypto and the people's coin, right? So the people's coin is conceptualized and conceptualized through the form of generosity,

right? And like giving and not taking. So this meta does, I think, make us look at other things that I think are a little bit different, right? Like we have abstract. We have other companies in the igloo. You know, and so we're just looking around, right? Like obviously, I really like the mechanic of, you know, airdropping the most loyal supporters.

And then obviously having an ICO for the opportunities and the truth. traders. I do like that balance. But Pengu specifically just in its form factor, I also don't think it would have been as successful. I don't think where it's going to go, I think if you would have done it any other way, I think would have handicapped it going to where I think its future ultimately lies. But I do function because it's a community coin, right? It's a community. It's a it's a proxy of community. I really believe that. But I do believe that. in a world where the ICOs have come back, like they've come back today,

it's almost irresponsible from a founder perspective to not really take these things seriously, especially if you're more of a, you know, technically driven, you know, business driven, you know, type of protocol driven, you know, type of token versus I think we're in a very unique category. Right, right. You're not trying to generate.

revenue and you know build like build some weird defy scheme or something like that yeah it's a it's a proxy of impressions and do you believe that we are the next iteration of mickey mouse and like you know is is do you believe in the meme in the culture that is the token versus you know nobody's underwriting pengu because you know we're going to do 50 million dollars a year in revenue this year Right? Like, you know, if you did, I'd be like, you're, you're kind of, you know, you're getting it wrong. You know better than me. A lot of these guys are way dumber than everybody's that knows. Yeah. Yeah. There are some people who have under it in it in such way, but you know. But it wouldn't be 50 million to be $50 billion in revenue a year, right? Like that's the,

that's like the left curve take is like, so, so to closes this ICO meta out, right? The other side of the, the other side of the, of the spectrum, it was Aztec, or Aztec is about to do their ICO, I think, in a couple weeks. And they started with an FDV of 350 million, which, again, to go back to your point, Tay, like, the ICOs, you know, they would raise like, you know, Brave or whatever. They would raise like 50 million, 100 million selling like 50 to 60 to 75% of the tokens in the buy. So these were like FDVs of like 50 million, 80 million. Like the Haven token, the FDV was like 60 million. So I have a question, were those fully unlocked the second that they came out?

Yes. Yeah. Yeah. I know. You think like it was so wild. It was so wild. That was like people, okay, this is the thing is like there was this, there was a tension between the true believers. and the people who had been in Ethereum for a while

and then like sort of the newer, fresher faces, or just the people who were there more for the financial gains, right? The people that were true believers were like, it doesn't have a product, it's not going to ever ship. They're like, there's nothing here. And then the other guys would be like, yeah, and? And then the true believers would be like,

yeah. What? You'll be like, you can't do this. You're ruining our network. Why would you buy it? The answer, obviously, was because you could literally sell it at like minimum 2x instantly. But oftentimes if it was a really like if it sold out, you could sell it like 10x, 100x, you know, within days or hours. It would be hard.

It would be hard. You would have to stay up until 2 a.m. Especially. You had to click. Yeah, you had to click a lot. Things would go down. You know, like the website. would go down the chain would get congested like there were somewhere like gas price i mean gas price

spiked yeah gas prices would spike can i run a theoretical by you guys and i want you to i just want to underwrite because i know you'd give me good advice as a friend and as somebody who's like a line but let's say i had something really special cooking really special and you're taking it face value that and and i told you and i said kane i wanted to i cio it i wanted to raise 50 million at you know, 75 million FDB, and I wanted to give it all out. As somebody, you know me to be a high integrity guy who's here long term, I really just want to help shape the space for the better. Would you advise me, because outside of that mechanic being really exciting for like a week

or two, right? Like, do you think, like, the long-term success of that, can something actually in terms succeed through a function, through a mechanism like that? Like, would you advise somebody like me to go and do it that way? or you're like, nah, it's just really fun for three weeks. And if not, it's going to blow up in your face. Look, it's a bit of both, right? And the reason why I asked you about AirDrop, you know, we talked last week about

AirDrop versus ICO, right? And there is absolutely a psychological difference, you know, to your point, Tay, yeah, there were a lot of flippers, but there were a lot of people, like, I guarantee if you go through the chain, there are a lot of people who bought the NOSIS token in 2017 and have never sold it. Like they swap their eth and they've just literally been like diamond handing it for that entire time, right? Yeah. I have like hundreds of these, by the way.

Hundreds. Yeah. Literally hundreds of tokens. I'm like the all-time diamond hander. And 90% have gone to literally zero. So it's like, it's like, okay, you, you sell a token to people very cheaply, right? And you're talking 75 million FDV, 100 million FTV these days. And that was sort of the point I was making, like,

Aztec feels cheap at 350 million FDV, right? Like the times have changed. Like there were ICOs that were doing like 20 mil FDV, 10 mil FDV, like they were, you know, it was just a different era. So selling tokens to something that people have any kind of long term belief in very cheaply, there's two components of this. One, okay, how do you decide who gets those tokens? And this is one of the challenges, right?

Like there were a ton of ICOs in late 17 where it was like, and you know, not an auction. It was it was just, you know, put a ticket in and it was a lottery system who would get access. You know, there were a bunch of different ways that this could play out. But let's say that this was something in the Pudgy Penguins ecosystem, right? If it were me, I would say if you hold a Pudgy, you get an allocation into this ICO, right? That was kind of the point I was making about Pengu, right? is like if you hold a podgy rather than air dropping it to you, you're allowed to buy Pengu at, I don't know, 50 million FTV, right?

The difference there is that you have bought a thing and there's two components. So one, you have a cost basis. So you believe, like you had to choose to buy the thing. But the other thing is you feel like you made a good investment that went up and therefore you want to hold on to it versus someone gave you free money that you now need to dump to realize. It's just a different, it's a different mindset. Yeah. And it's also, it's different today because, yeah, they're like, I'm sure there were some amount of automated systems that were buying these ICOs.

But the vast majority of the ICOs was actually like very, very manual, which is just insane to think about. And every time I like recall this, I have to like go check myself because I'm like, there's no way. But it was actually, yeah, there just, there wasn't this MEV land. There wasn't this really understanding. Like, it would take years for that, you know, like even early defy, really like, it had like manual back running and stuff, right? It took us years to get to that point where like, but if you were to do an ICU today in the same way that we were doing them back then, it would just be like, I mean, we saw this with NFTs a bit,

right? Like, you just like the bots and the. Yeah. It's all automated. Exactly. That's the hard thing now is like figuring out like what would the mechanism be, right? So yeah, it's, it's, do you remember Civic, the Civic? The Civic ICO? Yeah.

Yeah. So the Civic ICO was an interesting one because it was like this three day period where you had to register and wait. And then the distribution of allocations was like, tapped, but then there were like, there was like a weird bidding phase. That to me was like the peak of people trying to get into a very small door. And there were like hundreds of thousands of people that tried to get into that ICU. And like 5,000 people got an allocation. It was like today that you just couldn't get away with that.

And then they and then what do they do? They literally released like a vending machine. Yeah, I don't. I think that's one that just died quietly, quietly quickly. It was like, I don't. But yeah, it's like also what's the point of the ICO? Do you want like fair distribution? Do you want you want to create the market?

You want the price. You want founder exit. Do you want community? You want loyalty. Like what exactly are you going for? For a lot of the early ICOs, it was like, it's kind of like a seed round. It was kind of like a PR community building thing. But also, but not like a seed round, but where you sold all of the tokens up front and never

raised again. which was, you know, not the smartest tactical. Like part of the reason I think so many of them went to zero, right? It's like you raised $10 million and you think $10 million is a lot of money and it definitely was back then. But like two years later, especially because everyone raised an ETH, right? So this is the other ICO dynamic that people forget about, right? Every single ICO was denominated in ETH. We didn't have stable coins.

We didn't have stable coins during the ICOM amount. Yeah, it was all EVE. It was only. I have so many tokens that are zero now. Don't tell me how much they were worth any. UST was on the Omni network. It was on a different network. There wasn't $60 billion of USDT sitting on Ethereum main net, right?

So Eith was the only medium of exchange we had. And so everyone raised in ETH. which was a huge eth sink, which is why the price of Eath went up, which is why people could then raise more, et cetera, et cetera, and then it all unwound and here we are still. Yeah. So like if you raised in late 2017 when the price was like 500, the price of ETH was like 500 to a thousand, a year later, Eith was what, down to 80? Well, yeah.

In December. Actually we go down to 80. Yeah. Yeah. So you did. didn't raise $10 million anymore. I mean, haven we we raised 30,000 eighth right. So 30,000 eighth at $980, which was $30,000. This was you. You were at the top. This was me. I was there. That's me that you're literally describing me. So we raised 30,000 eighth at $980. By the time we got to

2018, if we had done nothing, it's worth $3 million. Yeah. Imagine that. You're sitting there. you're like in a smoking crater and you're like, what have I done with my life? And also like you sold like all of your like everything. Yeah. It was crazy. It was crazy. Well, you sold it right when it fell.

You basically just denominated from each dollars. You didn't hold it until 4,000. No. So, well, I mean like. Because your payroll and like. Yeah, expenses. There were expenses, right? So the, my favorite part about this, right, is that obviously synthetics is still

here today. So we didn't run out of money. But it was, I remember sitting there in 2019, it was like Feb, 2019. And we were looking at our runway. And it was down to like months at that point, right. And Jordan, my co-founder is like, okay, I've got a plan. Like we can cut costs. Like we're going to figure this out. We'll cut, you know, the team down to like five or six core people, engineering or whatever. And I literally looked at him. I said, listen, we have six months to either make this work or it's dead anyway. Like if we, if we, you know, kind of try and extend that to nine months, it's not going to make a difference.

We need to throw everything at this. And I said to him, I was like, I will plow this thing into the ground. And he was just like, I don't even know what to say your site. No, but I don't know what it came. I got to keep going. Yeah, no, that's it. And so I did. And like at the last second, we pulled out of this death spiral and survived.

There's a common denominator here because I almost told my co-fran are the same thing verbatim. And it was a little bit of different context, but we were going, we basically bought pudgy, FTX blew up, we were going broke. We had to put another million dollars into the business. And he was doing this thing of like two years runway. And I said, Lorenzo, I said, by the time we survived two years in crypto, we would be irrelevant and this whole thing will be cooked.

And so our strategy basically, you know, even today is like, I'm fully all in. this whole like three year runway thing in crypto you don't survive three years if you're not staying relevant and it's keeping top of mind i don't run three year run i mean now we've been able to capitalize the business well enough or we can run at that run rate but i tell these guys you got to put you got to put it all on the line because if not they're the the the community the space will chew you up and spit you out you don't have you don't have years to figure it out yeah you go six months exactly yeah six months so it's ironic you say that it's pretty interesting because I do think that's a really interesting factoid and common denominator that I haven't heard

many other people say, but since you mentioned it, I think it's so critical for at least our success was like, dude, we had to put it all on the line. And that's what kept us outshipping everyone. At a certain point, everyone was looking around and then the Tland being like, dude, you're like the only guy. Right. And it was because I was just putting it all on the line every time. Yeah, because you can't, you cannot wait. And you can't like, yeah. Because if you survive three years, like that doesn't actually get you. Like, what are you going to do at the end of the three years?

Like, that doesn't. Because of crypto is nothing, right? There's plenty of ICOs that survived three years. And no one's ever heard of them, right? Like they were just like, 50 pennies, you know, and then eventually they died anyway. Because you have to have attention in crypto. If you don't have attention, it's not going to work. I was just going to say, I remember that picture of you with all the,

pudgy toys in Walmart and I was like this guy is like in how did this happen like my mind was blown like I saw that tweet and like my head exploded I was like how did he get an NFT into Walmart like what is happening right now so yeah yeah definitely work and I shouldn't have done that but I put it all on the line right I basically said I was like because theoretically just one last point to this before we switched topics is like, I was way too small to be in Walmart at that. Yes. This is more and under of anywhere. Yeah.

So the risk that I was taking and we underwrote it at such, which is we either are not going to do this and miss our biggest swing at bat, or we're going to do this and risk blowing up our relationship and completely flopping in mass market retail because there's almost no way we can sell a million toys. Thankfully, we did. We've been in there for now two and a half years. but you know had to put it all on the line if not i would have been cooked and a lot of things probably wouldn't have happened the way they did so yeah put it all the line that's the so so uh let's move on next topic um people people leaving hype there's been a bit of hype fud around um the white whale

uh who you know one of one of probably like 10 large anon traders um which is you know it's it's a really interesting dynamic with hyper liquid because all of the trades are on chain you have these people like James Wynn, the White Whale, there's a few of them that trade, they're almost like celebrity traders, right? People can watch their trades, they know their accounts, they can see their P&L, and the White Whale post 1010, the huge liquidation crisis that happened now like six weeks ago, which it feels like yesterday, but there was this liquidation cascade that was triggered by finance and a bunch of different kind of circumstances that obviously, you know, cascaded through all of the per exchanges, but in particular hyperliquid there, there were a lot of

people who were liquidated. There was an issue with auto-de-leveraging where hyperliquid was designed. And I think Jeff, the founder of hyperliquid, you know, came out and talked about this and said, we are designing hyperliquid to be as resilient as possible, right? This is an interesting question about trade-offs in a trading venue, right? Okay, you're, you've got, you know, this tension between protecting the venue itself and protecting traders, right? And you have, and, you know, it's a little bit zero sum. The more you protect the venue, the, you know, the harder it is potentially for traders. And so they made a decision, Hyperliquid made a decision to protect the venue, to protect the exchange.

at the expense of traders. And they said this is just very clearly the design structure that we've chosen for hyperliquid. We think it will make the exchange more resilient. We think it will attract more liquidity, et cetera. But we have some of these celebrity traders who are saying, we don't love this and we're going to leave and go and trade elsewhere, find places that are more trader friendly, let's call it. which is, again, there's been a few hyper-liquid incidents, I suppose, right? You know, that come out and created a little bit of fud and, you know,

but this is definitely the most recent and one of the bigger ones, I think, you know, traders leave in the exchange. Yeah, I think his, I don't know, his point, I mean, it's really interesting that he specifically is talking about um like he has this emotional and like real connection to like real people who are he's either directly talking to or like he's aware or like copy trading him and like they all got wiped out and that's i think the the thing that's like kind of underlying this entire point is like when i read his post at least like it's not the biggest part of the post of the post but I think this is like his story and like why like the the shift in his mind.

He goes, so this thing happened, 10 time happened, like the liquidations happen. Everyone gets wrecked, et cetera, et cetera. He's like, but across the industry, everyone's doing victory laps. There's zero bad debt. The liquidations process flawlessly. The protocol didn't die, et cetera, et cetera. And I think he's sitting here like, we have a light. There's like dead bodies everywhere, pros.

What the hell? And to me, like, I don't know, it resonates with me because I have lived in that experience so often where what my personal observations and relationships and like the people are struggling is in direct conflict with what's happening, like what the ecosystems narrative is. Because as long as the protocol, as long as the tech was good and operating logically and rationally and by the rules or whatever. I mean, Maker. Maker, this, you know, like there was a long period. So Maker Dow OG protocol, you know, Sky now. There, this is, you know, leverage, right? Like, your hyperliquid is a leverage trading venue.

Maker was the leverage trading venue of the, you know, 2018, 2019 era. And it was all on chain. And so you could see all of the positions. And there used to be these graphs that people would post of, you know, at $600, there is going to be, you know, however many millions, hundreds of millions of dollars of liquidations. At 550, there's going to be, you know, a billion dollars of liquidations at 350, et cetera. And you could look at this graph and see the progression. But to your point,

Tay, like, that was us. Like, those were our positions that were about to be liquidated. And, and, you know, oftentimes people in the maker ecosystem would come out and be like, yep, job done, liquidated all of those plebs, you know, like. Yes. Yeah. It was like they look at it ate through that liquidation wall. Like it was nothing. And I'm like, bro, that's someone's livelihood. What the hell is happening here? I know. I know. Yeah. So yeah, there is it. I mean, it's it's kind of to that same point that you made about the ICOs, right? It's the like mechanism designer, mathematician meets DGens. And it's like, wait, someone, you know, was recursively levering up through Maker, you know, borrowing and and, you know, levering up on. Heath and just got wrecked and probably lost millions of maybe lost all of their Heath, right? So. Yeah. Yeah, I think my interpretation of it was like he loves hyperliquid.

We all love hyperliquid. It's a great platform. But after 1010, he spoke to Jeff. And Jeff was not taking the same type of, you know, didn't take the problem, right? The problem that, you know, everyone can get, you know, the same. systemic design of the exchange, which created or contributed to the problem. Obviously, I don't think hyperliquid was the problem. I think we kind of know what the problem was at this point. But like, he wants to go and trade on venues where people want to address the systemic problem.

Now, I might take the side of this where I actually might fundamentally agree. I mean, at what point, and Arthur from Deviance has had a lot of takes here. And I don't really know what's wrong with these takes. And I would actually love if maybe you guys could steal man the other side of it, because I know he got some pushback on this, but I don't fundamentally understand how you could get some pushback on this. I mean, what you're basically asking for is it's claiming that there's systemic flaws in the system and somehow some way we have to address it. And we don't need to go and innovate and prophesize on how to do it. There's protocols like Drift and others that are not completely calling your liquidation if something wicks for a couple of minutes.

minutes, right? There's some sort of, you know, it doesn't feel like a circuit breaker, right? Like where the whole thing halts, but there is something in place. And to sit back and the C-10 happen and for, and Kane, you would know because I would know, I know, I know, and you probably know more than me just because of how probably more well-connected you are than I am. I mean, everyone got smoked. I mean, when I'm, there's the first time in crypto that I had multiple people messaged me saying it's over for me, right? Can I have money? Can you loan me money? People ask you to loans.

I mean, one of our biggest holders, I basically, I gave him money for all of his penguins. And he said, he was like, no matter, he's like,

penguins would go down 99% I'm going to give you this money back whenever I get this money. And if it appreciates, I'll give you the appreciation for helping me out. I mean, in droves they were coming to me. And it wasn't,

it wasn't like, we deserved it. It wasn't like, oh, like, yeah, we, we really fucked up this time.

Right? Like, it actually was a systemic breaking of the system. Right? Like something internal broke, which, you know, in one venue that broke things in other venues. And why does everyone have to suffer for what probably ended up being one or two, you know, two or three people, you know, making a mistake, clicking some buttons or doing some rounding errors on some map, right? Like that should not cost tens of billions of dollars. I don't know how that's a variantate. The interesting point here, though, right, is like, let's look at price action today. So, you know, Bitcoin Wick down. to you know whatever it was like 104 on finance or something like that and and we're at 89 today

and this is unfortunately the problem there were a bunch of people who were long bitcoin at 20k and that price was wrong the market has corrected and the price of bitcoin is now 90k and you were you know 20x levered up uh speculating of Bitcoin would go up, right? And so, you know, like we sit back a month later, six weeks later, and the market was right. Those traders were wrong and they would have been liquidated at some point anyway. Now, that's, that's a maybe a harsh thing. Let me. Let me steal man this because I can just speak to it anecdotally. I had a hyper, I had my hyper liquid account. I got liquidated on everything. And the stops of my liquidation prices were 95% off of the spot price. So I was like, I'm never going to

get liquidated. And if it gets liquidated, I'm going to fill it. Or if it gets close to it, I'm going to re-up the wallet and, you know, it's crossed. I'm going to make sure I don't get liquidated. I got liquidated on things that would have never gotten liquidated in any efficient or correct market. Right. So the Bitcoin analogy, okay, it didn't really get affected as much. But basically on anything that wasn't Bitcoin, Sol, Ethereum, or anything in the top five or top six. Yeah. I mean, Adam went to zero. Like we've never seen. Literally zero. Literally zero. Yeah, literally zero. How was that?

And it was all so fast, right? Like the wicks were true wicks. It was down and then it was right back up. So even if it continued down over time, you still have a chance. Yeah. So like, again, how is that an exchange? If you're in exchange, how is that not your biggest priority that makes sure that doesn't happen again? Like what priority is bigger than that came?

Yeah, I agree. I think, you know, it's interesting. We've been, we've been reflect. on this at synthetics now, right, for a while, you know, OG synthetics, the old protocol, it was a leverage, you know, you had leverage synthetic tokens, but without liquidations. And the reason why we had no liquidations is because we had this view that, you know, the market will almost be induced into liquidating people if you have liquidations, right? So, so, you know, there is, there is a sense, especially on hyperliquid, that if you can see that liquidating someone is going to be

profitable and someone's stop is close, you know, you can get hunted, right? Now, there's arguments, well, no, because there's an oracle and it uses external prices, et cetera. But, but, you know, there is something to be said for very efficient, aggressive liquidations induce more liquidations, you know, because people make money from liquidation. I mean, this is, go back to the maker example, you know, back like the, the Maker Oracle debacle that happened in, I think, I want to say 2019 or something like this, I'm forgetting my law a little bit, but, you know, there was, there were people who were effectively running those liquidations, running liquidation bots that made like tens of thousands of ETH on this day when, you know, there was a liquidation cascade

that happened on, on Maker. the price dislocated, et cetera. Same thing, right? Like someone's on the other side of this making money. And so you have to make a decision between whether or not you want your venue to be perfectly efficient or whether you're willing to take some risk to tamp down the volatility a little bit when it comes to liquidations. And it seems like hyperliquid is saying, like, too bad, so sad.

We're not doing that. And so, you know, there's definitely room for other people to come in and say, well, you know, what if we had liquidation insurance? What if we had WIC insurance? What if we had some things that, you know, and there's a cost to these things, of course, right? But if you knew, okay, if Adam goes to zero for a one minute candle, I'm not going to get liquidated because that wasn't the real price. Like this is what it comes down to. I think, you know, to sort of maybe distill your point. The price was wrong and that's not fair that you got liquidated at the wrong price. Like, that's ultimately what it comes down to, right? I got liquidated at five cents,

and that's not the price. Like, if you look, you know, it's one thing to say Bitcoin, okay, Bitcoin, you know, 104 or 90, like, what is the real price? But like some of these alts, the price was wrong. And I got liquidated at the wrong price. And that just doesn't feel fair. And, you know, everyone's willing to kind of take, I think everyone's willing to take the risk when they're in a leveraged trading venue. But like the rules should be fair. And if the price is wrong, you know, then then we've got a problem. Right. And I think that that's ultimately what everyone feels right now is like the prices were wrong.

I got liquidated at the wrong price. It doesn't feel good. Yeah. And I think also like I think probably from Jeff's perspective and the team's perspective, They are probably more focused on the protocol and the design and the credibility and the trustworthiness and like all these more technical things because there's a lot of people betting that it won't, you know, like they'll just end up with like a massive amount of bad debt and fail. Right. Like that's what people are, right? So in their view. Can you steal man this? Can you steal me in Jeff's point cane? I'm sorry.

What is their take like actually? Well, hold on. I don't think that I don't think that Jeff is saying or hyperliquid. I don't think that they're saying like users should be just like liquidated en masse at the wrong price. I think that theory just don't have that on their radar as much as they have everything else on their radar because since the day that they started building, it's been like hyperliquid is going to fail for X, Y, Z reasons. and those failures are all protocol failures. They're all technical failures. They're all market failures in that sense. Oracle failure, like, you know, funding rate, like all of these design flaws that people

have been pointing out. And so their view, I think, is that we could not have scaled this venue if we didn't make the design choices we did, which are aggressively skewed towards protecting the protocol over its users. And, you know, it's hard to run that counterfactual, right? But like, it has worked. So you kind of have to go, okay, fine. But this is the problem with crypto.

Things work until they don't. If you start ripping the faces off your users and they all feel, you know, aggrieved and that they were treated unfairly, they might leave. And if your users leave, then you don't have an exchange. And so there is a very, you know, there's a tension here. I do, I do understand Jeff's point because what you want to avoid if you're running a venue, is the entire, it would be far worse for them. And I don't think there's a perfect tradeoff, right? But he is saying if there's a 5% chance that the exchange blows up, right?

And, you know, HLP gets bankrupted and, you know, the entire venue collapses or a 5% chance that a bunch of my best customers have their brains blown out, he's like, yeah, sorry about your brains. Like that's the choice of being made here, right? Like, I appreciate that clarity, T. Yeah. Well, and I think this is what is going to be really interesting, right? It's like, okay, so now 10-10 has happened.

A bunch of people, like, lost big time. Moving forward, there is some amount of competition in the space, right? Hyper liquid, they sprinted and blew this market open, right? And so now you have all these other, you know, upstarts that are appearing. some of those are going to be good enough on the technicals, and some of those are not going to be good enough, but they're going to be innovative. And probably at least one of them is going to do both, right?

Where they actually are, you know, structurally sound enough, but also have something that differentiates them. Now, if that differentiating factor around, say, like, users and liquidations and those sorts of things, if that's good enough, they will then eventually be hyperliquid, right? Hyperliquid will just hammered users to them. Some point, then hyperliquid likely, depending on the exact mechanism or whatever, likely starts to prioritize that to keep their users.

And that's why, like, in my opinion, like up until this point, hyperliquid does, I mean, even today, I have a hard time saying that hyperliquid has, like, a competitor in the same, in the same sense. Like, sure, you have Binance and that's like their competitor, but But there's no reason for them to drop everything and pivot to users right now from like an economic logical perspective. In my view, they should, right, because it's the right thing to do because they can because they can solve this problem. There's a lot of ways that they can go about it and they're in a good position to do so. But I do understand why they might not.

But I think, you know, one thing we've seen, right, in the space, and we saw this in DFI. is someone comes up with a design that they think is sound, right? And they've optimized for all of the right things and your maker even, right? Like leveraged Eath, you know, borrowing against leverage Eath, et cetera. And then someone else turns up, forks it and goes, what if we just tweak these parameters a little bit and make it much better? And 20 minutes later, it's smoking crazy. And so like there will be an exchange, I promise you, that turns up and says,

we are so much better for our users for these crazy reasons and we haven't really thought it through and you know i saw one where they're like we don't have liquidations i read the for like the the the kind of uh excerpt and i was like this is insane this is going to blow up this exchange will lost for like what's the what's the what they just like hair got everyone like what is the they charge higher funding rates like it's and and i had someone sent it they're like oh these these guys have no liquidations and i'm like you can't just have no liquidations yeah i mean that's the the the knee jerk reaction yeah it's like all we'll just remove them they whenever people are like oh drift has the whole i don't know kate what's drift mechanism

uh no i don't i don't know enough to speak basically like um like a slow t-wop out if you hit your liquidation price over like a fixed period of time so you're not like completely obliterated if for some reason you get kicked down you maybe lose a little bit of your position and and this yeah like i think the the oracle it you know ultimately unfortunately like everything in defy it all comes back to oracles um and so the article design becomes really really critical around like how where do the article prices come from you know um and again maker and compound and ave like all of the article design your chain link etc. This has all been Oracle design of like how do we know what the price is? And if you tweak the way the Oracle price moves, then you get different results. So, you know, but that's, that's a

very different story to say we have liquidations. We just have a slightly different design. An exchange showing up and saying we have no, because the problem is you say, we have no liquidations and everyone goes, oh, amazing. Let me go on training. And then it's like, oh, actually there are downstream consequences of not having liquidations when everyone loses all their money. Okay, hold on. I found the drift. I found the drift. This is actually interesting. Okay, so they trigger liquidations based on Oracle price, not Mark Price. That's number one. Number two, they block liquidations based on 50% divergence between Oracle and the Oracle 5 minute a twa. And then three is they perform partial liquidations over an extended period of time, for example, 10 seconds. And then obviously they have insurance and stuff to cover. any losses from like bad debt, etc., etc. So it seems like maybe they've just prioritized how the liquidations happen by taking the edge off, basically. Yeah, soft liquidations. But the challenge here, right, the trade-off is, and, you know,

Jeff and the hyperliquid team are not idiots, right? Like, they have sharp liquidations because they are worried about low up risk, right? And so, you know, you look at a system like that where the liquidations are soft and you go, okay, what are the tradeoffs? What happens if we have soft liquidations? Well, there's a couple of things that can happen. A huge price of dislocation that's real. Like Bitcoin decides that it's worth 40K now while we're on this call, right? And soft liquidations, the exchange blows up. That's just what happens. If you have soft liquidations and the price goes down to 40k in the space of a five-minute candle and you were slowly liquidating people based on a T-WOP and you had a you know some kind of circuit breaker or whatever unfortunately

you know circuit breakers only work if you control all of the trading in a single venue like the NASDA can say hey sorry guys we're not allowing Tesla to trade for 15 minutes so you guys can cool off a little bit but if there are 50 different places where Tesla is trading and 49 of them are like Tesla's worth two dollars and one of them's like No, no, bro, like that's the wrong price. Like, stop trading for a minute so you guys can figure out what the real price is. The 50th one is going to have a bad time when it switches back on. And people are going to be mad.

So, all right, let's move on, though, because I'm sure we'll be talking about hyperliquid and perps dexes every week for a while. Multi-coin decided to go along, Enah. And this is a bit of a, like, first of all, I'm a big Enna bull. So I'll just say that at the outset. The reason why this story was kind of surprising to me, Kyle came out and said, hey, we've been buying Ena for the last some period of time, right? So first of all, they've been buying Ena while the price has been going down. And I always love when Multicoin loses money.

So that's, even though I've also been losing money, I couldn't help but be like, oh, okay, that I like that. What's the beef with Multicoin? So maybe I'll get to the second part. The other reason why the story was interesting to me is multi-coin in 2018. So they turned up to D-Fi and they were like, okay, you know, they were big Eithballs. And then they switched off. They became not-Eath-Bulls.

They went and did Solana and EOS and a bunch of other things, right? And they turned up in like late 2018. And they were like, okay, defy, cool. It seems like you guys have survived. Congratulations. Like, you know, you've got 10 real. projects here. Instead of saying, why don't we turn up and invest in all those projects and like help to support them or whatever, they literally were like, who is building the exact

same thing that we can fund to attack all of these projects? And we were just like, what the hell is wrong with you guys? Like that, like, it was just, and so it's quite funny to me that multi-coin chose to invest in Ena over trying to fund Ena in a killer. Because, that was their MO for a really long time. So I don't know if they've like lost their minds or pivoted or whatever, but, you know, as a VC funding the blank, you know, like as a VC funding a Pengu killer, and I'm sure you know there's a few out there, whatever, they're like, oh, we're going to be better than Pudgy Penguins and Pengu for reasons, right? It's just positive EV. If someone comes, if someone turned, 10 people turn up and say, we're, we're building the next Pudgy Penguins, we're going to do

all of this stuff. We're going to be in Walmart too. I'm also, you know, a toll guy who's young and dynamic and like, you know, they literally like they'll roll them out, right? And there's like 10 of these dudes that are like all like, you know, like they've got like the plush toys and everything. And multi-coins like, yeah, we'll fund every one of you guys. Let's go. And they, and they, you know, we'll invest at like a 20 mil val. And they're like, we only need one of these things to pay off. Meanwhile, you're like, bro, I've been grinding for four years here. Like, when do you give me some money to actually scale this thing that's already working? Like, why are you funding these guys to come in and, you know, pretend to be me and fork me and take me down and whatever?

So that's why it was interesting that multi-coin said, actually, you know what? Fine. We'll invest in something that already exists on market. Like definitely empathize with your energy, given that context. Obviously, like, I'm, you know, I support the multi-coin guys. just because they've supported us in the past, but that's good context. And anecdotally, I feel that because I've been very upset in the past,

just personally having guys that do really support us who haven't gone done exactly that, right? Trying to make a place. Yeah, like someone's like, we've got even bigger plush toys and our founder's 6-8. Like, what do you think about that, huh? And it's like, wait what? Like, because it's just in crypto-

Those fun deals that are not even that compelling is the crazier. That sounds pretty compelling. But they'll fund deals that are like a fraction as compelling as that. I mean, if that was the case, maybe I'll let them. But there are some of these guys are doing way worse. Yeah, fair, fair, fair. So anyway, so I think, you know, well done, multi-coin. I have to give credit where credits due, buying liquid tokens on market of something.

I think maybe we should just explain what Ena is quickly for the audience. So Athena is a project that actually came out of, this is interesting lore. So Arthur Hayes wrote an article in 2023 and was like, what we need is a tokenized basis trade. So without going into too much detail, effectively tokenizing basis trade just says when funding rates on PEP exchanges. So Arthur Hayes is the founder of Bitmex. So obviously he thinks about funding rates a lot. And he was like, if we tokenize the Bitcoin basis trade, you could get yield from people who were effectively paying funding, paying to go long Bitcoin.

So all of these DGens that are long Bitcoin, 10x, 20x, 50x, 100x long Bitcoin are paying for that. And we could tokenize it and get yield from a stable coin. Now, that was both genius and retarded because you can't. tokenize a basis to trade for Bitcoin very easily. And we have this network called Ethereum where like it was such an obvious play. And so Guy from Athena is like, okay, except for the Bitcoin weird, you know, voodoo magic stuff where you're going to like build some technology there, we can just do this on Ethereum. And so he built Athena and it became this huge project. I think

they're like six or 10 billion dollars in stable coins. Like it's an incredible growth in the, in the stablecoin TVL. And obviously, because it's crypto, a bunch of people were like, oh, we can tokenize the basis trade better than you and came out trying to build these yield-bearing stable coins. But multi-coins double down on the leader, which, yeah, feels pretty good. Yeah, I like it. I like it. I like whenever somebody...

What's your history with multi-coin? Multi-coin supported you? What's... I think they've been friendly. I've been, you know, when I first did Pengu, that whole Salana ecosystem really rallied behind me. Right. Of course. And so Kyle was, you know, I don't know if they ended up buying, but he was supportive and he wanted to invest in early. And, you know, I told him that it's not this really what it was.

But, you know, anybody that I think pick up the, you know, because we're building an Ethereum land for so long, like no one picked up the phone. So when I walked in Salana land, right? and I started and then like literally the top 10 figureheads of Solana all got on the phone with me and gave me a I I respected it and I and I appreciated it to say the leave you saying I mean that's by the way I am never going to be over here yeah I'll say this Kyle is like I will rage against him we have you can go search Twitter there's like years of beef but I have like endless respect because like when he goes in on someone and he goes in on a lot of people, he is actually like a viciously great supporter. And so like if he's on your team, like and I do, I have respect for that.

Like he and he's not going to back down. So as much as much beef as we have on the edges like fundamentally like I don't know. I can't like deeply hate him or anything. Yeah, same energy. You know, it's funny. I sat there with him at Ethereum conference in 2018. and he was literally the only guy bidding Eath then. He,

like he had a bunch of cash and he was bidding Eath. And I was like, wow, actually, you know, so I have a weird love-of-hate relationship with Kyle. Like he does some stuff where I'm like, this guy's amazing.

And they do stuff where I'm just like, what are you doing? How does Athena blow up? Right? Like, what is the black swan? I mean, you think 10-10 would have really pushed,

you know, pushed the boundaries on that out. I actually put a lot of size. I never, because of Luna PTSD, but actually, like, early, earlier this month, I put a lot of money in Athena for the first time because I was like, if they were going to blow up, they were going to blow up on 1010. You know, what is the black swan scenario for Kane, just so I can underwrite my risk? Yeah, so I think the, well, the interesting thing is it was actually the USDA DPEG that a lot of people kind of point to as one of the factors on finance where, again, Oracle, the Oracle price versus what the actual price was, et cetera, and, you know, it always comes down to

articles. The Black Swan risk, I think, that the people talk about is that it will be hard for Athena in, you know, a volatile environment to unwind all of the positions that they have that are backing the stable coin, right? So they're, they're delta. neutral, which means they're not exposed directionally to the price movement of ETH, but they do have these constructed positions where they're long ETH and short ETH and that's how they get neutral. It's not like they're just sitting in dollars in a vault somewhere, right? That's where the yield comes from, though. The difference in cost of holding ETH versus shorting ETH is where the money comes from. And so they need to unwind those positions. So even though in theory all the money's

there, right? I think 1010 was interesting because it exposed something that I would have said people were under appreciating in terms of risk. Like, what happens if there is some huge ADL event, right? So if, and again, auto-de-leveraging is basically we don't have enough money to pay the winners on the exchange. So, you know, you had a winning position and instead of getting 100% of your win, you're only going to get 80% of your win. Now, the risk for Athena there is they have a position that if they don't get paid 100% of it, all of a sudden the stable point is not backed. They have to get paid 100% of it.

And so this is another place where some FUD came out where I think there were rumors. I don't know if it was actually confirmed that Athena had a deal because they're not leverage. They're one X leverage. So this is a position that they have that is not on margin or whatever. They're not borrowing. So they have a deal where they can't be auto deleveraged. Is the rumor, I don't know if it was confirmed, which means they didn't lose money. But in theory, if something really, really bad happened, they could be in a position where

their delta neutral position suddenly becomes directional. And this is what happened to a lot of the market. and why they lost money and why you're seeing market makers complaining about 1010 so much even today or liquid funds. Like anyone who's still griping on the timeline about 1010 lost a lot of money is basically the theory, right? And so I don't know what the, I don't know what they expect to come out of the griping. I think they're just, they're just griping in the timeline.

But if you had a position where, let's say, you were long Bitcoin on finance and short Bitcoin on buy Bitcoin. it, 1010 was a bad day for you. Because in theory, you were, you know, farming the funding rate or you're trying to, you know, some arbitrage play or whatever. But one of those venues kind of blew you up. And so your position ended up being directional, which is not what you want if you're, if you're a delta new, if you're hedge, if you're trying to hedge the price exposure and all of a sudden you're exposed to price exposure and all of a sudden the prices are moving wildly, it's going to be a bad day for you. Yeah. And I think Athena generally, like super generally, the Black Swan is like a combination of like, like it's, I think it's predicate like you have the bear market. And so the funding rates are negative or whatever for any amount of time. And then you have something happen where you have a gap that's created or obviously like there's counterparty risk theoretically, although they've mitigated a huge amount of that. Like it's still a thing. So then you have like, yeah, this triggering event, let's call it.

That's, you know, something blows up somewhere. And then due to probably like the more long-term market conditions, as people are trying to pull out, as they're trying to unwind the positions, as they're trying to get, you know, back into sane territory, one, it just takes a minute and they can't. And two, the direction of the market is like further impacting them, right? Because like when you're unwinding positions, the money is moving around, which means that you're going to have an impact on the market, you know. And if you're in that position where your own actions, right, there's like Tara, right?

They're like, unwind as fast as we can. But every time you unwind, you're making the situation worse. Yeah. Right. And so I think that's generally, I guess, like the biggest fear. Again, they have taken a lot of stuff. I think they've taken a lot of steps to try to mitigate. gate us. They have. They have. I mean, it's the same thing as like Lido, right? You know,

wrapped steak d. Rapsed steak to eat. Rapstaked eith is a tokenized version of ETH that gets yield from being staked in proof of stake, right? The problem is to unwind a stake deeth position, there's a cool down period. You know, so you're going to be sitting in the withdrawal queue. And sometimes the withdrawal queue to get out of staking is short. Sometimes it's long. You can imagine it might get much longer if all of a sudden people really needed that eight that was in the staking pools because they had a position long Bitcoin that was getting wrecked that they're trying to like cover the margin for. And so in the market that's dislocating, you can get these weird duration risks, basically

like I need my money 10 seconds ago and you're telling me it's going to be 30 days. And in that 30 days, bad things will happen. And so then at that point, I'm like, I don't care about your 30. days, I'm willing to sell it a 20%, 30%, 50%, 99% discount because I need every single penny that I can get to go and defend a position over here. And so anytime there's any duration risk where it's like, hey, Luke, I'm going to give you, you know, a million bucks for a month. And then 20 minutes later, I'm like, actually, I need it. And you're like, sorry, bro. Like you said I could have it for a month. And I'm like, no, no, no. Like, how much can you give me? And you're like zero. And I'm like,

dead. Like that's duration risk and and I'm like begging you. I'm like just give me five bucks and you're like sorry I can't do it. Yeah. So or like I'll give you one dollar in. I'll give you one dollar. Can you make it two dollars please? That's it for this episode of uneasy money. Thanks for tuning in. If you like the episode, follow us on the Unchain Feed on X, YouTube, or wherever you get your podcasts. We'll see you next week. Bye, guys.