Hivemind: State of The Market, Hyperliquid, Plasma & Tether's $500B Valuation

Nothing said on The Hive Mind is a recommendation to buy or sell securities or tokens. This podcast is strictly for informational purposes only, and any views expressed by anyone on the show are solely our own opinions, not financial advice. Hi everyone and welcome to another episode of The Hive Mind podcast. The goal of the podcast is to provide an inside look into what we like to call the Delphi hive mind, bringing together some of our brightest minds from each of the divisions to share insights, alpha, and shitposts. Today with us, we have the usual cast, Ceteris Paribus from Research, Jan Lieberman from Delphi Ventures, and Venture Scout Duncan, also known as Flood Capital, who Ceteris described as a guy who used to work here and now kind of just chills Galaxy. I lead Delphi Labs, our protocol R&D arm focused on incubating and accelerating new Web3 primitives. So it's been a pretty busy 2-week period actually compared to the norm. We had our Delphi offsite and as is customary, the market dumped horribly during it and then proceeded to recover as soon as we got home. Maybe we can start with markets, just going around the horn, how everyone's feeling about stuff right now, how everyone's positioned. Maybe starting with you, Jan, you mentioned you were pretty long heading into year-end last time. I'm guessing you're still pretty long, if not longer than you were last time. And yeah, curious how you're feeling here.

Yeah, no, I took off some perps going into it just because I like it. It would be too much of a mental burden. But I've kind of redeployed since. Yeah, I know I'm pretty long. I think macro-wise, the setup is really strong, right? Going into year-end. And I think the biggest concerns are basically that crypto hasn't been following. And I think the bulls see this as there being somewhat of a lag and a catch-up trade opportunity, particularly with kind of how gold's doing. And then the bears are saying, you know, cycle's kind of over if we're seeing the bid elsewhere and no real follow-through here. I think this is probably one of the more divided markets we've had where you see a lot of big names being openly bearish. And, you know, to some degree there's kind of survivorship bias, right? Where these are the people that have survived multiple cycles and you do that by selling potentially too early, right? But you still survive. And so you kind of see those guys continue to be voices in the space. And naturally it's the mega bulls who on one hand tend to do well, but also are most likely to kind of blow up and leave the space. So I'm in the bull camp. I think macro-wise it's still really good. I think earnings are going to be coming up and things should continue to be strong. You've had 2 years of really strong S&P performance, right? And eventually the music kind of has to stop, but On the other hand, you have this one outside, this kind of, you know, just the AI and the CapEx spend and the growth and everything there. And so I think it's hard to be bearish. I think it's easy to be bearish if you just look at, if you zoom out and purely just look at consecutive strong years and how many you typically have, and then what happens after you've had a few of them. But I think there's a good argument to be made for this time it's different. I mean, I think the market will certainly have its pullbacks. There will be some point of contention, whether it's geopolitical or midterms not going too far in the Republican direction. And so there are always reasons for there to be sell-offs, but I think that the setup is pretty strong. I think the other element is you've had the BTC run, the ETH run. I don't think we've had the SOL run yet because we still have the ETFs coming. So I do think there's going to be something there. But no, I mean, I'm pretty long, just your standard BTC, SOL hype, you know, pump bag, which you have that like Buzz Lightyear meme of everyone saying the same thing. But at the same time, I do think, you know, you're certainly going to have these runners and you just kind of have to be there and ready to take a risk. I don't think it's, It's easy to catch those because they happen to play out, right? Like your Astors and others. And so you kind of have to be at your desk and ready to fire. But I think generally those names are more comfortable holds. And I think those are the ones that funds that get fresh committed capital are the names that they can, you know, definitively deploy into.

It feels like it's basically impossible for the market to go down when the CapEx spend is this high. Like, how are we supposed to have a recession? When it's like we're doing the largest infrastructure buildout ever and it's like the government's backing it. It's literally an arms race for AI. So I just feel like, how are we supposed to have a recession during that? I feel like I'm like insanely bullish over the next 4 years, but like obviously there's going to be pockets of like bad pullbacks.

But yeah, I'm with you. I think that, I think the calls for like AI bubble are pretty mid. Honestly.

Well, no, it'll happen. It's just too early.

No, no.

I think bubbles inevitably happen. Expectations can always get ahead of fundamentals, but the fundamentals are just so strong.

I think AI is actually underhyped. AI and robotics, when you combine those two things, are underhyped.

Yeah.

But you can have— we might not get a recession for a while, but you can see unemployment employment tick up a lot?

Oh my God, Cedars, who cares? It's straight up into the right. I'm like, the next 4 years, I think as long as there's not a war, we're going to be really buzzing. The one thing on like crypto-specific stuff is these SOL DApps have been a fucking flop. Unfortunately, they're trading like zero volume. Uh, so they need to go get those up. And there's also been like an insane leverage buildup into them. So I'm kind of worried about ETH and SOL. Just because there's so much leverage in the system.

But what leverage is with the DApps?

Uh, not, not with the DApps, with like just open interest is like on perps is like mooned for both ETH and SOL. And I think with SOL it was like front-running the DApps, and now the DApps are doing no volume. Like last week FORD was trading like $10 million a day, which is just like, fuck. Um, so that's, that's the one kind of tactical thing I'm a little bit concerned about. Um, and then also like BMNR's premium is getting pretty low, but they're trading into like BNR is doing like $2 billion in volume a day, and like FORD and Helios were doing like $10 million each, which is like really sad. But hopefully that, that they'll be able to generate some more volume. But that's what I'm kind of like a little bit skeptical on in the short term on ETH and SOL versus you have like everything else ripping and like Bitcoin probably catches up. So it's like two kind of forces. If Bitcoin pukes, like I think there's like the chance of like a massive liquidation on ETH and SOL just because of this leverage buildup. From front running.

I mean, we had like the biggest liquidation in quite some time.

No, but it was like this big.

That's the crazy part is how much leverage there's built up in, in such a tight—

well, that's what I mean. Like, man, if we roll, like, Ethan Solar literally—

sorry, why are they trading so little volume? Because as far as I can, I can tell, the MNAVs are still way, uh, are still like 1.5 and above.

Yeah, but that's probably why they're not trading a lot of volume.

Probably they haven't distributed shares yet or something.

Yeah, they haven't.

They haven't. But like, guys, listen, I was—

kind of fake prices though.

It's—

isn't it just on the pre-pipe circulating supply?

No, I want Ford to do as well as anyone else because Galaxy is a big part of it. But they traded yesterday 400,000 shares at $25 a share. Like, what is that? John, quick math on that. That is that $10 million, $400,000. Says $1.65 on the Blockworks, um, they traded $10 million yesterday and filed a $4 billion ATM. Like, anyways, yeah, so the pipe shares need to get unlocked and they need to get options markets there. And, uh, Mr. Multicoin has to go out there really, like, he's, he's doing it, but he really needs to generate some more volume, um, for SOL to to kind of carry through. But like, that is actually like such a flop. Like, BMNR is traded, uh, 2 days ago it traded 60 million shares, uh, at $50 a share. So is that $3 billion?

Like, I think it's gonna be fine.

That's why I can—

honestly, I think it's fine. It's just shares, there's not—

yeah.

Just more trading right now.

Okay.

Like BMNR trades at like 1, so it makes more sense that it has like trades at 1.3.

Yeah.

Okay.

But Cedars, the order of magnitude, it's a 3,000x different difference.

And I mean, I wouldn't say—

yeah, but it's the market cap. That's what I'm saying, though. Those shares aren't liquid. The market cap is $50 million. Not like it's— this is still pre-pipe stuff. So it's, it's, it's not, it's not like the supply isn't there yet. So they haven't— once that's live is when they can start doing ATM stuff.

They already filed it.

I'm not seeing— yeah, but I'm seeing the market cap at $2.1 billion on—

you're probably looking at SOL-owned— the amount of Solana it owns.

No, that's $1.26.

Uh, I see it is. They have 1.7 million outstanding shares.

Let's ask chat.

Are you looking at Ford as in—

but, uh, yeah, what about you, Cedars? Maybe you didn't, you didn't, uh, say how, how bullish or bearish you are.

Uh, I don't know, I just feel like we've been in the same market. Yeah, I'm like, oh well, I'm always—

never have any stables.

I'm always long, but I like— there's definitely periods where I think there's like way higher risk of everything going to shit. Um, I don't— I haven't really felt like this period was like that. Um, we've just been in this like grind, chop up sort of deal, and I think it's just mentally exhausting for a lot of people.

Um, oh no, going up too high.

Well, it's— I don't know, it's the same, it's the same market has been forever, right? I feel like a broken record, but the, the market's literally been the same for the past like half year. Where you just have a few things going up. Um, but I mean, equities still look good, and I am of the belief that you don't get a big crypto bear market until you get a big equity bear market.

So yeah, the weakness is, is definitely slightly concerning. Um, like with gold roaring and equities and equities pumping is— it's kind of weird. Um, but yeah, for me, I think Pump right now is the— still the best, best risk-return, um, out there, just in terms of the upside I see. And then yeah, the usual candidates that, that Jan mentioned is the rest of my portfolio. But I'm pretty—

have you bought it yet? Uh, no, I haven't. Oh damn, I haven't bought any Galaxy.

What about you? What about the rest of you guys? You bought Galaxy yet? Yeah, and Ceteris?

I've had Galaxy for a while. Yeah, but I don't like think about it because it's like it's just a stock I'm going to hold for a while.

Exactly. It's like, whatever. It's like, I equate it to like the new Berkshire Hathaway of the AI and crypto age. That's kind of—

yeah, I don't believe that, but it's got some good—

I've heard that one a few times and it was never bullish, the Berkshire Hathaway comparisons, for what it's worth.

Never bullish.

The first time I heard it was DX'd out. Berkshire Hathaway.

I don't know what the hell that is.

Yeah.

All right. And then one thing came out last, last week that I thought was interesting was just Tether raising it half a trillion, like puts it up there as one of the most valuable, I think maybe the most valuable private company on earth.

Does that make like Paolo the richest guy in the world now? Like, or one of them?

I don't think so.

He's up there for sure. He's up there.

I just, who is, who is buying this?

I don't understand the, uh, 500 bill. Yeah, dude, I don't get it. At like, what is it, a buck 75, like $175 mil in USDT, right? You're owning, earning like, that's, that's between, you know, $5 to $10 billion in, in interest rate yield. So like, that's only going to decline. And what kind of multiple are you slapping on that to rationalize? Like, it's just, I don't get it. I don't get how you see it.

It assumes that Tether is always going to be able to like keep all the interest. Yeah.

But like that, that interest is going to come down. They're all front end of the curve.

Yeah.

I don't, I don't really understand any TV liquid.

First of all, interest is going to come down. Second of all, I do think Tether has continuously managed to not pay out any interest and still keep growing, which is insane. They're like the only stablecoin that can do this right now. But I think with USDH and just the shift I'm seeing behind the scenes with like this stablecoin as a service, these white label stablecoins that every chain is kind of issuing, I think the meta is going to change where you just expect to get like the yield of the stablecoin you're using. And I think most chains and projects that have a bunch of stablecoins will try and internalize this. And I think that's going to be a hard trend to fight. Still on centralized exchanges, that's like, I think they don't—

That's where their market is. Tether doesn't do much on DEXs. So like, maybe eventually, you know, if DEX market share really chips away, but in a glass half full scenario, they don't have to deal with that. Interest rates will come down and like, how do you rationalize paying 100 times earnings on something like that? Revenue.

I mean, I think it's going to keep growing. I'm very bullish on like Tether continuing to grow, but yeah, for sure. I agree on that. I also think even on the centralized exchange, like you're seeing, like just even the USD integration on Binance, like I think it's up to nearly $3 billion in USD on Binance since then. And it's probably going to Wait, so I just think— what is, uh, USD got integrated as collateral yield earning?

Is that $3 billion on Binance? But so isn't Binance doing their version of it? What's it called? Aren't they—

that failed.

Oh, it failed.

Uh, yeah, I mean, it's that— that was a really interesting experiment because it never— I think it never got above like $2 bill, uh, market cap. I thought there was a new one like USDH or something.

I'm saying?

That's Hyperliquid.

That's Hyperliquid. I know. Okay, well, I'm, I'm saying the wrong one. It's— Aster's doing it. Do you know what I'm talking about?

Aster doesn't have their own stable though. That's just the Perp DEX.

I don't know, they're doing something like an Athena thingy. Let me find out.

I don't know, I think it's like part of their market making system too, to bring liquidity.

I'm gonna, I'm gonna check quickly, but yeah, I do think like you'd expect people to over time, especially as, as the yields, like you'd expect people over time to just like not accept stablecoin issuers internalizing the yield and for this to not stay like a massively high margin thing.

But yeah, hopefully they just use it to buy Bitcoin, which I doubt they're going to do that.

USDF has 365 million minted and you get a 15%.

Maybe a better question is, if you were them, what would you do with the $20 billion?

I think that the, the reason why they want to raise honestly is just to get a bunch of US investors that are like important and kind of just cash out and bro down, kind of just like help like cement them in the— like they want— I think they, they have— I mean, maybe not anymore because I mean Trump literally invited him and gave him like, uh, kudos or whatever, but I wouldn't be surprised if the Tether $20 bill gets filled by um, like important people and like systemically in the US. And this is kind of US Treasury and more like a political thing to cement Tether further. Because it's true, like they don't— it's the—

you do it the other way around, right? It's, it's the private investor that would support a US politician's business at an irrational value to, to, to, to cement the legacy, not a US politician investing at a—

I mean, the valuation I don't know, are they even going to fill that? That's the thing.

I'm sure like SoftBank will come in and—

true, maybe Cathy and SoftBank. Actually, I think I saw Cathy and SoftBank were interested, right?

I don't know what they'd use 20BO for though, to answer your question.

That seems—

yeah, it seems tough to—

I mean, if you can get it, I guess you just get it and just start buying more BTC.

And yeah, the BTC, or yeah, you should like a holding company of assets.

Okay, this USDF has grown from 36 million 3 weeks ago to 360 million on Aster, 15%. Hey guys, I'm just saying.

Do you know what this is? Like, have you looked into it at all?

Yeah, but is it on Aster or are they doing it all on, uh, Binance and then the— it's just they're trading it? Like, how does it work?

I don't know exactly how it works, but It's growing quick. It's like the, uh, it's the, it's the Aster. It's the, uh, true.

It is. It is the Athena. Yeah. See your screenshot. It is the Athena thing.

Yeah. Okay. I'm my mind's blown.

I just don't think any Athena on an isolated venue is ever going to be particularly interesting. Like you're never going to be able to match the yield at scale. Even Binance wasn't able to do this. Their own, with their own stablecoin. Like, even Binance wasn't able to do this, like the biggest exchange, with their own perps stablecoin, just because they can't compete with the yield across all the different exchanges at scale.

Yeah, I mean, the counter is basically, what if, what if the demand to go long is highest in Binance and it is then the largest source of funding rate and is actually bringing the weighted average higher than lower?

But Athena would arb that, Athena would overallocate to Binance and arb that, that like—

In theory, it should get arb'd flat evenly. I think it can work. It just doesn't scale to a large enough number, right? Like functionally it'd be the same because you'd assume that they would arbit across exchanges. It's more just the denominator can't get that big.

Wow. The Bitcoin chart looks really good right now. I just looked at it for the first time today.

Yeah. I mean, crypto has rebounded pretty well here. Um, oh, that weakness, that weakness could have just been somewhat of like an isolated flush there.

Uh, it could have been like quarter-end stuff.

Yeah, it could have been that too. Like, we started October 1st and we've been up.

We started October.

Yeah. Uh, what do you guys think about Plasma 10 bill?

It seems pricey.

People are either— I think, and it like, this is actually probably the right way to take it. You either become very giga bullish on it and you think it's going to get some Ripple XRP type valuation that makes no sense, but it's got the tether ties and super memeable or anything, or you just think it's like crazy overvalued. Um, and I— that's kind of the, the two buckets, and I think it makes sense. Like, on a fundamental basis, it's a crazy valuation to me. 100%. But like, we'll see how they execute and everything. And if they're able to— I don't know, you listen to— I've listened to like other podcasts and people are just very bullish on Plasma.

I don't, I don't have enough conviction either way to have a position. I don't want to get blown out on a short, and I think there's easier stuff to short, and I just don't have the conviction to long it. At this val.

Yeah, that's exactly how I feel. It's a pure sit out.

What even happened? Like, didn't it nuke a bunch and like, see, like the whole crypto trader is freaking out?

No, it's like, I mean, it went up to, what, 1.6, 1.7 almost, so like $17 billion, and it's back to $1, $10 billion, pretty much where it ICO price opened at. So it's just CT, you know, talking about 3-day price action.

Yeah, I mean, the— it's funny, the Tether thing. I heard— I don't know if this is confirmed, but Paolo put in a $50K ticket, and that's like the Tether connection.

Wait, are you talking about 5K?

Surely not that little. I heard, I saw it.

I've seen it. I'm curious to confirm if that's true or not. I assume it's not. I assume Tether also invested separately, but if so, it's pretty funny because they've also invested in a bunch of other stablechains, right? Like, um, I don't know, obviously Tron has product market fit for this and like the bar is not high, but they also have just inertia from just being there first and being integrated into a bunch of OTC bids.

Yeah, it'll be interesting to see what Stable launches at, because it's kind of the same thing, right?

I mean, I, we, we, I passed on Plasma, like the, the seed or whatever it was. It was like $100 million or something. So I'm probably salty, but I don't really see the the point of a stablecoin chain, um, still. Other, you know, I don't really see why we need a dedicated stablecoin chain, but by all accounts the team's like really good and is building some, some really cool stuff. But like with Tempo, and I think like every chain is, is going to want to be a stablecoin chain, there's like Stable, Tempo, like Converge, um, uh, obviously Plasma. I don't know, I don't think The market's big enough to sustain like a bunch of 10+ billion dollars.

No, definitely not. Also because stablecoins are just the— I've always thought stablecoins were like something you need to make your chain be able to handle, but you were never going to make money on it. Right. Cause there's no, they're just not a, like most of the money in blockchains come from ordering transactions. Right. And stablecoin payments have no ordering. That's like needed. But you still want it because that keeps people on your chain and in your ecosystem and everything. So it's very important for that. It's like this thing you need to have, but it doesn't really create economics for you. I still kind of think that, but we'll see. We'll see how like the DeFi ecosystem evolves there and everything. I think that there are some— I think like USD AI is doing something there which people are bullish on that one. Um, and so they do have like good projects, I think.

Just good stable farms.

Yeah. Well, yeah.

Like I'm farming, I'm farming there too. Uh, it's a good, good stablecoin farm, but like that's been the death of many chains, right? Like the farmers are pretty brutal with their rotation games.

Yeah. Especially stable farmers. Right. Cause you're like, Literally, you're, you're at least people farming in like other assets. Sometimes you can like make them hold. But yeah, point farmers are just pure like dumping.

Yeah. I mean, Tron generated like $2 billion, I think, in fees in 2024.

Tron's such a weird outlier because they still make $1 or $2 per transaction, which makes no sense for like stablecoins, right? It's like, oh, we're, we're, we're banking the, the, all the little shops in, uh, like Thailand and everything. And what people are paying, like a dollar or two just on the Tron fee for these, like, aren't you buying like 50-cent purchases, right? So yeah, I don't know, there's definitely a market for it.

Yeah, I think XPL also did a, did a public sale, and it seems like those are kind of coming, like they've been coming back for a while, but it seems like now they're definitively back. Um, I think the— everyone's up on the, on the, on the XPL one. Uh, Legion did Yield Basis recently, which was like 200 million oversubscribed for, for 2 million, for 2 million ticket. Um, there's been obviously like, uh, Flying Tulip released their raise mechanics, and they're also confirmed to be doing a public sale.

Yeah, do you want to, do you want to go into that one? Because that one is, is different, right? It's— they raised 200 mil out of 1 bill But it's like this weird mechanism where the $200 mil is going straight to farming, and then as an investor, you can like get back your tokens, your, your investment at any time, right?

At entry cost.

Yeah.

It's like a put basically. So it puts in a floor for price. So basically the, the team uses the rate funds operations through the yield earned by the raised funds. The raised funds sit in a reserve and function as a put allowing any investors the ability to redeem just principal at initial cost.

That's pretty awesome.

Yeah.

Good. Who thought of that one?

The king of yield farms.

Yeah. Yeah.

But it's been done before, like from even from ICO days. I remember projects doing—

you can get like 10 million. How much they raised? 200. So you can get like 8 8, 10 million a year? Probably more.

I mean, I feel like, well, I guess, yeah, it depends how aggressively, but no, I mean, they can definitely, I think 10% is attainable if you're savvy enough and have someone who's able to kind of rotate and do it quickly. Obviously 200 million's a lot of size, so you start to get some serious yield decay, but if you kind of scatter it across a lot of areas, you probably get 10%.

That's pretty epic.

Yeah, it's an interesting mechanism. I wonder if more projects will do it.

Yeah.

What do you think of it, Jan? Curious.

I mean, then, and then like, I mean, the psychological element of putting in a floor on price is huge, right? Then it's just like, rather than being an anchor, it's like a spring away.

Imagine Plump did that with your $1 billion. Yeah. That means that you can't touch the $200 mil like ever, or does the put expire after a certain amount of time or what?

That part I don't know.

Um, we can check, but, um, be cool if it was like a 5-year put or something, 2 years or something. There's like a time.

Yeah.

I mean, I think it makes sense. And then part, like, you know, you could eventually raise at a higher val too, right? And, and those, that would be a, a more standard approach. And that way you can raise at 2 knowing that price will likely not fall below 1. I mean, it always can, right? Because you can have perps and other market participants just sell the token down beyond that. So it's not like a surefire way. The impact of it decays over time as more of the supply gets out there.

Yeah. Okay.

Because it's only for the raised money. That makes sense. That was really cool though. I like that. Getting creative.

Looks like it's perpetual.

Oh, okay.

Hmm.

Interesting. But I guess, yeah, they could raise more money without that later on or something. Without that, like from a different tranche of investors.

Yeah. I mean, it all this and then like related to this, DoubleZero also got a no action letter from the SEC, which is—

what does that mean?

Kind of wild to see.

Um, action means they won't be, uh, pursued or anything.

Yeah, we're getting pursued previously. I have no idea what was this whole situation.

Um, no, it means they can, they can basically launch their token without the fear of later being pursued for, for securities violations.

Did they ask for that, or like they applied for it?

Yeah, I believe they went to the SEC. It's, uh, yeah, maybe Satoru is actually, you're probably the best to explain this. Kind of trying to build a new internet.

DoubleZero? Yeah. So DoubleZero, essentially, if you think about like high frequency, so you think about the way—

English, please.

Yeah.

I was just joking.

So, okay. So the way, the way blockchains work today, right, is you have all these validators. Around the world, and when they come to like agreement on transactions, uh, they need to communicate with each other, right? So you have validators in like Tokyo, you have validators in Amsterdam and in Chicago, and there's like latency with sending messages across the world, right? And the way standard internet works is when you send a ping from like Chicago to Tokyo, the path it takes to get to Tokyo is kind of random all the time. So it could go like even backwards a bit. Um, it could go like from Chicago, it could go to like New York, and then it could go over to Tokyo or something, right? Or it could go to Amsterdam and then to Tokyo. What DoubleZero does is you have all these HFT firms that built all this, all these, uh, wires like underground.

Yeah.

Uh, for trading, right? A lot of their fiber is, is like dark. Okay. Which means that like, it's not utilized a lot of the time. And so what DoubleZero does is essentially it gets all these validators to want to join the DoubleZero network. And then DoubleZero kind of like negotiates to use this fiber on behalf of like all the validators in the network. And so now when you want to go from Chicago to Tokyo, you get a direct line. And it speeds it up a lot.

They lay that across the ocean?

Yes, across the ocean.

So, and floating, or bottom? It's already there.

Yeah, it's already there. That's the thing, like, all this is already there and it's not really used. It's dark and they want to light it up, essentially, right? And so, um, it's like Deepin in the sense where it's this, like— and that's what, that's what Hester Pierce, I think she had a comment in here talking about how, like, Deepin She specifically mentioned dPIN, so it seems pretty bullish for dPIN projects in general. Um, but yeah, they're, they're, they're already live. Like, I think 10, more than 10% of Solana stake runs double zero. Their token goes live tomorrow.

It's, uh, so, so what's that? That was an excellent explanation, by the way. Thank you. Sorry for trolling you. What, um, what is the actual use case of it though?

Just, it makes it faster. Like, it makes consensus the whole, like, Solana or trading or what? Any network who wants to run it. So any high throughput network, it's not going to be of much use to something like Ethereum with 12-second block times. Uh, well, I mean, it'll be of some use, but like you still have these 12-second block times, right? And it's not going to be helpful for like— I don't know if it would be helpful for L2s because there's no consensus. Maybe it would be helpful with that in like another way, but It essentially, it's like this whole increased bandwidth, reduced latency thing, right?

That's awesome. We're actually doing things with crypto now. That's what—

Yeah. So DoubleZero. Yeah. So DoubleZero is like not even this like crypto thing per se, like it is, but it's not like you could use it for other, like not even blockchains.

And is the token to just like get people on the network or something?

Yeah. I'm not entirely sure what the token. Is going to be. I'm not entirely sure of like the economic model for DoubleZero. I haven't, uh, I should probably look into it.

It's a typical L1 token. So the token is used, uh, we're investors by the way, full disclosure, but the token is used to, um, pay validators and also pay for resource provisioning on the network. So, um, and then also there's going to be some burn that happens there too.

It's its own layer 1 along with like providing support for Solana.

It's not really a layer 1.

It's not really a layer 1.

Yeah. It's like this coordination. Is it, is there even a block? I don't, isn't it like a Noma in the sense that there's not like a blockchain? It's like this other layer that it is. Like, is the double zero tokens probably going to launch on Solana, right?

Wait, so who else would use them other than Solana?

Like, Kasui could use them. Monad could use them. Any like performant chain with consensus?

Yeah, I don't think it has a ledger or a consensus. I think it's literally just like a networking layer that anyone can use. So validators can opt into it and then they're using double zero to send data between them rather than, yeah, rather than the traditional.

It's a cool project because like Solana, for instance, they can, they can make the validator client better. They can do all these optimizations. But at the end of the day, especially if you don't want to co-locate validators, like have all the validators in Amsterdam or something, there's like only so much. I really want to, if they wanted to like decentralize maybe, but I don't know if they care about that.

Yeah. So like, that's a good question. Do you know how long it takes to go from like one side of the world to the other with this? Like, How much does it affect latency?

There, I forget off the top of my head. There was a good presentation actually from ECC on this. It wasn't about double zero, but it's with like some Google. It was, it was Fire, it was Flashbots and a guy from Google. And he had a really good, it's like it changes it. It can change it from like over 100 milliseconds to it can like cut it in half, right?

And is it— is that just capped by like the speed of light going through the fiber cables?

Yeah. Yeah. I think 150 milliseconds is like fastest you can get. I think.

Is there any way to get faster than that or is that—

I don't—

I think that's like the physics issue.

Yeah.

We need the alien tech for that so we can get zero latency trading.

Yeah.

What did you guys do with this tech?

Well, Zero latency. My, my HFT firm made 8 million.

Yeah.

Top of book. Just got a lot better.

Yeah. But no, DoubleZero is really cool. It's one of those like, um, everybody is bored of infra, right? And everybody's like, oh, we have too much infra, all this stuff. I've always kind of thought that we have too much of the wrong infra, but we actually don't have enough of the right infra. But like, and DoubleZero is one of those. Projects that I think is, you know, getting the right info.

So like these trading firms historically just like keep this to themselves. Like there's no like way to tap it.

There's no monetization for it for them. Yeah. So this is a way for them to kind of like monetize it more.

How much do you think, how much does he think it costs to like lay cable from Japan to New York?

Uh, it's a big number. I don't know, remember off the top of my head, but it's, it's like a good build out. And then once you build it out, You have to maintain it.

Is it like at the bottom of the ocean or just kind of like hanging?

No, it's at the bottom of the— how would it hang, man? There's like boats in the water, like low, and like kind of—

it's not like at the very—

I think it's at the bottom, very bottom.

Yeah. Imagine like an animal or something just like destroyed it.

Well, no, there's like sharks that have like chomped on fiber cables, right?

And that's nice. That would suck.

Yeah, but, uh, but yeah, that's double zero. I think the other kind of like meta going around is this whole like PerpDEX meta, right? Do you guys think this will be like a real— I think PerpDEXs have always been this like thing in crypto that just has great product-market fit. And then I think over the last few months, a lot of people started thinking like, okay, it's over now and it's just hyper liquid. Um, and you have got a lot of things. There's just a lot, right? There's a ton of like perp DEXs that are pretty new and coming out. Like, gee, there's even a— there's even this perp DEX that lets you— it's like a pump fund for perp DEXs. It's insane. It's called like Orderly or something. You can just like launch your own perp DEX. Uh, it seems kind of ridiculous. Seems ridiculous.

It's like we've, we've seen this before, right? It's, it's Um, I mean, I think all this stuff is, is a little bearish for hyper liquid because, um, you know, the issues before were that, uh, you could only really optimize so much. And then, uh, at a certain point, the, the DEX has become interchangeable. So if you're a trader, you know, I'm just going to kind of move my existing volume to the next one that still has a token. And so that was kind of the issue for a lot of existing Perp DEXs was when you're incentives started to kind of slow down, you'd see the mercenary traders or just rational traders who were seeing, who'd get the same execution elsewhere, just move their trading there. And then Hyperliquid came out and they kind of dominated for a while, but now you're seeing these other ones pop up and I think it serves as inspiration, you know, for an opportunity for builders to kind of continue that. And you're going to see traders move, you know, from Hyperliquid to, to Lido and, and others. And so, it's, you kind of, yeah, we'll, we'll see when the, the water washes, when the tide washes away and tide being incentives, who's still left standing and, and where it makes sense. I think some of these are iterating in cool ways though.

I think Lido's pretty cool.

Yeah. I mean, they're, they're, they're, yeah, exactly. They are cool. And, and there's certainly innovation and you kind of have to do, some degree of it in order to stand out beyond the incentives. But, um, yeah, it makes sense for some of these DEXs or the, the SEKs to do one where you can try and kind of bridge liquidity across the two venues and ideally kind of improve the experience for SEKs by bringing some DEX liquidity there and allowing market makers to kind of bridge it. Or, um, and on the DEX side, you launch a successful token and there's obviously monetary benefits to that.

Yeah, I mean, I think DEXs are the most, like, in, in general, perp DEXs are, I think, the most profitable product in, in crypto, um, and, and arguably the one with the most product-market fit. But it is, like, very competitive, and the switching costs are very low, right? Like, if you compare something like, and we've seen it kind of time and time again, that there's been a perp DEX that was really dominating with with, you know, uh, well over like majority of market share, and then they got unseated by, by someone new. Uh, because when you just bring fresh incentives, like already everyone's farming Lighter and EdgeX and, and Astra, I guess, to some extent. Um, and the products, it's, it's kind of hard to differentiate a lot on the product. Um, I don't know, like I, I missed, uh, like I missed Hyperliquid initially because I just didn't see that it was that differentiated from from like dYdX and things like this to where it would warrant, you know, like a, whatever it is, a 40x or whatever evaluation premium from them. Um, and I think it's tough to, to tell like what, what is, what is the better product in this, in this purpose.

You have to use it.

I do use it though. That's the thing.

Everyone, I mean everyone who faded Hyperliquid is like, I'm like, have you used it? And they're like, uh, no. Okay. I, I wrote a thread on this. Can I please share it? Can I share my screen? I literally— this exact topic on why I sold all my hype for Galaxy at $54.

No.

Oh my God.

It's literally exactly what we're talking about. I literally put out exactly all the points you said, but with—

yeah, just say it better.

Okay. So basically the quality of revenues, right? As we said, the switching costs are are super, super high. And then as you have like these competition, like if Hyperliquid's $50 billion, like it kind of has this problem where it's like the higher it goes, like the bigger the prize is to come in and copy it. So like for majors, right? Like you probably just need like a pretty good team and a few hundred million dollars and you can offer like similar liquidity on kind of like major pairs. And then you can run this massive campaign, right? Where like Aster has whatever, billions and billions of dollars in tokens as incentives. So like, it's kind of like as you get more successful, it's like a bigger prize pool to come after. And then like a competent team with like a few hundred million dollars and some market making arrangements can come in and try and take a stab at your prize. So that's what we're kind of seeing with the GastroLighter and all these guys. Uh, and then why I was solely for Galaxy is because they have very sticky contractual revenue. So it's like the quality of revenue, right? Like how can you put a really high multiple, even though Hyperliquid's like a 99% margin business. It's like, how can you put a really high multiple on that if there's like not any guarantee that it's going to be there in the future? Because these people can kind of just like suck it away.

Yeah. This is why I still think that Pump, which trades at a way lower multiple than Hyperliquid, does have a path to like actually justifying a way higher multiple. Because if Pump actually breaks into the mainstream and they're successful on like the streaming and like TikTok thing or whatever, I don't think that's as easily disruptible as like a really good perp DEX, right? Because the brand matters way more. Like, and like the social.

100%.

Yeah. Okay.

Second one is the flows and the absolute size of Hyperliquid. Okay. So like at a 15, like at 50 billion FDV, this thing launched a year ago, right? Like it only TG'd in November. Think how much like UPNL. Is there from like early buyers and airdroppers still, and it's gonna hit long-term capital gains for US people in November, right? So that's another thing. It's just like to, to, to get hyper liquid to like 10x from this price to get up to like $500 billion, like ETH's valuation, it just takes like an immense amount of flows. And there's just like a point where people don't even care how cheap it is. They're just up so much like UP&L from like buying early that they will sell no matter what. So like already all the, already all like the crypto funds have bought, right? Basically like any crypto fund has bought. It's like you need now like the next leg of buyers and like maybe the DApps will be able to do that for Hyperliquid, but it's just going to take a long time for the market to digest that versus Galaxy at a $12 billion market cap. You know, Novo holds all the float. It's been trading lots of volume.

I agree with you on pump too. But I think also like within crypto, like stablecoins are way less profitable, but they have a way bigger moat. Like it's really hard to create a new stablecoin and like get all those integrations, you know, across DeFi, across CeFi, get the trust, get all that compared to a new, a new perp exchange. So yeah, and I agree with like, I still hold, I think I haven't really sold much Hype. Still hold most of the original position I bought, and I did buy on the initial run-up but bought on the, on the sort of FUD, um, for the, when they closed, when the Jelly Jelly FUD went down to like $10. Yeah, I think I started buying like $14 or $15 and bought the way down, but I still hold most of that. But I agree, the upside seems kind of, uh, tough to, to see how high it can go from here.

People are up so much.

It's not as big as people think. Like, I think the SPV is overstated just because of the amount that's sitting in. And you, we saw that John Charbonneau proposal to reduce supply by 45%. So FDV is like roughly half of what it actually is. But I agree. And I think the unlocks could be worse than people think and destroy some of the sort of aura that the project has.

Yeah.

I mean, I think, yeah, right now it seems like a better trading tool than like, than, than like a longer-term hold considering how soon the unlocks are coming. Like, my hype bag is a lot smaller than it's been. And I think next time I'd like to buy is if you get like a really bad flush or, or I think around unlock FUD. Because I imagine like, yeah, I gotta imagine those like sell a piece and then say we're sitting on the rest kind of thing.

Yeah. Or just do like a schedule, just be like, hey, we're gonna sell a million bucks. Like, and then it's just planned. The market knows it, can get its head around it.

I don't know when I think about, so when I, when I think about some of the crypto projects that could be in like a future, I talked about this before, but in a future like MAG50 or whatever, hype is definitely one of them though. Top 50 like companies.

Oh, okay.

Yeah, yeah.

Like the crypto, not a crypto Mag 50, like a total, like when I think about what crypto projects could make it into the 50 top companies in the world in the future, Hype is one of them. I think like then an L1 and something like a stablecoin player would be the ones I'd see doing it. So maybe exactly, you said it, not your words, not mine. Um, but yeah, so I don't know. I feel like I don't want to sell, uh, my entire hype bag, but maybe do something a bit. Hip3 could also be huge. Like, although like the interesting thing with Hip3 is I'm, I feel like the biggest TAM of Hip3 is traditional markets and those are harder to execute than just adding the market, right? Because there's like all this stuff you have to do, like maybe Jan, you can speak to this a bit. Obviously we had Kaladora on and she kind of explained last time, a bit of what makes it so tough to offer traditional markets, but it seems like someone, like the, the, there, there's enough going on at Hyperliquid that someone will be incentivized to like build basically Ostium on top of, on top of Hyperliquid. Obviously you can, it's like an oracle-based model, but what do you think? Is, is it going to be possible?

I think Unit's doing it.

Question I guess is if you're good enough to do it, would you, is it better to just own the whole pie. Like, do you have—

it's 50% though, right? Like, 50% seems pretty reasonable. It's like, are you going to be 2x more successful launching, um, on hype and benefiting from that entire user base and stuff? I think probably yes, especially because most of the people who probably will build it already have giant hype bags, which is another—

pretty sure Unit's doing it. Okay, do you know how spot or I don't know, but Shoku's tweeted about like, what should I add, like in stocks and stuff. So I don't know. I'm sure that he'll, he's really smart. He'll figure it out. If they can do perps in spot, he'll do it with HIP3. Yeah.

I mean, you basically need someone else market making in a really efficient way on trad markets. And also how do you do it?

Like when, when trad markets are, are, are closed, like how do you do it on weekends and after 5:00 PM?

You hit a pause on the market and then you limit leverage.

Yeah, definitely have to do limitations on, yeah, exposure.

Um, why can't you just pause the market and then limit leverage, right? Like obviously if you have 100x and then the weekend closes and then it gaps, you can't liquidate the person correctly. But if you have like, you limit the leverage to like 3x or 2x or something, or depending on how volatile the stock is, then you can like be pretty confident you're not gonna get bad.

You gotta limit OI and not, not just leverage.

Because leverage and all that, yeah, you can just do things. Like, I feel like you just figure it out.

It's tricky. I think the, the, the, the market maker or whatever pool they're using to do it just takes on a lot more delta. Um, and then, I mean, then it's like the— obviously the end goal there is you become the, the oracle of, uh, closed prices, and then when they open, they converge to you. But that's obviously a ways away. I mean, if they open up 24/7 trading, which I don't know if that'll ever happen.

Yeah, this is where it does feel like the vision is just like so big and like in years it could be so, so, so, so, so, so, so massive. But it's just like there's going to be so much competition along the way and it's just like a harder bet with certainty to make because there's just going to be so much competition, especially for this, right? You get into this token at like blockchain, like You don't think, you think people are just going to like the trad fi is going to stand aside and let Hyperliquid like be the global trading venue? Maybe, but, uh, I think it's like, there's going to be a lot of competition.

I think the biggest risk for Hyperliquid is just the like KYC AML stuff.

I think that, um, and just black swan from tech being a bit of a—

yeah, I just think that Hyperliquid is probably going to be pressured into, um, I think there's a lot of lobbying going on. And, uh, I think there's a decent chance that Hyperliquid may be forced to like KYC AML.

Yeah.

Anyway, actually, we, we— can I ask you guys, actually, do you guys have anything more to say on the PerpTech stuff?

I have a question about Hyperliquid. Are we holding or selling the Hyper NFT?

I mean, I don't have any, so yeah, I don't have any.

Well, yeah, I think you're one of the few— you're the only one I know who opted for both. Are you up or down had you just opted for—

there was no penalty to do that. There was zero penalty to opt for it. That was, that was—

well, no, it was an exchange though. You like sacrificed some tokens.

No, people were FUDing that. It was a—

I thought you had to pick one or the other.

No, you could check both boxes.

Uh, I'm gonna go check if I did.

Yeah, if you just put your address into OpenSea, it'll show you. Okay, how do we feel about— mine's pretty rare, so, uh, I'm thinking, is that— should I hold it? Or if it was a floor, I would probably just nuke it, but given its rarity—

yeah, but, uh, that— I don't know about the HyperNFT. That what I wanted to say before, in ICOs, is hearing, hearing, um, sort of rumbling about it that the SEC is basically bringing back, um, or like trying to figure out a way to bring back ICOs to US non-accredited, which would be pretty huge. Um, they're also— obviously there's no action letter to 00 is a pretty good sign. Like, I don't, I don't think they gave a single one of those during the Gensler, during the Gensler term. Um, and that could open up, uh, a way for projects to actually do like pretty big ICOs and for like on-chain fundraising to become way bigger than even in the ICO boom, which was already like, I think over $10 billion was raised in ICOs. So I think that's pretty exciting.

What's going on with Legion in this? How does this affect Legion? Give us the inside scoop. What's going on?

I mean, Legion is doing well. Like, uh, obviously YieldBasis was a big success. I think it was the most it's ever been, uh, sort of deposited on Legion, the $200 million, uh, and it's like insanely oversubscribed. And also like the cool thing about that was we're investors in YieldBasis and they didn't do any of the standard like buying Twitter followers and doing KOLs or anything like that. So people weren't talking about them, but now since the Legion sale, they're like all I see on my feed and like people are doing threads and shilling it and stuff, which is kind of like what you want. You literally just got massive free distribution. You didn't have to do anything other than sell your token to investors, you know, at a good price. So I think it's pretty good validation of the way they're doing things. And also even like the merit-based sale, like they were able to decide from 60,000+ applications to narrow it down to 2,300. People were writing like cover letters showing they really understood the project, like threads that they'd written about or this kind of thing. So I think it's, it's pretty cool. Definitely validation for the, for the way they were doing things. The Kraken sale was kind of less successful, like Kraken, which is partnering with Legion, sold out in about a second. And literally the entire website was, was down, at least for me, it was down. Like I couldn't even log into my, to my Kraken account. So I think it was, it's kind of a good problem, but it was a lot more traffic than, than, than they were expecting, which kind of, and YieldBase is, is, is definitely like a high profile project. Like it's ex- co-founder, but there's definitely some, some, some projects that, that have way more hype that will be doing ICO soon. So it's kind of interesting to see how that goes. Um, and obviously Echo is, is, has been crushing it too, uh, with, with Plasma and, and, uh, and I'm sure they have some other stuff, some other stuff coming. Uh, it'll, it'll be interesting to see like how the US rolls out this, this non-accredited thing, whether they do a pilot with specific people or whether it's like a general a general, yeah, it'll be interesting to see how they roll it out. 'Cause I guess there's some worlds where they just work with specific partners on it. Uh, and which would be pretty good for those people and pretty bad for—

Is it non-accredited? So they're gonna let everyone do it.

I mean, no, no evidence of this at all. It's like rumblings that I'm, that I'm hearing.

Uh, you should be able to be, 'cause like the whole thing is like, if you're not accredited, then it's like you're too, like, stupid and poor to make your own decisions.

I'm curious, what do you guys think of, like, if they open this up more and you have, like, tokenized securities and all this stuff, which they've been talking about for a while? I don't know if it's ever gonna happen. Do you think that's, like, bullish crypto?

Yes. Novo was talking about, um, Hester Pierce saying, like, talking about, like, bringing everything on chain. He's like, this is so They say, we get a market structure, Bill, like, I don't even know how to explain how fucking bullish this is. Like, that's the guy you need to listen to, the guy who's talking to like literally all the tradfi institutions. His calls are so good. Like when he's like, ah, I'm bullish BTC, I'm bearish. He sees like all the flow. He's talking to all the big shooters. Like it's honestly a lot of alpha and just like listening to him whenever he goes on TV.

It's definitely bullish. You, you don't want just crypto, crypto prod, you know what I mean? Like you don't want to just be trading self-referential tokens.

Yeah, the bearish argument is basically that it cannibalizes demand for crypto, but I think it grows the pie to a much larger degree and just brings more assets on-chain, which then will be flowing into DeFi, which, you know, obviously that becomes bullish for the fundamentals of everything. So I think it's net bullish for sure.

Yeah, like it depends what assets you're talking about. For instance, let's say Solana started getting a lot of legitimate companies you know, IPOing on Solana, that's good for like Kamino and, and like all the exchanges. It's good for SOL, right? Is it good for like other tokens that are not like related? No, right? And so they can catch a bid from some stupid narrative.

What happens when people lose their shares? Like you can't lose custody of your shares. You can lose custody.

Yeah, you could KYC and like recover them. I'm honestly so like, raise your targets over the next decade. I was reading this, this is insane. Are you ready for this? Okay, uh, through— to be estimated wealth to be inherited through 2048 by generation: $40 trillion from the Gen Xs, $46 trillion to the Millennials, and $15 trillion to Gen Z. Like, I'm pretty sure people Like global allocations to gold are like half a percent, and it's literally like doubled in the past like 5 years. And it's like Bitcoin, the, the global allocation of like Bitcoin is probably so small. So like if you actually put all the equity markets on chain, just like naturally they're going to get more comfortable with, oh, this is good tech, and buy like blockchain stuff. It's just like, oh my God, raise your targets, raise your targets long term. Just don't get liquidated.

I don't know, my— I'm, I'm more on the side— I, I do agree, like a lot of infra, crypto infra will, will some things will benefit. But I am more on the side of if like real companies start having a really easy path to tokenization and issuing on-chain, I think it's more so cannibalizes, um, a lot of the shitcoinery that's going on.

Yeah, sure.

Um, and like you'll have, you'll have a bunch of the real companies.

Yeah, but like we don't even, we don't want, like you're still gonna, there's still gonna be the demand for like the gambling, the getting like the 100x.

100%. It's just the universe of deployable cash, which just goes up through the roof, which is what you need. Like the whole reason the meme coin casino gets nuked is like everyone just ran out of money and that's why there are no more runners. It's like new money.

Everyone got rugged. Yeah. The president.

I guess. Do you think so? So you think like like, if people can gamble on like random private companies, it's just not fun and it doesn't itch. It doesn't like fulfill their gambling itch in the same way as aping a meme coin does. Like if there's, if there's, imagine there's loads of startups here, you can like listen to the founders or watch, watch pitches or whatever, look at, read documents. It's just a bit too serious and too complicated for most people and they just want to ape Doge with Hat or whatever.

I think it tickles a different itch, right? For, for most people, crypto, like people in crypto have the majority of their money in crypto. People outside of crypto don't. And so I think this just helps them get more money into the space, right? Like, sure, they might shift some of their equity portfolio from one to the other, but I, I think they will maybe take themselves off of zero or go from 1 to 10, 1 just being like, you know, like a, like previously mentioned, this gets them comfortable with, with the tech and, and how it works. And then two, it's just money that they weren't going to—

just getting comfortable, like, oh, this is fucking awesome, right? Versus using the bank, which sucks. But Jose, it's like, don't— I think you have to think it's growing the pie a ton versus like replacing.

Yeah, yeah. I mean, maybe. I think, I think there's also a world where like Robinhood kind of just, just makes all the money from this stuff. And like, if, if these things get tokenized, like the, some of the big company Web2 companies and, and exchanges end up making all the money. But, uh, I mean, it's definitely bullish crypto as technology. I just think a lot of the, a lot of the shitcoins, um, just feels more cannibalistic.

Well, the cannibalistic, like the notion is basically that all the crypto money, there's gonna be more crypto users that get their money outta crypto and into startups than there will be. New money that comes in, right? That's like basically the math.

Yeah.

And like, I think crypto people are more likely to put their money into startups to recreate like the general risk exposure, betting on innovation that they want versus startup people aping random crypto shit.

There's just so many people not in crypto that—

Yeah, that's fair.

It's also like, oh, this thing is going to like 3x in a year.

Boo.

You know, and that's like a best case scenario for crypto. These people have just, and, and like we're, we're in the same boat. We're just like, oh, this is like a guaranteed, you know, 3, 4x in a year or two. And, and it just doesn't get you excited.

Oh yeah. But like, you, if you literally could do that for like 10 years, you would be a gazillionaire. If you could 2 or 3x your port over like 10, obviously you'd lit. I know, but it's just like, oh, it doesn't get you excited.

That's basically it.

That's, that's the takeaway. We're insanely bullish. Don't get liquidated.

I think more people these days get chopped than liquidated. The, the chopping has been really bad, like the trends chopping.

Oh yeah, um, people need to zoom out.

I think there's a big overlap there. I think you're much more likely to get chopped when you trade perps too.

Yeah, 100%. That P&L, that P&L number is, is treacherous.

I got absolutely blown out on this ETH I did. I woke up and like, you know how like the chart from like last night's like loading and it's just like literally like the green candle's off the screen. I'm like, it's just like the old— I like wake up, the old chart's like still there and then it like refreshes and the green candle's literally off the screen. I'm like, ah, that's not good.

Do I still have a position?

All right, do you want to, um, Wrap it. Yeah.

Yeah, let's do it. Uh, good pod, guys. Thanks for, thanks for tuning in everyone, and we'll see you again in, in 2 weeks.

Yeah. See everyone.

Bye.

Thanks everyone.