Transcript
Speaker: you
Speaker: Welcome to a new episode of the InSilico Terminal podcast. My guest today is Omnia from Kinetic. So we have another non non-trader guest, a more protocol, project-oriented person. And um I've heard that you got started in NFT market making. Is that correct? Where we're just yeah talking about NFTs?
Speaker: yeah How does NFT market making work? What what what is NFT market making? It's genuinely horrible. I wouldn't recommend it to anyone. We were the only ones stupid enough to do that at the time. But, you know, there was some interesting opportunity to fuck with that. um It's...
Speaker: You know what we were a few years back, we were really surprised to hear that there was like a very famous market maker that was trying their hand at it. um And they got like famously very blown out doing it because they bought a lot of like really expensive inventory. And as you can imagine, that did horribly over the last few years. But anyway, the point is, there was definitely a market to make on it. And the edge actually wasn't in like making markets for floors.
Speaker: It was actually making markets for like rarer traits. So that was really interesting. And we somehow pushed that to its absolute limit and were able to figure out our own methodology for how certain traits within collections should be valued and did quite well.
Speaker: um But yeah, obviously wound that down when the time was right, which was a little bit after founding but finding Hyperliquid in ah early 2023. And here we are three years, three plus years later. Yeah.
Speaker: how did you first get started in crypto what was the nft market making thing your first real thing you did or no no so it was well before that fuck um geez wow what a while ago um so it's been almost a decade now funny enough really oh yeah um my co-founder magnus even longer 2013 when he was involved And I got in during the 2017 cycle.
Speaker: um I found it by complete accident, actually. So somebody I had followed on Instagram when I was on it at the time was like very into, i forgot how I found him, but... ah he was very and He was doing a few other things that time, so very entrepreneurial, um doing a couple of different things in business close by me. And at the time, I was working in the hospitality industry. And um what was it? I mean, obviously, you know, being a broke hotelier in, I won't even say in training, but just like, you know, in in the real world, essentially, I was like, and a teenager, i was like, yeah,
Speaker: ah this is really cool and i started dabbling and i was like a big fucking believer in like cardano and all this other shit and like the again let me be super clear right like i didn't have any idea what a smart contract was until like well into that i think like i spent a few months in 2017 initially dabbling and then by the end of that year is when i actually learned what a smart contract was and i still couldn't explain it properly but that's what i had there and uh obviously got my ass handed to me in 2018 when everyone got blown out and that was it cycle over crypto died uh so i actually gave up for a few years uh i actually didn't say for a few years but like i basically like went into hibernation between 20 like early 2018
Speaker: and
Speaker: So yeah, that over that period of time, I basically like did not pay his attention to crypto for a while. um I don't even know if I tracked. I mean, i don't know. I like i I had like a dead portfolio that I would look at every so often. And obviously everyone has like their funny COVID story. But like so when when COVID had happened and I got laid off from my hotel job,
Speaker: um I was like super fucking bored and doing very different things at the time. And I was like, you know what? i'm gonna I'm gonna like the get interested. Actually, okay. So I went down a very conspiratorial rabbit hole and it's got me really interested in economics.
Speaker: So when that as that was happening, I was like, okay, this is actually really cool. So I'm starting to see like all these different things happen. I missed DeFi summer and got in at like the very tail end of it, a few months before the uni airdrop.
Speaker: And if anybody remembers Ampleforth, that was like my first foray into DeFi. By the way, I still have no fucking idea what they've done. Like, I've refused to open that chapter of my life again. I remember the name, but I also have no idea what it does. It was, I, no fucking clue. It was some algorithmic rebasing stablecoin of some kind. And that's literally all I know about it.
Speaker: But... What happened was I was LP-ing in the Ambleforth geyser, they called it at the time. It was like a uni V2 pool that they were, was like a pool two thing. And I had no idea i was like participating in pool two. i It was just like deposit your tokens here and you get such and such. And I was like great.
Speaker: It was a super shitty looking white, like dashboard essentially that had like four different but ah boxes and like I just picked whatever box I thought was cool and I like left a hundred dollars there and like forgot about it for a long time um so full circle oh what ended up happening was Uni airdrop comes, ah I'm getting back into like the hospitality business. i end up leaving because the Uni airdrop, which is only like three grand for me, I was like, this is great.
Speaker: And I'm going to quit and trade full time. By February of 2021, I believe, I was blown up with my $3,000. three thousand dollars So I moved to a much cheaper country and i before i left, I applied for a job from the guy who I had found out about crypto through in 2017, who had just started a hedge fund, you know, maybe a couple of years before and was looking for analysts.
Speaker: So I ended up landing that job only on the basis that I was the only one that had ever messed with nascent ecosystems like Solana in 2021 or 2020. I was like the only one to fuck with that. um There was enough to get like a a hedge fund job after you. Yeah, blowing my 3K Stimmy from Uni. So that So that happened and I was so it was Solana usage early on like me me fucking with that though that did it and then also Avalanche if you if anyone remembers Pangolin that the decks on Avalanche like the unit of Avalanche airdrop I did everything in my power to claim that like $50 airdrop it literally took me two days to figure out
Speaker: through deep research how to basically go from like avalanche px and like c chain to like get those tokens and somehow get that money out so so that was my expertise outside of just like general i guess at the time basic crypto knowledge uh which was enough to get into that world and That was it. That's where I like began my crypto career, if you will, on the investing side of stuff. And i spent about a year and a half there. we put on some really great trades and like had a lot of fun. like the
Speaker: Probably most notable time was like the ecosystem rotation trade, which was really fun. And I got to learn a lot about the ins and outs. But the one thing that was missing for me was like we would talk, and I find this like really stupid. So like i I'm happy to be very public about this. like There are a lot of investors in crypto, like, whether venture or, like, Liquid, that have never been part of building a business in crypto. And this makes them, in my opinion, ah horrible investor in crypto. And that's what I was, right? Like, I was, sure, good at, like, calling a trade or whatever, so Liquid was fine. But, like,
Speaker: there is a special, I don't know, threshold in which like you can step into a founder's mind and like team's vibe and culture and stuff like that if you've been on that side of the fence before. And I had never had that experience. yeah So I was only used to like looking at like the numbers and potential narrative matching and like that that was it, right? Like that was my investing experience. um So I had met my co-founder actually investing in another ecosystem that we were working in. And, you know, we became friends, but like later co-founders and partners and everything we're doing. And the point being that I left the fund after like a good year and a half towards the tail end of the fund, helped start the venture side for the first few checks. and left to work at what everyone may remember, Redacted Cartel.
Speaker: So I worked there as co-head of BD for quite some time. um So this is what got my feet wet you know at the highest level in DeFi, essentially. And yeah obviously, it was a whole new world after that. Then we started the NFT market-making firm in which we experimented with a lot in like and NFT finance. you know we used We were like the first addresses to use PseudoSwap and so on and so forth. so Yeah, that led to obviously, you know a year and a half later coming across Hyperliquid and joining Closed Alpha. And another year later, at the end of summer 24, we decided to build Kinetic, which was totally blind because we had no idea Hyperliquid would have a token, just obviously our own speculation. And we had no idea when the EVM would come.
Speaker: So yeah, i probably would have preferred cryosleep if I knew it would come out a year later. yeah um But you know, nonetheless, ah That's just how it goes, right? and And we were so excited about it that it didn't matter.
Speaker: And here we are now. We're the largest protocol in Hyperliquid. So that's my lore. well Actually, ah your your law is kind of similar to mine in in what you did in 2018. I also left in 2018 and came back and in 2021 at the top, like a little bit later. i It was pretty bad. It was pretty bad. It was pretty boring back then. like nothing nothing after I've told this countless times. Nothing was going on. Bitcoin was expensive to transact on. Smart contracts did nothing. so It was so repeatzz to say really don't understand like how horrible that shit was, like how hard it was to like find an article or research on literally anything, um how bad the tooling was.
Speaker: Even in 2021, the tooling was shit. Yeah, really, really bad. So now oh for sure. Oh my God. I mean, now it's like night and day. um But yeah, no fucking respect, man, because holy shit back then was really bad.
Speaker: when you When you found Hyperliquid, were are you convinced right from the start? Like, were you an early believer? No, I don't think, well, yes, from the product perspective, yes. But like, I don't think anybody that says like, oh, i knew Hyperliquid was going to be a fucking $70 billion dollars protocol from like day one was fully retarded, like fully, like just don't believe anything at work that they say, right?
Speaker: It is impossible to have thought that from day one. um It was possible with early usage of the product and like an understanding of the execution speed that the team had.
Speaker: Right. And the execution quality. Right. To be clear. So I think by the end of 2023, like we were very convinced that this is like going to be something big. Yeah.
Speaker: And what really did it, by the way, and like this only happened because we had had a lot of experience using DYDX, GMX, PRP protocol, all the ones that came before, right? um We've traded on FTX, we trade on other exchanges like anyone, right? um ah so okay like we were we were convinced of that ah in the the end of 2023. now the whole thing like blew blew out to something totally new and different from a potential perspective uh in April 2024. like this was the turning point for me uh magnets and like what would become our team uh when hybrid BFT t was announced I was like this is fucking crazy when so that was obviously the new consensus mechanism that is now in production today still um
Speaker: the HyperEVM was like the next part of it as well. was like, okay, everything that we just speed ran over the last few years, like we can do HyperLiquid, right? um So that was big. And then obviously as that started to form up, was like, yeah, like that's why the KineticBet was made because we speculated that there would be hype token at some point. But as you you and everyone listening to this may know, Hyper-Eligo doesn't talk about these things. So like there was zero possible way to confirm. We knew very early on there was zero point in asking. So we had always maintained a very respectful relationship with them. Whereas others would be like, one token and like give me support, maybe this. And like, to be honest, like if anybody comes to build on hyperliquid and expects any so of any form of handholding or or help or whatever, you like just just know that that is a <unk> a losing battle. And that's kind of what I love about the ecosystem, by the way. Like there is ah there is an element of like, you must know how to, you know, figure shit the fuck out on your own and kind of work with like almost like going back to the stone age and like rub rocks together and then figure it out. That's like the most, you know,
Speaker: Darwinian part of the hyperlinker ecosystem that I've talked about for years now that I really love, that it is totally eat what you kill. You must build a product that people love to use, right?
Speaker: And if you don't have that, you're fucked. Like, and just don't even waste your time. So I love that about the ecosystem, right? And this is something that most builders and most traders are not really ready for, that the environment is very, I won't say PVP, it's very um survival of the fittest, right? Which is why you see like two really large and I would say notable protocols on HyperLiquid today, which are Kinetic on the EVM and general purpose side and TradeXYZ on the spot issuance and purpose issuance side. So, yeah, um it's hard to be completely honest, ah but that's what makes it exciting and challenging.
Speaker: So you you were convinced, you were so convinced by the the new staking algorithm instead of Hyper BFT. I don't know too much about stuff like that, to be honest. Yeah, okay. All right. So let me get nerdy with it super quick. So basic so basically Hyperliquid was initially a...
Speaker: they They were using, like the way that they built the blockchain was using Tendermint consensus, and this allowed them to achieve transactions per second of about 20,000. Right. right So good performance, way more than anything that existed out there. Tendermint is like the the Cosmos thing, right? Correct. Yeah, yeah, exactly. So that was the first iteration.
Speaker: of the hyper liquid blockchain right and then they then eventually shifted the consensus mechanism to a custom implementation of so of of hot stuff and bft that they call hyper bft um so bft t for those that don't know Byzantine fault tolerance so This allowed Hyperliquid to basically crank throughput by like a lot, and they 10xed the performance that existed in the previous 10x implementation. So it went from 20,000 TPS ceiling to 200,000 TPS.
Speaker: For those that don't know, and I don't think this is really known, the maximum amount of transactions even today that Hyperliquid has ever processed per second, ah like in terms of executable trades and stuff, is about 16,000. So it still hasn't passed a tenth of its true existing in production ceiling. okay And a theoretical ceiling of Hyper BFT is about 2 million transactions per second. This is about what Binance is at today, to my understanding.
Speaker: So obviously, like you can scale, it can scale pretty hard, but demand has to be there in order to justify doing that. But that's, so that's Hyper BFT. Then the other thing was announced in April, so Hyper BFT was announced and then a week or two later, it was live. So that was like huge. I was like, this is crazy. And we were like, these guys are just incredible.
Speaker: um So Hyper EVM, on the other hand, was obviously a very interesting wildcard because we had not expected Hyperliquid to have some sort of general purpose environment like Ethereum or an L2 or base or whatever.
Speaker: a hub So they called this Hyper EVM and Hyper EVM would eventually basically take the form of like Ethereum post Cancun, meaning the only thing that they really inherit outside of like the burns of, well, the only thing that they really inherit from Ethereum is obviously the the existing EVM and they inherit the Cancun upgrade, which is basically like burning hype on transactions. That's it. After that, like there's really nothing else. ah So that's HyperBFT, which is like the consensus mechanism of HyperLiquid, and then HyperEVM, which is the general purpose smart contract compatible environment.
Speaker: um And the genius is the composability between the two of them. Now, there is, like, again, just to be a little bit more technical, the only thing that is atomic between the two of them, meaning you can kind of read in real time, is hyper core state, meaning like prices, for example, on Bitcoin perp or Bitcoin spot or whatever, anything that's listed on hyper core, you can consider an Oracle.
Speaker: It's like, we're on a screen right now. If I look at another screen of Bitcoin at the same time, it's like, I could look at them practically at the same time. yeah um But I can, it's it's like, I wouldn't be able to trade at the same time as I could read the price, right? So the composability at the right level, meaning like what your what kind of transactions you're actually executing are asynchronous versus atomic. So that takes more time and needs to be in in tune or in sync, if you will, with hypercore versus hypervm block times. So anyway, that's my technical nerdy...
Speaker: part of discussion, but that's really this stuff in April, 2024 was really what convinced us that hyper liquid is going to be something crazy. And this was still extremely few and far between in terms of who actually believed this, let alone, yeah you know, exercised anything around this belief.
Speaker: It's very interesting to think about stuff like this again for a bit because I remember while we were talking about the old days, like there was quite ah long time in crypto where all everyone talks about where all of these consensus mechanisms and tenorment and all of that stuff. Nowadays it's like gone. Like no no one cares about it anymore or talks about like anything like that. and I already like deleted it from my mind, but it's like good to to remember that this is still like the basis of how was like everything that we're kind of doing. was like, oh my God.
Speaker: If you put out a paper on like your ability to achieve, i don't know, insert number transactions. Yeah. I would add like 100 billion to your valuation. I feel like people that only join now, they won't even understand like how ridiculous it actually was. Like this was legit everything that like all of crypto was about.
Speaker: I remember Kobe talked about a Filecoin like a while back and like that shit went to like 400 billion FDV. Yeah. um That was crazy. Right. So yeah, people don't realize, again, how ah silly things were and like obviously now how sophisticated the space has become.
Speaker: um You know, naturally, valuations compress, right, because now and and I think Hyperlink Grid has been obviously like the ecosystem. nick Sorry, the the crypto industry's like um scapegoat for like, oh, Hyperlink Grid like ruined tokens. and It probably did. Right. Like it actually showed that revenue is all that matters.
Speaker: right revenues all that matter it's not really a bad thing in this that thing at all ruin stuff i feel like it maybe you can blame it a little bit on hyper liquid but also a lot on the the vc high fdv stuff and all the segmentization of liquidity with name coins and pump fun and like what's the inflection point essentially but there was definitely a practice of like Let's get in at like 10, 20, 30, 40 million FTV or whatever, and then just send this shit as high as possible because we should just like coordinate. Again, i'm not going say there's a fucking cabal, which there very well could be, and I don't know or care, but like there had to be, and there was clearly practices around people being in the same round.
Speaker: Let's pitch this as like the next next greatest thing ever. And we could have still been in that cycle if it wasn't for Hyper the Grid. saying, you know what, there's no VCs. All the revenue is go to be used to purchase the token.
Speaker: And people were like, wow, this is a great idea. This is really great. Isn't that similar to what happens in like, um you know, stock land or whatever that weird shit is? excelling yeah Yeah, actual finance.
Speaker: So it was good. it It was honestly a very good thing. um It has definitely like mowed the lawn of like unserious builders. And if you're left over, then like you must be trying to work it out or already have figured out that like this is the way to go.
Speaker: I would like to ask you to like explain to me a bit what Kinetic actually is because i don't i'm I'm not too much into all of the the DeFi kind of stuff. And you you had a lot of conviction. ah i mean, you you kind of knew, I guess, that there would be a token coming because there was already points back then, but you didn't really know when. so you just Yeah, there was no confirmation of anything. Yeah, it was so weird.
Speaker: but yeah and um so kinetic in in my understanding it's kind of like lido i guess for staked eth kind of like lido for eth or like gito for soul yeah so that's us for hype so kinetic is the leading liquid staking protocol in hyper liquid we just happen to be the biggest protocol hyper liquid with 1.1 billion in deposits um we have about 85 market share in staking like liquid staking to be specific And we make up a very large percentage of the stake supply relative to large individuals or companies that hold the hype.
Speaker: And ah yeah, so the protocol today controls about 16 million hype within the contracts, which is obviously non-custodial. And like everyone has deposited in between 29,000 stakers. And we have every type of staker you could think about. so ah from you know retail traders on Hyperliquid that received hype or bought hype, they stake with us, all the way up to institutions and publicly traded companies, regulated market makers, et cetera.
Speaker: So, yeah, that so Kinetic's flagship product today is K-Hype, which is the... general purpose LST, but we've also ah created a suite of like child LSTs essentially, you could say, where like we have an institutional offering where institutions could stake with us and get a fully kind of like extremely secure environment to have their hype stake not commingled with others. So they KYC,
Speaker: And basically you have this staking environment that is composable if a DeFi protocol would want to take this. Custodians can custody it as well. And you know that you know your stake is not sitting in a pool of potentially other, you know, $29,000 addresses. So that's an institutional offering that we have. We call it iHype.
Speaker: We have the Earn offering, which we work with Veda Labs on, who essentially offers the best risk adjusted yield on Khype. So people could deposit it Hyper Khype. They go out to the most vetted protocols on Hyper EVM and then basically deploy that capital and generate returns for users. So currently it returns a little bit over 50% of the native staking yield by itself. So that's been a good option for a lot of people.
Speaker: um And then most recently we launched what we call KM Hype. So this is another specialized LST that essentially allows people to stake Hype on behalf of our HIP3 DEX deployment. So the way that the stake was funded is like a crowdfunded manner, almost like Kickstarter, essentially.
Speaker: um So it's not like myself or anyone in particular on the team or the company that has supplied the stake. It is tens... Well, no, today it's like...
Speaker: a little bit over 1500 people that basically make up the stake that powers the exchange. So we have a little bit over 600,000 hype there, well over the the required amount. And this allows people to basically come in and out of the LST if they want with liquidity, um while also still earning a fixed yield from the exchange, like a fixed percentage of the exchange revenues. So we've done a lot with staking. We've pushed the envelope by a lot. Hyperliquid, thankfully, allows you to do this because there's much more than just stake.
Speaker: um Everything that involves you know leveraging the Hyperliquid protocol for some kind of technology, like HIP3, HIP4, even fee discounts, involves staking. So Kinetic is in a really interesting position to leverage all of these different things and allow people to do more than just like simply liquid stake.
Speaker: so Yeah, today, thankfully, we've become the third largest global LST. The only things larger than Kinetic today are Binance ETH and Lido. So that's it. Oh, I didn't know Binance ETH was that large.
Speaker: Yeah, it's like six billion in ETH. Pretty crazy. so can you Can you maybe like walk me through a simple example of like what what is like... Because I understand staking in the sense that's like... You stake your... Either your holder, you just hold your hype, you do nothing. Or you like stake it on the protocol so you get like the fee discount or whatever. Or you can also do all of these things where you can stake a certain amount to like make your own markets and stuff like that. But what what what do you get from like depositing to kinetic and then you have the K hype?
Speaker: And what can you do with that then? Yeah, so you could do a lot with it. So what people do today is like LP on DEXs, for example, and they take advantage of like trading fees. um So people are obviously swapping between Hype and Khype at any given time. They own a share of those fees by by LPing that. Some other really interesting stuff that people do is like get fixed yield on Pendle by like trading the yield.
Speaker: of Khype. um So that's one that's really good. you know We brought Pendle to the ecosystem and they're a fantastic partner. And then the options, which are really cool as well. There's two larger options offerings on HyperVM called Risk and Derive. And the Khype is collateral on both of those platforms. So some people purchase you know covered halt covered calls or sell covered calls um against Khype as collateral.
Speaker: And that's been a really interesting strategy for people. So so you can do a lot. So basically it's like why leave the 2.2% of yield on the table ah when you're going out and doing what you wanted to do anywhere with hype?
Speaker: So it's like, You have your K-Hype as collateral and you're just generating more hype, you know, essentially yeah intrinsically while doing whatever other strategy you're running. So it's like, would a hedge fund or any other serious fund in the world leave an extra 2% on the table?
Speaker: Not really. um And all of the stake is secure because the Kinetic is a singular contract that stakes to the native blockchain. It's not like the stake is sitting there waiting to be attacked or something like that. It's literally staked to hyperliquid.
Speaker: Yeah, we inherit hyperliquid security, essentially, in that fashion. So people can rest assured that you have this really secure environment, which we don't fuck around with at all. We have real time monitoring across several companies, Groom Lake, Hypernative, et cetera, that we work with that basically ensure that things are you know kept safe and sound at all times. um And one of my co-founders, Justin, who is are also our CTO, I mean, he he lets us sleep at night is is the point. So um yeah, thankfully, because of the security protocols that we have in place, it puts us in a really good spot and allows users to be very comfortable knowing that their stake is in the best possible hands. So, yeah, that's like the very high level of like some of the security profile of Kinetic and also what you can do with KHAB as well, which several people do today, thankfully.
Speaker: Is there like a ah way in which you, um if you were, like if you're a trader on Hyperliquid, you want to use ah the hype to reduce your fees by staking it? is Do you also get this fee reduction a way if you do it through Kinetic or is it more something for people that are just holding their hype and want to do more with it?
Speaker: but do question. But not necessarily traders. Yeah, really, really good question. So the reality is that... right now hyper liquid has ah set up the fee discount in a way where you cannot delegate that to more than one address so since we have 29 000 stakers we don't obviously don't want to be in a position where it's like okay you know this stake has to go to like one depositor or like i don't know set up several contracts yeah that like abstracts the stake and and like complicates things and creates security risk and doing that so it's kind of one or the other if you're a serious trader and you prefer the discount
Speaker: you should just stick hype natively because it may be more worth it for you. But if you are DeFi savvy and you're going to be running options, et cetera, if you're going to use hype as collateral, there is no better collateral than khype.
Speaker: I see. Simple as, yeah. yeah that makes that makes sense um i want to talk a bit about markets can you explain a bit more about uh what that is how it's uh involved or in i don't know what the correct word is like what is the relationship with kinetic how does it work it's like a sub-brand uh so markets.xyz uh was developed for our um our HIPP3 offering so essentially, but it's become much more than that. It has basically become like a broker for all types of hyper liquid listings, whether it's crypto, trade XYZ listings, our own listings, etc. So we believe that you know Kinetic is in a really unique position to basically own our distribution and we really own the end user, whether it's a staker or a trader.
Speaker: And we basically service all of the hyper liquid markets to them. and they could trade it directly through us. So um I know people like to talk about HIP3 like it's some crazy monopoly and competitive environment.
Speaker: And to most people, it is. But in our case, we're very excited about TradeXYZ's success. And we're kind of a partner indirectly to them because we're just bringing them more flow. So... Everyone's happy. TradeXYZ gets a trade.
Speaker: Kinetic Markets makes 35 to 70 times the money on the same trade. And the user gets liquidity of that TradeXYZ builds up. So yeah, it's a very interesting um symbiotic relationship, I would say. A lot of people kind of frame this very negatively online. Like, TradeXYZ has all the OI and all the you know volumes and stuff like that.
Speaker: And that's fine. um it It only is a problem if you don't own the end user, is the point. So I think um with all due respect, it's a skill issue, essentially. Whether it's good or not for hyper-equity is not really what I give a shit about.
Speaker: What I give a shit about is like giving users the best markets, the best liquidity, and them having the best experience. um So as long as that's the case, I'm genuinely happy. um And obviously, hats off to those guys. But that's what Mark gets to XYZ is. We have a web app offering, and that we also have a mobile app offering.
Speaker: um was very happy to see that go viral a few weeks back when we launched um and yeah it's like a pocket rocket you know the mobile app is just so fun it's practically like instagram for purpose at the moment and it's only gonna get better so yeah i've i'm really enjoying it and so is the team Did you intend to compete more seriously with TradeXYZ in the beginning when it wasn't like completely clear that they would take over the number one spot like they have now?
Speaker: It's a good question. I mean, it's no secret that everyone would have loved a slice of all the OI and volumes. But to be completely honest with you, like... I'm really glad that they have the position that they have right now, to be honest. I very much enjoy picking and choosing you know what markets are best to surface to the end user rather than them you know then than having you know they're the headache that they have to deal with, for example, which is like, i don't know, so many, right, with regards to Oracle Selection or whatnot. Thankfully, we already work with really great partners in this regard. we work with Keiko on the Oracle Selection side and several other partners in making our markets you know liquid for what they are. um ah If you've seen the USDH saga, like that wind down was pretty unceremonious. and Maybe we can talk a bit about that. Because I think I'm now at a point where I kind of understood what everything was about. But I remember when it was like a whole thing on Twitter, I was kind of like, I didn't really properly understand what what the the whole point of it was. And then I just saw it like as a user from like a user experience side, it's like very annoying to have like multiple different stable coins and like different markets and whatever. Because as a user, you just want like one thing and then you trade this and this is where all the liquidity is and this is like easy to do. But I think USTH was for like getting this yield that is like went missing before because there was no deal with Circle for USTC. Yeah, there was like,
Speaker: I remember putting out tweet to Jeremy Allaire from Circle saying like, hey, you know, you could fix all this by just paying Hyperliquid all the yield that they, like all the money that they made here, which is like, I don't know, $134 million. buy $135 million worth of hype. And obviously, shareholders probably never allow that. But that's one way to basically say, OK, we're good.
Speaker: um But Hyper the Good took the interesting approach of allowing this quote unquote, USDH ticker auction to be you know auctioned off to like the best bidder. And then it would be voted on.
Speaker: um Kinetic actually abstained from this vote. So, you know, we essentially told people, hey, hey like if staked with us, like Kinetic obviously had no knowledge of this vote coming up. So we're not in a position to basically allow you to like shift your stake to like a certain validator that you want to align with or whatever. If you're staked with us, Kinetic as a protocol is abstaining on everyone's behalf, right?
Speaker: We'll just let everyone like duke it out and like that's that. So the Kinetic Protocol didn't really take much of an opinion on it. ah The validator did vote yes for USDH. It was a great idea um if it was executed properly, right? And yeah, again, I mean, it could have been cool, right? It's like an interesting...
Speaker: I guess part of the Hyperliquid offering. like you know The whole vision that Jeff and Co have talked about is like housing all of finance. It would only make sense that you have your own stablecoin, but this is obviously not good for Circle. right like At that point, Hyperliquid had an area between $4 and $6 billion dollars worth of Circle, which represented a very sizable chunk of the supply. I think 5% of all USDC.
Speaker: I said Circle, but it's USDC. so yeah i mean it's logical and it's also somewhat logical what happened the execution not so much uh but but nonetheless the point being that yeah it's you know that fiasco has ended thankfully uh we wound down our usdh markets and we were the only we are the only deployer outside of trade xyc that is continuing to deploy markets so yeah our markets just went live again last week with us 500 and us tech which is showing us qqq on the hyper liquid front end
Speaker: um So yeah, that's it. I mean, outside of that, my opinions aren't too strong. I see. Is it like, um has there been um a lot of difficulty to like interchange these markets as you have done now?
Speaker: Is it like a difficult process or? I mean, look, I'm i'm just going to keep it a buck here, right? Like for anyone developing on Hyper the Good, they will tell you it's a pretty nightmarish process. Like it's not easy to build anything on Hyper the Good. It's just true, right? Like,
Speaker: The documentation is sparse. um Again, the team has made it clear that there is no support channel. There is no ecosystem person or whatever, and that's OK. like Nobody wants a fucking concierge. But but ah you know it's not like other ecosystems where the developer experience is prioritized. um It's a very raw environment. So if you're not prepared for that, it's very difficult. And even if you are prepared for that, there is definitely some pitfalls to navigate for sure. So that wasn't easy at all.
Speaker: No, I definitely respect and appreciate the Hyperliquid team doing what they can to kind of accommodate. But yeah, no, easy, I can't say, and good conscious. What are some of the challenges to get the HIP3 markets rolling that may also like affect trade-rex was e or why there aren't like, ah why it's not every single market of of everything in the world already on hyperliquid? Why don't we have like TLT or whatever yet? like what What is difficult about spinning up these markets or maybe extracting liquidity and stuff like that?
Speaker: Yeah, two things is that, like number one, everything needs a price. right So like you need to have a reliable price sheet for this, which several Oracle providers are working their asses off to do. And then the other side of it is you need liquidity for it. It would be great to list like a Sokyo perp, but like who's going to put put up the bid and ask for that is like the real question. you know So everyone talks about perps really niche stuff, and that's great. But the most important thing is that it's not a horrible experience trading them.
Speaker: So yeah, we've done something really interesting where we've partnered with Perps.fund and they will be using the Kinetic Market stake to essentially allow for deployers, sub-deployers essentially, to come in, propose markets, and if those markets get approved and bonded, then they own a sizable share of the actual revenue from those markets. So that has been super interesting.
Speaker: yeah um And I do believe this is going to be the solution for like long tail listings on Hyperliquid. um So now it's just a matter of just like following through with that. I think I've seen it. i Actually, it's kind of a cool idea. i Also, like I feel like Hyperliquid compared to all the other chains, it's maybe like it's a strong...
Speaker: dichotomy between like other ecosystems because most of the crypto ecosystems that we've seen so far are very... ah
Speaker: Maybe they're way more supportive than Hyperliquid, but they also kind of live off these like grants and like... Basically, they they hand out stuff to the developers and everything is incentivized and whatever, and otherwise no one is really using it. And Hyperliquid is like a lot less incentivized, especially now after after the token has already dropped. There is no season three.
Speaker: Maybe you no one knows if it's there or not, if we ever get more tokens. So it's pretty much you just use the product for the product. And there is no more like ah help, which is maybe sometimes a bit annoying, but it still has led to like this really good ecosystem that is like better than every single other chain that we have seen like by far.
Speaker: Yeah, exactly. I mean, the environment, look, there's not a ton to do on Hyper-EVM, right? The economic activity on HyperCore is like obscenely interesting from a flow perspective. And this is like, i don't know, what's the best way say? This is creme de la creme for market and makers, right?
Speaker: um Again, most of the volume is HFT. Most of the volume is via API, right? But there are significantly you know sizable people from an on-chain perspective that do swing big positions on hybrid grid as well. And it's paradise for market makers.
Speaker: So yeah, from an environmental perspective, you're right. like This is where the prime economic activity is happening. And hence why I understand Hyperliquist's decision to prioritize HyperCore versus HyperEVM, which, again, makes sense. yeah so very ripe for disruption.
Speaker: I mean, if if you look, like maybe there isn't that much to do on HyperEVM or Hyperliquid apart from HyperCore, but like what is there to do anywhere else? Exactly. Exactly the point. That's why it's so interesting and why it's really captivated people's attention. Because like what are you going to do? like You can trade memes on Solana or like you can do like ah boring DeFi on Ethereum or you trade perps on Hyperliquid. That's got kind of it. So I agree. I mean, the amount of things to do in crypto has definitely compressed because I'm not going to say experimentation is like out the window, but like there's this weird consensus these days, which may or may not be true around like all the brains have left for AI. And maybe there's some truth to that.
Speaker: But the reality is that, especially with these LLMs getting how they are, it has understandably stifled the experimentation kind of uh ability or willingness from a lot of people in the space because again like you'd make one mistake and like some LLM um can just crack your code right so yeah I think it's um it's just you you know you remember the the interesting spot meme I forgot who started that fuck yeah but like um was that oh my god uh i don't want to say something wrong but yeah i can't really remember actually um yeah if we are in an interesting spot
Speaker: Oh, fuck. It was right on the button. You know who it is Giver. It's Giver. Oh, yeah, true. I forgot about him because he doesn't post anymore. He's gone. Yeah, it was him. Yeah, yeah interesting spot.
Speaker: Where is he now? I don't know. Shout out, Giver, man. what do What do you think about like the current, when from looking from where we are now, what do you think about the future of Hyperliquid? Where are we going from here? How is it developing?
Speaker: I mean, obviously, crypto markets are kind of like down a bit. They're not that interesting, but HIP3 and real world assets kind of carried us through that, which is very good. And now they also have HIP4, which is like competing a bit with Polymarket, Kulji, but it hasn't really like taken off that much. And the the vision is to be the host of all finance. is Is that going to happen?
Speaker: Are we in for a bad time when Democrats may or may not be elected in 2028? That's crazy, yeah. um I mean you you're someone that has like a a huge stake in the future of hyperliquid like yeah so what are your opinions on that?
Speaker: Man it's so difficult to say ah in terms of like so well factoring in all the different things you've mentioned as well which are like macroeconomic and geopolitical. um yeah Like I should probably start with like what I think right like what I think happens. i won't I'll try not to veer off the edge here but um I think obviously perps are like the superior form factor for risk taking, right?
Speaker: And perps should definitely claw more op more ah more market share than options over some period of time. The question I think is, does this happen in regulated or unregulated environments?
Speaker: And Hyperlux is very much clearly on the side of the ladder. And, you know, Now that that's the real big question. Like what where does that activity take most prevalence? And that's something I don't know, right? That's what I could only guess. um But yeah, from the from an implementation perspective, from like growing the technology into something that can support handling more and more flows, ah doing more and more composable things, whether with it's within DeFi or with it or or within some sort of advanced perp offering that may or may not exist today. i don't know. um Would I bet on the Hyperliquia team to figure something out? Yes, absolutely.
Speaker: um And now it's about the execution and the general purpose component. I think like the next leg for purpose is like how it gets integrated within sophisticated DeFi protocols, which I believe the ecosystem needs to support and it needs to be possible. now without speaking too much on this, we definitely think that there's a solution for how this happens. So we can talk about that in the future. But the point being that, yeah, right now composability with perpetual features is like somewhat non-existent at the moment. options What exactly do you do you mean by that without ah maybe giving too much away of of whatever you may or may not be planning, but like in in general, what what exactly would this composability look like or what is lacking?
Speaker: Yeah, so I think that part of the genius, like I said earlier, from Hypergrid was this Core Writer technology, which is basically the ability to go from the EVM and ah HyperCore within one single swoop, right?
Speaker: Now, not a lot of products have been built around that. And I think that's like probably the most nexociting unlock for DeFi. So let's see, like, I think the environment needs to be performant enough to handle that. And that's what's most interesting. um But yeah, so...
Speaker: Kinetic is the largest user of this technology. We make up about 95% of these actions, these transactions on CoreWriter. So we definitely know what talking about here in this regard, with regards to like the genius of this technology and how it can be used to do really, really cool stuff. Now, what that is, is a different question.
Speaker: But yeah let's just say perps being some core component of a very interesting defy offering is like very under discovered today and unimplemented so that's my view on it in terms of like what's happening and like kind of what's needed to kind of further this house of all finance vision and think when jeff says that by the way you know he's thinking very far out right yeah um The technology, and this is not wrong, this is actually good. This is a good thing, number one. And this is just what people have to understand that I don't believe they currently do. You know, Heisling All of Finance is not a one, two, three, five-year thing. It's like a multi-decade vision that he has and is clearly executing on bit by bit.
Speaker: But... That becomes the question, right? Like, hyperlical needs to evolve into something that is, ah that can accommodate every type of financial transaction, which there are a shit ton of in the world.
Speaker: So there's a lot of work to do, as as he fairly says. um What that looks like and what the road to get there looks like, I have no idea. That's the thing. I have my opinions on that. I don't think they're formed up enough to discuss, but I do have opinions on that.
Speaker: um I'm sure they have opinions on that too. Hyperliction, I mean. ah So we can only hope that... it goes according to plan. um But yeah, like you said, Kinetic is a very big part of that vision. And if we believe hype as an asset continues to grow, then Kinetic as a protocol continues to grow. And what we've done, you know, for better or worse, I'd like to think the former, is you know Kinetic and obviously our own underlying token is extremely correlated with Hype and its own performance, not just as ah as an asset, but I'm saying like the ecosystem. right So if staking yields for Hype increase, the Kinetic yield increases and so on and so forth, that flywheel exists. If the hyper-lequid ecosystem grows, the Kinetic protocol grows. More holders want to do things in DeFi, Kinetic protocol grows, et cetera. So what we have done is set ourselves up to basically be the biggest benefactor for hyper-lequid growth, like and unquestionably, at the protocol level. And that has been the most important part of my job over the last two years, building Kinetic.
Speaker: So, yeah, that's my view. I know I've left a bit out because, again, I don't think I have enough of an informed or formed up opinion, I should say, to like talk on the macroeconomic or geopolitical component. But I know there are some spicy opinions out there for sure.
Speaker: I mean, you're kind of showing your position by just putting your money where your mouth is and then doing what you do. That's it, man. And all the other things are kind of like, no one really knows what is going to happen. think obviously the biggest problems are like competition from Tread5 players, established Tread5 players, and then also regulation. But no one really knows what is going to happen there. No, it's very unclear.
Speaker: it's very unclear obviously it's a cool it's like great to have like crypto friendly admin for sure but we all know you know the the world's biggest empire like changes every four four years so who knows right like and it's very difficult at the protocol level to plan around things like that as well because of that shift i can only imagine like what what macroeconomic issues come with that um so that's really the difficulty in stuff like this hyper liquid and i'm gonna make a really funny pun accidentally right now but like hyper liquid really has to be a chameleon and like what what's funny about the word chameleon is obviously like jeff and co used to run chameleon trading before hyper the grid um but it has to be chameleon it has to be able to adapt to the very quickly you know to quote ray dalio
Speaker: changing world order. And i don't know, there's only like two and a half years of this administration left. The next one is going to require very different things and they're going to have a very different posture and stance, whether better or worse. I don't know.
Speaker: um So as long as it can do that, we're all fine. yeah So that's the bet. for sure I mean, the same the same kind of applies to all of us. I mean, maybe you as a kinetic are in a very connected position with the protocol in Silica Terminal. There's also very like huge support of Hyperliquid. Hyperliquid is a huge part of our business and crypto as a whole, even like if you're still a bit further out from what Hyperliquid is doing, the crypto is kind of being carried by Hyperliquid right now. So everyone in the space kind of has ah as a stake in in this going well and then.
Speaker: I couldn't agree more. though I cannot agree more. It's like pretty bullish to say it's become an existential risk for the industry. It's like, i think that's fair. I think it's fair to say. I mean, like, let's be real, right? Like without hyperlinks. It is, yeah, it is. a I agree. like you said Without you're like, where are you going to go trade? Like, you're not going to go trade on DYDX, with all due respect. You're not going to go trade on, you know, I don't know.
Speaker: Maybe, maybe lighter gets some more flows. Yeah. um But who knows? I mean, that's my, that's my view. It's definitely become an existential risk for the industry, which is very bullish for hyper liquid TBD for everything else. But, but yeah, it's kind of like say, I mean, dude, like think about the sailor, right? Like Bitcoin has become like strangely uninvestable because of this overhang. Yeah.
Speaker: um depending on how you look at things, but there's so many factors that are just nauseating about it at this point. It's annoying. It is annoying, but hey, I mean, shout out Sailor, I guess, airing us all these years, you know? Do you have any any views on the other perp deckses? As you just mentioned, Lighter may also like be existing. And I feel like the last couple of days, I feel people went so crazy just because like,
Speaker: ah You know, that's what I kind of like, I love hyperliquid and everything, but I think this the stupid things about crypto is always like we get so tribal. Like, yes, we just discussed this is like an existential risk and we all love it and whatever, it's still just an asset. And I'm probably going to sell something when it goes up in dollar price and buy it when it goes lower. But like, I later did nothing but just go up in price. And hyperliquid people are like, yo, what is this? I hate this. Yeah. look it's so tribal man like you said it's like hyperlink host was talking to someone recently and they said like hyperlink has become like a religion it's like you see each other like high hyper yeah and cole saying hyper but you know it's just a funny running joke but the point is like yeah it's
Speaker: I mean, look, that is the ugly side of this type of shit, right? and But I will say it is a fair manifestation of like you know people's belief and passion about like what they have done, which has very much been defying gravity, right?
Speaker: So after that, everything else like really sucks about it, to be honest. Like, yes, I'm a.HL, but like I'm a.HL since like, i don't know, 2024, like January 24 or something. I don't know. so it's been It's been a long time. um But like, you know, there is a.HL class that just like,
Speaker: really ruins the image. I think like it's very counterintuitive, right? If you go out and shit talk everyone, and by the way, I used to be that guy. So like I can say it. But if you go out and shit talk everyone, you're just going to turn everyone off about the product. Yeah. Right.
Speaker: There is no liaison today between, ah besides like liquid funds, I could say comfortably, there's no liaison today between people who are not invested in hyperliquid or don't know about hyperliquid or don't trade on it.
Speaker: And um hyper liquid itself there's no good liaison there's the dot hl cult and religion and like that's pretty bad to be honest so i do think culturally it's not good i think that's actually how solano won over ethereum to be honest yeah yeah it was the same thing and it still is this fucking annoying ass religion that people have bought into. And it's a do can do no wrong type of thing.
Speaker: They raised gorillians in the ICO, and they are net massive sellers of Ethereum themselves, which by the way is not a bad thing. It's just obviously been framed as really bad because we're in an industry that punishes people for selling.
Speaker: Right? um Rather than rewards them or rather than understands. So anyway, the point is, they've really messed themselves up here on the narrative. They've lost the Solana over the last few years from a general purpose, yeah economic activity at the chain level, even if it's spot trading perspective. They lost that.
Speaker: um They've lost that on the ah the killer app of the cycle with Perpetuals, clearly. So Leiter has been the closest thing they can attach themselves to. It's like the cult mentality never leads anywhere good. We saw it with Terra.
Speaker: We saw it with Hex. We saw it with like everything. And yeah, maybe the team themselves don't necessarily buy into this and I'm sure it's appreciated, but it's just not good, right? And like, I do hope that that dissipates...
Speaker: I mean, the the lighter token going up literally takes like nothing away from Hyperliquid, except maybe like some beta effect, you know? But you can literally like long you can trade light lighter on Hyperliquid. Nothing is being taken away from you. No, like nothing has. And I do think that this is generally one of the most cancerous parts of the ecosystem, if only. If the only cancerous part of the ecosystem. It really sucks.
Speaker: It's very annoying. And like I said, I myself used to partake in this type of banter. But... um I think it's fair like when somebody's saying like retarded untrue things about hyper liquid okay fine like then yeah you know everyone fine kill each other but like if if it's just a like there's no need to basically go on someone's post that's like praising lighter or whatever i talking about hyper liquid or whatever and just go bombard them like you're the fucking you know global police or whatever that's just like you're not a hyper liquid you're not a dot hl fuck you you know like that's just retarded um not a fan so yeah i mean i think it's just part of maturation as well like yeah the other thing that people have to understand is institutions are very very very invested in hyperliquid now not talking about you know big fucking u.s institutions i'm talking about like the institutional players in crypto they pay attention to the stuff like this yeah right
Speaker: And buying into a cult yeah is always a red flag, to be completely honest, if there's anything we've learned over the last fucking decade. um And yeah yeah i mean, NFTs are a perfect example.
Speaker: ah So that's one. And then the other side of it too, though, is that if it wasn't for the level of execution that the team displays, the level of professionalism and the fact that they keep their mouths shut, um then yeah, like it would be much harder to make the case for investing in hyper-lecruid. Thank God Jeff doesn't doesn't t tweet. like he He just like makes his long-form post once a quarter about like real stuff and doesn't talk about any... Yeah, man. Tweet and just be you know be cool, right? like i think there's a lot of good that comes from good conversation on socials. yeah But there's a lot of infinite downside that comes from horrible, you know, kind of usage of socials. And I mean, again, just to be fair and like call call all sides out, right? Like,.HLs do this horribly, yes, but like even Vlad from Leiter did this really bad. and like would argue with people over it, which I i respect, stand on business for sure. But like there just comes a point where it's like, shut the fuck up, man. like Not you specifically, but like you know there comes a time where it's just like, let the product do the talking. The technology moat and yeah the technological moat of
Speaker: is very rapidly dissipating. People are building very good products. right yeah That's what I wanted to to ask as well. Do you think there's like space for other DEXs to like... I think in in general DEXs will probably take market share from SEXs as is happening now. There's like regulation in the EU and whatever. that That would definitely happen. But do you think it's like there's only hyperliquid, there is no second best winner takes all, or there's also room for other prep taxes? And would is Kinetic 100% hyperliquid aligned for you, or would you also like maybe expand towards other ecosystems at some point? That's good question. I personally don't see the other ecosystems as good enough ah to implement at the moment, or like other products, I should say. But there will come a day where the liquidity is on par, is my view.
Speaker: um So the hyper liquid has to differentiate itself far outside of that. And like I said, the technology moat existed for a good year or two. um And yeah, I suppose the the best way to think about this is like as the technology moat kind of flattens, like other things need to take place. yeah And it's an example of how TradeXYZ has done a good job with, like they have three listings and whatnot.
Speaker: um So yeah, I mean, there's gonna be you know everyone's taking really unique approaches i don't know if you've noticed this too i mean i'm sure like you've seen what's happening but um you know like extended raised money from like e toro uh lighter is like aligning with robin hood you know there is a big push from fucking gargantuan real institutions that have very sticky users that have very sticky liquidity ah that are aligning with some particular ah players in space and it is a risk right not just to hyperlink or say to anyone right
Speaker: um So it is very important to actually focus on what matters. it's ah It's very important to cultivate the culture in the ecosystem to like be friendly and open to dialogue, not just be completely shut off and say, you know, Jeff and and Co are the Messiah and they're coming to save crypto and whatever. It's like,
Speaker: you know it's like saying someone's coming to fucking save finance like finance is finance and that's it it's either you win or you lose right um so yeah i think there's yeah like the there's there's a reason that like society has reached this point today where like we have countries and like politicians that represent us and then whatever and we're not like cavemen throwing stones so like crypto right now is still to finance like cavemen throwing stones at each other and going to war with like spears yeah like that's that's what crypto is today from the outside in and thankfully we've gotten confirmation of this from the institutions that come to hyperlink and come trade on it they're like
Speaker: What the hell is going on here? um So anyway, I mean, I think it's very important just not just be mature. I'm not talking about personal level. I'm talking about at the ecosystem level, there is a reason why very mature industries represent themselves the way they do.
Speaker: Yeah, that's in in Throughout the world, right? And if crypto wants to be that, then, you know, it can't just be, you know, market clapper 69, you know, like just talking talking shit about anything else that comes to market. It's it's it's um it's kind of why I can like slightly buy into you know people saying all all the brains have left you know crypto for like AI or whatever because the dialogue is at such a higher level right it's not so I guess culty so anyway that's if if there's any ecosystem feedback I had there it would be that for sure yeah um just again from personal experience I used to be that guy you know throwing stones in a glass house um you know saying fuck you to people that and actually say that but like you know just really attacking you know, with the herd of people that would just attack Hyperliquid because at that time it actually, again, I'll justify my own actions here, but I'm saying like, at that time it actually made sense, right? Like people were attacking Hyperliquid for literally no reason, right? Binance is going after Hyperliquid and has clearly so failed, thankfully. um
Speaker: And many others were just making statements that just genuinely were not true, right? So that's different than just like, hey, there's a competitor. Okay, fuck you. Like that that's not good. So yeah yeah, that's where I'll leave it.
Speaker: I think those are some very very good words of reason to like come together and have some some reasonable discussions and always just like... be too tribal and uh I think that's been like everything that I wanted to cover today is there anything else that you would like to to say no clear man uh thank you for having me on I really enjoyed this conversation um we should do another one at some point in the future thank you for coming on but but yeah man this was really dope uh in silico obviously great product so congrats to you guys on that appreciate it and yeah I mean otherwise that's it man all right goodbye everyone
