The $40B Liquidation That Exposed Crypto's Biggest Problem - Framework Founders

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These are very dangerous questions that you're asking and I think that you're going to start to see institutions slowly start to get in once they can start to assemble a pretty strong case around recovery being being the narrative. The list of hyperlquid wallets that went from 70 million to zero uh you know or or the hundreds that went from you know six figures to zero. That's just like absolutely terrible. And there was someone who benefited from this. Why is nobody talking about the fact that clearly Binance have special nonADL deals with certain counterparties? Clearly violating the fact that they're supposed to be a neutral entity. What other pref preferential treatment do they give to insiders? Info on user special APIs. Is there a a a right way that you think Hyperlid should like did Hyperlid handle the situation in the way that you think

was the best for the platform or you know is there a right way to handle these of situations from the purpose? >> Welcome back to the rollup. This is your home to learn from the biggest guests, the brightest minds at the tip of innovation. >> Our goal is to help spread the collective knowledge of everyone in our community. >> We are breaking crypto out of its echo chamber and taking it to the real world. >> All right. >> How we doing, >> guys? Welcome. >> Yeah, thank you. Thanks for having us. >> Good to be here. >> We've we've uh survived. >> Congratulations on surviving >> surviving the bare market of uh 1010.

>> Yeah, 1010. DJ Ping. We're >> just talking about DJ >> favorite character currently. >> I love DJ Ping. I don't know who it is, but he's he's got good calls. >> Well, Vance, we saw your retweet of alltime highs in October. >> That's the things I'm looking at right now are um sorry, I'm just looking at my phone. But what's interesting is that all the funding rates are still negative. So, I mean, especially on on all the alts because they got hit so hard, it feels like someone just kind of sold on per their entire alt inventory. And even with alts rallying, the funding rates are still pretty negative. And most of the time with alts, like it's not really negative or positive. Just not much of anything is happening. But feels like

finally someone is off sides on alts, which is a good thing. >> Yeah. I mean, I was just saying if you've if you had any sort of leverage, even like to the tune of 1.1x or 1.2x on on those top 50, top 100s, you basically got washed. Um, and and I think like now kind of like the thesis is basically that's been, you know, that's happened and, you know, we can continue up from here. I'd like to talk about the future and kind of like what you guys are seeing, but we got to kind of do a post-mortem here. So, you know, you guys are, you know, obviously on the East Coast. This happened like Friday evening or sorry, West Coast.

>> West Coast, bro. >> This happened Friday evening. So for you guys, it was like middayish afternoonish. Um, where were you guys when this happened? What was your response? What the hell? Like what what was this like from Vince and Michael's eyes? >> Where where were you when it happened? >> This isn't like the JFK assassination. >> I think uh I mean we were actually trying to record a podcast. >> Yeah. We had to put a pin in that uh because just in case the market literally went to zero, we needed to be up and ready to do things. But I think the main thing is that we mostly hold spot and we don't trade on per especially not on these overseas centralized exchanges. Um and I think you know there's been a lot of

postmortems done about what exactly happened. So I don't think we need to like get into I mean obviously it was like USD deped which then liquidated everyone and then you know there was questions about whether it was malicious or uh innocuous but there are people who got to buy USD at 65 cents um at large large size and then same with I think being soul and we have heard of you know at least one trading firm who kind of got taken out which would make sense given that all the alts sold off the hardest. If you ever see something DPEG and then ETH and Bitcoin sell off and then everything else sells off, that means that someone had to liquidate basically all of their inventory of alts to keep themselves stable. Um, but I think the first thing is I feel really

terrible for everyone who was impacted by this. Like the list of hyperlquid wallets that went from 70 million to zero, uh, you know, or or the hundreds that went from, you know, six figures to zero, that's just like absolutely terrible. And there was someone who benefited from this on the other side. you know, we don't know exactly who it is, but I've seen some guesses on Twitter. Um, but it it is like kind of a shame that like crypto Twitter is is only capable of like really kind of explaining it in the most complex terms possible, like really taking it into orbit or, you know, kind of giving the response of like, well, [ __ ] everyone who got ADL and like our trading firm had the best day ever. Um, I think this is a tragedy that so much OI got wiped out and so many people in the process.

Um, and I think it means that the the mission of hyperlquid has never been more important. Honestly, the industry cannot continue on if finance is the main venue that we all trade on. It's just nobody wants to allocate capital to a place that is considered dangerous and lawless. Uh, and so until we get past that, it's going to be an albatross in the industry and feel bad who got impacted. >> Yeah, wholeheartedly agree. I think, you know, just to roll it back onto what we were doing and talking about and and thinking about on Friday, but then also over the weekend, when you see a major wick like we saw on Friday, everybody like gas basically goes to 500 on ETH.

Nobody can move assets around. You're kind of waiting for these pending transactions to settle. And I think generally it takes a couple of hours for some of these systems to kind of like catch up. But once they catch up, that's when you really do kind of have the like everything starts processing, you know, orderly or or disorderly. Typically, it's pretty orderly these days. The last disorderly process that we saw was March 12th, 2020. And you know, that that was the COVID crash. Um, where things really did fail and and go to halt. Um, but what we what we kind of see typically is you you see everything kind of orderly process in the way that it was started.

it gets, you know, turned through the the funnel as it goes in and then everything kind of settles and and what typically also happens is you end up with on Saturday or the day after another retest where you get a bunch of people who say, "Okay, let's go see if there's real kind of staying power to this, you know, deadcat bounce or potentially resurgence, V-shaped recovery." And that's where it gets tested again. And and these are actually great buying opportunities. And so our our primary focus, you know, when we're thinking about what to do and how to react, you know, like Van said, we're in spot, we have stables, we're moving stuff around on chain, um to be able to get into some of these buying opportunities, but that's the first

conversation that we have. It's like, what do we buy? What's going to be the huge opportunity here? Um and you're we're going to get probably one, but maybe two shots at doing it, whether it's right now or we get to wait 24 hours for that second wick down. But unless there was something substantial that drove this, which it seems like there isn't, you know, Trump already came back and and kind of rebuffed the commentary that he had that drove this in the first place. Unless there was something substantial, this was going to come back and we knew that there was going to be a bit of a re bit of a V as we're seeing right now. So, I I I wholeheartedly agree with everything Van said where it's terrible that this industry is still prone to this type of stuff. Um, Binance, I think, you know, I

don't I don't know if it's going to be another major wick or another major catastrophe or if it's just going to be like a thousand paper cuts that finally gets everybody to recognize that this is not what we need. Um, and and decentralized players like Hyperlid are are the the ultimate solution. Um, but it definitely does push us in that direction as an industry. So, it's positive in that respect. I I think it's important to just call out a couple of the uh pieces of evidence that support what you guys are saying. Flood ThinkingUSD put it like this. Why is nobody talking about the fact that clearly Binance had special nonADL deals with certain counterparties? Clearly violating the fact that they're supposed to be a neutral entity. What other pref preferential treatment do they give to

insiders? Info on user special APIs. When you guys are looking at the deals that Athena has negotiated with centralized exchanges like Binance, they've probably done it elsewhere and there's probably other projects that have done this. What What goes through your like the psychology and your train of thought? How do you react to Did you already know that things like this are are taking place? And as a industry, how are we supposed to reconcile with these special deals that we we don't know are taking place?

deals in this industry. Uh if you really think about it and um if you are five, six, 7% of open interest on any of these exchanges, you do have a special deal, honestly, whether you know it or not. Um and what that means for everyone else is that they don't have it. So every single dollar of open interest that's on these per exchanges that does not have uh ADL protection, you know, they are disproportionately in the eye of the storm when these things happen because the other parties are not. Um and you know it's it's kind of uh you know I think Athena did a lot of things right.

Um you know they had deep defi pool liquidity to support themselves. Uh I personally think the use case of USD is margin is cooked. you know, we should not be doing that, especially when things dislocate on a per basis and your stable coin is based on a perpetual swap yield exchange. Uh, like you are obviously going to be impacted by that. Whether Binance did something malicious or not, I think is a different question, but like generally like the risk needs to be tamped down. Um, but when you put any of your coins on these exchanges, you know, you are in their clutches. And you know, you think about when things like FTX ended, like as soon as FTT was on that exchange and they put a lot of open interest on on on Binance, we knew that FTX was done.

>> CZ was not going to let them go. Like it was just going to end. And I think we got away with one in terms of, you know, Athena being in that position today, but that was a warning shot. The next one will land. Um, and so I think it's a uh even to people like a like look at how much USDE is uh in those pools and like I'm kind of touching the fourth rail of like DeFi lending right now but like the risk needs to be chilled out a little bit and there needs to be less concentration within specific coins I guess USD today uh so that we can be more resilient tomorrow. But you need to be very cautious when you put your coins on exchanges that are centralized because maybe you have an ADL, maybe you don't. Maybe they honor that deal, maybe

they don't. But like, you know, you have seven, eight, nine billion on that exchange. You don't think it's above them or below them to kind of take 10 or 20% of that? I don't know. You just got to be careful. >> Habachi provable. Trade perks with speed and security. Earn rewards. Visit habachi.xyz. Trading on fire. Relay, low fees, lightning speed, and the power of multi-chain at your fingertips. Instant multi-chain payments. Choose any token on any chain. 75 plus network supported.

More than 5 million users. 8 billion plus volume processed. 70 million plus transactions. Fast, reliable, everywhere. Start swapping today. Only on Relay. The wait is over. The Talis test net is live. be part of the revolution. Join now at testnet.talis.network. >> The question that Jordy Alexander posed um was around how like who do you kind of favor when it comes to perexes like do you favor your traders or do you favor your vault u depositors and hyperlquid has continuously shown his hand to basically favor HLP over anything with jelly jelly or exploit following into this where HLP had a massive day. I think that they made $40

million. Um, so huge huge bump up in the expected APR. Then like other ones like lighter, they ended up uh taking a big loss on LLP. They had downtime and others had, you know, different variations. So Vance, I know you're talking a lot about kind of like the actual centralized versus decentralized exchanges, but when it comes directly to per like is there a a a right way that you think Hyperlid should like did Hyperlid handle the situation in the way that you think was the best for the platform or you know is there a right way to handle these types of situations from the purpose perspective? Um yeah, Michael, you can start then. goal starts. I think the bare minimum in terms of you favor traders, you favor

the vaults, the bare minimum is you need to report the liquidation activity accurately right? >> And Binance only reports one uh liquidation per second. So, we actually don't know how many liquidations happen on that exchange and we don't know how people were treated or how collateral was crossed. Kind of just putting up this veil of opacity and saying we did it our way and it's all good doesn't inspire confidence. And even if Hyperliquid could have favored their vaults over traders uh because they had to, at least everyone knows how the system is designed and it's transparent.

You can tell how many liquidations actually happened. And there is also a systemic under reporting of liquidations because they're so bad because they don't actually want people to know how many folks got liquidated and under what circumstances. So we need like actual answers to this stuff. Um, and that's like the first principle. After that, you can sort out who's at fault or what happened. But if we don't have the actual data, it's just like fade it comply. >> Yeah. I mean, 100%. It's exactly what I was going to say is that transparency ultimately is the deciding factor of who should be winning here. And it doesn't matter whether or not, you know, you favor one side or the other. You just got to disclose all the information. And I think ultimately that will be where

the gravitational force pulls in terms of activity and traders and attention and then dollars. And I I think that it's just very clearly in the eyes of Hyperlid at this point, especially in comparison with Binance after the last three or four days. >> Yeah. All right, guys. Well, I was telling Rob earlier that our our darling XPL started the weekly candle at 1.6 and is now at 35. Where does Plasma go from here? I mean, generally, like, where does this alt market go from here? I think all of crypto Twitter was pretty underwater on XPL um and was kind of just like trying to get back up and it it looked like it it it was going to do it. it went back up to like 1.1 or something and then um yeah, so clearly, you know, it's it's taking a hit. Where do you guys see kind of plasma going

from here? >> And this goes back to the conversation that you guys had in in the war room over the weekend at once you saw the this dump occurring. It's like, okay, what are we buying? Like what conclusions came as a result of that conversation. >> We we put out orders that that's that's what came out of that. If you're looking for what limit prices and what assets, obviously not going to tell you. >> Chill, man. That's all we're asking. >> Look, like our our first instinct is to buy and I think questions about where this or that asset goes are kind of like overdetermined >> when you have a liquidation the size literally the largest day of liquidations ever in crypto history. And uh there's a couple of good charts. One

is uh Benjamin Cowan if you're looking for some some some light TA. Michael and I have have hated Benjamin Cowan for for a couple of years now because he's been so right on ETH going down, but he's actually bullish ETH and he's also got this altcoin chart where it's like literally, you know, six years of up and then down and then it's tapping uh resistance. And so if you're looking for a chart perspective, that's probably the one I would give you. But I think also going forward the alt market is going to be bifrocated into people who are building real things and have real traction. And in the case of plasma, I think it's the fourth or fifth largest chain by stablecoin and it's really the only one that is able to disintermediate a lot of the legacy lending activity

that exists on Ethereum today versus the rest of the market. And I think Michael and I have held over the years most coins that have, you know, are worth holding. Um, but I think now we're down to probably five to seven uh that we feel good about and the rest of the market is, you know, basically bleeding to zero. >> So that's maybe not the most uplifting uh, you know, kind of commentary that I could give you, but I think it is the most realistic. >> It makes sense. >> Said there's now venture opportunities >> that are available. And even over the weekend, someone bought Athena for 12 cents.

>> It's a 4x to where it is right now. So like you get back to that point that we talked about about the hardest day to invest for is is today actually it's not like when the unlocks happen or when the liquidation's clear, you need to be ready to go. Um and you need to know why more importantly and be very choice on your asset selection. >> What I'm hearing Vance is that the revenue meta is not dead. There is >> the revenue thing that is just a business, >> right? >> Yes.

>> Well, I don't know. I'm hearing this like the the next like in the in the telegram chats with like you know the onchain guys and stuff the next meta is the return back to the nihilism because we we swung too far to like this revenue thing. >> What I like >> that's what that is what's being said. >> It feels like people are taking investment advice from people who consider investing in crypto the same thing as like daily fantasy sports. >> Yeah. Those are the people that are going way out in the risk curve and they're saying I have to make it all back in one trade and the only way to do that is to further out on the risk curve.

>> Also, the way the reason you lost it all in one trade was because you were all the way out on the risk curve. >> And and just to be clear, there is a huge difference between investors and traders. >> And it's all about time horizon. And if you want to really make money, the only way to do that sustainably is by investing. You can try and trade, but there's probably like two people in the world who've historically been traders that have been able to make it work. Paul Tudtor Jones is one of them. If your name's not Paul Tudtor Jones, I don't think you're going to do it. And neither of us are like that either, >> right? Or the best thing that we can do is wait people out. By law, wait a long time.

>> For what the market looks like in a week, I have no idea. >> In a year, I probably have a good idea. In 10 years, I I think I know where it's going. And it is just towards fundamental value. Um, but the more things like this happen where the industry seems dangerous and lawless, the less amount of flows that we will get. So, it behooves everyone to get behind Hyperlid because frankly like I think the industry needs Hyperlid as much as the as much as Hyperlid needs the industry at this point. >> Wow. >> I I would also honestly just go back to it. I would put Plasma in that category too. Yeah, we we are seeing both the stable coin volume on plasma just hit over a trillion dollars annualized >> and it's been around for a week.

>> It's also the fourth largest blockchain in terms of stablecoin TVL. Now, one of the things that we describe is there's a separation between payment stable coins and yield coins. Yield coins are what we consider to be ultimately interesting when it comes to stable coins. Payment stable coins are maybe what Tempo is trying to do and less interesting. Um, I I would say it's really really hard to build a business where your blockchain is based around fees from payments. Just look at Visa. You have to have that level of scale to be able to actually have a real business model. Once you have it, you have a moat. But if Tempo is really going after Visa, that's going to be hard to disintermediate. I would much rather build financial services around things that are yielding seven, eight, nine% and be able to, you know, cut a nice healthy fee on that. and and

the names that got hit the hardest this weekend were the ones with the most perp open interests. >> You know, everyone literally got liquidated. And so now like the only bids that were backing it was spot. What this looks like going forward is spot bids need to rebuild prices and then you can layer on pers on top of that in terms of more leverage. But um you should be looking for high quality assets and a spot driven rally. Um, and for everyone else who got a lot of their open interests wiped, the slate is basically wiped clean for them. Uh, and that that is a good thing. Um, you do not need this level of altcoin OI buildup. You need more fundamental spot bit bidding relative to the price.

>> And and where does that come from? If if we're zooming out a little bit and we're we're thinking about kind of like these concentric circles of of industry buyers that have yet to come into the industry, what do you think the perception was and the reaction is from the non-cryptonative firms, institutions and and and buyers? How do you think they're reacting to this wash out? And are are they looking at this like now there's an opportunity to come in and pick up the pick up the scraps? Are they like this thing is fundamentally broken? It's lawless. It's still the wild west. We're we're still going to wait it wait it out on the sidelines.

>> So there there's two reactions. The first is the the people who do have the lawless reaction. Honestly, those are the flighty uh transitory kind of uninteresting participants that weren't ever really going to be staying a long time. Anyways, anyone who's actually been following this industry is probably looking at just what I described where, you know, Friday was the sell-off, Saturday was the test, Sunday was the recovery. I think you could also extend that to weeks where you say, "Okay, this week was kind of like a crazy wick. Let's see what happens next week. There might be a retest and then the week after that might be the recovery, the full recovery maybe back to, you know, 45 4,500 ETH, you know, basically where where we were before anything. And I

think that you're going to start to see institutions slowly start to get in once they can start to assemble a pretty strong case around recovery being being the narrative. And it's not going to happen. Like think about it. They they have investment committees. They've got to move cash in which takes maybe a day or two for a wire. Like like they're not they're not people, you know, like framework who can jump in, you know, 10 minutes >> and move cash around because we've got stables on chain. It's a very different process. And so they're going to take days to maybe a week or two. But those are the ones that we're going to want to see come into the industry because they're going to be buying spot and they're going to be holding for a very long time. So the things that recover out of this I think are going to the

things the things that actually really outperform going forward. So I'd be keeping my eye on what spot recoveries have uh you see in the next week. >> The the other thing I would add to that is um the last time something of this magnitude happened uh I was in Japan for the tariff tantrum. So what's really tough is when Michael and I are not physically like colllocated. Um, >> but we got to follow the sun model when he's in Japan where it's like he's waking up as I'm going to sleep. It's great. >> You don't you don't want that. But, uh, you know, whatever. I think ETH got to like 1400. Obviously, it's a lot higher today, but uh, I was in this art gallery and there was this painting of these like two dude I haven't even shown you this yet, Michael. It's like these two

dudes on this rock in the middle of the ocean and like the the storm is is like just like beating down and like the boat is like in the distance. Like it's just completely [ __ ] And like uh my fiance was like, "You know, you should buy that." Like it's a good representation of what today. You know what? I bought it. I shipped it back. Just like arrived at my house actually three days ago. And I think the thing that that painting means to me is like it's interesting how fast things can change. It's like you have this huge flush. The industry is [ __ ] over. It's terrible. You know, you're the two dudes on the island just like storm's coming. And then now we're at like 42 4,300 and looking for new all-time highs. So, like I think there is a perspective of

it's going to take a while to build back, but I think the more realistic crypto perspective is it's going to be even more violent to the upside as a result. >> Yeah. >> Have these big flushes, you have the negative funding rates, you have people trying to catch it, you have people trying to buy it, uh, because they've been waiting. Um, and so I wouldn't be surprised if this turns around just as fast as it kind of happened. But it's going to have to be led by assets that are considered to be safe. >> Like Tradfi is going to want to buy Bitcoin and ETH. The rest of the board, they're going to need some some price action to convince them that the markets are actually real and liquid, which I think is the long-term impact of a of a selloff like this is people are like,

"What the fuck?" >> Well, it's just crazy that like the infraquality tokens literally had zero bid. Like like that is just that is like that's terrifying for anybody who is like looking at the space >> and the fact that Ethan Bitcoin didn't go down to those levels >> or soul. Yeah. >> A very very good thing. >> B&B is pushing new alltime highs all already today. Your your favorite coin Vince >> man favorite coin. Yeah. >> You know this stuff this stuff happens in Trafy too. Like al also just to like level set here in 2009, in 2011 I mean I I don't know if um anybody here remembers Night Capital they had like they were losing like $260 million every minute and they like went bankrupt in 17

minutes or something like that. you know, like there there are massive sell-offs that happen in traditional financial markets and and granted, you know, this is like a decade ago, but also in the in the same span of time for this industry that would be like in two decades from now, we may still have like massive sell-offs and liquidation candles and but but we're just like early like the infrastructure is still getting kind of built out. And I think we're still trying to decide as an industry, are we going to lean more decentralized and have more transparency and disclosures, therefore, or are we going to like trust in these overseas operators to like tell us the real numbers and like turn the lights back on when it's safe, you know, when they determine it's safe? And I I think that we're we're kind of getting smart. We're

getting smarter about this. And unfortunately, you kind of have to have accidents to be able to get smarter, but like that's what this process is. And you still have them in Tradfi. It's just, you know, they're smaller scale and they don't happen as as often. >> The future runs on intelligence, creativity engineering health money productivity. AI promised utopia, but delivered only hype, blackbox models, and zero accountability. With tons of tools claiming to be the best, how do you know what's real? Introducing Recallfind. Top models ranked by transparent reputation from researchers, users, and developers. Test AI skills, curate favorites, and compete to see what works. Don't guess what's

good, recall it. Blockchain shortcuts, templates, and widgets launch without friction for builders by builders. Visit enso.build. >> Um, I was watching 60 Minutes last night. It was obviously pre-recorded. Uh, Larry Frink was on there for maybe 15 minutes. Obviously, you know, all the events of Friday happened after this recording and then they, you know, they play it live on Sunday and you know, he he basically him and the let's call him the institutional elites have adopted this debasement trade that they are now ascribing to gold and like they're like he literally just basically said just like gold, crypto is an alternative and that you should have allocation like on

60 minutes made the exact, you know, analogy there and I think that you know our we had Arthur Hazison in Singapore, same thing. It seems like like on the like if we're zooming out to this macro level, like this debasement thing is like really catching on with people and obviously gold's at, you know, 4,100 for an ounce today, which is unreal. Um, yeah. What what's your kind of take on this way of describing crypto to to like the boomers? Like, is it going to work? I mean, look, I if you the best way of describing uh gold to someone who doesn't understand or sorry, the best way of describing Bitcoin to someone who doesn't get it is it's digital gold. And

then you say, okay, well, how much of the world is on a digital platform now? You like, okay, well, you probably need gold for that platform. It's just like the most simple basic way of putting it, but it frankly like whatever gets the boomers on board, like I I'm I'm cool with it. And you know, they're going to they're going to have a first grade understanding of the technology and an elementary understanding of the the social aspects and community aspects, but that's fine. You know, you got Morgan Stanley coming out saying to all adviserss, and keep in mind Morgan Stanley is the largest bank platform for asset management because they bought Smith Barney back in the day and and you know, they're they're the biggest they said 2 to 4%. 2 to 4% is trillions of

dollars. I mean it it is insane the amount of capital that could come into the market just because of that one change on advising if you go to the full aggressive 4% it's a lot of money and I I think that type of stuff this type of narrative um and anyone who gets curious you know Stan Junk Miller had the famous line invest and then investigate you buy some Bitcoin maybe dig in a little bit you're oh what's this Ethereum that seems kind of cool digital oil okay what's this D5 makes sense you just pull on that thread and keep going >> well it was 1% % right like that was the saying the last couple years >> zero >> well yeah it was zero and then it was one but now we're getting like okay because even Larry Frink all he said was like it shouldn't be a substantial

amount of your portfolio but you should have allocation to it and I was sitting there with my mom she was watching she was like I I got her into Bitcoin and quite a while ago she was like okay cool I think we're looking >> blesses this message >> so it's so it's now evolved from zero to one to up to 4% which is a significant like shift. >> I mean, I I we hold a lot of Bitcoin. Um, a lot of Bitcoin. We feel good about it. Gold is going up. We think Bitcoin will catch up. There's also like, you know, a little bit of a bare case relative to ETH at the moment. Michael Sailor bought 28 million of Bitcoin yesterday.

>> 28 million, brother. That size is not size. >> His MNAB is 1.18. the realized follow Bitcoin I think has hit like a fiveyear all-time low which is generally like how you monetize a treasury company to buy Bitcoin versus Ethereum you know basically caught up on ETF inflows BMR is buying I think they bought 100 million of ETH on Saturday which kind of like slingshoted it back up um funding rates are still negative hasn't broke an all-time high the realized vault is I think 2x higher than than what Bitcoin is >> Ben Cohen's bullet Ben Cohen is bullish, which like man, >> that's kind >> Ben Cohen, just to say he said his

minimum case is 5,300 ETH in in short order. >> Yeah, he's calling for 6 to8K as like the top. We don't need to get into like the whole top calling conversation, but that's where he's like that's where his head is at, >> right? >> And and Crypto Twitter owns none of it. This is kind of like the thing that sucks about having crypto Twitter on your side is like you get something like happened to ETH in 2021. Everyone was like it's the safe asset. GCR posted it's going to 10K. We got you know all this stuff going on. It was pretty rough few years. You should never consider your your reason for going into an asset should not be because of it safe and consensus. That is a reason to sell an asset, not a reason to buy an asset. Um, and so seeing all of this, uh, even just

like, oh yeah, Bitcoin's going to a million, fade comply, it's going to happen, makes me more bullish ETH. Uh, not to call for the flipping, but like I think you probably see some ETH BTC price action on that ratio starting probably, I guess, today. Um, yeah, I mean, Ben Cohen was calling for like a local bottom on that ratio, which in his last video, he's, you know, he's said that we're, it's either happened or it's happening. I called Rob last night. I was pretty hung over, absolutely dead tired. And after this whole wash out, I was like, "Dude, we got to go long ETH."

And he's like, "Bro, you are absolutely just full of it right now. We are not taking leverage after what's just happened." I'm like, "Bro, we got to go long ETH, bro. >> It's the best time." >> We are, >> Andy. That's why you're going to make it. >> There is. Got to go long ETH. But I I think I mean if we're thinking about like the whole like you know like like that secrets of crypto thing where it's like Bitcoin, ETH, altcoins and then like it starts over. It's funny that this time it's gone way different in terms of like the way that it's happened. But we we have had the Bitcoin run and then of course like the meme coins and such. But that aside, ETH hasn't even had its like all-time high push yet. like it hasn't had that like that moment in the sun let alone the

like the reject or the rest of of the market outside of like the you know bigger winners and the kind of outperformers. So like in a way it feels like we're almost ear like still like in the earlier part of the cycle than what it seems. But then Ben Cohen saying the final rotation has begun and again I don't want to get into the top calling stuff but it it just feels like ETH hasn't had its moment. So I think I agree. I I said this to Vance probably like I don't know two or three weeks ago at this point, but uh I said, "What crypto asset which had a all-time high and then a three-year bare market, came back to its all-time high, barely broke through its all-time high, and then basically range traded for a period of time. What crypto asset has not

substantially broken through that all-time high afterwards?" There's not a single one, not a single major asset has ever done that before. So ETH would be the first time that that's not happened. I don't think that that's possible, especially when you've got structural flows like Bit Mine, SBET. I mean, there's just so many catalysts. I think the narrative is pretty clear. It's just a question of when. and and like the the chart that you talked about where it's like the Bitcoin and the ETH and the altcoins like that altcoin thing that basically what that means to me is like pick a cryptocurrency at random and go all in and you'll be rewarded. That's just obviously not how this works, right? Like we now know more about the industry than we knew one cycle ago, two

cycles ago. What's working? Bitcoin, digital gold, ETH, smart contract, world computer. By the way, 90 million people own ETH. It's the second most owned crypto asset. It has native distribution. Soul I think I think is there. Um, and then outside of those, what do you have? You have the DeFi assets. You have a you have Sky, you have Athena. Those are the real actual uh businesses of this industry. Everything else assume is a zero. >> Dance, what's your take on Pump? Are you guys are you guys bullish or bearish on Pump? Because it has all of the flows that you would look for in an asset, but it's just a memecoin launchpad. Like it's just in the issue with Pump. We're bullish on Pump. The issue with Pump is

that if you own the token, you don't really know what you own. Do you own the cash that they generated before? On what cadence of the buyback's going to happen? Are they guaranteed for how long? If [ __ ] hits the fan, do you get access to their treasury reserves? People are willing to pay a premium for businesses that they even perceive are well-run, but they are willing to pay a huge discount for things that they think are even a little bit sketchy >> or have clarity around what you own. I mean, it doesn't even need to be like well-run or or, you know, fine-tuned operations. It's just like if you know that the cash flows that are generated in excess of costs are going to flow to the token, that's great. And it's checked through governance. Tokens have governance rights. the less that you

have around that, the less clarity and and control that you have around that, the less valuable that asset will be. >> It does feel different than hype. Like hype has very clear, it's a very programmatic kind of schedule, whereas pump, it just you just don't really know. >> What what if what if Jeff one day was like, you know what, for today's fees, I'm going to put half in in this treasury company that I control. >> Yeah. No, I hear you. >> Also, what do you think would happen if someone that ran a public company did that? That person would literally be in jail. >> Yeah. So like what what does the issue gra what does the industry grapple with today? A lack of robust disclosures >> and frankly we have enough businesses that are wellrun to have those things be big companies but we still struggle with

even basic things like can we all get in the right gap accounting standards. You have one platform defining fees as revenue and revenue is fees and nobody discloses costs. How how are you even supposed to sort top to bottom on what to buy? Like I think Sky is the best in the industry at doing this. This is why uh you know we're just such huge bulls on it is because every single dollar is accounted for and there's programmatic guarantees about what goes where. Everything else you there's a there's like a huge leap of faith that you need to take. Uh and you know Plasma is doing quarterly you know uh kind of disclosures and and plans and road mapping similar to an earnings call.

Same with Syra. Sky have has it by the block. Um, but this is an industry issue that we need to actually grapple with and solve. >> So, as you guys are thinking through the thesis for these companies, is it essentially like these companies that already have, for lack of a better term, their [ __ ] together. These are the ones with the highest chance of survival and therefore those are the ones that really meet the criteria as we converge trady and DeFi. >> Correct. >> Yep. I I mean look, if you don't have any business and you're disclosing a whole lot of nothing, you know, you're not going to go anywhere. But there are some now opportunities that look almost like Carvana back in the day, like that type of upside reflexivity where if you

were a traditional company, you would be valued an order of magnitude higher. And I think a lot of these DATs are trying to kind of square the circle um by taking their tokens effectively public. But again, you need that real gap earnings to to actually make that a reality. It can't just be inflation. >> And for Von in the sense that it went down 99%, there were kind of like questions around what it was doing, if the business was even, you know, survivable or or going concern. And and for anyone who was really paying attention, it it was, you know, it ended up being like a a 50x from there. It came all the way back to whatever 100x.

Um but I I think broadly um the other thing that I would say is and and this is something that we've learned over the you know years of investing in framework. You can have a really awesome opportunity at like a $20 million valuation and or you can have you know a a bigger opportunity um maybe at a $200 or $2 billion valuation. But if you have an operational um operationally excellent team and you've got a much bigger market, it's way more creative to buy at the higher valuation for the brand name for the things that's working because the size of the market is probably far underestimated. And you you may say, "Oh, well, if this thing just gets to that level, then it's a 10x

and we can sell it and it's great." The bigger opportunities somehow have a much bigger opportunity for you. >> Yeah. >> And and so that's what I would say. the winners are just going to keep on winning and that's where you know in this market is going to be dispersion where the big things that we all have been talking about on this on this pod today are going to be the ones that keep on winning. Well, so Crypto Yield Info, one of my favorite OG DeFi uh guys, you know, was probably one of the biggest whales on like year and these types of things been falling for so long. And he put out a tweet today is more or less around, okay, like maybe synthetics, this per thing that they're doing now is going to reignite this kind of like OG DeFi trade and like linked a he was

like, I think that like per DEX trade may be kind of slowing down or over. And so, you know, I just kind of want to give you guys a bit of insight into like where my head was at for the last month with this hyperlquid trade was this thing ran to 60. You know, Rob and I had limits from like 52 to 60. I pulled them up. He's he's in my ear the last three weeks like you're an absolute [ __ ] for pulling our our limits up. I mean, it was a small part of the position, but and I was actually with Chris Berniski and he was like, "Brother, you're flying too close too close to the sun here." And he sent us like some iicarious [ __ ] philosophy thing. Anyhow, >> Chris.

>> Yeah. So that happened all the while lighter variational osteium uh Pacifica all of a sudden crypto Twitter went from like hyperlquid bulls to like perex bulls airdrop farming and of course you live by the sword and you die by the sword. You get all of the the the hyperlquid you know farmer defi people on perplexes and then you liquidate a ton of them in this on Friday. really sad. Again, nothing to like be, you know, you know, bragging about if you didn't, etc. You know, shit's ri, you know, serious. But now I'm calling Rob and I'm like, dude, I'm going to start persping. Like, I think it's a great time. Oi's down in half. I'm a hyperlquid bull, but lighter TG is coming at the end of the year. I

think they'll they should be able to trade at least 1/4 of Hyperlquid's market cap. Then you got Pacifica, etc., etc., etc. And so I think my question to you guys is like what is with your hyperlid thesis? How do you kind of reason about these other purpose platforms getting traction uh in terms of like OI in terms of volume and uh you know do you think it's a decent time to actually jump into like some of the purpose farming stuff? >> So so it's not it's not the exact same comp but let me like analogize this to maybe like social media back in the day. Um because what you had was all these competitive social media platforms starting basically at the same time and you had billions of dollars of venture capital money chasing after these same, you know, companies. But in reality, the

best thing that you could possibly do as an investor is invest in the $15 billion Facebook round, which seemed like the most expensive, crazy thing you could possibly do at that time because they didn't make any money. And and I think that is where we're kind of and very different in many different ways, but but you can kind of think of it in the same way in that you're you're talking about a network of users that are generating revenue. They're providing a business and you could go off and trade, you know, the the second tier, the third tier because it's so much cheaper than, you know, that tier one. But in reality, the best thing you can do is just buy the tier one because the size of the opportunity that we're talking about here isn't like does hype go to 100.

We're talking about $500 to $1,000. Like that's the size that we're talking about of the TAM if everything is successful. And over time you start to add, you know, it it's not just a per stacks. You know, we're obviously going to see a stable coin and stable coin competitions which are going to generate a ton of revenue. We're going to see what HIP 3 ends up doing. Maybe even HIP 4 with prediction markets. Who knows? But the the idea is if you have all these things coales around the same thing that's already winning, the outcome is just much larger. And if you want to do a farm, you know, lighter or aster or try to get, you know, some some air drops, that's great. But it's sort of like, okay, well, then what do you do? And we do have a unique opportunity in crypto

to go off and farm and have that be accreative to our core positions. It's a it's a great staking mechanism that earns you yield. Um, but I I still think you have to question, you know, what are you doing with that and and how are you aligned? What's your long-term investment versus what's your short-term, you know, trade? Michael, I think your time horizon is a little bit different than Andy's. >> Yeah, there there's uh paycheck to paycheck. Uh >> this guy, >> look, if you're going to farm, make sure you're shorting ETH, okay? >> Yeah, for sure, buddy.

>> Make sure you're short. >> I mean, isn't it just biblical that that we get all of crypto Twitter farming per stexes that, as Michael was saying, are, you know, going to be secondary or tertiary to the winner here and then the whole thing just gets wiped. It's just it's just >> I mean but this I don't want to say that this is always going to happen but when you have people onboarding into per platforms that they don't really understand and they and you can run up huge on per like we know people who made hundreds of millions of dollars just being like 5x long you know something for a few years but that like as soon as that happened it's like as easy it is easy it is to lose um and so like the flash crash was always going to be how people got taken out if they got

taken out. But I mean, I think people should be searching for more answers than they're currently being given about why this happened. Um, because it's not just like all good in my mind. >> If you lose $40 billion, someone obviously made some fraction of that. >> Um, and and like the refunds I I think are like a pittance in terms of what people actually lost. >> Yeah. So when we're thinking about this, you know, generally it's a PB PVP landscape where especially on these purpose platforms, we have longs equal shorts. If all these if all these people got liquidated, say that say there was 5,000 10,000 people that got liquidated, how that money ended up in the hands of

how many people would you say? Just estimate like is it one? Is it five? Is it 10? Like there's an order of magnitude less that we've now consolidated that amount of capital into. These are very dangerous questions that you're asking. I don't have the answers to them unfortunately, but doors locked >> no more than 10 to 100 people probably. Yep. >> And how many lost? You know, tens of thousands, >> thousands, orders of magnitude more. And so, you know, it it was also interesting hearing you describe your your thesis for a valuable company and how the market cap is somewhat irrelevant. It it's essentially down to the industry standards that they're reporting. It's down to the the the GAP accounting principles that they're using and it

doesn't and I again I the market cap is somewhat irrelevant because if you look at the largest exchanges and the largest companies that actually you could say have product market fit they might be bigger but they don't adhere to the principles and the standards that you're describing. And so you're you're describing this flipping essentially that >> I I think um if if something is working and has fundamentals, like Michael knows this, I will just refuse to sell it. >> Like fundamentals may not be a reason why you can convince someone who's doing like daily fantasy sports gambling to go buy your altcoin, but it sure is a reason why people will not sell. And why that matters is because in a market like it is today for all coins where VC overhang is real. And basically what you

have with VCs is they're selling coins to give back money to LPS to get more money to buy more coins. It's kind of a round trip, but um this is just like outflow tape. This is what it looks like when an industry is losing actual bidding. To bring bidding back into the equation, you do need the VCs to be recapitalized, but I think they're going to need a lot more than just faith to buy tokens that are on the open market today. And even though people like maybe Hyperlid's a little bit like overvalued relative to fundamentals, but like we think it can obviously go much higher because we have programmatic guarantees about where the revenue and fees are going. We're okay holding it. We're okay even buying more because we know that that will always be the case. If someone is not telling us, you know, what's

going on or there's not real revenue or real traction, uh why would we hold that token? Like that's the difference there. There's there's varying degrees of this as well where like if you have uh you know a monthly call with a team and they're like here's our report, here's what we're doing. It's great to get those kind of check-in moments. That's level one. Level two is like you've got a website and I can go to it any day of I want and just check and see what the numbers are, see what the trends are. I can get the digest. It's great. that there's that and then there's like governance guarantees where it's like it's 97% or whatever you whatever the revenue metric is for Hyperlid you know you're you're taking that and for you to change that you got to do a vote onchain

with all the different validators that's like transparency plus guarantees that you know we're on calls with our LPs who have absolutely zero idea about anything going on in crypto except for a few things one of them Bitcoin digital gold ETH really picking up steam and hype is just printing cash. Like those are the three things that endowments in the United States, pension funds, like that they know about crypto right now. And so how does how do how does that third one get into the narrative? The third one gets into the narrative based off of all the trust, all the reliability, all the transparency, but then everything else on chain and everybody's talking about it and and so like if you can break through that, you have a shot of being

the size of Hyperlid. If you don't, you don't. you won't. And yeah, I think governance guarantees is is really really strong. >> Yeah. >> Earlier on the stream today, I told Andy, uh, I think the most dangerous thing that could happen to Hyperlid is that Trump pardons CZ because CZ has a vendetta for Hyperlid. Do you guys think that there's some some possibility of Binance entering the US market and them leveraging that to be a detriment to Hyperlid? as we just talked about there.

Look, we're talking about centralized decentralized. It's it's not it's not like who's got more. It's the same thing. It's an apples to apples comparison. It's like it's apples to oranges. And every single time we have a weekend like we just saw, that difference becomes more and more pronounced. >> When when you're when you're already transparent, there's no skeletons in the closet. That's like what's great about running a transparent pro protocol, a transparent fund, like do your worst, get pardoned, whatever. like there's nothing that's going to really materially change. Um, in my mind, I think there will be some ramifications for Hyperlid from this weekend. Just like the sheer amount of open interest that came off, it will take a while to build back. Um, it's

also quite tragic that a lot of the most rich Hyperlid customers got liquidated in the process. So, there will be a rebuilding period, but I think, you know, the exchange will be a lot stronger for it. They will probably deploy HLP liquidity differently. that will probably have different relationships with market makers or how they treat their vaults. If you've ever seen that photo of the plane that gets like shot a bunch in World War II and then they patch up all the bullet holes and like that's kind of those areas are actually the safer areas. I kind of think of that in the same way as Hyperlquid today. And I do think there's also ramifications for the centralized exchanges. I I think the use case of a lot of these synthetic dollars is margin is probably done and and like the use case of like sold that got bridged to

BNB that's then put on an exchange and used to trade against like random who knows what coins that's probably done too. >> Yeah. >> And maybe those funds are done as well. Like and I and I think that is kind of there's some protocols that really prioritize growth at all costs, but like what you don't realize is like there's that one day every once in a while where like it's just over. >> Yeah. It's the It's the life It's the life of a turkey, >> right? Thanksgiving goes with trading persp Thanksgiving's coming up, Vance. >> Yeah, I know. Can Thanksgiving, I think. >> Not not Canadian.

>> Yeah, we're doing that early. Um, but like here here's my two cents on the whole thing. When you're running up video game money on pers, that is when you should consider selling some. When you have a $70 million unrealized P&L that goes to zero, your life is forever changed. Not in a good way. There's no enlightenment coming from that. You're just pissed. >> Yeah. >> So, so don't do that. >> You guys got your uh Monad cards. >> Oh, man. Gonad.

>> Gonad. >> I think we just got a couple minutes. Um yeah, so the airdrop claim is tomorrow. >> Uh it's going to be a unique claim. I have zero intel. Um, not sure if you guys have heard anything. I I anticipate them doing something where you got to interact in some capacity within the community, maybe on the test net or basically like airdrops in crypto have gone from like you know the easiest thing being like you don't even got to do anything. It just gets sent to your wallet to all the way to like these kind of like intricate uh you know processes. But I think the community has pretty high expectations for monad. Uh we didn't do any rounds. Unfortunately I DM' K for like a KL round back in the day and he just ghosted me. But that's life. Um, I think this thing could trade

>> about it. >> I this thing could could have a plasma-like trade like uh launch and trade 10 bill plus and be a big airdrop. And I think it could be like a little bit of a golden moment for like like you know the we're looking for monad and mega eth launches here basically. I think from the from the chain perspective and it seems like monad's going to come first and probably bigger. >> No no view on on either. I think both are good. I I would say if you're going to buy by spot, if I could impart one lesson from the past weekend, just buy spot.

>> Especially for very recently launched assets. >> Yeah. Yeah. Gent. Um I think the moral of today's podcast or or the or the sum is Jeets out, Chad's in. Um guys, stay strong out there. Stay off the leverage tickers and uh I'll see you at all time highs. >> I'll see you at all time highs. There we go. We'll end. Thanks, guys. >> All right, boys. Cheers. Easy. Enjoy. >> Tune next time.