Designing Thoughtfully, Not Greedily | S9 E3 Clip

Transcript

One theme that we're uh very interested in this season is this idea of vertical integration. And when you look at a lot of the dexes in Ethere or in um crypto today, uh you're starting to see a little bit of that, right, which is uh like unis swap is a really good example of a protocol that started at the AMM layer and they're kind of going up and down the stack, right, towards the distribution layer of having their own, you know, UI uh like desktop UI and then their own wallet and then down the stack to their own chain. You can look at like the recent uh competition between pump fun and radium in Salana is another good example. Jupiter is the same thing. And so you know I think especially like UI is super super critical when it comes to exchanges which is maybe what is the the

sort of driving force here. But, you know, I'm curious on, you know, on your thoughts in general on the idea of vertical integration when it comes to uh dexes, whether or not, you know, how Hyperlid thinks about that. What areas of the stack are the most important for you to have, you know, direct control over? And then, you know, you mentioned at the beginning of this episode that or actually I heard you in sorry, ZeroX research episode that I was listening to before this, you know, there are so many things that you need to get right. You need to design the right environment for traders, for market makers, but you also have to get the UI stuff right, which has been a real challenge in the per space so far. obviously until um you know you guys have done a really good job on moving the ball forward there but

talk to me about how you think about vertical integration in general and then UI right like what is what is important to get right from a trader perspective here. Yeah I think the so I think vertical integration is is obviously super good as like a business decision like if if you're just like a traditional company you want to own as much of the stack as possible. Um, I think it's like part of that is just like it's it's often unclear where the value occurs, but another part of that is just reducing the overhead of like if you have like many people you you need to rely on to uphold their part of the deal, then you're kind of your

ultimate user experience is only as good as the weakest link in that chain. So, and I think that's also true in crypto, but I think there's a bit of there's a bit more tension in crypto, which is that sort of owning the full stack is also a bit antithetical to I think the like what DeFi should be. Um, like I think DeFi is more resilient if there are multiple possible choices at each layer of the stack. And so if any one of them, you know, is compromised or just goes down or like

whatever like loses starts going the wrong direction and like stops prioritizing the right things that that that like ultimately the you can find some path through these um like different options at each step. You can like find some path that's like still pretty good. I know that like creates a much more robust financial system. So it kind of depends what you're optimizing for. um from hyperlquist perspective I don't I don't think it's like a huge basically like we we we never even seriously entertain the idea of building everything in finance and so um I think when the like when the vision is that big it it's ne ne like

necessarily built by many people and and I'm very I'm very bullish personally on like coordination through protocols not through like management. It's like you have like a 10,000 person company, you probably build all all the finance like everyone's super good and coordinated and whatever, but like I I just feel like that's that's a I just don't see that happening in the real world. And so like the next best thing is like 10,000 people coordinating across, you know, a thousand companies like each building their own pieces and like um in a thoughtfully designed protocol to coordinate those efforts. And I think that's that's where I see Hyperlid being. And yeah. Yeah. I think it's just like the the end state is so

massively impactful and just like there's just like so it's just like such a valuable enterprise as a whole like finance that I don't think it matters if like hyperl doesn't need to capture all of it. That's like a super greedy perspective. I think um I think if you're like if you're like yeah I'm I'm doing this like one super small segment then yeah maybe you actually care about squeezing out every last bit of profit for your shareholders or whatever but um when you're building a protocol to power all the finance I think the perspective is more like um it's just like like let's just like grow the pie and um you know if if this thing if this thing is to succeed like everyone's going to be like so happy that um yeah doesn't matter.

There's maybe one area of like um sort of vertical integration that we've seen across a lot of exchanges that I'd be curious for your take on which is um we've seen a lot of like centralized exchanges try to capture some of the economics from the stable coin balances that are held on exchange. So Coinbase has this uh very lucrative distribution uh agreement with Circle where they get a lot of the uh the carry. Um, Binance several different times has tried to either partner or kind of like white label their own stable coin to capture some of that uh huge amount of of like yield that's just latently um being generated on all the the stables that are on their exchange. And I think

that's a really interesting angle because it's taking money that's completely outside of it's not like taking from builders or users. It's just taking money from basically the US government and injecting it into your ecosystem. So, um I'm curious if like Hyperlid has any uh if you have any thoughts about, you know, how to capture some of this uh economic juice from all the USDC on chain uh on Hyperlid, whether that's, you know, agreements with Circle or with Coinbase or, you know, maybe even having another kind of white labelled stable coin or something like that.

Yeah, it's not currently something we're working on. Uh I I think your question sort of highlights the point that there's just so much lowhanging fruit that like it's kind of hard to believe but you know there yeah there are like billions of dollars like of stables sitting on Hyperlid but up until now the priority has not been that like that has actually not been the low lowhanging fruit like um yeah that's maybe like more than hundred million dollars of yield at this point But also the the protocol makes annualized like five to 10x that you know I don't know the exact details like not enough data points exactly to extrapolate a

year but um but I think you get my point which is like just there's just like so many things to do and um yeah I think I think it would be cool eventually for um the protocol slash users to be able to have all all sorts of benefits And I think this is what kind of what happens when all of finance moves onto one chain is you get to kind of um if if that chain is designed thoughtfully and not greedily like not not as a sort of company company maximizing extraction but rather um a company maximizing just cool that can be done then uh yeah I think I think all

this stuff becomes possible.