How Robinhood Perps Are Different and How That Affects the Trading Math

Transcript

Robin Hood chain had a big announcement last week and it's already showing promising metrics and lighter lighter was a part of that announcement since your perex is powering perpetual futures directly into Robin Hood wallet. This is a big deal since now Robin Hood's retail traders except for certain jurisdictions including the US um will have easy access to decentralized perks. Robin Hood was an investor in your round last November. was this part of the plan from that time and um just tell us generally how the deal came together.

>> Yes. Yes. Well, it's I joked with the team, you know, this deal is uh you know 12 years in the making or you know 25 years if you look it another way because I went to high school with uh Robin Hood founder. who were the two lads at our school and uh 12 years ago I was an early adviser to Robin Hood which had just uh I think their corporate name before that was actually cash right they had just become Robin Hood and we're getting their weight list so I've kind of known their team and been um you know involved a bit at that point but then as as you mentioned late last year they participated in our last equity round uh before we launched the token And um you

know we we've actually I think talked about doing something with them for a while. A lot of things had to come together for you know for the tech to work for Robin Hood chain to go live for kind of per to become something that's interesting to uh customers in the Robin Hood ecosystem. So yeah, I would say this partnership started a lot earlier than just the that equity round. Uh and uh yeah, we're very excited about it and it's also kind of the first step of what we hope will be a deepening um level of partnership.

>> And what are the deal terms? Is there a revenue share? >> Yes. So the revenue is shared 50/50. Um the 50% that goes to us is kind of immediately acrewed to token holders for buybacks as is 100% of the revenue from for lighter. >> Okay. And how does this product differ from lighter's own app? >> Well, for one thing, as you mentioned, it has a unique front-end access through Robin Hood wallet, which for many customers, they can bring if they have a um if they already have the wallet app, they can use it seamlessly, but also if they have a Robin Hood core app, they can fund that the the wallet with USDG,

start trading per um if they're in the area that has the jurisdiction for it. Um I mean also it'll it'll be like a different mix of markets. It'll be settled or it is settled in USDG stablecoin. Um I think we've already seen like some of the markets that folks are interested in to trade are uh you know more more stocks you know tokenized stocks some memes as well. So it'll be a different customer base, different mix of markets. One thing that's interesting on the back end there's high level of interoperability between Robin Hood chain and and lighter. So like a market maker can actually quickly move capital around between the two um lighter domains as we're calling them and that

creates a lot of advantages as well, right? Because a market maker can now participate on both and in a much more efficient way than if they were just like you know I don't know trading on one exchange on Salana and another exchange on Ethereum or something like that. >> Oh interesting. Okay. I wasn't aware, but I guess um since uh USG is the quote asset on lighter and sorry and the Robin Hood app on lighter then um like doesn't that create a little bit of fragmentation anyway but you know with your main app.

>> So yeah, fragmentation is interesting to think about like I think it's not as black and white as that, right? Because if it's on the same underlying chain which is Ethereum you know Robin Hood chain is also on top of Ethereum like you know the liquidity is very quick to move around where market maker you know can participate on both and quickly provide liquidity to order books on both and kind of hedge across the two. So obviously it's a it's not as um consolidated as if it were on one instance but it's a lot um less fragmented than like two completely separate instances like one in Ethereum one in Salana right so so it's it's a

lot closer to being um consolidated than to being fully fragmented >> okay yeah I guess circuits work to kind of move capital around >> okay yeah I guess it's more that it creates a little bit of friction for the market maker. >> Yeah. But just a little bit, not a lot. >> Okay. And so I have to ask for my largely American audience. So this PERPS product is available in Europe, but when do you expect that this offering might be rolled out in the US? So we have been in the process of working with CFTC on uh uh you know a license for decentralized purp and that license would cover both lighter zone

front end and uh brokers like Robin Hood plugging into it. Like right now if you look at the Robin Hood US product, you know, they for, you know, for stocks, they obviously plug into uh US exchanges, but for prediction markets, you know, they're plugging into Cali, which which um has had a license for prediction markets a long time. But basically, the components that need to be there are the integration itself, but also the license necessary. And we're very um uh you know involved with CFTC on in that process. No one has that kind of license yet, right?

We we think with how innovative this CFTC has been and how you know with the process with that we're going through has looked like we expect that to happen uh you know in in a relatively um you know short time frame and then then then we'll be able to uh open it up to to open up both lighter core and Robin will be able to plug into lighter from their US app Okay. Yeah. And I'll ask you a bit more about that in a moment, but let's go back to the USDG um issue because, you know, as we talked about, that's the quote asset on Lighter and Robin Hood chain. And I imagine that that uh the

usage of that brings some interest income to Robin Hood since they are one of the corporate partners of USDG. But um you know going back to what we said about the market makers, I would imagine that usage of that also creates friction just for users because USDG is not as liquid as USDC or USDT and you know as we talked about market makers would have to um probably charge a little bit more I would imagine to quote against USG. Um, I also would think that it creates a little bit of risk for the venue because um, if USDG pegs DPEGs then it could cause liquidations um, you know, and yeah, you could

protect against that by like hard co hard coding the value at $1, but doing that also creates its own problems. So how do you account for these issues so that having USDG as the quote acid asset is also a good deal for traders? >> Sure. Well, for one thing, um the market makers uh there there might be um reasons why they would um be less aggressive on, you know, in the Robin Hood instance, but there are a lot of reasons why they would be more aggressive, right? Because they know they're getting a high percentage of the flow they're getting is retail flow and that's the flow ultimately they want.

Like so, so they're going to balance that out, right? and kind of run the calculations on their side, how they manage the risk. Um, I mean there there are risks they have to think about at the same time there are rewards they have to think about, right? And the reward of being on top of something like Robin Hood chain is that you get a lot of retail flow which is their bread and butter. So you're right there risks to consider here. You know, from our perspective in the long run, we want to support a variety of stable coins as collateral on lighter core as well. I mean we think USDG can be collateral on lighter core as would other stable coins. There would be some you know the risk model would involve some haircuts when liquidation happens but you know that's

all of that can kind of be um factored in to the risk model. So so I guess from our perspective you know we're we're building the core infrastructure. you know, some stable coins um may be treated by market makers in different ways, but ultimately like the vision we're building towards is that you can use a any major stable coin as collateral. You can also use ETH as collateral, BTC as collateral, and tokenized stocks as collateral. And there going to be some, you know, the liquidation model will account for that the way in the way it measures risk, but ultimately that that gives customers the widest choice of of products to use.

>> Okay. And so you also recently um announced an integration as the perplex on Telegram wallet and I wondered how that deal came about and how it's been performing for you. Um and if you have any numbers to share that would be great. I actually couldn't find any so um I'd be curious to know how that's going. >> Uh well if you go to um we we recently released something that shows kind of all of our integrations. Um it's called Lithub right? You know like GitHub but with an L. Um and there it it should actually be pretty easy to find where we show all the integrations. Um you know in terms of partner attribution revenue uh that the telegram one is right at the top there. it's done uh very well. I

guess if you compare it to um I mean we we don't um focus on competitors as much but as just a data point if I think one comparison to this is kind of builder codes and hyperlquid and so out of all of those you know they have many different integrations as do we the telegram one there's only one builder codes on on hyperlquid that has had more revenue or that has had more volume than our telegram integration has so So, Telegram is right at the top of our list and um it's it would have been number two, you know, if you compare it to the kind of builder codes list. So, it's pretty good. We'll see where Robin Hood ends up. It's only been, you know,

hasn't even been first week yet, but but yeah, Telegram 1 has has has done very well and they were very happy that they picked us as the partner. >> You just caught a piece of Unchained. I'm host Laura Shin and the full conversation is in the description below. We go live every Monday and Thursday. Subscribe [music] so you never miss it. Fidelity has been researching and investing in blockchain since 2014, long before it was a headline. And they're hiring crypto and DeFi professionals to join their team and discover what's next in finance. Fidelity is looking for people with fresh perspectives from different backgrounds. Whether it's tech, UX, or product design, whether you're cryptosavvy or cryptocurious, as long as you have the passion to make a

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