Inside Lighter’s Plan to Overtake Hyperliquid | Vladimir Novakovski

Transcript

Hyperlid was probably the first one that actually was competitive with centralized exchanges. I think lighter is even more so. But in terms of the performance and so now that that exists, I think it'll be more like all of these exchanges, centralized and decentralized, will compete for the same market share. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Block Works. Our hosts, guests, and the Blockworks team may hold positions in the company's funds or projects discussed.

All right, everyone. Very excited about this episode. We've got Vlad Novakovski, founder of Lighter. Lighter, hopefully you guys know, very fast per decks, low latency, ZK proofs, L2 to Ethereum. We'll get into all that. Um, but before lighter, Vlad was at Citadel, uh, director of HFT at Graham Capital, head of machine learning at Quora, I think it was, VP of venge at Adapar. Um, and also co-founded an app that I used to use actually all the time called Lunch Club. So, Vlad, welcome to the show. >> Thanks for having me. Thanks for that intro. >> Yeah. I didn't know you founded uh, Lunch Club until I was like about 10 minutes ago looking up your background before this episode.

>> Yeah. Yeah. my co-founder Scott and I started working on that back in uh 2017 and uh it actually you know it still runs you know the AI runs in the cloud so you know it was um it was really interesting to build >> uh and some kind of early applications of LLMs there as well. >> Yeah. What were the lessons from that business if there are any like building it basically like a social network that connected folks who wanted to >> Yeah. I don't know more more for business purposes I feel like but what were the lessons from that? Yeah. Yeah, for sure. Uh I mean I think that uh there were some like on the technical side, right? I mean I think there are some really interesting things that we build and we we learned a lot about um

kind of some of the newer approaches to machine learning and um I mean also just like it was interesting to uh grow customer base because you know for a while it was growing quickly and then you know then things kind of plateaued. understanding kind of what drives those cycles was interesting. I mean, I think ultimately, you know, where we ended up though is like like the the size of the market for people who want to have, you know, kind of open-ended conversations that are not transactional but you know, kind of more like open-ended networking is just not that big of a tam, right? Like unfortunately like most people either

>> you know >> like I I think if you look at like founders or entrepreneurs or other people like that >> or like investors so that that's that happens a lot right but like when you zoom out like there's it's just like kind of relatively small market. So so I think that's that's kind of where it is but it's but for that market it still provides a useful service. >> Yeah. Yeah. Yeah, I was kind of your perfect I feel like addressable customer there with like you know founder does some angel investments like interested in meeting other people but yeah you go beyond that kind of shrinks. Um maybe we can start I want to I mean I want to talk a lot about lighter. You guys just launched your token. You've been growing market share month over month. Um just

had a big fund raise obviously. Maybe we can zoom out from lighter though. You were you were kind of this prodigy child. Uh you know graduated Harvard I think I read at 18. went to work at Citadel, uh, you know, built out a whole bunch of cool HFT stuff at Graham Capital, uh, led machine learning at Kora. Why is, if I looked at someone with your resume, you would probably be I would think that you would be working at anthropic, open AI, maybe a Renaissance, maybe maybe back at Citadel. Why is crypto the thing that you chose to work on?

>> Right. Well, you know, I think that uh for one thing, like I like building things, right? So, like I I think Citadel is actually the I mean, actually, when I was there, they weren't that big, right? But like that's the biggest company I've been at, which is like a few hundred people at the time. So definitely like kind of being somewhere early stage you know um building something new that that's that's always been appealing right but um in terms of crypto right like after having like I was in TRA 5 for a while right so I saw everything from the 2008 crash to you know flash crash 2010 and

you know I kind of saw a lot of what was good about TR 5 but also a lot of what was broken could be more efficient more transparent and so you you know, I I kind of started learning about crypto over time, starting with, you know, Bitcoin, reading the white paper in 2012, started, you know, to learn more about Ethereum like 2015 and got into ZK proofs around 2018. So, it's like then putting all these pieces together, it's like actually like a lot of this is the tech that can lead to um a lot of innovation of finance, right? And then kind of if we think about like I mean DeFi has been around for a while but if we think about

how does DeFi actually perform at the same um level as stratfi without sacrificing the verifiability I mean that that's like a really big and important problem to work on. So, so yeah. So, I I think like like from my perspective, it's not like uh you know, you know, it's it's not like okay, let's like build in crypto for the sake of building crypto, but more like okay, here's actually a really important problem that puts together a lot of the building blocks that exist now. And >> you know, myself and the team kind of have, you know, we're pretty mixed, right? because we have experience both

on the kind of cryptography and research side but also on the quan side right like including my experience >> right what did you learn from Ken Griffin >> um well Ken is very um like laser focused I even back then like he he's you know was always kind of thinking about Citadel and pushing the team like kind of very just like very like intensity in his work I mean that's one thing but the other thing is that um he was always thinking outside the box of like like back then he had the idea of building Citadel securities, right? And it it was like okay this is weird like why would a hedge fund like that stuff

should be done by a bank like why would a hedge fund build kind of an internal brokerage like that you know and but but he he did it right. Um, I mean he like there were other ideas like that as well. Like the way he approached building training desks like it was just like there wasn't like okay this is the way it's always been done so let's just keep doing it this way but thinking outside the box. I mean that's that's probably the the other big thing. >> You said you were uh excited to solve this you know important problem. What is the important problem as you see it today?

>> Right. Well, the the important problem is that you know the like the the um fact that in you know we we have all these technologies right but at least like when we started building in 2022 like 99% of the way digital assets were traded didn't actually use the rails of blockchain right like they were actually traded in a way that's centralized which you know arguably is you doesn't really get get us any improvement over trafi.

In fact, in some ways like as we saw with FTX is even worse than stratfi. And so that's I think that that's the kind of the big problem. But but I mean ultimately like like Trafy like I said itself has a lot of inefficiencies. I mean I think part of why like crypto is exciting in the first place is to kind of build a financial system that's more efficient, more transparent, right? Like, you know, you can still have a lot of different intermediaries in the system, but if what they do is verifiable and is onchain, that just makes things more efficient as opposed to like having um intermediaries that that whose actions are opaque.

>> Why did you decide to start with a perp dex? Because you could you could start with a mobile app, you could start with a chain, you could start with uh spot, you know, spot decks. Like what why start with the perp decks? Yeah, we actually looked at um spot like the very first iteration of what we built was more spot and then just from talking to customers it's like per I mean it makes sense when you think about it right like traders I mean you know spot is important as um you know you need that in the ecosystem obviously right like but like most active trading happens with per like there are not a lot of people who

are like okay I I trade and I only trade spot like like I think it's more like per is where um a lot of leverage allows you to like be capital efficient right and um and then you know spot is important like if you want to do something that's a longer term position or if you want to hedge do like basis trade like that it's important too but but like made a lot of sense like if the goal is quick customer adoption to start with what customers want to trade the most and that's per I mean I think the like like we we we did build an L2 on Ethereum right and so that and it's now one of the biggest I mean by like by TPS

it's you know that has the highest TPS it's you know top four by TVL and so on but but we like we we wanted to build the core tech and the application I I I think sometimes what happens is this there's this like if you build it they will come mentality where it's like hey let's build this tech and then hopefully builders will come in on top of it. Um and like I I think you kind of um you know I think without having that iteration where loop where you actually have like real customers using the tech kind of from day one. Um it it just you know

like I think in principle it could make sense. Okay. Well, some, you know, one team is really good at building the core tech, another team is really good at building an application and like, but I I think those things actually make more sense once there's a version that's already working and has a customer base. And then like kind of what we're doing now with you know saying okay well like lighter L2 like we're um getting ready to announce the ZKVM sidecar where now other developers can uh you know kind of any any Ethereum D5 app can now work on top of lighter you know in once that's released. So, so I think that all of that is important, but if you just start

with the infrastructure layer without any applications that I think that's just like not necessarily great way to bootstrap. >> Yeah. Tell me about um the the evolution of perplexes of perexes are very is very interesting, right? Or even just per crypto is very interesting. I feel like every every cycle you have like one per platform that kind of dominates. You had you have like BitMX and then you go to D obviously DYDX commanded a lot of market share. Then you get other people popping up. You you've got Drift and GMX and then the platform that dominated this cycle obviously was Hyperlquid. Nobody's been able to keep their market share though. Do you have a theory for why that is?

Um I mean I I I don't really think about that so much. I mean I kind of zoom out and say okay like overall exchanges have kept market share. I mean, I think some of the those earlier projects you mentioned, like, you know, were didn't necessarily have good product market fit to begin with relative to centralized exchanges. Like I think you need like this is one of the interesting things we learned after FTX collapse, right? It was like, okay, well, after this happened, surely volume would move to Dex's, but that that didn't happen. So it's like so I think that it's like you'd rather trade on a centralized exchange where you know

there was maybe a one in six chance it's going to you know completely collapse like one of the six big ones did just collapse and yet you'd still rather trade in that space and I think to us what that showed is like there's just like the product market fit for most traders at the time of being on a DEX is just not there like and so that's why our our goals were kind you know, have something that's fast, you know, low latency, low cost, secure, verifiable, and composable. But those first two things, you need that, right? Because if you don't have that, then like most traders would rather forego the other um advantages of DeFi and just trade on a centralized venue.

So, so anyway, I guess all that to say like I I think like Hyperlid was probably the first one that actually was competitive with centralized exchanges. Um, I think lighter is even more so, but in terms of the performance and so now that that exists, I think it'll be more like all of these exchanges, centralized and decentralized will compete for the same market share, I guess, is kind of where >> I see it. and and certainly overall right like there's Binance, there's Coinbase, Bybit, like those, you know, there there's there's a lot of players there. It's not just like um focused on a single one. So I think that over time that's what will happen with um you know like I think the the the shift from CFI

to DeFi will continue and also as more people from Trafi come in I think they're going to especially after um you know US markets um are opened up like a lot of those folks will come in to um DeFi native platforms. So, so I think that that's kind of how we see it. Like again, I think to to your point though, I guess why did we see this phenomenon? I think it's probably because none of those products really had true product market fit at the time. And so they were it was just kind of like people trying stuff out, but they weren't necessarily used by like they weren't really getting a meaningful market share from traders to begin with.

>> Yeah, I would say until Hyperlid. Hyperlid broke out of this like little niche right? >> Yeah. Yeah. And I again I think that's because just the product, it was like the first one that actually um was competitive on the basic things that trader needs. >> Yeah. What do you think Hyperlid got right and what do you think Hyperlid got wrong? Um I think that uh you know they got a lot of stuff right on the product side, right? like actually building um something that

you know has I think performance that's good enough for most traders and has you know a lot of the um the the kind of the UI UX features um that you need and I think there's some other interesting things like the HLP right that was good um innovation I in terms of getting wrong I I think it's more like you know at the end of the day I think building on top of Ethereum and being connected with kind of the broader ecosystem both existing DeFi and then also like like TRFI as much as somebody might want to talk about like housing all finance like Trfy just isn't going

to move to like an L1 that's not Ethereum like when you talk to when you look at like what is you know like tokenized stocks right like Robin Hood or you like JP Morgan or you know others working on stuff like that like they're going to build and they are building on top of Ethereum and so that like you if you want to capture that market down the road like you need to build on top of Ethereum and it's also just more and that's also where most of existing DeFi is right if you want to have that native unlock. So I I think that's um and the only way you can do that and have the good performance is to build it the way we did. So, but like you know, but that that also took longer

to get to market because it's just a harder technical lift. So, that's that's the trade-off. And I guess now we're seeing that play out in real time. Now, again, we think like if you solve the hard technical problems first, >> then you get the bigger unlock later, but that has to that's easier said than done, right? Now, now we're seeing that play out in real time and we'll, you know um like I think this this year will be a lot of things will happen, right? as far as um between unlocking the full connectivity to Ethereum um between kind of institutional use cases or use cases like tokenized stocks and between

you know opening up to the US market. I mean I think a lot of things will happen this year. >> Yeah. Yeah. Um can you double click on why the why why you guys are in ETH L2 instead of an L an L1? >> Yeah. Well, that's kind of um the thing here, right? It's like like anyone can build their own L1, right? I mean, like it's like any Ethereum L2 can just remove the connectivity to Ethereum and call themselves an L1. Like that's not that's like the it's so when people say like why don't you guys become an L1? It's like yeah, like we can throw out all the hard and interesting things we've built and and call us. Like what you know, like what's the goal of that, right?

Like I think the whole point of being part of um of building on top of Ethereum I besides the you know the security aspect of it right like you're on top of the most secure L1 that's been around for you know over 10 years and um it's kind of by far the most decentralized most reliable. I mean besides that I mean you just if you just look at um the the data right like that that's just where most of the TVL is most of the existing DeFi protocols are there so being composable with those is huge unlock and on a forward-looking basis to

the extent that defi and trfy will merge like again like like tr like ethereum is kind of the only um kind of underlying architecture that Trifi trusts. H how important are the um all right so so on one side you have the the institutional trust how important are the integrations with other you know players in DeFi how important is it that you know because you guys are at this ETHL 2 it's much easier to maybe plug in with something like a >> yeah exactly uh exactly and so kind of the vision here right is that any asset that's already on Ethereum whether on the L1 or other L2s can be used this collateral on lighter kind of

natively and that that's >> that that's a kind of huge right. So you can imagine like if you have something um yeah like let's say on a right or you have even just like um if you're holding a lot of ETH I mean you can then use that and trade trade other assets on lighter you know and participate in um per other other markets we launch in the future like options prediction markets and so on. H um I heard I forget I was texting a couple investors who' participated in this last round saying what should I talk to Vlad about and they said um forget if it was in one of

these texts or maybe I saw it on Twitter but uh someone someone had mentioned you guys are the only product on the market that had is strong across five different dimensions or maybe this is you said it on another podcast I forget where I got this from but it was low cost low latency secure verifiable and composable. Can you talk >> Yeah. Can you talk through that competitive edge? Yeah. Well, I think the low um low latency part is really important, right? Like if you compare lighter on the latency side, it's like 200 milliseconds. And the reason that's possible is because the sequencer can be highly optimized and uh you know if you're trading from I mean there's other than you know speed

of light I mean you can kind of be as efficient as possible and the idea is that because everything that's done is proved like the sequencer can go very fast and then there's you know the kind of the prover um can go a little bit slower than that and kind of generates proofs and post them back to Ethereum. But if you're trading in real time like um that the latency of that is is very low like it's much lower than what you can get if you're trying to build your own consensus mechanism. Um so and that that's like again going back to like why why are we building this? I mean that's one of the huge unlocks of CK, right? Is that you can have very high performance applications yet still be verifiable. So

that's the low latency part. I mean low cost is kind of there's two things to say there. One is just like the way we build the tech it can be operated at very low cost. Like we're processing 500 million orders a day right now and the costs of doing all that are like under 50k USD, right? So, um, so that's I think I think cheaper, you know, if you imagine how much that would cost if you were, um, like doing that on one of the other Ethereum L2s, you know, it would be orders of magnitude more like even I mean I think even centralized exchanges probably have a higher cost structure, right? So that's and but one thing is to have low

cost, the other thing is to pass that on to customers, which we do in particular, retail customers where it's free. Um, and like you know there there's kind of this whole idea of like you know monetizing from the market makers and the high frequency trading >> right >> firms but none of that would even be possible if the costs of operating the exchange were high. >> Um so that's the second part. The third part um the verifiability I mean I think like uh there's a question of you know why why do people care about verifiability?

Well so for one thing like what what would it mean to not be verifiable right? That means there's some component that you just have to trust like where there's no code for it. there's no um no nothing to see on chain to confirms that it's doing what it says it's doing. So then like for example if you had something where trades are settled on chain but matching is done offchain in a way that's not verifiable. that especially with like big market moves like an October 10th or even other big moves like who's to say you know price could be moving um a few percent in a couple minutes like and you know

let's say your order was not matched fairly like and you don't even know you wouldn't even know that it was right like if the price is moving that fast like how how would you you know um you can have situations where um you have instead of like making finance more efficient and fair, you can actually have outcomes that are worse than stratfi if you're not verifiable. So that's but the other piece is like because sometimes people say well traders don't really understand all that and don't care. I mean some traders do understand it but even if you say okay maybe most of retail doesn't well the people on the other side the market makers HFTs they certainly do understand it right and so they

>> right they understand what they understand the verifiability part >> yeah the verifiability part and why that's important and why that that makes them comfortable um trading in this environment and knowing that you know everything that that they're doing is processed fairly and so so like they they And when you those guys, you need those guys to have higher liquidity for the retail, right? So it's like right like every trade has two sides. So >> like arguably not everyone on the retail side understands the full nuances of how the tech works, but certainly the folks on the other side do, right?

>> Yeah. >> Yeah. >> So that's that's the verifiability part. >> Um I mean Yeah. Go ahead. >> Before you get into that, can you explain the ZK stuff that the ZK innovations that you guys have been able to do? Uh I guess two two questions there. One, explain it to me like I'm uh not not you. Um you know, help help me understand like why this is actually so important. Uh and then the second part of that is like why are you guys able to do it when no one else has been able to do it? Is this because of partners like the succincts of the world have made improvements or this is some you guys have a team of you know math Olympians or what? Why have so I guess two-part question there, >> right? Maybe I I'll start with the second part first just uh um because I

think that'll inform the first part. >> Yeah. >> Um so so far everything we've built has been built in house. Um so everything you see on lighter today like you know how it works. Um, no, there there's some, like I said, there's some new stuff we're working on now where we are working with partners and we'll announce who those partners are soon, but but that's that's for stuff that hasn't even been released yet. So, everything that's been built so far has been built in house and, you know, our our team has a pretty unique mix where it's um yeah, people from, you know, we have um like 20 our team members have a medal in one or more of the Olympiads. I mean

I have metals as well but I think that's part of it but the other part is that you know we have experience both on the cryptography side and the quan side and I mean both of those have to do with things like math and computer science but the point of it is like there are certainly teams that are very good at one of those things besides us but I think we might be the only team that has both and so when we're building the you know the the specific things it it's like yeah yeah now I'll get to the your first question right but but like I guess in terms of like why us it's because

we're able to kind of wear both hats and say okay like this is how you design things from a cryptographics um dimension but then how how's that like what are the trade-offs you need to make there that are actually important to trading right because I think some of the teams that are really strong in the cryptography side like the stuff they focus on is not necessarily what actually matters in the markets like like like to to the earlier example like how do you make sure that the that during like a big market crash like in October 10th that everything with liquidations is proved correctly like that matters a lot more to the market than maybe something more academic like what happens you know is it possible theoretically possible to have ME you

know at, you know, the microcond level, right? Like that the dash isn't what the market cares about. What they care about is like when the big moves happen to make sure everything is like liquidations and everything are handled correctly, right? But but in terms of like how it all works, um I guess like one one analogy I think that's pretty interesting is like um so like again the goal is to process transactions, right? do those do that efficiently, you know, low cost, low latency, but then to prove that everything you did is correct, right? And so it's like there's um you know um there's certain rules that have to be followed. Um and the rules

are things like first in first out, right? Or like you know like time, price, priority, kind of all all the obvious rules that when it comes to trading, right? But like when there's a lot of trades that say a million orders were just sent and like a 100,000 of them were matched with other orders, the rest were cancelled. Like you can generate a proof that all of that uh followed the rules of um of the trading which which which are public and kind of open source and what's so-called ZK circuits. Now the the hard part is how do you do that efficiently because um you know you can use there there are systems you can use that I mean you can even try to just do

that using smart contracts but it would be very expensive. I mean so one analogy is like kind of like what Nvidia did for like they created a chip right that was like very specifically optimized to graphics um you know like like to video games and that was the initial application now obviously used for AI but like they created that that chip that was highly customized for specific applications. Similarly we created zero knowledge circuits that are specifically for finance. So our circuits can very efficiently encode the rules you need for finance like for risk management for order management for you know liquidity all those rules and nothing else right so we don't prove like we're not and this is where um the the distinction

between like full ZKVM and our custom circuits comes in right because we prove only the stuff you need to prove for finance and nothing else now we're going to combine that with the full EVM as well >> yeah cuz I was going to say isn't Isn't there a downside of that? Like it's you you you perfectly optimize for trading, but maybe you it's tougher to add custom logic or you know if you need to do a big protocol change it's it's a little tougher. Um Right. So exactly. So there there is there is a trade-off there. I I think you need I mean for the trading you need to have the efficiency, right? There's no other way to have that and again and still be on top of a secure L1. But you can actually have the you can actually

have both, right? And that's what we're going to announce in the coming weeks with the sidebar EVM. So again, it's kind of like you can in traditional hardware, you know, you can have this like really optimized, you know, co-processor and then kind of the main um you know, the main CPU. But here we're actually going to have something where you can you can write generic code too like something like an A or Moro can just come in and bring you know their existing smart contracts slider and those can run um in a somewhat less efficient environment than um than the customized circuits but be able to share the sequencer, right? And so

then but but for a lot of applications that's good enough, right? like applications that are good enough as this to run on top of Ethereum certainly >> will be will will work just fine with the lighter EVM and be able to kind of coexist with with with the the high performance trading. >> Yeah. Yeah. Vlad, can we um maybe we can get out of the technicals. I want to hear about your your relationship with the other Vlad with uh Vlad Tenev at Robin Hood. >> Sure. Sure. Yeah. Um, so, um, it's interesting. Um, we were at high school together. We were the two Vlads at a high school called Thomas Jefferson in Northern Virginia. Um, and

>> you you and Vlad went to high school together. >> That's right. >> Same same grade. >> Um, I think we were like a year apart there. I mean, we we didn't know each other well, but you know, we you know, certainly um >> give each other like a little salute like the same Vlads like walking past on the Yeah. So, um and then we reconnected like 10 years after that. Um because we were at the time well so we were actually both doing high frequency trading for a while like I I don't know if you know this but before starting Robin Hood like him and his co-founder Beiju were like building some >> HFT

um systems for um for for trading companies and so yeah we we we reconnected as as they were kind of going from that to starting Robin Hood and um you know what I guess what they didn't know at the time is that I had left trading and was working on stuff in startups as well and so it was like we were all in Palto as it turned out and um I started yeah I really liked what they were building with with Robin Hood and um kind of started helping out a bit as an adviser with you know kind of bringing some of my HFT um expertise there and kind of building thinking about how to build some of those early systems there. And then

obviously like you know I think even though I was the adviser you know I learned a lot more from them than the other way around in terms of like how do you actually build a consumer product that uh you know and I think to to an important point here is like innovating business models like at the time right like when they had this idea of zero fees like no one thought that would work. I think they pitched like 75 VCs and only one uh wrote them a check in the beginning, right? Like no one thought this would work. I mean, I don't think I thought it would work, right? I thought, okay, these guys are smart.

Like, they'll figure out I want to be involved, but like, you know, but then then it worked. Not only did it work, right? But it changed the industry. So, I think that just shows you like experimenting with the business model and not just kind of keeping the status quo can be really powerful. >> Yeah. Um, why did Robin Hood participate in this round and Coinbase? Coinbase and Robin Hood both participated. Why? Why did they why? Because I look at that I'm like, "Oh, you guys are the world's moving on chain. You guys are actually competitor to the brokerages and the centralized exchanges." So, >> right. Well, I I think um we're happy to have both of those partners. I mean, I think they they're um they're obviously very different from each other as well.

Um you know, I think in the case of Coinbase, like they're in a variety of businesses. I mean the main one like their their main um driver of revenue right now is a centralized business, right? But I think unlike some other centralized exchanges, they they certainly understand the power of DeFi kind of moving over time from centralized rails to decentralized rails and they they obviously have their wallet product and other products. So I think that there's you know there there's a lot more there there's a lot of collaboration we can do there as um you know as I I think they they certainly um want to work closely with kind of folks

innovating in DeFi and that's that was kind of the basis the investment there I think in the case of Robin Hood it's um you know a bit of a bit of a different perspective where it's like okay well there's all this um you know if you think about moving stock trading on chain like there's a lot of I mean there's obviously they already have their crypto business but also like their core business there's they're you know tokenizing stocks I mean those types of things um they're very actively working on and we've been a partner on on some of those projects and so we'll also kind of announce that in the coming weeks. But I

think there it's like um I think they they see kind of eventually like a merge between DeFi and TRFI and see us as a potential partner in in in achieving that. >> What what will the um you know, you don't have to leak anything about the announcement, but what give me a sense of like what the partnership could look like with Robin Hood, >> right? So there's um you know there there's some interesting things to do both on um you know like there there's like kind of two directions you can go right like one is actually how do you bring um assets like equities to cryptonative traders and

investors right through tokenizing stocks and um having them exist on platforms like lighter I that's one direction I mean The other direction is how do you bring like decentralized purps to you know the trady customer. So so I think there there's kind of some work being done across both of those but yeah we'll definitely have more to say about that in the weeks and months to come. >> Cool. Exciting. Um I saw you guys have equity pers uh on the platform now. I think it was Hood. >> I mean yeah Hoodcoin maybe Nvidia um a a couple other ones. Why would a you came from Citadel um you were at Graham. Why would a serious actor trade per equities

on lighter? Why does that why why would they ever use why would they ever trade equities on lighter? Why would because they have all these other platforms that they have? Um well, I think the the you know um ultimately the the institutions go where um you know where where the retail is too, right? Like >> Yeah. >> Uh I mean would would they >> like if they're if like you know like if if they're if Citadel is doing a trade with Goldman or something like would they need to use lighter for that? Like probably not. But but that's not like most of what they're trying to do isn't that right like they want to participate

in as many markets as they can and provide liquidity and you know generate profit. So I I think the the biggest thing there right is like um it's it's like a um cold start problem like because I think a lot of people have tried real world assets um you know in the in the previous years. I think the the problem you run into is that yeah like retail is like to get retail you need liquidity and then to get liquidity you need the institutions and then you know so like the institutions don't I think one of the biggest challenges for

like yeah there's there's these like cryptonative um trading shops but they don't have a lot of expertise in in in US equities um to be a strong market maker for those I mean some of them are starting to develop that expertise right but like the players that do have that expertise up to now haven't been haven't actively want to trade on dexes because not because they don't think they can make money from it but because of you know regulation and compliance questions and that's what kind of that's why it's so important for us to figure that out with policy makers in the US so that there's actually a pathway forward here where you can have um like imagine something where um you know an institutional

player maybe they only want to be matched with other KYC participants >> right >> and that's and that's okay right because they can be like >> as long as it's one order book and then you can have the like this is what also you can do with the logic in RZK circuits you can put that in there and say hey like if you have this like onchain KYC you can have certain rules around that and those are all made public so like you're going to have price discover recovery happen. um let's say somebody who's an institution um that has these requirements but they they can still trade with with others like the price discovery can happen and then that can be passed on to retail that doesn't need to go through KYC

>> because it can be like like trading firm A can trade with trading firm B and then trading firm B can trade with with you know retail right so so I guess the point is like I think >> the all of these markets are interesting If there's liquidity and there's retail and you kind, you know, to get both, you need, you know, good consumer experience kind of like we're saying low latency, low cost, but you also need and in cases like these, you need the kind of compliance and regulation side as well.

And that's finally like there's both interest from policy makers to figure this out and there's a lot of tech that can be used for it. >> Yeah. How big of a going back to Hyperlid, how big of a competitive advantage is it for you that you have so many US institutions on the cap table, you're spending time in DC, you're in the New York finance scene. Like, how big of a competitive advantage do you think that really is? >> I I think certainly spending time with folks is um is helpful. um but I I think fundamentally I mean that that um adds value but fundamentally it's around

like the technical stack and how we're approaching things right so like building on top of Ethereum like like TRFI just you know they're not you know they're they're you know it's hard enough for them to trust crypto at all right but they really if they're going to to do it. They're going to want to um build on top of the most secure L1, which is Ethereum, right? So, that's starting point. And then um I think also kind of be being for for us like we're very open to to partnerships and kind of building stuff together with folks and spending time kind of educating them on how a lot of this works. Like I think again that helps

with the margins, but I think fundamentally like the alignment of the technical stack needs to be there. Yeah, >> without that like it you know it's not um um like I don't know there's some other projects um that you know actually have like there's a project called Canton right that like has a lot of the institutional relationships but the tech there just doesn't work like there's no there's no actual customer using it so like you so I mean you you kind of need like it's like if if there's technical alignment and the tech actually works and it's being used then the relationships with Trati or you know spending time with folks

you know in your institutional folks in the US figuring out how it works helps for sure but you you need you need that um >> the tech actually needs to be the right solution and needs to work. >> Yeah. What did you um you guys just launched your token >> token's been live for like I don't know a couple weeks. What have you learned since uh in in the few few weeks that it has been live? >> Let's see. Um I think that uh it's it's um you know the kind of people pay a lot of more attention to the price action than

we would have thought, right? Because like I could have told you that my man I could have told you that. Yeah, because I mean from our perspective it's just one more metric, right? Like we we're always looking at you know things like TVL and open interest and volume and revenue, right? Like all these metrics are changing every day. Um but um like that's that's been true all year. But but it's like people like you would if you just think about like um it it is interesting, right? Like is like I don't know like like before the token launch let's say we had one day with like lower revenue like no one would freak out about that but like now they do even though it's the same

platform same you know we've had it's not like we've had no low revenue days before you know sometimes the market shifts back and forth so that that that part is kind of interesting but um you know uh like I I guess at the end of the day we if we you know we're we're we're building we're creating um you know building new products creating value for the customer and value for the token holders right with staking um with buybacks other things. So I mean I don't think we should pay attention too much to the kind of back and forth like I think if we build the right things and um you know create value for folks like the price will take care of itself and you know kind of in in the months and

years to come. >> Yeah. Why is lighter trading at 2 billion but hyperlid trading at 24 billion? Well, I I think there's some um models that where that would make sense and some models where it wouldn't, right? Like if you just look at it, okay, like what are the revenues right now? I mean, I think like I think that ratio is something like 10 to1. So from that perspective, >> I think now may maybe both should be higher, right? like maybe both should be lower, you know, that like you can ask that question too, but on a relative basis, I think if you just look at it that way, makes sense. But I think um like I I mean I think it's like it's good

that crypto now looks at revenue, but I think like you should also look at growth like like I think um you know like I think in the past there were cases where like valuations were like not based on business metrics at all. That's that doesn't make sense, right? like if if you have no revenue, no customers, like being valued at like 8 billion or whatever, like that doesn't really make sense. But at the same time, I don't know if you should go all the way to like um like you know kind of stratfi like discounted cash flow. You know, you should also take a look at growth, right? And like we we grew like a thousandx in a year and there's a lot

of opportunities for growth ahead of us including with um you know unlocking the full Ethereum ecosystem including like institutional growth like opening up to us like I think if you price all that in then you would have a different story than just like okay what's the revenue relative to your competitor right now I mean so >> yeah you have to look at the growth rate of course >> right so and I don't think people necessarily do that I mean some do like the um some of the you know the investors we worked with and but it's like again I think you have to think of it more as a startup it's not like it's not vaporware but it's not like a public company that's existed for 20 years either you have to look at it more like

a as a startup with growth >> yeah what um there's been this conversation around value acral recently um and I saw a tweet from you guys on like maybe New Year's Eve it was uh something along the lines of the value created by all lighter products is will fully acrue to lit holders. The LI lit is the lit is the token of lighter for people who don't know. Um and you guys said we're building in the USA. The token is issued directly from our corp. >> Um which is cool. I hadn't seen many posts like that just directly calling it out.

>> Let me give you a hypothetical scenario here. >> You do a partnership with Robin Hood. You and Vlad, buddy buddy, same high school. Everyone's loving everyone. He tells you, "Vlad, I want to I want to acquire lighter." Who makes money there? The equity holders or the token holders? >> So, I mean, we're certainly not, you know, looking to be acquired. Um, I think in a hypothetical like that, if something like that, you know, were to make sense, I mean, the acquiring, um, entity would have to, you know, buy up all the tokens. So, you know, or there be like kind of a deal around that, not not around the equity. So, you know, I think there there haven't been a

lot of cases like that in in crypto. I mean, I think there have been some, right? But that's the way I mean, again, we're not certainly not looking for, you know, we want to like we we've grown a lot in the in the last year. I think we want to continue growing, but again, just to answer your hypothetical, I think something like that would have to happen through through the token. >> Yeah. The reason I ask is because there's been a few acquisitions recently and they they haven't bought the token, right? They just buy the equity or they buy out the labs co or they buy out the team. >> Well, people can, you know, like people can do like just to go back to um like my former co-founder from Lunch Club, you know, Scott started company called Cognition, right? And they um

>> Your co-founder at Lunch Club was Scott um >> Yeah. >> was it? Oh, I didn't know that. >> Yeah. Yeah. So he um and I I'm the first >> Yeah. Speaking of crazy acquisition stories. >> Yeah. Right. And so I'm the um founding adviser to Cognition. So I'm, you know, I mean, I didn't work on the the acquisition stuff with them, but I know a little bit about what happened, right? But like they acquired Windsorf, but I guess the reason I bring that up is like like I think in that case like some of the team kind of left to go to Google when the rest now can can people like I I don't think many people were happy with those decisions, right?

like can individual people make decisions that are not good for an ecosystem? Like I guess that's a you know I guess they can but I mean we we certainly again like I think at the end of the day it's like at at the at the level of the project we what we're doing is um building something that's going to acrue all the value to the token holders right now. I mean if again hypothetically if some individual person from the team is like poached by an open AI or whatever like can that theoretically happen but that can happen with any company right like I don't think there's not like a guarantee any company can make that that can never happen but

you know our intent is very much aligned with like the team now with our investors like everyone who invests in the round came in with that in mind right like they that what the reason they're investing is because of the in the token and so the same is true for the customers, for the team and the investors. >> Yeah. Well, as we think about wrapping this up, is there anything when you look out the future of crypto and capital markets, is there anything that looks really obvious to you that you think others are missing? >> Um, well, I I I think this is more of a big picture thing. I mean, I I think I guess we we spent some time on the technical details. So, I won't spend so much more

time on that, but just on a big picture thing, right? I think one thing that people are missing is that um like Trafy institutions like they they're um I think a lot of like the crypton native people don't don't understand how much trfy and institutional players have come in understanding uh the value here and wanting to you know incorporate these technologies in a real way like I think um like you like because from my perspective it's all kind of part of one larger ecosystem and there's going to be this kind of merge that will happen and I think like I don't know like when I write about

stuff like Citadel or Robin Hood or you know Renaissance you know a lot of the crypto people are like whoa that's totally different like how dare you use that analogy and it's like no like that's the whole point we're not like that's not to say that like you know it's exactly the same in every way but the point is like it's like things like onchain hedge funds, right? Or like tokenized stocks. Like all these things are going to happen and they're not just happening because like people from crypto want to rebuild finances because people in finance actually understand these technologies now and want to use them and so it's like that and I think a lot of the early folks don't actually know that that's the case already.

>> Yeah, I love that. That's a good place to end. It seems very likely that all capital markets are coming on chain and we won't think about it as traditional capital markets and crypto capital markets will just they'll just be capital markets. >> That's right. Exactly. >> Yeah. Yeah. Agreed. Vlad, congrats on everything, man. Cool seeing you grow. I didn't realize you started Lunch Club, so that's always that's always fun. I I was a very early user of that. And um Yeah, man. I know it's early days for lighter, so yeah, just rooting for you. >> Cool. Thanks so much. Appreciate it.