Valantis Deep Dive: Understanding the Modular Exchange Protocol | Deven & Ali

Transcript

the power of like customized liquidity solutions is for assets themselves. we should be building very asset specific and there was like a kind of a thesis I mean like hype is probably the most interesting asset we've seen generated um in crypto in a really really long time and on top of that hype staking I think is like an an entire like world that will be explored over the next like several years um like it's not just tokenizing staking yield it's like the second order effects of everything that you can do with staking hype is being tokenized by LSTS >> quick shout out to today's sponsor Katon Katana. We'll hear more about Katana's 1 billion cat campaign later today. But for now, let's get into the episode. If you care about what's actually happening on chain, subscribe to the Xerox

Research newsletter. Our team at Blockworks Research sends a daily brief with analyst insights, datadriven breakdowns, and sharp opinions on what's happening on chain built by people who live in the arena. Subscribe at the link in the description today. >> Nothing said on Zox Research is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and any views expressed by anyone on the show are solely our opinions, not financial advice. Pocachio, Ryan, and our guests may hold positions in the company's funds or projects discussed. What's up guys? Welcome back to another episode of Zerx Research. Today I am joined by Ali and Devon from Volantis. Um, do you guys want to give a quick intro

as to what you guys do and then we can get going? Wait, we should switch this up. This doesn't work. Sorry, Ali. You're lower on the scale. >> Yeah. No, no, no. That's That's understandable. I'll uh uh Yeah, David, you go first then. >> Yeah, sure. Uh we've been building modular DeFi for the last three years. Uh primarily around spot, dexes, and exchanges. Uh a lot of that has been focused on uh asset specific DeFi for liquid staking tokens. Um and yeah, pretty recently we acquired uh stake type, one of the largest liquid staking protocols on uh on Hyperlid. Uh we've been on Hyperlid since launch. Um and yeah, definitely been thinking really

heavily about the LST design space over the last three years. So definitely really excited to execute on a lot of the uh the ideas for vertical integration that we've we've always known were were huge. >> Fantastic. Ali, what do you do? Uh yeah, I'm uh I'm head of growth. Uh I joined the team I think like it's almost exactly been a year now. Um I joined like right when Volantis was transitioning from being a developer platform to more of like a userfacing brand. Uh which is perfect for me because like I don't know how to talk to developers but I can talk to users. Uh and I do everything related to that. So that's marketing, community, uh BD, partnerships, uh sometimes like some

product stuff, uh really just like whatever needs to be done that the devs aren't willing to do. That makes sense. And I find that talking to developers versus talking to actual users, it's like people is very very different. So a lot of work there. I didn't know about this lore of it used to be a developer focused platform. >> Yeah. I mean, uh, about about three years ago, um, I was me and both my co-founder were working at Nevermind. Um, and there was kind of this like just idea for a modular DeFi platform that could cover all of the use cases of what a decentralized exchange could be. Um, when we started building this, we

essentially just kind of like stepped back and we were like, what are all the possible use cases uh, of a DEX that we could try to cover? And we come up with a lot. And when we tried to approach other people and we were like look like this thing allows you to build smart contracts in like a very safe way. Uh you can build basically any possible exchange design you could think of as these single pieces of code called modules. Uh nothing is like left off the table. uh we realized that like people don't really have that many ideas or like to not es especially with dexes at the time there was kind of this like mindset that concentrated liquidity was like the final form of exchanges and there wasn't any additional logic that could be added added into them. Um even

like as the time that we were building it started to catch on of programmability put into lending markets uh was seen as kind of like a valid uh use case and design with like morpho and oiler like really catching a lot of traction. Um and also we were designing this pre um pre-unis swap before pre like kind of all of these hooks dynamic fees stuff that you see now. Um but still like to this day like we uh we had definitely not seen the amount of crazy ideas that we had expected to or at least that we had for like what you could do with building a custom exchange logic. Uh so we I guess this would what you would be be like call or pivot is we

went from like marketing this as a platform that other DeFi builders can come build on to just building interesting products on top of it. Um, and the stuff that's caught on the most has been specifically around liquid staking. Um, this has kind of been close to our heart at a really for a really long time. Um, especially like coming from Nethermind, uh, which this was also like I was there over the time of like the merge, like liquid staking was kind of a new concept going on. And a lot of the early designs that we worked on were were specifically around specialized exchanges for liquid staking tokens. Fast forward three years later, that's kind of what you see today. Yeah, I was going to say I feel like most of the people that I meet from Nethermind have either worked on staking or like on

Ethereum road maps um which is like the merger or I think EIP4844 was also a big one um at least like people X or X never mind are usually talking about it. Um, one one thing that I want to clarify is so you go from developer focused to user focused and your main product um or I guess the initial product that went out was staked hype hype AMM or was it Khype hype AMM? >> It was stake hype. We launched about uh I think like three to four weeks after the EVM went live.

And what is the I guess um friendly way of describing what the customizations that you guys did on your end that would make it um I assume more liquid and more efficient compared to a general V3 or V4 or V2 or V3 implementation. >> Yeah, I mean we we talk about like asset specific DeFi a lot and I think like liquid staking tokens really are one of the most clear examples of this. Um, the way that pretty much all AMMs work is they determine a spot price based on the ratio of reserves in the pool, which means if there's more LST pool than native token, that being like hype in the pool, they will try to sell the LST

at a discount to try to rebalance themselves. It's the only way that they work. They like try to sell something at a lower price and something at a higher price. Uh this leaks a huge amount of value to arbitrageers. Whenever there's one-sided sell volume, uh the pool accumulates accumulates a bunch of LST and then it just sells it to arbitrageers at a discount and it kind of relies on this like these actors to be able to keep the pool balanced. Uh essentially like that's like kind of dumb if you really think about it. Like if you're a market maker and you're like market making tokens, like if your asset is worth can be redeemed for this much, you should at some point it's worth it for you just to go redeem it yourself and not to sell it to another guy for a discount. Um so essentially that's I

think the core of this architecture is it's able to use both the staking and unstaking queue to be able to rebalance its position. So leaks less to arbitrageers. Uh there's definitely like a lot of efficiencies added on top of that. One of those is passively putting the reserves in a in a like a money market. So lending them out. Uh so we're currently like one of the major um lenders across like all the major uh hype markets uh a and morpho uh markets on on hyperlquid. And yeah uh there's a whole world of design space about how you determine fees in a way that can uh be like future predictive of volume and like be able to crank APY as much as you can. Uh there's

a lot of other stuff that we're working on and actually like have been doing recently as far as like actually being able to use the pool reserves directly to arbitrage other exchanges. So I think like just kind of expanding on this model. It looks much less like an AMM as it does just like a very common sense like robust DeFi strategy for taking liquid hype based inventory and earning yield on it doing a subset of market making lending arbitrage. um soon. Uh so one of the things we're most excited about is bringing that liquidity over to the the hyper core order book doing market making over there as well.

>> Very cool. Um one question I have is about uh the unstaking queue on hype it is seven days or like you unstake and then you have to wait seven days. Um does that go into the calculation at all on your end or is it something that you're not particularly bothered about? I guess still >> it actually it actually does like pretty pretty heavily. Um, so there's like if you if you actually like look at the the a lot of times if you look at so usually the actor that's like keeping an LST market pegged or really like anything with the withdrawal queue uh usually they'll start buying the asset when you take the cost of capital of the of the underlying times the unstaking time. So

like seven days. So if my if I can earn like 4 BPS by lending hype over 7 days, why would I trade that into an LST for like one BPS? So if like lending rates are high, uh it probably means that I should stay in lending and raise the rate that I'm um that I'm swapping in. I think like broadly a lot of like my mental reframing of AMMs have become a lot more like these really are just like yield vaults where they have like reserve allocation and a bunch of different things. Uh but they have this like extra dimension of being able to trade between its reserves for a price and if you could price what holding one asset versus the other asset is whether

it's money in a lending market or money in a liquid staking token or I guess like money on an order book. Um, if you can price what it would cost a user to pay me to uh or pay their the LPS to move from one type of reserve to another um that's basically how uh how I like mentally think about pricing and and fees. >> I think that makes sense. Um one more thing I wanted to ask is with regard to the lending. So I'm a user and I deposit staked hype and hype onto um Volantthis. You guys take the underlying and lend it out and then how does the back end work on that? Like is

there any additional risk that I'm taking or that you guys are taking where you have to like be careful with timings? Yeah. So there's a uh there's a there's a module attached to the pool that's that's been audited a few times now uh called just the lending module uh which its responsibility is purely taking uh hype allowing the pool to dictate when it's like withdrawing from these lending markets but taking the hype from the pool and then depositing it into lending markets withdrawing it from those lending markets putting it back into the pool. Um yeah, this has a hard-coded set of lending markets that it's integrated with. Uh besides the actual module itself, which is like pretty simple small set lines of code, uh you are inheriting the risk of the lending protocol themselves, which we're only integrated with like morpho and a

forks that uh we pay pretty attention to the the utilization and risk risk profile. >> Just to add one thing there, uh you only deposit hype in these pools, Pekkashi, you said like you take stake type and hype. You deposit hype and then we handle everything from there. Um, >> okay. >> And then something else that I think is pretty cool, uh, which is like I think something that that David and our backend engineer qual like recently cracked is is we're now like optimizing pretty much like minute over minute across all the different lending markets to normalize rates across all of them.

So it's like if there's 5% on hyperend 5% supply poo on hyper lend and like 1% on Felix we will lend more to Hyper lend less to Felix for those two to normalize and then we're getting the best rate possible. the lending markets are getting like the most uniform borrow rates and then that is adjusting like in real time as well which is like a product in and of itself like that alone can be its its own like very attractive thing but this is something that our our pools are doing now for with their with their idol reserves.

>> Yeah, I I understand what you mean now when you say we're kind of running a strategy. Um it's very focused. >> This episode is sponsored by Katana and their 1 billion cat campaign is live. Katana is a DeFi first chain built for deep liquidity and real yield by redirecting chain revenue back to active D5 users. Bridge and deposit directly into vaults in one simple click and start earning immediately on your Ether, Bitcoin, USDC, and more. Follow the link in today's show notes to get started. Is your treasury losing value to inflation? Learn how to make digital assets like ETH and Soul productive with uncorrelated protocol-driven staking rewards. For CFOs, DATs and corporate treasures, the path to integrating liquid staking and restaking should be riskmanaged and aligned with long-term strategic goals. The productive treasury

report from liquid collective and iigen cloud outlines practical adoption and a forward-looking vision for the role of the modern treasury as a strategic enabler of new technology. Read the productive treasury report today by following the link in today's show notes. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. >> So, does the Kype AMM, the stake type AMM what's coming up next in terms of I guess AMMs and then I want to talk a bit about stake type. >> Yeah. Um I I guess like really there's been a huge amount of learnings that we've had over the process of bringing both of those pools into production. Um yeah, I I would say to like start with

we didn't realize like how large of size we were going to be able to attract and how limiting the integration of the lending market would be initially. So we kind of spent a lot of time recently figuring out this like optimization across a lot of different lending markets. Uh we've also realized that there's still even if we're able to like price ourselves better than other pools and we're able to unstate, there's still like one actor in the middle of whenever another DEX is selling at a discount like like at a discount, there's still an arbitrageer that buys from that DEX and then swaps it back to us. So there's still like some small amount of value leakage in the middle. And we've like gotten very intelligent with fees about how to close that to like a minimum. Um,

but yeah, we've been working on like a pretty large extension of this design. Uh, really I I hate to use the word modular, but probably going to say it like 20 times in this podcast, but it's a modular version of this. Um, so for example, like ST type is integrated, the stake type AMM is integrated with the stake type protocol. The KHY AMM is integrated with the KHY protocol. Those both actually have like very specialized logic to be able to deal with the unique features of both of those. uh for example like KHY like has a withdrawal fee. Um so that's something the AMM needs to account for and needs to inform its pricing about and it also has this like other mechanism where if it finds another deck selling below the withdrawal fee it can rebalance using another exchange versus using uh using the the native withdrawal queue. And we

found that like actually this is the primary way that the AMM has been operating. It's been it's driven over like $50 million in volume across other dexes, which is like a weird thing to say that like an AMM is doing swaps on other AMMs. Uh but I actually think like this extension is going to be pretty big because uh we're going to start essentially just buying up all the dagged LSTs directly from the exchanges with the pool's capital. Uh yeah, essentially like we've been working on this like final form I guess of of stacks. Uh the first pool launch that we're doing which is very soon is is for SUSDUSD so launch with Athena. Um then we'll extend the design down to both of

our both of our LST pools. Uh I think there's a lot of like hunger to keep expanding because really it's not just LSTs, it's anything that has a withdraw queue. A lot of like RWA protocols have this property as well. um expanding it expanding it mostly to like uh like stable like pairs I think or like stable coin pairs I think are like super interesting to us. Those tend to be higher yield. I >> think that makes sense. Um bringing it back a bit developer platform and then you go user friendly. Why did you guys end up choosing Hyperlid? What was the decision? I mean it's worked out obviously now but back then when you first decided what was the main reason back then?

I definitely want to get Ali's opinion on this as well, but I think a large part of it comes in from just like cross the team personal conviction in Hyperlid kind of forming over a period of time. I remember like there there was a point where like Ali said the words like there's I think it's just reached escape velocity and I remember like on TGE day I just like repeated that to myself like 20 times and uh just but this was still kind of like before we had really thought deeply about what we could build that was interesting here. I think at this time had like looked a little bit into pre-ompiles had thought a small amount about how like some of our um like

LVR solution AMMs could be using native pre-ompiles to be able to keep themselves priced correctly or like the read pre-ompiles. There'd been like a little bit of design work in this manner. Um but I think like the the conviction at least that I had that pushed us to like actually fully develop a product on it was actually around hype itself. I would say that like we started to form the thesis of like we should be building like we should really be building DEX's the power of like customized liquidity solutions is for assets themselves. we should be building very asset specific and there was like a kind of a thesis I mean like hype is probably the most interesting asset we've seen generated um in crypto in a

really really long time and on top of that hype staking I think is like an an entire like world that will be explored over the next like several years um like it's not just tokenizing staking yield it's like the second order effects of everything that you can do with staking hype is being tokenized by LSTs and for that reason we knew that there was like a huge amount of growth opportunity for how much hype could be liquid staked and there's going to be need for people to take leverage on that and there's going to be need for people to unwind that leverage which really that's kind of like how I view stacks as lending to be able to allow people to have low borrow rates and then being able to like process swaps at very cheap rates for people to be able to like unwind. So we

saw this as like being a pretty heavy service uh to the growth of liquid staking tokens. we thought liquid staking tokens around hype were the most interesting thing that like going on in the industry. Um, and then lastly, I guess I would add that like there's there's also a like capital attraction like problem to this as well. Um, hype is like really it has a very large holder base that does not want to sell its bags and it wants to earn more and it doesn't want price exposure to other things. So like building like a hype USDC pool like nobody wants to take any other risk and they want to be completely hype denominated. So, if we could build something where we could just tell people like besides general smart contract risk, like there is no impermanent loss, you cannot lose or go down in hype terms, um it becomes like I

think just kind of like a perfect storm. >> Yeah, it's kind of like I I agree on the Well, I mean, we've seen that people aren't that interested in buying and selling other assets on the hyperlquid chain. It's mainly it's kind of like Bitcoin holders where they don't really want to get rid of their Bitcoin. They just want to like stack more. Um, Ali, what what is your hindsight reason? >> Yeah, I think uh it's interesting because like there's a couple people on our team who are like very opinionated about like chains and products and like what is like what is valuable, what is worth spending time on and what's not.

And prior to like making the decision to to go on Hyperlid, it kind of felt like those people were already like converging on that for their own their own reasons of like a similar flavor. So like my answer is different to David's but like along the same lines. Uh I I had known about Hyperlid since they like launched. I I was like pretty deep in the per deck space, but I didn't really I didn't really recognize it as like special until probably like a year ago. Um, and that was because like I'm just not a sophisticated trader. Like I can't understand the nuances. Like I can't really understand the nuances of what makes uh a per deck more attractive to an institution or a market maker uh versus another. Uh over time like it's

easier to to get to that conclusion, but like it wasn't something I arrived at just by like using Hyperlid myself. Uh, I do remember like it was kind of just a gradual buildup leading into like TGE and then before even I think this must have been like a month before TGE there was like a there was a Hyperco event uh at DevCon in Bangkok. Uh and I went there and my like main takeaway from that was like there are like degenerates like left curves developers and then like institutions validators infrastructure that are like all kind of converging on this one thing before we even had before we even had like a hype token like there would like obviously

there were the moonmats out there but I think most people didn't realize what the scale of it would be >> and yet like all of this was still happening and there wasn't like single Hyperlquid team member there. You know, these people were in no way being like coerced or paid or entering some sort of deals to do so. They kind of just all came like the entire IQ curve came to like the same conclusion for their own reasons. Uh and I was just like I have not seen that happen in like a really really long time. like you could maybe you could maybe make the comparison of like Salana post FTX, but uh even that like didn't feel as uh as cohesive and and as like you know the the signs were there type of type of deal.

>> No, I agree. Um Solon Post FDX to me felt a bit more like okay this has to kind of work out at this point versus I feel like Hyperlid was a bit different. Um, one surprising news to me over the past what I don't know when it was maybe a week and a half ago is that you guys acquired um the Thunderhead LST stake type. I want to first ask what was the decision process behind that? Um, are you guys going to be expanding it on your end or is it just generally want to figure out what you guys were thinking?

um and how you guys approach that whole process. >> Yeah, I mean I I'll start with like since we've like ever been thinking about liquid staking tokens in DeFi. Uh there's always been this like notion that we knew that there's only so much that we could do on our end as a D5 protocol to be able to service a liquid staking token, but there were huge levers that a liquid staking token could do to service their D5 protocols that I think creates a flywheel of just like insane uh liquidity efficiency. Um and that design space goes really deep. I'm sure we'll have like more time to like

talk about that more more concretely. Um, but we always knew that there were things that lived on the asset logic side that could be done to like fulfill this vision of asset specific DeFi embedded liquidity. Um, kind of like and essentially just like pivot and prioritize the uh activities that are healthy for the asset from the asset logic itself. Um, so there's always been this notion of like we knew what to do when handed an LST and what exact strings we would need to pull to make it more liquid. Um, the second thing that I'll like I'll add here is um this is not just an LST. I've like held

this opinion for a pretty long time that like hyperlquid LSTs are inherently different from other tokenized uh staking emission tokens that you'll find anywhere else. And there's a whole thing about like why hype itself and yield on it is much more interesting than other assets. But there are incredibly profitable businesses that you can run on top of staking hype and being able to flow that back to token holders I think is um essential for like that full vision to be fulfilled.

And yeah, we've spent a we spent a really long time stepping back on the exchange design space from like a very far view and just thinking of like how do you like design a basis that can service like the full world of possibilities. um liquid staking tokens. I think even today like on on Ethereum, there was like one of the the recent I think it was like the Pectra upgrade for like um for for Ethereum, it actually like enabled something pretty critical to LST protocols, which is uh allowing LST protocols to force withdrawal from validators. Right now that's actually not possible. There's like this thing called like hostage situations where um

yes, a validator can only withdraw to the LST protocol, but it actually still needs a signature from the actual validator to be able to like release that that ETH. And this was like a pretty fundamental like rework about the trust assumptions about liquid staking tokens on Ethereum, which historically really the entire history of liquid staking tokens on Ethereum is like using a huge amount of technical complexity to build something that was not meant to be built. Um but yeah, so I mean even with this spectra upgrade that which like adds a huge amount of lessening trust assumptions to LSTs like basically none of them are going to be able to adopt it for a pretty long time.

Um I know like Lido has said that it's just like way too much of um like down their down their codebase to be able to like implement this and it's because like as you start to build like opinionated like architectures and liquid staking tokens like need to be extremely secure in some in some sense like need to try to be oified and frozen. The thing is that the chain is not oifying and it's also not frozen. Um, so how do you like build something that is adaptable to these changes without like uh like hitting the core security model itself? Um, which really is the exact same problem that we've been thinking about from the exchange design perspective. And it really the answer is modularity. Um, how do you like create some basis that can adapt to everything but at the same time like

holds its core security properties? Yeah. So, I mean, we know that there's probably a continuously growing number of things that LST should be doing on Hyperlid. And it's really everything that the hype sync is. Every every every feature that's added that you can do um with staking hype should in some way, shape, and form be trickled down to liquid staking tokens. And if you oify a liquid staking token today or build something completely inflexible, there's no way that you're going to be able to cover all these use cases and like you already see this with like very small seemingly small changes in Ethereum today. Um so I do think we need kind of like this uh this modular base. So I

would say yeah answer is twofold. Like one we know how to boo boost what we do today and make it like 10x better. And yeah, two, like we could just take the same exact design philosophy that has enabled us to like build anything as a DEX to build anything as an LST safely. >> Shout out to today's sponsor, Katana. Katana is a DeFi first chain built for deep liquidity and high yield. No empty emissions, just real yield and sequencer fees routed back to DeFi users. Incubated by Polygon Labs and GSR. Katana is launching with notable ecosystem primitives, assets, and partners like Morpho, Chainlink, and more. Katana's 1 billion CAT campaign is live. Bridge and deposit directly into vaults in one simple click and start

earning immediately on your Ether, Bitcoin, USDC, and more. Follow the link in today's show notes to get started. Corporate and protocol treasuries face a major challenge today. Cash and traditional instruments are losing ground to inflation. A new industry report from liquid collective and iigen cloud lays out the next evolution of the digital asset treasury. Moving beyond just passively holding Bitcoin to actively making digital assets like Ethan soul productive through liquid staking and restaking for CFOs, DATs and corporate treasuries, the path to integrating liquid staking and restaking should be riskmanaged and aligned with long-term strategic goals. The productive treasury report outlines practical adoption and a forward-looking vision for the role of the modern treasury as a strategic enabler of new technology. Read the productive treasury

report today by following the link in today's show notes. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. >> One thing I wanted to ask about is, and this might I might just be bringing it up because I just did a pod with kinetic site as well, but there are differences in the way that kinetic khype operates and uh staked hype operates, right? Is that are you guys going to be changing around that and looking more towards the kinetic side or is it are you not touching the general codebase and just building on top of it?

you're talking about for the for the stake type codebase like what are the >> the SD hype and the K hype because as far as I understand they are like because I remember um and it was a huge thing Omnia kept mentioning they have to wait for pre-ompiles versus like I obviously launched they whatever week one um what are the differences on their ends >> yeah I mean I I would say like uh and also like our team has spent like good time with the kinetics codebase integrating with them and And um it they've they've done like a pretty good job at like oneshotting like an LST architecture. And I think that like that itself is going to serve for a pretty long time as like a robust solution with

a single stake account for like core writer that does the normal functions of tokenizing uh staking yield on hyperlquid and like as close to a trustless setup as as you can get. Um I would say that like our position is being much more opinionated on the growth of uh what you can do with state type. Um so for one state type today is not used for writer and we are doing a like rewrite of the codebase to make it compatible with such. Um what that looks like is a like modular pattern for deploying core writer instances. So instead of one single stake account and one single oified um kind of component

an instance of core rider to be able to move stake to that stake account uh we will have a like modular set of stake accounts which in our eyes is going to enable us to basically build a hip 3 module that has very specialized logic for uh allocating to hip 3 markets which inherently does have to be different from the rest of the LST protocol because you have these uh lengthened withdrawal requirements and kind like withdraw condition, normal staking. Um, also being able to fragment these out into accounts that can also run uh vaults on top of them uh to be able to inherit the uh the fee discount that you get from staking hype. Um, and essentially like by fragmenting out its stake accounts into these modular

components um which use core writer to trustlessly move uh stake back and forth between the protocol. you can also add this like extra logic that's necessary for these other essentially businesses that could be run on top of liquid staking tokens. Um, and you know, we we've experienced this firsthand with our with our work um on exchanges, but taking a modular framework for designing this stuff does leave the design space much more open and more flexible. we will never need to do a full rewrite of our codebase if there is some large upgrade to um large upgrade or feature ad to staking hype that we want to be able to inherit.

Um, and it really reduces our like Yeah, I I guess like our our security needs of being able needing to like if we want to become HIP 4 compatible or something like this, needing to do a core rewrite of our of our of our logic in the way that we deal with stake accounts and accounting. Um, everything can kind of just be inherited under this like isolated in these like modular pieces. I >> think that makes sense. Um Ali, I want to bring it to you and ask you what it's been like um trying to come up with new decks um I guess integrations in your case especially for liquid staking and if you guys are focusing on doing

different types of markets uh although you did mention that liquid staking is probably the most attractive in hype which to me makes sense because especially HIV free. Um, and my second thing is, is it increasingly getting more difficult to do BD on hyperlquid? Um, with everybody coming in. Um, and >> that's an interesting question. >> Yeah, that's a good question. >> I don't get a lot of insight into the Hyperlid. Um, it's very diff I mean, you guys would also know. Um it's more closed off than other ecosystems which I think is good um because it keeps things interesting. Um but yeah, excited to get your take.

>> Yeah. Yeah, for sure. So I guess like on the integrations question um uh obviously like a big part of the the benefits of inheriting stake type is inheriting its existing integrations. Uh so it's already everywhere that it needs to be at least like fundamentally all of the pieces are are there. Uh and then we have our pool as well which is we think like critical to its success. Um so like the the groundwork is laid which is nice. We also just got the panel integration live as well which was like I guess like the last the last like obvious domino to fall. There's a couple of other cool ones that uh are like more niche, but we think would be would be interesting still. Uh integration wise,

I think that like the most the most like novel thing that would really move the needle for a stake type is really like deepening its role within our own decks. Uh so there's like a couple there's certain ways you can improve like the stake type AMM pool or the kype AMM pool or any pool under that design by having native integration of the the asset itself. So you right now it's kind of just like a one-way road like the the the pool can stake and unstake uh but the asset itself doesn't have like any awareness of the pool. Uh so in that sense one easy example of that is uh

like the pool's let's say the pool's entirely denominated in hype uh people come in and swap all of it uh everybody like exits stake type and now the pool is completely holding stake type and you have to unstake that to rebalance. Uh if you also have ownership of the LST then you can either give it preferential treatment on withdrawals without necessarily affecting withdrawal timelines of other users or like staking yield. Uh or you can just route like new deposits to the pool instead of actually like minting new stake type. Uh because if the stake type is there or if it's like pending as an unstake request like that that hype is going to leave the protocol anyways. And if somebody comes

in and issu and wants to stake more hype, they want to bring in hype and get stake type back. Uh instead of minting new stake type, we can just like offset that coincidence coincidence of wants and just like rebalance the pool in the process. Um that in and of itself helps a ton because the pool can only do as much volume as uh the pool can only do as much volume as it has obviously like over a 7-day period. And we do see some like organic rebound rebouncing volume. But by having like a direct integration to the point where the pool has other ways of getting more hype in it just really like it just really increases the amount of volume that it could possibly

do. It keeps like the stake type supply more I guess like in more equilibrium of secondary markets. So it helps out guys like Hypers Swap or other other dexes as well. they would see less DPEGs. Uh, and RL LPS would earn more yield as a result because they can they can do more volume with the with the additional rebalancing. Um, so that's like a pretty clear example. I think there's other ways of like how stake type is delegated to validators that is pretty interesting to add into our pool integrations as well.

Um that's like I guess like would be getting into the nuances of how uh how stake type or how stake type stake is delegated to different validators. Um we should have some stuff coming out on that one pretty soon, but uh there's a lot you can do there to make the LP's role a little bit more uh just a little bit more involved with the asset itself and and get them to get a nice reward for it in return. Um, and then yeah, BD on Hyperlquid. I definitely think it's changed a lot in since the early days. Uh, it felt like it was very easy to break in and like speak to whoever you needed to speak to and people people's plans were like a

lot more wide open. Like everybody knew that we we have this new chain and we need to get enough liquidity and just like the basic pieces that have to exist on any chain like you know everybody's in agreement that we have to have liquid lending markets that we have to have liquid dexes. Uh we have to have good borrow rates against hype. Uh we've kind of gotten there at this point and like it is it is really like firing all firing on all cylinders in a lot of different ways and teams are my read is that teams are like starting to lock in on their individual road maps or like visions a bit more where it's like clearer what your what your longer term goal is and who can be beneficial to

that and who can't. Um so it's like there's probably a little bit more like like it's probably a little bit more difficult I would say to work with some teams who are like very laser focused on this one thing which is like totally makes sense you know there's like >> to build these like really interesting use cases with hyper core you have to be laser focused on on this one thing um but I would say that's one way that it's changed and then like a big part of it too is there's no usually like the ecosystem team is like your steward if you are building on the chain it's like you come in and they can give you whatever you need or whatever guidance you need. Uh I mean the Hyperlquid team definitely like does help out a lot with

um with like technical questions we have and like intros in some cases. Uh but like as most people have have already heard like it's like the most bare level of communication you can get. Uh which uh I I think myself and like probably a lot of other builders agree that that is a good thing just because it's like a level playing field. Uh it most likely does make it harder if you're like just breaking in for the first time and you're like, "Okay, like who do I talk to, you know, and you go and talk to to Volantis or like one Hyperlquid team?"

And then you got to go and find like the other 20. You got to figure out the other like 80 at this point. You got to figure out who is who is like the right team for you to be speaking to. Um there are also people out there like some protocol teams who are willing to help out with that stuff or guys like uh guys like Hyperco who are like sort of filling this role for uh for the ecosystem and like being the stewards for protocol teams and and even users to some extent. Um so it's definitely different. It's definitely more of like a it's definitely more of like a figure it out yourself type of deal. uh which you know I would say is not entirely a bad thing.

I mean, it works out for you guys, right? Because you're you just joined Hyperlquid, but there are massive massive companies out there who benefit off reputation. Um, probably a bit too much. Um, and you guys are on the same level playing field like they don't get any of the >> Yeah, that you would typically get. >> For sure. For sure. Yeah. I I do wonder sometimes like what it would have been like being like a new entrant to arbitum when GMX was like 80% of its activity and like knowing knowing like how the Arbitum Foundation operated I I you know have no idea obviously but like situations like this where there's

like a clear monopoly or like a clear cohort of applications that is just like the cream of the crop uh and a foundation who is just like you obviously like it's their job to to activate these these specific teams and continue giving them support in a lot of cases like favorable support. Uh that's not the case here obviously which is which is a good thing. >> Yeah, I'm glad you mentioned um they need to build out the or I guess like hyperlquid the ecosystem has now been built out. You got your basics. Um, I feel like once you hit the Pendle Ephina combo, that's when you're like, "Okay, well, I have like the actual I guess

advanced basics. I everything else is kind of like an additional um additional layer." Um, I'm kind of I guess like more of a Devon question and then we can wrap it up. on the um I guess performance side and on the way that the chain works specifically the hyper EVM works. Is there anything that you have had to that's kind of been a strug struggle or like an intense modification compared to what you're used to with a typical EVM chain that you've had to adjust to that you guys have had to change the way you work?

>> Yeah. Um, I can't wait for the node to be open sourced. I think this is like honestly like that that's my opinion that this is like the largest um I think accelerant that the hyperlquid team could throw into the system is open sourcing the node. Um, we would like just pivot completely to being able to rework our own internal infrastructure. It it especially initially I mean there's it was really difficult to deal with like indexing data still. I mean upgrades were pushed that leave current solutions like they break sometimes our RPCs go down. Um it it happens across the chain.

Uh I think like enabling people to build out the node level infrastructure themselves a little bit more. Um this is the one ecosystem where I think it's going to work insanely well. Um I understand like why they haven't done it, but I think at the point that they do it's going to be the biggest torch on the fire that they could add. Um, and definitely it's gonna it's going to accelerate our infrastructure a lot. Um, yeah, I mean as a user trying to figure out how to like deal with big blocks, small blocks in the beginning was a bit difficult. The chain is sped up a lot.

Um, I don't really care how fast the chain goes. I just care about how money moves on it to be honest. So, and Hyperlid does that. So, that's great. Um, Corore writer is like a completely separate beast um and like a net new kind of thing to learn to deal with. I would say um the architecture of Corriter is like pretty nice. Uh the one like I think difficulty I don't even know if I'd call it a difficulty but like because the Hyperlid core team tries to like not be very clear about like um I guess upgrades coming. you get a lot of like rhyme and riddles about like is this possible and usually when the answer is like no but

maybe soon or like maybe at some point like you kind of just get like very political answers which if you learn to like decode you can kind of figure out what's going on just they'll silently push a docs update with exactly what you're asking for like a couple weeks later. Um, so it's kind of I guess like interesting from that standpoint of you know we we are taking like pretty heavy bets about um like things that we need to be in place for us to do things that we want to do that maybe don't exist today but we have conviction that they will be possible um or are in some roundabout way. Um yeah, I think uh generally that's the hardest thing I guess about like silent roadmap um is you could take a super deep bet on some

specific part of infrastructure on like hyperlquid stack um and you could find out like a year down the line like oh it's just completely obsolete. It's been replaced by some like core writer action ID and like now everyone's doing it this way. Um, I think like I mean, yeah, I take uh I take like HLP as like some example of this. Like I think at some point like Hyperlid Vaults in general will be able to be like rebuilt much more flexibly as like Corriter like on top of Corriter. Um, for that reason, like I'm a little bit like I I mean I have no signal about whether that's going to exist or not in the future, but like I I could see a possibility of like that being deprecated and like I would

hate to be stuck in a position where I spent like a year building around that and then uh all of a sudden it's being built a completely different way. Um, so I would say that that's the chain works great. Um, I think it's takes a lot of foresight to be able to bet on the things that you like know will be around and will be useful and also like plainly asking for the things that you need um to exist to do what you want to do. I think the Hyperlid team like listens a lot but they won't tell you that they're going to do that.

They'll just hear about like what people want to build and what should be possible and yeah, all of a sudden it'll just exist. Um, so I I think that there's there's the the cryptic nature of stuff is is a little bit difficult sometimes but >> Yeah. >> Yeah. >> Um, because you mentioned vaults, I feel like the HLP is probably going to be maybe not deprecated, but like less. I mean, I saw they changed the fees recently.

I saw something that convinced me very well is like somebody else in the industry told me that very early on that they were like if HLP was meant to stay around the hyperlquid team would have just turn they would have represented it as a token on hyper core because they already have a direct onetoone mapping of like users deposited into a vault. They should just turn that into a token themselves. if they know people are going to tokenize HLP, like you should just create it, like you should just represent that natively on hyper core as an asset and allow it to be like transferred to the EVM. Um, and for sure it makes a ton of sense like why would they want to keep running their like when they grow so large and other people are going to build these like strategies

um on top of on top of Hyperlid and especially with HIPP3 where it's like people are going to rebuild their own native HLPs for these for these other exotic perks exchanges. Why would they keep running their own? They've reached escape velocity. It's like handed off to us now. Um I have no proprietary information, but I share that opinion as well. >> Yeah. >> Okay. Um before we end things off, is there anything that you guys want to mention anywhere that people should check out? Anything that they should read or look into? I know your codes are like, do you guys still do the codes? Yes or no? It was earlier.

You're talking about the deposit codes. >> Oh. >> Oh, yeah. >> That was just for the KH Hype MM launch for like the first five days, I think. No, you're good. You're good. Um, I guess I can I can start off on this one. Um, I think that I mean we spent a lot of time talking about uh our our pools and why those are important which is like obviously still a critical part of our road map and what we're going to be doing and nothing to that end has has changed necessarily. Um, but there is a lot of really interesting stuff that we uh like will be communicating around

what's happening with stake type and what's going to be possible with it in the future. There's like some inklings of this in the acquisition announcement post uh which it seems like some people have picked up on. Uh some of it is like maybe too vague to even pick up on. But uh we will be like talking about more of that stuff in the future and it'll become like a little bit clearer. Uh David has also done a lot of rambling on like just what an LST on Hyperlid can be and why it's like so much more important here than it is anywhere else. Um so yeah, I I would say like be on the lookout for that and like uh yeah, just

like more more like focus on that on that vision. I guess I think that there are a lot of interesting ways that we can kind of deepen the connection here and like it can become clear Volantis' role like in the staking ecosystem overall. Uh beyond that, you can deposit hype a lot of different ways on Volantis. We got three now. Used to be two, now it's three because you can deposit for stake type too. Um and uh yeah, these these uh the pools earn points from a lot of nice different sources. Have really good yield. It's all in hype. deposit hype, you're in hype, and then you withdraw hype. Uh, so a straightforward as as we could have make it could have made it

be, I think. >> Yeah. Um, nice show, Ollie. Um, I think, uh, yeah, the only other things to add or would just, I guess, be on like the next like three weeks. Um, instead of like what's available in the future, like what's what's available now. Um, if you are like building any protocol that relies on minting stake type, you definitely should reach out to us. Uh there is like an extra layer of like monetization that's already live right now which is community codes. Um basically for every single person that mint stake type they can earn a little bit of extra yield by adding in like this extra code. Um just trying to make it so people can build profitable businesses around uh around this. Um and then for like any DeFi protocols I know like there's probably a sense that like

a lot of dexes would view us as competitive because we kind of have this like native infrastructure. Uh I would say that like one we kind of already pushed this upgrade into Khype. We've done over like 50 million in volume across other KHype pools just by nature of the pool. Uh we'll be expanding this like super rapidly for stake type. Um so launching stype hype pools will mean that you will get a ton of volume or any anything paired with stake type. Uh because we will be using it to like um rebalance ourselves. Um, yeah. And, uh, I guess just like any DeFi integrations, we have a lot of layers of the stack that we're live right now that you should reach out to our team because there are ways that we can help you have

like higher value capture. Um, just broadly, our position with stake type is like pretty similar, I guess, to like how like Hyperlid itself of like we just want people to be able to build profitable businesses on top of this asset. Everything that we do is like geared towards that. Um, so if you're interested, if you do anything related to the details, please reach out to us. >> Perfect. All right, guys. Thank you so much for coming on. This was really fun. >> Absolutely. Thanks for having us. [Music]