Where Is DeFi Headed? | Jim Parillo

Transcript

Nothing said on Zerox 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. Pokio Ryan and our guests may hold positions in the company's funds or projects discussed. >> We're waiting on the milkman. >> [ __ ] velvet milkman and he just won't come. He just messaged me saying, "How do I get on?" which doesn't inspire a lot of confidence, but you know, [snorts] I saw that he just had a podcast released yesterday and he was also on Unchained like two months ago. I mean, he's a very public figure. He clearly does a lot of talk, so I'm I don't know if he's just egging us on.

>> What is um Yeah, I didn't know the I didn't know the Milkman was going around on a podcast tour. That's uh >> Milkman's on a podcast tour. Figment Capital needs needs to Let him speak more and more because >> let him speak anything like if it's anything like slots. There we go. >> Please speak freely. >> Hello Jim. >> Hey, what's going on? How's it going? >> Good. How you doing? >> Welcome on. >> Welcome. Welcome. We're um we're already live just FYI, just in case. >> Jim, do you want to give a short intro and then we can dive in and I can bug you with some questions?

>> Yeah. I don't even know what we're talk What are we talking about today? >> We're gonna It's gonna be fun. >> Okay, cool. Awesome. Yeah. So, I'm Jim. I'm not a debt developer. Um I'm actually uh the managing partner at Figma Capital. Uh we're an early stage venture fund. We're focused on like DeFi infrastructure. Um been around since 2021. We're pretty small team. There's Rob in the background. Dougy's over there. Three guys in a room >> trying to make things happen. Um, other than that, I'm also an active participant in the Xerox Research Telegram chat. I don't know whether I'm on the left curve, the right curve, or the middle of the curve.

I presumably on the down slope of the left if I had to guess. Uh, but there's like a lot of smart people in there, so I don't take it personally. >> No, I'm I'm I'm happy you're in there as well. I appreciate your your takes um and your slot um sendins. Jim, I I I purposefully didn't send you the questions for today because I I kind of want to take some risks today. Um, number one is so >> Let's take some risks. >> Awesome. [laughter] Amazing.

>> First of all, I'm very like I'm aware that as a fund you can't chat about everything. So, you can just tell me I can't chat about that and it's completely fine. It's happened before. Um, I guess like just to start us off, I I read um your uh hyperlquid HIP free um not HIV free you one of the hyperlquid um articles you wrote for bedm with bedlim research. I'm I'm curious like one of my takes was and I talked about this with crane as well is that like a lot of intellectual capital is moving towards this like per space and this hyperlquid space. Do do you think this is a take? Do you think this is a correct take or do you think we're still like um not there yet?

>> Like you mean just because of all the HIPP3 like kind of launches and stuff like that? >> Yeah, I I feel like a lot of more people are spending time thinking about like oh oracle design for equity pers or like um how can you deploy perpetuals more like um prediction per on purpes on a hyperlquid etc. Yeah, I've talked to Crane about this as well as early as like this morning when I told him I was going on. Um, so I think like the article that we wrote was like man, I don't even know when it was. It was probably like four months ago or more, right? And at the time like I I I read I mean the the spec or whatever you want to call it in like the git book for what HIP 3 was going to be was pretty small.

It was like two paragraphs or something like that, right? And I read it and like I was like, "Oh, this is like oh this is interesting. like this is really cool and um uh I asked a few of my friends like I was like hey have you have you read this like like because like there were a bunch of takes on Twitter and there were a bunch of artic like Twitter articles and it was like no offense to those people but like it was very surface level it's like this is going to change finance and crypto forever and like nobody really looked it looked at it and like I most people had not read the paragraphs like literally nobody I would ask a bunch of people no offense Crane Crane included right and then Crane read it and was like uh Oh, this is interesting. And so the the reason we

wrote the article honestly was because and like we wrote it because like we didn't think that there was anything good written about HIPP 3 yet. Um and then nobody really actually like kind of looked into it a little bit deeper and said like what is this and like how can this be like what what is interesting about what what is actually interesting about it and like also where does this go from here? um and like what what do we think could potentially be interesting about like projects that launch at three markets? And so it got a lot of views, it got a lot of reads, it got a lot of like looks and like some some some attention and uh that's uncommon for things I write. So like that was that was nice. Um and we actually became really bullish like

as a team like so we don't like you know Hyperlid didn't take any venture capital, right? We're not investors in hyperlquids like uh but but like I hold hype myself. I'm a very terrible per trader um as many people probably are this morning. And uh I think uh what we started to think about was like I we had like an idea of what what Hyperlid's like EVM ecosystem should look like um or or could look like and it's a lot different than I think other EVM ecosystems that are like general purpose. And so the products that we think should exist on Hyperlquid or could be could exist on Hyperlid are slightly different and nuanced than like the products that could like list and launch on like uh a general purpose smart contract like L1 or L2 um on day

one. And they should essentially like I I'll try to be really quick with this, but like um you have this like flagship product in the middle of this L1, right? And generally speaking, there isn't a flagship product in the middle of an L1. And so what how when L1's like launch, what do you have? you have like AMM lending protocol LST uh maybe an NFT marketplace I don't still today right I don't know but those are like the foundational like kind of like building blocks of like building an economy right like like stable coins and here we have this like flagship product like the kind of like the uh Burj Khalifa just like in the middle of the city and it's like hey like rather than try to build don't really make sense or benefit at all from this like huge

product that's right in the middle. Like why don't you build like more of a pyramid? Like sure eventually AMMs and lending protocols and all these things like they should also exist, but like there's actually a bunch of products that could be built alongside the the flagship product that like start to like kind of benefit from and like contribute to like like more adoption of per. And so we kind of were like trying to push people to think a little bit more outside the box and like like building another lending protocol and building another you know another NFT marketplace like build something where you have like you know billions of dollars of of of volume that like are are complimentary to the flagship product and like that's actually more interesting.

>> So in my mind this is like a prime brokerage. Um, I I honestly like now you're making me feel dumb, but like six months ago when Hyper EVM launched, I was like, you don't really need anything on the Hyper EVM, but lending markets just because I think people are just going to want to like borrow on something and then bring it onto the chain. Um, but you think that's not a good take. You think it's not >> Well, like people want to like I mean, I don't know if you've been on the lending markets, but it's like really tricky, right? Like the yield's really high. Um, like the the interest rates are really high. Um like sure people want to borrow us their hype to gamble more right on perks and like then I don't know how they're paying back their loans but like even USDC was like there

was no bridge between hyper core and like hyper EBM. Like if you wanted to trade per on hyperlquid on hyper core, right? You'd go to hype, you you convert your hype over to hyper emm, you deposit it into like you're going to do LST, right? So like you deposit it into like hyper lend or something like that. You borrow hype, you deposit that into Felix, then you borrow USDT, then you transfer USDT over to Hyper Core, then you swap it into USDC, and congratulations, you can now trade PES again. Oh my god. Like what year are we in? Like it's crazy. It's like that's so many clicks, right? And part of it's due to the fact that like USDC just like wasn't native on on Hyper EVM initially because like you'd be

like, "Hey, how do I transfer my Hyper my USDC over to Hyper EVM?" And like there's like you don't you don't you transfer hype over and so like there's just like all of these like headaches that exist. Um, and so I do think lending is like a so yes, people do want to l borrow against their hype, right? Um, but like products like uh risk finance is like one of those types of products which is like kind of interesting. It's like it's like you know it's options uh put options on your on your on some some of the spot assets. Um, uh, you know, obviously like unit is building a bunch of different things, but like at for one point in time at least, they looked like they were going to be like the spot markets for for

hyper core. Um, now they're kind of also building hip three markets up. I haven't seen anything meaning [clears throat] to ask like I haven't seen anything about man like uh spot like have they have they already minted that? I I I I saw I saw they minted it. I think they either minted mon or mega but not both of them is what I remember. Yeah. But >> and then there's a couple other products we think are also interesting. So there's this one called like bounce, right? Like we invested in them. So I'll just start with that. But like they're building like leverage tokens that like rebalance. So like there's like no liquidation. So like if you're like directionally been correct on every single move but you keep getting like blown out like on like a a quick like

you know 10 or 5% move or 2% 1% move depending on how much like how much like leverage you're taking on like this is a way to like you know you can stay in that position and it just like rebalances to the upside or the downside um to give you like either like protection. We think that's like a good product. We think that should exist. Like pair protocol is building um like pair trading for for like really simple like design for for pair trading on on hyperlquid. Like that seems like a good product like that that should exist. And I think there's just going to be a few more of these products that like can kind of like leverage all the liquidity and all the activity on Hyper Core and maybe can actually provide like better retail um solutions that

it can be very successful products and generate a lot of revenue and be like a little different than just like your next AMM or something like that. >> Yeah. And you make a lot like you make a lot more money on it as well on Hyperlid because of the way that they set up builder code. So it's like it's not like if I'm pair now I know pair is an existing product that has like it's been out for some time but they're going through some form of change. I don't know if they have yet. Right. >> Yeah. >> Um I assume they're using builder codes and that's like you can immediately start monetizing it if you if you can get the users versus I feel like to build a product out like that like just building out a pair trading product.

It's >> it would take it's it would be impossible almost like without a builder codes type of thing where you can make actual money on fees because it would just take you months and maybe even years to get the >> Yeah. And so Bounce is going to be another example of this, right? like they're going to be able to use builder codes. They have uh the team actually came from uh like they built the same product previously on uh synthetics when syn when synthetics had an L1 per exchange um and they were acquired back then and then um now they're building they like left and like they're building building this product and like I'm excited to use like 5x leverage like leverage tokens which like if you look we want when we're doing our diligence

we looked at like the FTX estate and we looked at like all the assets that were listed um on the FTX estate and the one thing that like because when Hip 3 first came out we were like super excited about it and this is probably a different story but like we we're like okay what isn't being traded right now that could be a market and you know like what isn't being traded that's like really interesting and we talked to like market makers turns out market makers don't have an opinion on like what assets like are are interesting they just want organic flow of like you know$25 to $50 million or $100 million and they'll they'll show up for free and they don't have you don't have to pay them. Um, but like they had no opinions and then we started thinking more and more like this

is like back in during like before ETH ECC we were we were having these conversations and like like forex equities we were pretty felt like it pretty early on that like unit was going to try to own the equities purpose market. Um, so that's like sort of not an option like like there's nothing really to back there and we just like there aren't that maybe maybe we're wrong but like the the amount of like volume that you're looking at it's like pretty hard like when you look at actually hyperlquid's volume and you look at the assets that are trading like on just like the regular per like there's like less than 10 assets that have over a hundred million dollars of daily volume

>> like >> and so you're like, "Okay, so are people really going to trade like silver pers? People really going to trade like >> preipo stock pers in size where like the company is actually going to be generating like real revenue?" Like I mean we wound up like kind of walking away and going like after all after after that article after all the research we kind of were like oh like uh maybe it's not as big of an opportunity today um as as one thinks. Um and like I think unit's done a really good job. I think I think like the the equity perks have actually done quite well. um >> surprisingly well almost surpris like for me as a individual like surprisingly

well today's a bad day to like look at them but like yesterday I think there was like over hund00 million in like uh oh no today's a good day to look at it uh like I mean the XYZ 100 has like over $und00 million of daily volume it's like $140 million like uh Nvidia has over 50 like that's that's really good like 140 is like that puts it over like Farcoin right now and puts it in the top like seven I think if I'm looking at this correct like really quickly like seven or seven or eight per market's trading on hyperl liquid right now that's that's >> that's impressive that's awesome >> yeah per sexes are super topheavy I I guess like perpetual volumes are like it's mostly BTC Even so doesn't really

um I'm kind of sad about your take but I also I guess I kind of agree is that like pre IPO markets doesn't probably It's a very cool idea technically like but I guess like you don't care about the cool idea because you're investing in a business and the business has to make some form of money. >> I mean no one would tell you yes. Uh like I think you know everybody falls in love with ideas a lot of time and like we wind up consistently having to like check ourselves and like we we fall like I think everybody falls forward a little bit right like the dream. Um, I guess the question is like how is how is like the preipo like markets like designed?

Like is who are the market makers here? Like do they own inventory of like the under where they can actually like hedge like like you know like um it's really tough for a per market or even like even like a spot asset to trade on a sing like if a spot asset trades on like a single exchange like market makers are supposed to be you know delta neutral and like how do you get how are you delta neutral if there's only like one one market for something. Um it's very hard and and so like I think for and I'm I'm uninformed on like you know equity stuff to begin with. So like

I'm consider me retail in this example right in this conversation when we start talking about like this type of stuff but um I like hyper and they're using hyperbs right and I think like there's been a lot of problems with like the the asset is the like the assets price is the oracle price um and with volume this like low I I was I've been trying to look into I know there's been some there's some protections on weekends and like on like uh some of the equity perks and I actually haven't read it. I've been meaning to read it because I had a feeling we'd be talking about this and I haven't read it. Uh but like it's pretty there's not a lot to read about it also.

It's like kind of hard to to find the the information and so there is like some protection over the weekends on like liquidations and things like that. Um, but I don't know like how are we what is really the price of like Stripe's like shares and why are we gambling and like betting with leverage on something that like doesn't have a price that like like a tradable price like I who's taking the other side of the bet and like you just you worry about liquid what I worry about is like liquidations, right? and like the actual like the market itself not being like uh a proper reflection of like what the

value of something like presumably if it was trading today. Yeah, I'm I'm glad you brought this up because the previous two guests I had to bring it up so you brought this up so I don't have to bring it up but I completely agree with you and equity pers are the like public equity pers are the exact same thing in the weekend like yes it's better than preipos um because there's actually like some form of a market you can attach to or like multiple markets you can attach to or anchor to but it's also very difficult to do and I don't know how they're going to do it but like you said they have some weekend stuff Um, some of them are just charging uh like 1% fee on the weekend for any trade.

>> Yeah, >> I that's something, right? Like I guess you should close your positions over the weekends. Like I mean it was cool that the Nvidia, right? Like so it's like also there's some cool aspects of this, right? Like the fact that you could take a bet on like that Nvidia was going to be earnings and you could be long and you could see that market like post post close and you could be long, right? And sure the price did rip up like on like the news and you could make money on that. Um I also saw a lot of people getting liquidated on the on the long like a 14 minutes later, you know. Uh but like um but it's a it's a it's nice. It's it's cool to have this

like ability to to take that type of bet. Um and to make that type of like investment or wager trade, take that trade. But um beyond those types of events like there's a lot of I think risk involved and like I think like the liquidations are are concerning like like the risk of liquidation is like people are getting liquidated enough. >> Yeah. >> Yeah. Danny, I I realize I'm kind of dominating so and I saw you on mute twice and I have to mute again. So, please, >> uh, we're well past some of the questions I had. Maybe on the preipo thing, though. Uh, Jim, I think you like I think you have a good point there.

Like, it's interesting to skip straight to a purpose product for something that doesn't have a spot market. Um, to your point, like I don't know. I would just be so concerned about being liquidated by basically nothing. Like, people just pushing the price up or down and like nothing material has happened. the price maybe the underlying like price of the thing in private markets hasn't changed at all like you know no fundamentals there so it's like I don't know you're just at risk of like waiting around for three years long paying funding to hope you don't get uh wicked by uh somebody trying to close you out of that position before >> a technore revenant right someone like I mean what is the difference between

trading >> uh Like, yeah, I'll just keep using I Stripe is not a good example because it's not one of them, but like maybe it's a good example because it's not one of the ones that's like listed, right? But like what's the difference between trading Stripe preipo uh pers and like jelly jelly [laughter] ps, >> you know what I mean? Like what are we doing here? Like [laughter] >> that's such a funny comparison. >> Well, because the markets are as manipulable if not more.

>> Yeah. Like if you had a million dollars right now and you threw it into the into the uh which one is it? Space X and you threw it into like the SpaceX per or even the Open AI per like what's happening, right? The open interest is like $300,000. >> Yeah. >> A million dollars after that, but it'll be your million dollars, right? Like essentially. And I I could be wrong here. If you're if I'm wrong, chat, like don't at me. But like I don't think I am. I think like >> I think that the interesting thing here is like it is something of interest.

Like we've seen um Vlad at Robin Hood talk about they want to do preipo stock tokens. And um I mean there's plenty of platforms who've like kind of tried to do this to some extent like Republic has some of their like you know our SpaceX and our OpenAI tokens and it's kind of a similar thing and I think they you know they're not liquid and you can only invest so much and it's pretty pretty small market relative to what's going on there. So I do you think do you expect that that's something like kind of the regulation regulatory landscape has been changing? Do you think that that is something that might change in the future and like maybe spot markets do pop up and then at that point it's like

okay pers like let's throw the ps on top or >> I don't I'm not going to we're we're a team of three and so the regulatory like uh aspect of like preipo equities trading is like not something I spend my time on um to be perfectly honest with you but like could I see it like yeah I think so right I think it's like it's already sort of happening like there's like OTC I don't know if you guys are in any these like Telegram OTC like notification chats and stuff like that, but like there are people buying Kraken shares last like maybe even earlier this year at like $2 billion or $3 billion, right? Um so like these markets exist and like bringing it to Robin Hood or something like that I

think is interesting. I think price discovery is it's valuable. It's valuable for employees. It's valuable for people who want to for for shareholders. it's it's valuable for retail to get like earlier access to these these markets if they want exposure. So like and I I guess like my answer would be like yeah I think that's probably the way it works is that like once those markets start to exist um then then you can have pers and options I guess like u maybe but like um but that makes more sense to me they're also like ri like insider trading um like which is like another thing that

seems obvious like if you were if you knew the results of like the uh if like the president was gonna announce something about like the Bitcoin reserve um or if you knew what the results of the Nvidia like you know if you work at like an audit like an audit firm or whatever like I don't know like you could put on a per and on a on chain that like no one's really going to know you did it um versus like trying to buy the shares like which people would absolely absolutely know right away that you did it. So there's like >> yeah I don't know >> we've once again come to the conclusion that crypto is very very useful for

people who are trying to insider trade which I'm very happy we've we've decided. >> Thanks to UniS swap for sponsoring today's episode. The unis swap trading API solves the problem of adding crypto to your products without the hassle of needing deep crypto expertise ongoing maintenance or liquidity aggregation. The trading API provides access to the unis swap protocol, which has processed 3.3 trillion in all-time volume, handled over 465 million swaps from more than 25 million addresses, all with zero security breaches. Developed by Uniswap Labs, the US-based team behind one of the most used DeFi apps, access some of the deepest liquidity in crypto, combining both onchain and off-chain sources for optimal pricing. The same liquidity that powers billions and swaps, now available via a singular API.

Let's get back to the episode. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. >> Jim, I I realize we've talked a lot about PERPS. Um, but I never got to ask you my like quintessential VC question, which is what are you guys most excited about apart from PERS in this case? Like what are you looking forward to? um whatever you this is like I think the VC's dream which is you can shill whatever you want for the next five minutes and no one's going to be upset.

>> Yeah. I mean I think um like going forward or like what's in our portfolio or or >> going forward like where where >> where are you looking right now? What are you looking for? >> Yeah. So I'll give you like one example of something we're looking into. Um we haven't invested in either of the two major uh prediction markets um Koshi or um Poly Market. Um congratulations to both teams on massive valuations and raises. Um but we have been using them and trying them out a little bit and testing them and man the liquidity is bad. Um, like Douggee specifically is like in a prediction

market right now where he has like a $500 position and like if you wanted to put $3,000 into like this position which has like generally good volume like um he'd take on slippage of like you know 25% or something like that and he wanted to close the position because he was up and he would have taken like 40 or 80% like like slippage right so he would have lost he was up 80% he would have lost 10% or something silly like that if you sold it. Um so like clearly liquidity is a problem on these like on these these exchanges. Um and so one of the things we've been looking into is like whether there's some solution like Kelshi is offchain at least for now and like um they market make their own book

and so it's a little bit different but like um but for like poly market which is onchain like my understanding is that they they don't quite like market makers get paid like to take the opposite side of like informed flow um which is like a pretty bad deal for the market makers um and or for poly markets business because they just wind up paying a lot of money. So, like we've been trying to figure out if there's like ways, especially for the onchain, like if there's like ways to solutions for market makers to be more profitable. Um, and if there's projects that are like able to like enhance or to like provide more liquidity and inject more liquidity into the markets without being like super exposed to like

directionally directional moves in the market. Um, and we think we found a team who's like maybe maybe building in that direction. That's pretty exciting. Um, so we've been spending a lot of time on that. Um, I've also, so that's that's like one thing that we've spent like probably the last like month or so on. Um, beyond that, I mean, we were, uh, we led the preede in a company called Euphoria. And so, uh, people are kind of familiar with that. Um, we're really excited about the product. Um, it's actually really interesting in times of volatility. like I've got the beta version of it. I think people have mostly seen the alpha early on and now they're seeing the beta

version and that team is like just shipping something really really complex that looks really really simple and like left curve and like that's so hard to do I think and very few people have actually built a good UX for anything in crypto I would argue um or I would make the point and so I'm really excited to see where Euphoria goes and like whether people and how people are going to use it and when they're going to use it. Um, like I'm already kind of like trading my own mental model of like when I should be opening Euphoria. Probably when like people are really sad, it's like a good time to open Euphoria and like try to trade on the volatility, the little little alpha there. Um, and the other thing we've been looking at a little bit more is like and there's been a bunch of

articles like this week on it. Um, but like we're looking at options uh options and it feels like now is a good time maybe for options to exist in crypto. uh both so that you could buy puts and like uh like maybe hedge like some of like your individual personal like you know positions but it just feels like a good time and like maybe that tech is like kind of there um and institutions are sort of here a little bit more than they were in the past and like you know it's like one of those things where you go oh like you know what was bu trying to be built in 2018 and 2019 and just like never made it and like didn't have

like product market fit and like I think options might be close to being ready. Um we might we might as an industry be close to getting ready for options which is kind of cool and we're looking into that a lot honestly. >> Do do you think that um like we're at a point now where IBIT ETH like some of these ETFs are large enough and they have like openly publicly traded options on those products themselves? Like are we at a point now where options on changes make sense because you can kind of look to those markets as kind of the the existing kind of pricing of them and previously we just you know you just didn't really have that and there wasn't

enough interest otherwise. >> Yeah. I mean it's still going to come down to what the premiums are, right? I think and like everything that I've whenever I've ever looked on chain for like an options market or exchange like the the high that's just like crazy, right? And then like if you talk to some of these teams that like we we've talked to a lot of teams about it, right? We've like really kind of tried to do quite a bit of diligence and so we talked to market makers about them and they're like, "Oh, we offer options, you know, we offer like options." Oh, really? Like what do they look like? And so we we've we've just to like get a sense of like what the pricing looks like and it doesn't look like anything that it's like onchain. Like onchain is like way more expensive. Um and and then

you have like you said these ETFs, right, where there's options on price on the ETFs. And so my guess is is that like maybe the infrastructure is like maybe the chains are fast enough now. Uh maybe that's part of it. Maybe they're cheap enough now. Um and maybe there's a way to use PERPS as like a hedge where like these market makers can actually just kind of go and just use the perp. Like the question is like whether there's like enough sophisticated users or whether like pers are a better product. Um Douggee would tell you that like per retail product. Um like fundamentally a retail product.

They're not like an institutional product. Um and I think I tend to agree with him that it's like much easier for the retail user to like say, "Oh, I'm up I'm I'm gonna make 3x if this goes up, you know, 100%." Um it's harder for them to like kind of gro the the options. But I think institutional players like like sophistic I don't know. I I I maybe it's maybe it's not a good time for options. Maybe I'm talking myself out of it right now. Um but like I think there's a lot of people who got blown up on 1010 and would like some sort of like liquidation um uh protection. And like one one way you can have liquidation protection is entering into an option call option or like a a put option. Um because like it

expires when it expires. Um versus sorry it moved on you and like you're you're blown out now. So like like you were correct on like the longer you thought in three months like it was going to be here and like it actually got to that price but like unfortunately the road to get there wasn't like a straight line. It was like a pretty pretty volatile like trip to that to that ultimate number. I um I agree with Douggee in the NU in the re like pera retail thing the now I really really like I fell down a big option because I thought they were very very cool um last like in the bare market 22 um and back then everybody

just wanted AMM so like or like 21 everybody like we didn't think order books were possible so we were kept building out like AMM style options. Now, I think we have the order books and everyone's super comfortable admitting that AMMs are not great for trading a lot of assets. Um, but like I from what I understand, institutions in crypto have access to options already and like that's what you're saying as well. And not just institutions, but if you're a protocol team member, if you're a founder, like anybody who is able to go and talk to a market maker um on a regular basis or like on a one-off is able to get these options. And if institutional flow wants options, I feel

like they would want it hidden away by a market maker as opposed to like putting them on chain is is my thing. I like for context, I don't understand options very well. This is like the first time I thought about options in a really long time. But like just off of that, I would really like options as well because sometimes I want to just hedge. Um, and I don't think pers are like it just doesn't work. It's it's not a viable way to hedge. It's it's always if you take on a per trade, it always feels like a directional bet as opposed to like, oh, I'm just trying to reduce exposure. It doesn't make sense.

>> Yeah. Like so I think and so interestingly enough like you know I'm not I don't think I'm giving away any like secret sauce here but like when you look at Euphoria right very simple product uh like when you look at it it's squares and you tap on the square these are options this is options right they're very shortterm duration options that are like um both long and like you have like some like upside and some downside like uh price that you're like targeting and So the question like that we've like kind of pushed Euphoria for like like quietly has been like okay cool like you guys have like that means that like in the back on the back end there's like an options exchange you

know and like that's really cool and like do can you do like a protail version of this like right like so you got the left curve can you get the right curve or can you offer like other other sort of like scenarios where like people can price like what the I mean because like the Crazy thing about it is like you're just showing them the multiple on on Euphoria, right? And like I was there's like a couple of conversations we've had around like what maybe other versions or other like other opportunities exist like using that same like kind of front end or maybe a slightly different front end and like making it retail friendly and kind of being like yeah I want some sort of downside protection. I want some sort of upside protection here um if I'm short I guess. Um, and so it's like a matter of

just like how do you make it easy enough for people to gro that like they feel they feel like they've that they can like learn learn like options are hard to learn, right? Like there's a lot that goes into them and it's it's hard to learn on like the most liquid markets like in in traditional finance and like in crypto like it barely makes any sense for anything that's been like available to the public. I think it's a little easier when it's like on the private side. We we haven't bought any options or sold any options or anything like that, just to be clear. Um it's like not in our mandate. Um we don't hedge or anything like that. Like that's just not it's not what we do. But um but it's like but we've been asking for

like prices to just understand like what it looks like and like what the price of these things look like and like for for the private investors u because like not everybody has exposure to that and I think a lot of people would have liked some option optionality uh over the last couple months like my guess is like people are like oh that would have been nice. Yeah, there's a lot of vault pro I know we're going over time, Danny, so I apologize, but there's a lot of to do. It's all good. >> There's a lot of vault products that got built out. Like I think a lot of people tried to simplify it um to some extent and it just never worked out. I I would like for it to work out, but I think the euphoria approach is cool because you're kind of taking this thing that is

um I I think crypto retail doesn't like options. Like clearly it likes per >> and you're trying to make it something that is like okay well what if we repackage it into this format and it's like very dynamic. I've only seen the alpha version on Twitter like three times so I'm just I'm going off the boxes. >> Yeah, I chased you down. I chased you down at uh uh the conference and >> yes, it is cool. Um yeah, I don't know how it's I'm don't want to speak out of my ass about options.

>> It's just like sort of like you can almost set it and forget it, right? I mean, so if we talk a little bit more about pers, right? Like like let's like compare it to per a little bit. The thing about pers is like you are you are glued to your screen when you open a per, right? Like nobody's nobody buys like a 5x long or short per like and is like okay let me go to the movies and let me go out to dinner with my partner and like let me go away for the weekend like that's not the exper and like let me let me turn off my phone you know like that's not the experience that anyone has like people are glued to their phones they're like oh my god like it's just this like set like this like sense of dread that like the world is right

around the corner um and [clears throat] like One of the cool things about Euphoria is like actually the time like people are like, "Hey, these are like short duration. It's not very but like the great thing about it and I think like what we could do is we can maybe extrapolate this to like options just in general is like you open up your phone, you play it when you're done, you're done and like, okay, that was good. Like I don't have to work. I can now put my phone down and I can go have dinner, right? And go out to dinner and have a nice time." And like I think if we just kind of like extrapolate that to options in general, it's like yeah, I'm like hedge here. If the price goes down, I'm gonna like buy here. I'm like I guess I'm a I'm a

forced buyer maybe at this price or I'm like a forced seller at this price. Um but like that's okay. That's what I want. Um and I think it's just is I think we'll see more experimentation around that like over the like if anyone's building an options platform like particularly if you're like using per on the back end on Hyperlid like let us know. please reach out. Um, but just in general, I think like we're we're interested to like learn more and see what people are what people are experimenting with right now. >> Yeah. And maybe I'll just add to what you're saying because I I think I agree with a lot of it is like the the top heaviness that we discussed with per like the same exists for options even in the equities world. It's like if you go to a smaller stock way out on the

expiration date, it's like yeah, there's not going to be a lot of volume there. Um, same goes like if you wanted to have an option on Jelly Jelly like that no one's going to be no one's going to be trading that. But I'm sure the the BTC book could be quite full. So I think it's just one of those things where it's like this is something that I mean the industry has talked about a lot and it's like yeah, you know, options for like probably BTC, ETH, like some of these core majors could um could be pretty meaningful. And um I don't know, maybe there's just a disconnect when these products like try to position it or sell it to retail. It's like where's the, you know, where's the the option for, you know, next June on Bonk? Like I want to have a bunch of liquidity on that. like

it [clears throat] might just be tough to like fill that particular spot in the market, but uh there's probably plenty of capital that like you're saying would be interested enough to you know hedge or get you know asymmetric upside maybe on like BTC or something based on their view of the next 12 18 months or next three months or something along those lines and then not get liquidated. >> Yeah. Yeah, I mean we have to ask ourselves like what are the market makers doing that are offering these options like on the other side, right? To the private side and like my guess is is that they're in per, >> right? Like my guess is they're on they're in the per like they're they're hedging it and pers and charging you like a flat fee and it's like up to them

to like figure out the the math um and the calculations. But like if they're doing it offchain then like my guess is there's like a way to do it or not. Yeah. My guess is there's a way to do it onchain and like it's going to take some some like ingenuity, but like my guess is it's probably doable. >> Yeah. Okay. Um Jim, thank you so much for coming on. This was very fun to the point that I'm going to ask you probably again. And >> dude, let's Yeah, let's do it. I mean, I've literally been hitting the slots literally waiting for this invite. It took [laughter] forever. In case you're wondering how long it takes to get invited to the Xerox research, [laughter] [snorts] >> it's around like 800 slots stickers for context but

>> it takes 800 times. You have to send 800 times. So, if anyone's in the chat, [snorts] please hit the slot machine 800 times in a row right now and you are the next guest on your fun. I appreciate you coming on and I appreciate you coming on despite me not sending you questions. There is a reason for that and the reason for that is that I think it's much better if I already have the questions in my mind. I think it much makes much more sense if we're doing onetoone conversationally. So I hope you didn't mind it too much. >> The the reason is that he didn't prepare anything. So we >> not questions. I didn't know what the topic of conversation going to be. Kind of fun.

>> Yeah, he didn't think about it until you shut up. That's why [laughter] >> I pulled it all up. >> Well, thanks for having me guys. I appreciate it. Big fan. >> The chat is one of the best chats like I've ever been in. So it's amazing. Um, I spend too much time in it, but like that's just >> Okay, outsource outsource all work to Douggee. Just send in the slot stickers. That's it. >> Get to work. No, he's not even there. Uh, yeah. Thanks a lot. >> Awesome. >> Thanks for coming on, Jim. >> See you guys. >> Big day for us today.

>> All right. >> We said we were going to take some risks. I don't know if we took enough risks, so we'll have to have them on again. I that's just kind of what I do to stress people out. I did um I can't make this joke live, but I'll tell you about it in private, but >> I promise you guys it's going to be really funny. >> This is related to something completely different. Um okay. Uh Danny, shall I close us out? We should also let Will go because I'm pretty sure he wants to It's Friday night. I'm pretty sure he just >> Yeah. Producer wants to get out on the streets. He doesn't want to be hearing about crypto options. That's He's [ __ ] bored of that. Yeah. Close it up. Say what you want to say.

>> Guys, thank you so much for Oh, that's you. [laughter] >> Wait, can you can you just mimic me? No. No. Danny, go back. >> Guys, thank you so much for coming on today. This was extremely fun. Um, to all of our listeners, thank you so much for listening to us.