Steve Ehrlich (2:41)

Some of these other companies and in particular some of the strategic decisions that they're trying to make right now during this bearish period.

Owen Lau (2:51)

Yeah, so there are always two key factors that affecting crypto equities that I cover. So you mentioned correctly mentioned I cover Coinbase, Circle and Bullish. And I would say the two factors are number one, the macro factors, it is related to interest rate, it is related, related to tariff and some other like broader macro theme. The other one is the fundamental factors that you try to get into and I can talk more about that for, from, from both perspective from a macro standpoint. You know there are lots of news flow coming in and out. We have like Terrace Meals and then about a month or maybe like two weeks ago the, the market has pricing a very low probability of December rate cut and since then the market has turned and pricing at a higher probability of December rate cut. So you saw how that changed the sentiment and also the price action for Bitcoin. The interesting thing is there's still a very high correlation between Bitcoin and the equities I cover. To be fair, I don't think that's a good sign because actually when bitcoin goes up in Jiang or when you see volatility there's actually higher trading volume. So interestingly when you see higher trading volume, revenue, it's actually higher. But you see some of the names I cover when there's high volatility, the stock goes down but revenue actually goes up. So you see that dislocation between the fundamentals and also the sentiment. That's why sometimes I would say over the past two weeks I actually see more opportunities to get into these stocks and the stock I cover compared to many other stocks. So I think that's kind of the introduction or maybe the key point I, I, I want to send it out.

Steve Ehrlich (4:39)

Yeah, that's a really interesting point because one narrative, and I was actually going to get into this later in the conversation, is that fundamentals for crypto, the actual network fundamentals seem to be good and improving but sentiment is very poor. And I actually wanted to get your sense of how like I hear about that a lot in the context of the price of bitcoin and eth. But I wanted to kind of get a sense of does that carry over into equities like I mentioned, especially the non debt equity. So the fact that you brought that up Coinbase is, is particularly interesting. It's funny, the coinbase narrative, I mean they've been trying for years and years to sort of pitch themselves as sort of a more diversified play on crypto and to break this correlation with with bitcoin not just by diversifying trading volume away from bitcoin and ETH to alts, but then also building out their subscription and services revenue to I think be at least 50% of the total net revenue as well, to sort of smooth out that seasonality. Can you maybe get a little bit more into that? Like sort of the divergence between the revenue and the price? Because that seems very atypical and frankly something I think would be more applicable in crypto where the traders don't pay as much attention to fundamentals. But it's happening here too. I'd love for you to get a little bit more into that.

Owen Lau (5:53)

Yeah, I think there are lots of factors affecting that still high correlation. Part of that may still reflect that the immaturity of this market. Right. So if you look at the traditional market, if the stock price or the broader market S&P 500 goes down, if you look at some like traditional exchanges, like their stock price actually went up in that down market, but you don't see that in crypto market. So part of that again maybe it reflects immaturity of the market. Maybe over time that correlation could break. We'll see. And then the second point is, you're right, Coinbase has been diversifying away from the trading revenue as well. Even though you don't believe in that high correlation or you believe in that correlation in some sense part of the revenue, it's actually kind of like non volatility driven which is like stablecoin. They share around like over 50% of half of the revenue from Circle for the reserve income. So those revenues are more stable and predictable compared to trading revenue. So over time my prediction is that correlation could break between bitcoin price and crypto equities or maybe crypto exchanges. But in the near term I still see like people still try to tie that equities fundamentals to bitcoin price, regardless of the fundamentals. Because I agree with you, I actually see a lot of traffic companies embracing crypto. And we saw the news from I think Vanguard bank of America. They started to open up their offerings to their clients and maybe over time you can start to allocate from 1% to crypto to 5% to crypto. So those are the incremental money, the fundamentals that support the blockchain adoption longer term.

Steve Ehrlich (7:43)

Yeah. The capitulation of Vanguard was particularly compelling just given how obstinately opposed they were. To all this for so long, I don't think they've quite reached Jamie Dimon, JP Morgan, or Larry Fink blackrock territory. But we'll have to check in another year or two and see what happens once Vanguard starts launching their own ETFs and tokenizing stocks and running perhaps their own ETH layer too. Not reporting. Just. Just some fun conjecture.

Steve Ehrlich (8:12)

Okay, so I want to. One other big difference that I see is.

Steve Ehrlich (8:19)

Like, there's a lot of R and D happening when it comes and a lot of spending from some of these companies. And let's talk about Circle. I mean, Bullish, Coinbase, et cetera, to build out product lineups because they're much more diversified than adat, for instance. So bitcoin miners, again, are in their own particular category. So I know you spent a lot of time talking to these executives because they think, I mean, quarters months, years, years ahead. And I think in one of your reports even talked about how Circle, there's a mismatch between expenses and revenues because of some of the work that they're doing to build their Ark blockchain and sort of expand their distribution platform. So can you talk a little bit about what's happening there and like how you pay attention to what's happening behind the scenes and what investors can do to understand how all this will translate into future revenue and growth?

Owen Lau (9:14)

Yeah, I think because we are still in the very earnings, in terms of the blockchain adoption, we need to build the infrastructure first and then we can ask people to come in and use our services. Right. You cannot just like magically create an infrastructure. Then people would come in. First of all, the number one thing, just like Circle you mentioned, they have to build layer one, and then they have to build more utility and functionality to attract people to come in. You have to provide more incentive for people to come from maybe your competitors to your platform. So, number one, it means that, number one, you have to spend first and the revenue would come later. But it's fine. You know, we understand that you're investing for the future. Some people may not like it. I like it because I like company investing in the future. So I like that trajectory. And. But the, the bottom line is they have to prove that eventually they can get the revenue in maybe one or two years. So that's the bottom line. The second point is it also takes time to get the people in. Right. So you need sometime maybe, I don't know, maybe three to six months to invest the infrastructure, and then you may need another six to 12 months to attract customers to come to your platform. So and then maybe after 12 to 18 months you start to generate revenue. So that's the mismatch I'm talking about. You need to invest first for the future. Those are good long term project. Why? Because blockchain can make the transaction faster, cheaper, 247 and also global. So those are the pitch to customers to come into your platform and I think those are good pitches. And once you have that value proposition you have to still convince your customers to come in. So that's why it takes time. There's a mismatch. I'm not too concerned about that. But that's kind of the reality in the blockchain adoption right now. We need to build infrastructure. It takes time. You have to be patient and invest in these companies longer term, not just for the next three months and six months or so.

Steve Ehrlich (11:17)

And, and how does, I mean all of these projections and, and a lot of this again was issued based on some Q3 earnings which I know each company reports on slightly different days and weeks. But we're two months now almost from October 10th and the massive wipeouts, liquidations and, and this very bearish climate health. Is any of that impact like either what you're saying or some of the guidance that was issued from, from the companies that you cover? I also presume that maybe the answer depends on what happens. I mean we're not in a bear market yet, but the climate is certainly bearish and there's a wide variance in projections for what next year is going to look like.

Owen Lau (12:05)

Yeah, exactly. So taking a step back, it really comes down to your view about next year. Are we getting into like sometimes like I think I know some people talk about crypto winter right now. Some people don't believe in it, some people may believe in it. To me what I'm looking at is like you're right looking at the guidance and look also look at the price action. So you mentioned the massive liquidation $19 billion on October 10th. That actually may drive you know, up a little bit of their liquidity. But if I, when I look at these stablecoin or USDC market cap, it actually has increased quite a bit over the past two weeks. So it's not like people are just taking the money convert from USDC and USD and you know, put that into the bank. I haven't seen that. I actually see market cap, market cap of USDC keep going up. So what that means is there may be some auto deleveraging, like some mechanical robotic sell off that creates some kind of panic that drive all the equity markets. But as a human being we can dissect and filter out this noise and use our analysis to make a call that is it actually justified at this level? That's why we upgrade Bullish about like few weeks ago because we felt like that liquidation drove down the price. At the same time the fundamental was still very strong and since then the sock actually recovered quite nicely. So to me from like the human investing standpoint, I actually see this as an opportunity, not a risk. So I mean it's still, there's still risk, always a risk of in, in investing. But what I want to say is we have to come down to our own analysis, you know, based on all these factors and, and evidence so that we can make a co core that is different from the robot.

Steve Ehrlich (14:01)

Oh, and a few more questions on, on the exchanges that you cover Coinbase and Bullish. And then I want to go to Circle for a couple of specific things but for one, I really want to get your sense of prediction markets and how either of those platforms might try to utilize them into their, their operations. I mean that, that's clearly between Cal and Polymarket, the, the rising star of, of all of crypto. Seems like every other day they're raising billions and increasing their, increasing their valuations. But I haven't heard much news or much noise. Robinhood's recently launched. I know Gemini either is about to launch or has announced their intention to launch. Coinbase seems to be a natural place to do something like that as well. So what are you hearing about that?

Owen Lau (14:49)

So I think more and more brokers and these crypto exchanges will launch prediction market offerings at some point. Like you saw the news. I mean there was like many speculation out there that I think Coinbase is partnering with Ki and I think there was a leak report out there that there was some pictures of Coinbase prediction market as well. They have a system update event in two weeks and I'm going to San Francisco to listen to that as well. So there is a, you know, high probability that they will announce something in two weeks about maybe prediction market or tokenization or international expansion or maybe even agentic AI integration, that kind of good stuff. So to me, further diversification for platforms such as, you know, Coinbase and Bullish makes a lot of sense for Circle. I would say yeah, just keep going into the B2B Cross Border Payment Arc Layer 1 and those are good channel for them to further diversify their revenue stream.

Steve Ehrlich (15:55)

But okay, so yeah, we'll have to keep a lookout for that I know Bullish is more institutionally focused. You actually put out a report about a key hire they just made for CoinDesk to try to monetize their retail audience. But prediction market certainly seem to be a retail play. So out of the two, I mean, I know they're in different worlds in terms of size at least at this point it seems like it might be more of a Coinbase play. I am curious though. I mean Coinbase has had some successful launches, but they've also had some flops. I mean their NFT Exchange did not do well. Base has been successful in terms of getting traction, getting a lot of attention. But you and I have spoken many times about how it's still a long ways away from meaningfully contributing to Coinbase's bottom line. Is there anything in particular that you think when it comes to Coinbase's strategy in prediction markets, that's going to be really important for them to get right.

Owen Lau (16:50)

So first of all they need to get it out first. So I think the issue right now is they make the announcement a few months ago, but we are still waiting for the new products to come in. So I think the first step is they need to launch a product. Maybe it's in partnership with Kalshi or some other platform. We don't know. We may know that in two weeks. The other more technical question is do they want to follow what Robinhood just did last week or so, which is form a joint venture and have their own so called CFTC license, DCM and DCO license. I know it's getting very technical, but what that means is they are going to be their own exchange and launch the product like the event contract product on their platform.

Steve Ehrlich (17:34)

That's what Kraken, they acquired those licenses.

Owen Lau (17:39)

Exactly.

Steve Ehrlich (17:39)

A DCM and an fcm. Although they've announced anything related to prediction markets yet.

Owen Lau (17:45)

Exactly. So I don't want to get into like too much detail, but what that means is if they have the DCM or DCO license then they can launch their own, the own event contract, they can clear that contract. They don't have to white label or partner with some other prediction market to have their own, to have that product so they can control their own destiny. So that's what Robinhood did about like a week or two weeks ago or get announcement. That's an important step. The question is will other broker and platform follow that, follow that model?

Steve Ehrlich (18:22)

Yeah. And that's also what Polymarket did, which is what enabled their reentry into the us. They, they, they made a purchase a couple months ago or something and just were able to.

Owen Lau (18:31)

Exactly. This is an important step because once you have that license you become a regulator platform. Then you're not become like so like you're not like that opaque that maybe people don't trust you and all kind of good stuff. But again the bottom line is if you have the license, you're being a regulator platform. If you have the DCM or DCO license, you can also put out your own contract and control your destiny. So that could be a logical next step for many brokers to think about.

Steve Ehrlich (19:02)

And I also wanted to ask about going back to Coin. I'm sorry Circle when it comes to.

Steve Ehrlich (19:09)

Prediction markets to me like this isn't, this hasn't been discussed very much but I know it's in the air supply a little like is there a world, I mean where like what is Circle doing to try to help protect its distribution on platforms like, like polymarket? Because right now they're getting all the yield. Polymarket's not. I know that there are some more. There's some things happening behind the scenes to like sort of like stake or generate passive yield through stablecoins and other things that are deposited in these event contracts that sometimes don't settle for months. People don't want to forego those gains. But it could be a. I don't know if a vulnerability is the right word but obviously Circle is going to want to protect its market share in these platforms and what are they doing to protect them? Do you have any sense?

Owen Lau (19:58)

So I think the number one thing they're trying to do is to increase the visibility and try to list Circle on as many platform as possible. So example, it's a partner with let's say Coinbase. Right. They have the partnership already and then they had a partnership with Binance, they announced that last year. What I am seeing what they're trying to do is to have more partnership with many platform so that it can drive the adoption of USDC within the trading ecosystem. So that's the number one thing because their revenue reserve income it still contribute a very vast majority of their of their revenue base. So they want to increase the market cap of USDC as, as much as possible that can drive high adoption. The second one is again go back to the layer one. Right, right, the Arc. So now I think a lot of the USDC run on Ethereum, some may run on Pod, Solana and some may run on APCOs and some other layer one maybe longer term they want to have their USBC run on their Own layer one as well. Right. So that could also retain some of the fees within their own ecosystem. And then they also just launched a pretty interesting project called Circle Payments Network. So that essentially tried to disrupt the overseas like the remittance.

Owen Lau (21:32)

The fedwire path. So that is another interesting project that they want to try to get the whole network effect so that they can also tap into the cross border payment capability. B2B. Again we talk a lot about. This is a huge opportunity. Based on my estimate, I think the total transaction amount is about $40 trillion. So think about your student math. $40 trillion. If you can take a fee cut of 1% or 2% that you know, $40 trillion, that becomes a billion dollars incremental revenue opportunity for the bigger than.

Steve Ehrlich (22:12)

The total US debt I guess.

Owen Lau (22:15)

Right, Exactly.

Steve Ehrlich (22:16)

Yeah. So that is obviously quite huge. One other question and then we'll start to wrap up here. I wanted to get your thoughts. I know this isn't directly in Coinbase's crosshairs but they do have a DAX integration with the base app, et cetera. Citadel's comment letter to the SEC about potentially regulating Dexs as broker dealers, especially now that they're getting involved in tokenized stocks. And one of the big concerns is that you don't want, or I guess they don't want two different sort of regulatory regimes overseeing the same underlying security. Do you have any initial thoughts on that?

Owen Lau (22:53)

I mean it will be a long debate. I don't have a strong opinion on this one, but I would say this is a strong debate. My bottom line is we do need a clear regulatory framework for the whole ecosystem so that we know what, like what the boundary is. What we don't want is, you know, we don't have any clarity. I don't want to go back to like what we had two years ago because that just give the agency opportunity to go after this platform. I would rather have a clear regulatory regime or bill to govern these platform. Then we have nothing. Now we have nothing. So what I recommend is, you know like everybody come down and discuss and debate even though it could be a long, long way. But find a framework that works for you know, most people and then we can go from there. I just don't want to go back to two years ago that agencies can go after and send Welsh notice to all these platform on a daily basis. So that's what I don't want to see.

Steve Ehrlich (24:02)

Yeah, I don't think anyone wants that. Even the people sending those balls notices. Okay, so just a couple things to wrap up here. I want to look forward, look ahead a little bit and help some of our watchers and listeners in a very official, not financial, not investment advice kind of way understand what's going to happen next. One question that comes up a lot is how clarity in particular is going to help the exchanges, especially the ones you cover. Bullish and Coinbase. I know Bullish, I think they got a bit license and now they're really trying to ramp up in the U.S. coinbase is obviously the largest exchange in the U.S. we all saw what happened to Circle stock when Genius act was signed into law about a month after it IPO'd. Do you anticipate something similar happening with Clarity when it relates to either of these stocks? And, and if so or, or even if not, can you maybe give one or two kind of concrete reasons why?

Owen Lau (25:04)

So my prediction is I still believe whatever Clarity act or whatever the the market structure bill that Senate would come up with, I hope it will get passed in 2026 and if it get passed, I think that will give us I quite like the Altcoin summer. So now we only have clarity on the Stable coin, maybe clarity on Bitcoin and also Ethereum and maybe some other like maybe two or three other coins. But we just don't have the clarity on many other altcoins. So my expectation is just like Genius act, like when we got Genius act pass we saw a little bit of Stablecoin somewhere. So hopefully Clarity act or Market Structure Bill get passed next year. Then we'll see another maybe inflow of both like capital and also people coming into this space. So I think that will be a very strong positive to the sector next year. I just don't know when I hope I heard that it's still going on and some people said that you know, it can get past by the end of this year. I don't think it will happen by the end of this year, but hopefully early next year then we'll get we'll hear more stuff from the Congress.

Steve Ehrlich (26:20)

Here's another question that I'm not sure you've been asked yet. If you have, let me know. There's a lot of Talk. I mean DATs are all trading at not all but many are trading in significant discounts to to market cap. Their nav premiums are are well below 1. A lot of talk about matchmaking M and A. Do you get any sense of a company like Bullish or Coinbase trying to engage in acquiring or partnering with any of these companies? It could be a smart way potentially to get a Lot of crypto on your balance sheet below spot price. And I know in particular Coinbase is starting to make some noise about buying and holding crypto on its own balance sheet.

Owen Lau (27:05)

So I haven't heard anything related to either Coinbase or Circle or Bullish wants to buy any deck. I would say from an analyst standpoint I would rather see the management invest their capital into longer term project like building the infrastructure, partner with some traffic companies or building the bridge and things are building like prediction markets and tokenization project and things like that then buying a that company. But that's just my perspective. I felt like if you do more infrastructure or create more infrastructure for the longer term that would help the multiple and also long term revenue growth because I'm not sure whether that can give you a lot of revenue growth from that perspective. But if you get into let's say B2B cross border payment, that's again it's a $40 trillion opportunity. Even though if you penetrate one into like 1% of this market, your incremental revenue opportunity, it's huge, it's massive. So to me from an analyst standpoint, I would rather than to go to create and use that capital for longer term project.

Steve Ehrlich (28:13)

Gotcha. Fair enough. And last question.

Steve Ehrlich (28:17)

A lot of the IPOs, I mean circle had one of the, I guess the most successful IPOs of all time, at least in terms of percentage growth. It's given up virtually all of it by the, by now or the vast majority of it. A couple of other recent IPOs have, have also fizzled and companies are trading well below. I mean Bullish is, is one of them. Gemini, Gemini Space Space Station is another. And I'm just curious because there's another set of companies ready to IPO. I mean there's Kraken, there's blockchain.com Fireblocks is rumored.

Steve Ehrlich (28:52)

There's another, I'm sorry, I think Chanel Chainalysis is another one that's potentially rumored to be doing it. So what are you thinking when it comes to new IPOs in crypto? Has the moment passed or like do you think there's going to be delays? What should investors think about when keeping in mind this recent history of significant surges on the days or day of or days after trading, but now with a few months of perspective they've come back down to I guess more reasonable premiums and multiples.

Owen Lau (29:28)

Yeah, I mean I, I wouldn't comment on the stocks I don't cover but the, the two stocks I cover, Circle and Bullish, I also went through the the process. Actually both stocks are still above the IPO price. So circle I think IPO at $32 even though the stock came down a lot, but actually it's still 100% above the IPO price. And for bullish, I think the IPO price was about $37 and the stock today is trading at around $48. Again, this is also above the IPO price. So you ask about whether the moment has passed. I don't think so. I think if you are a solid company, if you generate positive ebitda, you have a good long term vision and long term project, I still think you can command a good multiple in this market. I wouldn't come on a comment on any specific name, you just ment but to me the bottom line is if you can show the investors that you have the long term vision you really have, like that your project has long term project, you're disrupting a specific area or you creating an incremental demand that people really want. I still think those are good companies that can go public and command a good multiple in the public market.

Owen Lau (30:44)

So we'll see what come out next year and I'm excited about this opportunity actually.

Steve Ehrlich (30:50)

All right, well thanks everybody for watching and listening.

Owen Lau (30:53)

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Bob Diamond (31:45)

We think that hyperliquid, quite frankly is the most exciting thing in the digital space today.

David Seamus (31:50)

This is sort of like MicroStrategy 10 years ago when lots of institutions really had no other ways to get bitcoin exposure than through MicroStrategy. That's kind of where we are right now on Hype.

Steve Ehrlich (32:03)

Hi everyone, I'm your host Steve Ehrlich, executive editor at Unchained. To break down the newest DAT that began trading on Nasdaq, Hyper Liquid Strategies, we have David Seamus, CEO of Hyper Liquid Strategies and Bob diamond, the former CEO of Barclays and Executive chairman to Break everything down for us. All right, so before we get in, I'd love to just hear about both of your journeys into crypto. David, why don't we begin with you? How did you get involved this project? What's been your journey down the rabbit hole?

David Seamus (32:38)

Sure. You know, as far as my journey into crypto, I've been a traditional finance guy for years. I've been doing basically private equity style, investing into financial services for over 25 years. Banks, insurance companies, lots of stuff in between. In 2015, I made an investment in bitcoin. I should have bought more. Um, but, you know, once you have an investment, you start really focusing on things, and I would.

Steve Ehrlich (33:06)

You held?

David Seamus (33:08)

I held, Yeah. I never. I never. You know, the only ones I. I only get, the only ones I don't have anymore is over the years, particularly early on when I was explaining bitcoin to people, I would, like, give away a little bit. I'd send somebody $5 or $2 or whatever. And, you know, now it's, like, worth actual real money. So. But other than that, I've never. I've never sold any bitcoin. I should have bought more, of course. But Anyway, that was 2015. In a serious investment. The first thing we did as a firm and the first thing I've done personally in Crypto was in 2021, we invested in Circle. We can obviously talk about that in more detail if you want, but that went very well, incredibly well. Four and a half years before the ipo. And then this last. Hyper Liquid Strategies is the second thing we've done professionally. And we were really made aware of Hyper Liquid. The blockchain and the exchange caught it early part of 2025. We spent time studying it. We can go into this more detail if you want, but we got to know the paradigm guys. Made a lot of sense to have a DAT for hyperliquid for a whole bunch of reasons. And we got serious about it kind of in the late spring, and we announced the deal on July 14th.

Steve Ehrlich (34:24)

All right, great. And, Bob, I would imagine that a lot of people watching and listening will be familiar with your background at Barclays, but would love to just hear even more specifically about your journey into crypto and why you decided to get involved in this project.

Bob Diamond (34:39)

Well, although David recommended to me that I buy bitcoin at a much lower price than this, I did not. My introduction was 2021. We were introduced to the team at Circle.

Bob Diamond (34:53)

We engaged with a De spac. We did a tremendous amount of work with Jeremy Allaire, and the team and coming up with evaluation and over the course of two years, when we're working with the SEC to have that approved. I'll come back to that later.

Bob Diamond (35:10)

I've got to tell you, Steve, it was for me, I'm a bit of a techie. Both David and I started kind of in the back office as IT people, David @ Solomon Brothers and myself earlier than that at Morgan Stanley. And we both have a bias to tech, we both have a bias to the infrastructure. And I was blown away the more I peeled the onion back on blockchain and the contribution that could make to financial services. On the other hand, it didn't take long to convince me that stablecoins were really going to be.

Bob Diamond (35:46)

Something that was, was natural, quite honestly. I mean, to do the opposite to convince me that there's not going to be an institutional digital version of major currencies would be impossible in this day and age. So the question is, is it a central bank developed initiative or a private sector developed initiative and then highly, highly regulated? I was clear it was going to be the latter. Eric Rosengren, who's part of our organization, but at the time was the president of the Boston Fed, was a great advisor and counsel to me as he was chairing the white paper from the Fed on the central bank version of the digital coin. So blockchain, stablecoin, the grounding I had there in the next two to three years, before we ever even considered doing something, something different, was enough for me to be very convinced that the integration of the best of traditional finance and the best of digital is going to happen. And then, you know, I'm getting ahead of myself. But my goodness, the tailwinds coming from this administration relative to Biden and Janet Yellen and Gary Gensler, who were frankly guilty of malign neglect in terms of financial services and what's best for the customer. And I think the tailwinds now mean that there are traditional finance people like Bob diamond and David Seamus, like Larry Fink, like the CEO of both Visa and MasterCard, who are really talking more and more about the importance of blockchain and stablecoins. And that leads to, as David said, it led to a very interesting opportunity for us with, with hyperliquid, which quite frankly, we are even more excited now to learn about this initiative. We think that hyperliquid, quite frankly, is the most exciting thing in the digital space.

Steve Ehrlich (37:46)

Today. Great. Yeah, we're going to get into all of that. It's funny, I mean, thinking about like just, just juxtaposing circle Trying to go public by a SPAC a couple years ago at what, like an $8 billion.

Bob Diamond (37:57)

Valuation? Well, originally 4 was our.

Steve Ehrlich (38:01)

Yeah. And then, and then I think that you, you doubled it to.

Bob Diamond (38:03)

Nine.

Steve Ehrlich (38:04)

Yep. Yeah, before it ended up not happening. And now look, just a few years later, looking at what happened, I.

David Seamus (38:11)

Mean, yeah, four and a half billion sounded pretty good in.

Steve Ehrlich (38:14)

Retrospect.

Bob Diamond (38:15)

Yeah. Luckily for our fund investors, we did, we did invest in the private round at 2.7 billion, so, so we, we did.

Steve Ehrlich (38:24)

Fine. All right, so you get to keep your jobs. So that's.

Bob Diamond (38:26)

This.

Steve Ehrlich (38:27)

Exactly. Um, all right, so, so, so look, I mean our audience is, is pretty astute when it comes to this type of stuff. And, and, and I, I know they're well versed in hyperliquid and in.

Bob Diamond (38:37)

The.

Steve Ehrlich (38:38)

General.

Steve Ehrlich (38:41)

Offerings that the platform and that the perps Dex provides, but would really love for some of you minute or two explain like why, why hyperliquid and, and why you think ADAT is the right vehicle for, for.

David Seamus (38:54)

It. You know, you have an existing thing that's doing really well, you have real potential future growth that feels exciting in different areas. And then you say, okay, you know, where are the tokens being valued? The tokens are on equity, but they're equity. Like you could use traditional financial valuation metrics to look at the tokens and to look at the valuation, and it's really not that expensive. It's a pretty compelling valuation. And using the words crypto, high growth, lots of opportunity, lots of cash flow and compelling valuation are usually not things that are said in the same sentence these days. But that's how we think about the hyper liquid token. So then the last question is why in a dat. Well, one of the reasons that we think the valuation is pretty compelling is that it's not that easy to buy a hype token. You know, particularly if you're sitting in the United States, you gotta get on airplanes or people deal with VPNs or there's all sorts of hoops you have to go through to buy something that we think is very interesting and exciting.

David Seamus (40:02)

Business today. And you know, the ultimate need for adapt, the ultimate use for ADAT is making things more accessible. You know, when, when Michael Saylor came out with microstrategies years ago, you know, that was creating that, that was solving a problem for a lot of people that wouldn't find it easy to buy Bitcoin, whatever it was 10 years ago. Today it's a lot easier to buy Bitcoin, but it's not so easy to buy Hype. So that's a long answer to your question, but it sort of pulls it all together and hopefully that's.

Steve Ehrlich (40:31)

Helpful. Yeah, and that's helpful. Forgive me, Hype is not available on platforms like Coinbase or Kraken or any of those for.

David Seamus (40:38)

Us.

David Seamus (40:41)

Nope, it is not. It's available, I believe, on Robinhood in the US only.

Steve Ehrlich (40:45)

Recently. Okay.

David Seamus (40:48)

Okay. I do not believe it's on any other. It might be available on Binance US though it might not. I haven't checked recently. I think they announced it, but I'm not sure it actually happens. But the only place where there's any real liquidity is on their own.

Steve Ehrlich (40:59)

Exchange. Gotcha. Okay, Bob, anything from your point of view? I promise I won't ask you both to answer every single question.

Bob Diamond (41:05)

But.

Bob Diamond (41:08)

No, I mean, I think. I think David is given a very solid answer. But I think in my mind this is a way to be an investor in the whole ecosystem around Hyper Liquid, not just Hype, the coins. We found a very elegant way to create liquidity for U.S. equity investors, giving a highly liquid opportunity on NASDAQ. And when you think about the cash flow that's being generated, 11 employees, over a billion dollars in free cash flow, and the fact that over 90% of that cash flow is buying back and retiring the native token hype, this is the economic equivalent of having a corporate buyback. And this is very different than just a pile of bitcoins and the valuation, competing with an ETF and competing with a cash offering. So David and I believe that we have a team in place that can create real value for US equity investors in this.

Steve Ehrlich (42:07)

Ecosystem. Okay. Okay, so great. So first of all, congrats on finalizing the deal and starting to trade. I mean, what's it been like the last couple days as a publicly traded firm? Seems like the price is doing okay so.

David Seamus (42:23)

Far.

David Seamus (42:24)

Yeah. So we trade into the ticker Purr P U R R for Hypur Liquid. Just in case. Everyone make sure everyone knows. And you know, look, since we announced this in July, the premiums for DATs have come down quite a bit. MicroStrategy is sort of the leader. You can see everyone knows what's happened there. So, you know, we're trading at a modest discount right now, I find. I think there's nothing more unbecoming than a CEO complaining about their valuation. So I'm not going to be one of those guys. But I do think that for any investor looking who's interested in Hyper liquid right now is an awfully Interesting entry point, opportunity to come in, you're coming in again at a discount to where the underlying hype tokens trade. It's a US equity, it's easily tradable and I think it's very.

Steve Ehrlich (43:13)

Attractive. Yeah, okay. So yeah, I do want to.

David Seamus (43:17)

Get. It's only day two, by the way. It's day two of trading. So you know, we're, we're still.

Bob Diamond (43:21)

Watching. Listen, we like the liquidity, we, we like the direction that we're heading in. We have a lot of.

Bob Diamond (43:31)

Opportunities to be investors here as well. So this is, this is a very exciting time and I think, Steve, you know this, I don't need to say it, but for you and for all, all of your.

Bob Diamond (43:44)

Listeners, you know, having met Jeff, having been with him in Singapore, having before that, already convinced ourselves that the, the blockchain being recognized as the potential future of finance is a real thing. This is an incredible operation that, that Jeff and his team have built.

Bob Diamond (44:11)

And now being in a position where we are kind of part of that team in spreading the gospel. And while it sounds simple, we're now listed on Nasdaq but you know, credit to David and the team to find a good partner as we did in San Therapeutics because we really needed to have a reverse merger partner so we could be listed publicly. It's a huge advantage for us right now and all the work that's been done in managing that whole process is paying dividends now. We're, you know, almost a billion dollar listed public company and represent a tremendous opportunity for U.S. equity investors. And again, I'm going to say it, I think the single most exciting thing in the digital space right now and a layer one blockchain that is now poised to have other builders come on and put other non crypto assets on the exchange. We have Nvidia coming, we have Tesla. David, you can probably talk a little bit more about that, but wow, this is just an incredible.

Steve Ehrlich (45:20)

Development.

Steve Ehrlich (45:23)

Okay, yeah, I do want to get into to all that what's coming but as you mentioned, David, it's been a difficult time for DATs. I mean for once focused on the flagship bitcoin and eth, but you guys run an altcoin debt and I do want to kind of ask you what you think some of the key differences are in running a debt, even if it is the flagship one for a major altcoin as opposed to one focused on bitcoin or eth, like the most liquid tokens in the world. How does that impact how you try to put your treasury to work to how you manage liquidity to.

David Seamus (45:59)

Everything. Yeah, I'd say a couple things. One.

David Seamus (46:04)

Certainly versus Bitcoin where there's no real staking yields, having an asset with yield makes a big.

Bob Diamond (46:10)

Difference.

David Seamus (46:11)

Right. The staking yield we're going to get and the interest we're earning on our cash right now is much more than we need to cover our operating expenses of the company. Right. So off the bat like we are absolutely stable and there's no, no issues there. Secondly, we are actively investigating ways where we can earn more yield on our, our token, our tokens over time beyond just the staking yield. I think that we want to be very careful and very judicious about that. I think that, you know, you can imagine how much my phone is ringing right now with opportunities to put hype to work beyond just staking. And you know, we, we, we think in traditional finance timeframes, not crypto, you know, in crypto world, you know, three weeks is thinking long term, that's not a kind of insult, that's just, just how the world works. In the crypto world we'll think hard about these opportunities but we're not going to rush into them and we're going to be very careful and we care about things like credit risk and counterparty risk, all that stuff.

David Seamus (47:14)

You know. Furthermore, how it's different.

David Seamus (47:18)

You know, look, the scarcity value we think is just, just very different here. Again this is sort of like, like MicroStrategy 10 years ago when lots of institutions really had no other ways to buy, get bitcoin exposure than through microstrategy. That's kind of where we are right now on Hype. And maybe we won't be there forever, maybe we will, I don't know. But that's a really important factor and it's very different than, you know, the larger crypto dash right now. Whether it's Ether, Solana or Bitcoin, they have other advantages. They do lots of stuff. I'm not going to be negative or positive about them. They can come on and tell you what they're doing. But to me it's just so obvious here. It's such an obvious thing. And if you believe that hyper liquid is going to grow the way it is, if you believe that it has a place in the future, we all feel that way. It's just really hard for me to imagine that getting an entry into our, into hyperliquid through our, through Per purr wouldn't be just a great way to do it right.

Steve Ehrlich (48:21)

Now. Okay, so let's go through some of the mechanics of the deal because I just want to put all the numbers out on the table right now. How much hype do you currently have? You bought, do you currently own at this.

David Seamus (48:35)

Point? A few different numbers happen to have these things in front of me. So I believe right now we own 12.6 million tokens. We also have.

Steve Ehrlich (48:48)

About. Yeah, about 300 million or so.

David Seamus (48:52)

In cash and then about 300 million in cash beyond that. So when you asked about structure of the deal, those 12.6 million tokens were contributed to the deal in kind. So more than half the capital we raised came in kind, not in cash. But 300 million is still a significant amount of money. Oh we.

Steve Ehrlich (49:14)

Have. Yeah, I was just going to ask, I'm sorry, the in kind tokens, did they come from the foundation or where did they came.

David Seamus (49:23)

From? They came from investors that we knew that owned the token. So paradigm being the most obvious one. They partnered with us on this deal. They a co sponsor with us. I don't know the number off hand. I think it's sort of publicly known that they own. They're one of the largest, if not the largest owner of hype. You know, they contributed some but certainly not all of their hype. And you know, from going on down there we, you know, other people added hype contributed.

Steve Ehrlich (49:48)

Here. Okay. And I'm curious too, like as far I know those tokens have mostly been staked at through Anchorage, is that.

David Seamus (49:55)

Correct?

Steve Ehrlich (49:56)

Yes. Are those tokens under any sort of lockup or are there transfer restrictions or.

David Seamus (50:04)

Nope. Other than the seven day staking lockup, nothing beyond.

Steve Ehrlich (50:07)

That. Okay, interesting because I have written a couple stories in the past about that and sometimes playing games with locked tokens that can still be staked or moved in different places and it seems like there's a lot that can be done with quote unquote locked tokens. But, but that's not, that's not the case.

David Seamus (50:25)

Here. It's just that, you know, we're on day two. We will be investigating things to do with our tokens besides staking where we think we're going to earn, you know, a very handsome yield versus the staking yield. But we're only, we're going to be thoughtful and judicious about it and as I said we, we might do it if we like it and we might, we probably we won't if we don't. But at the moment 100% of that 12.6 or nearly 100 is staked.

Steve Ehrlich (50:51)

With Anchorage and it's all Freely you can unstake it and there's no.

David Seamus (50:55)

Restrictions. I can unstake it anytime I want with seven days notice and do whatever I want with it. And then the cash is cash sitting in a bank account or earning interest right.

Steve Ehrlich (51:05)

Now. Gotcha. And the cash, forgive me, but was this done through a pipe or was it just a typical equity raise? One of the things I'm trying to understand too is I'm sure you've seen some other dads and when pipe shares get registered, there's big sell walls.

David Seamus (51:20)

And. Yeah, so, so the, the answer is it was the whole thing was the pipe, both the, the, the, the, the tokens and the cash. But because we used a structure called the dub double dummy structure, that's a corporate finance term where we went out and got shareholder approval and we had, we achieved the tax outcome that we wanted. Because of all that, the way it was structured is the day we close, meaning yesterday everybody got shares that were fully tradable without any unlocks or anything that happened. So the stuff you're talking about, I know exactly what you mean. Which are deals that got done frankly much quicker than we did. But the people got shares that were unregistered. So you had a huge percentage of the shareholders sitting there with unregistered shares they couldn't sell. And then at some point in the future, whether it was a month or two months or whatever it was three months, you had some day where the stock dropped probably a lot because everybody got their shares. So for better or for worse, we've done that already. Right. That, that was yesterday for us. We're now past that. Every single share of this company, other than the sponsor shares that we received, which have a one year vesting other, every single share and every single investor that put up money, whether it was tokens or cash, has freely tradable shares right now. And they could sell right now, they could sell tomorrow, no.

Steve Ehrlich (52:40)

Restrictions. All right, well that's good to hear. And I'm curious too just about the timing of the deal. I know that there was a slight delay because I think there were challenges reaching forum on November 18th. Can you just briefly explain what happened.

David Seamus (52:51)

There? Yeah. So in order to get one of these deals passed, we had six votes, I believe. I hope I'm getting these numbers precisely correct, But I think two of the six votes required not only 50% vote of the people voting, but it actually required at least 50% of the total outstanding shareholders to vote yes. And you know, we had said this publicly, so this isn't A big secret. We had to delay for two weeks just because we were trying to round up those shareholders to vote. The actual votes were coming in, I think, you know, above 95% in favor of the deal. So there wasn't any serious objection to this deal. There wasn't like some big proxy battle.

Steve Ehrlich (53:33)

Go. Yeah, I saw that in the foul just there.

Bob Diamond (53:35)

95%. It was the fine art of finding small investors who hadn't been contacted in.

David Seamus (53:40)

Years. We, we were chasing down people in airports. I, I, I can't tell you what went on over the last three or four weeks to get this. It was, it was, it was amazing, amazing system to get this.

Bob Diamond (53:51)

Done. But I'll, of course we're doing this for Sonnet Therapeutics, which is a company that we weren't involved in in the beginning. So you can imagine we were working together, though. Their team was great. It was just really hard to herd the herd. The.

Owen Lau (54:04)

Kittens.

Steve Ehrlich (54:05)

Yeah. I, I can only imagine what it's like to try to find so many shareholders that maybe didn't even know they own shares in Sonnet. And.

Bob Diamond (54:10)

Then.

Steve Ehrlich (54:11)

Exactly. You have to, and then you have to explain what Hydroliquid is and, and what a dad is.

David Seamus (54:15)

Entirely. And you know, I had people, I was literally making phone calls myself. You had people saying, oh, I want to think about it. I'm not sure I filled out the deal. You had people, you had people.

Bob Diamond (54:25)

That didn't even know they were a public.

David Seamus (54:26)

Company. Yeah. I said, look, I have your name on a list. You got a proxy. You know, as far as, as far as, you know, we're concerned, you, you all know shares on October 20th, which was the record date. So there was a lot of this stuff going on. It was really, it was an amazingly manual process. But you got to the finish line. That's the important.

Steve Ehrlich (54:43)

Thing. Gotcha. And then I think I saw Sonnet's going to remain operating as, as, like, I guess, sub entity. Can you. Because I know there, there has been debates as to whether or not it makes sense to have an operating company or not. Can you maybe walk us through why it made sense to do.

David Seamus (55:00)

That? Yeah, I think to be a dat, under the current regulations we all live by, you have to have an operating company doing something. It doesn't have to be the one you bought originally. It could change over time.

David Seamus (55:15)

Owning tokens on in treasury is not considered an operating business. So day one or day two, as we are in today, we need an operating business and that's Sonnet, which is more or less Identical to what it was before we closed. I think over time, over, you know, I don't mean like days, I mean months and years. It may make sense to, you know, for Sonnet to have a different home and it may make sense for us to be in different business and different operating business. It may make sense for maybe some of the Sonnet assets to do something and us to keep other things. We'll consider it for better or for worse. It's no longer a meaningful part of the, of the total market cap of this company. Right now it's a, it, it's small relative to the total capital, so it's somewhat immaterial. But we'll, we'll obviously figure out what we think is best for us and our shareholders and you know, and also best for Sonnet and their mission, which is quite a. It's a great mission. I mean, look, they're, they're, they're trying to cure cancer and God knows I hope they're successful or someone like them is.

Steve Ehrlich (56:18)

Successful. So let's get a little bit more into the hyper liquid ecosystem. As has been well documented by us and plenty of others throughout the last 12 months or so, it's been a rocket ship. It's been one of the real breakout stars of all of crypto.

Steve Ehrlich (56:34)

Perhaps only matched by the likes of Polymarket and Prediction Markets. But where do you think it is now? Uh, it's been a difficult two months or so for the industry and Hyper Liquid in particular faced a lot of pressure on October 10th with some of the, the massive liquidations and, and some controversies surrounding its ADL policies on that day. So I, I'd love to just kind of hear from, from your perspective or, or Bob, whoever, like, like what happened that day and kind of what it means going forward, especially as the market is sort of stuck in a little bit of a lull.

David Seamus (57:07)

Here. You know, I. Look Bob, I'd love if you could chime in to add anything around October 10, which we spent a lot of time looking at and discussing amongst ourselves. But I think two things happened on that day. These would be hyper liquid, and they were both more or less the way it's supposed to work. So one thing that happened is that the system ran, as far as I know, with a hundred percent uptime. And I think there are a whole bunch of other, other exchanges, you know, major ones like Binance, that didn't do that. So off the bat, like it was up 100% of its time for its customers doing what it's supposed to do. The Second thing that happens, I think a lot of people got a lesson in how ADL is actually work and what it means to be a perp exchange. So what I mean by that is a perp is a derivative. For every long there's a short. For every short, there's a long. And I think everyone knows every time you put a perp trade on hyper liquid, it shows you at what price your liquidation is. If you're long bitcoin at the time, which was at 117, and you're whatever, 10x long, it tells you at 110 or whatever the math is that you're going to be liquidated out when that happens really quickly in a time like, you know, whatever it was 4:30 on October 10th, they're liquidating longs. The exchange never sat there and said, we're going to take positions. Their job is to pair off longs and shorts. Their job is not to take positions either direction. And if there are literally no longs left or a lot less longs left than they had before, they have to have the same number of shorts left or vice versa. And I think that there's, I don't think there's any debate whether what happened with some of these ADL's was against, you know, hyperliquids rules or terms or anything like that. I just think people didn't like the feel for it. It didn't feel right to them, but that's how they have to function. And by the way, as we all know, it didn't take long on the October 10th for Bitcoin. We'll use bitcoin as the best example. Bitcoin to rally back. If you fell asleep at 4pm on October 10th and you woke up midday on the 12th, Bitcoin went from 117 to 115. But along the way it was quite a couple days. And that's exactly why they had to do that. If they were just sitting there with a bunch of naked positions, you know, that would have been a problem for them. And it's obvious that that's not what, that's not what the exchange is doing. And the exchange, again, it's an exchange. It's not hundreds of billions of dollars of capital looking to take positions.

David Seamus (59:53)

Bob, I know.

Bob Diamond (59:54)

You'Re. Listen, I thought it was an incredibly fascinating day.

Bob Diamond (60:02)

The blockchain that was built by Jeff and team behaved and operated exactly as advertised. Not a second of downtime, incredible liquidations and transactions and volatility and volumes. Very, very, very impressive. And you know, I'd like to say, we knew that would be the case. We didn't know that would be the case, but boy, you feel better after a serious stress test like that. And I think one could not, could not have created a more challenging stress test for, you know, an exchange that's been built in the last three years and is gaining this much notoriety and volumes and, and credibility. So.

Bob Diamond (60:52)

To see a market action like that and volumes like that and operations like that and not a single break and not a single.

Bob Diamond (61:01)

Second of downtime feel.

Steve Ehrlich (61:03)

Terrific. Right. So what else are you excited, by the.

Bob Diamond (61:09)

Way? I don't know. Another exchange in the world that can say.

Steve Ehrlich (61:12)

That.

Steve Ehrlich (61:14)

Yeah, it's interesting. I mean, I know that, like, Dexs in general have been very proud that, like, during periods of acute market stress, they haven't necessarily gone down, but. Yeah, I mean, I know there were issues with finance and, and, and, and questions about their ADL policy there. And for years and years in the past, there was always this joke on Twitter, like, is Coinbase down yet? Because they. Historically, like, during times of peak trading activity, even, regardless, regardless of whether or not it was bullish or, or bearish, there was always that joke that if it got really exciting, Coinbase would go down for a little bit. I don't think they've had that issue for a while. I actually used to, I used to work at Kraken, and that was like a little joke that, that we used to have, although we, we were always. Gerald, it's not as if Coinbase's customer base, as opposed to ours, but, but yeah, it is. Yeah, it is something that is, is certainly it was a learning experience for, for a lot of people that didn't know that. I guess they thought ADL stand for Anti Defamation League or something like that. They never actually knew what, what it meant in terms of, of finance. And then there was a lot of sort of misperceptions or misconceptions about how it worked and like. And there were people very loud on Twitter that had profitable short positions, yelling, why were they liquidated when they were in the money? But I mean, as you mentioned, Dave, like, at some point there has to be matching signs on each order or else the book itself is taking large positions that can be untenable. So. Right, yeah, so I get that. Let's talk a little bit more about the ecosystem, though. You talked about like the, the billion dollar sort of like annualized revenue, which obviously is very laudable. I think the only company that would really laugh at that is Tether, because they seem to make that every single month.

Steve Ehrlich (63:03)

But what are some of the other numbers that you're looking at to kind of give you a sense of the growth of this ecosystem in terms of stablecoin TVL user growth? I know the numbers have all dropped a little bit over the last couple months because trading volumes across the entire ecosystem have gone down. But what are you seeing? And I'd also ask you maybe to expand this beyond just the DEX to like who's building on the hyper liquid EVM and how is that growth sort of fitting into your broader.

David Seamus (63:31)

Narrative? Yeah, I would say, look, I don't think we have any secret things we're looking at that other people don't. We look at TVL and we look at the open interest and we look at volumes. You know, the most interesting one, I think not the most interesting trend, an interesting one is when you look at, you know, centralized exchange volume versus Dex volume over time. Clearly there's, there's a large portion of the customer base, the crypto customer base out there that likes trading on Dexs. And that's coming through when you look at just, you know that, that mix over time, especially in the last two or three years. So you know, Jeff and the team sort of hit the nerve at the right time when you look at their timing here and all that. So that's sort of the crypto world. Then you know, the other stuff you look at where you know the tams are just unbelievable are, are on, are on the real world asset side. Right. So you know, UNIT is a company we know, you know, they're the ones that built spot trading on, on hyperliquid. They're the ones doing trade XYZ where they're, when you're trading equities on hyper liquid right now, US equities in hyper liquid. And you know, the, the TAM there, you know, maybe the best thing to compare a PER on US equities to is to options trading in, in equities. And you know, you look at someone like Robin Hood, a huge percentage of their revenue are allow, you know, zero day options that could trade on that platform. I personally believe, and this is something I'd be curious Steve, if you agreed with me on this. I personally believe that a perp is a much better structure. It's a much better type of contract for almost anybody to trade, certainly retail investors than an option. I mean options are complicated, right? You got to worry about expiration dates and a bunch of Greek letters and all sorts of stuff that it's you know, black scholes Models like it's, I know it's doable but there are a lot of, you know, very well paid people at all the big investment banks that, that know how to trade options. You know, with degrees from mit. A perp is, you know, here's the, here's the price I'm getting in at, here's how the funding rate works, here's where I get liquidated it. It's just so much simpler and it's so much more sort of natural when someone thinks about, thinks about buying, you know, a position like that with leverage. And you know the, the TAM on that is just, is just massive. And I think part of all of our job, part of the whole ecosystem job is to figure out ways to, to sort of grow things like that. Equity is just such a, such an easy example. So it's sort of the first one I'm giving, you know, the company Ventuals. I don't know if you followed them. Ventuals set up their own hip three markets for pre IPO companies.

David Seamus (66:25)

It's really cool, right? You can trade SpaceX or companies that they expect to go public in the future beforehand and that's doing the world a real service, right? That is allowing for price discovery on a company before it does an IPO as we all just witnessed, circle IPO to $31 a share and then shot up into the two hundreds. And now it's, I think still it's in the eighties. You know, clearly JP Morgan didn't price that thing right. And if there were some markets with some real liquidity trading pre IPO that gave you a real window into that, into the, into the, into the price, it would have meant a lot. It would have meant a lot for the, for the people who were selling shareholders in that deal. That's not insignificant for like the whole system we live in. So you know, look, I, I think that if, if all hyper liquid ever does is what they're doing now in the crypto side, I think the, the sort of way the token is valued is compelling and you know, there's nothing to be upset about buying at these levels but there's just so many opportunities with massive tams all over the place in the ecosystem that that's what really gets us excited and that's why we think the valuation is just, is just super.

Steve Ehrlich (67:38)

Compelling.

Steve Ehrlich (67:41)

Yeah, I mean I certainly agree that probes can be a much more elegant product than options. Although.

Steve Ehrlich (67:48)

Sometimes it just comes down to sort of the ux. I mean Robinhood is so good at it. I mean Using them as the example that people don't appreciate how complex the type of products are that they're selling and, or that they're buying. And they like the idea of getting those lottery tickets like perps. I mean, I guess depends on what kind of leverage you want to take out. But options like you can be like, well I put down a hundred dollars here and if it hits on this date it could be paid out however much. I think people like that idea. And I guess the other point is just also perps, I mean people like us, it seems pretty implicit and easy to understand how they work. But there is an educational barrier for other folks to understand what an auto renewing future is and what funding rates are and stuff like that. But they do seem to be a very elegant type of fund product. I, I, I think now's a good time to talk about HIP3 because that, that is like, it does seem to be really fascinating mean if it's in line with like vexes and how people can like could AMMs could like launch like, like liquidity pools and markets for other tokens. And now the same things happened here. Maybe you could kind of compare and contrast a little bit that and, and this, this also might now be a good time to include in the discussion like plans potentially for hyperliquid to come to the US and if they are going to be making markets in these types of products. And there are US companies that are already doing this. I know Architect is another one that's doing some of this. How does that fit in with this sort of permissionless listing process? How does that kind of fit in with plans to take on the biggest capital market in the.

David Seamus (69:28)

World?

David Seamus (69:30)

And Bob, you want to make a talk about regulation and what we see coming in clarity. And I'll chime.

Bob Diamond (69:36)

In. Yeah, listen, I mentioned earlier the tailwinds and I think stepping back, what's the approach of this administration from a regulatory point of view?

Bob Diamond (69:49)

It is not to focus on regulation of crypto, which sadly the previous administration was kind of avoiding or debating and it was more discussion than action. And what I love about their approach is that there should be one regulatory framework for financial services. It's complicated enough in our country. So integrate between digital and traditional finance one set of regulations and I think that's the direction we're going in. And I think the keywords are keep them simple, understandable, workable and integrated. And you know, I feel so good about that direction because I think if you're an investor as we are, if you're building on your platforms as the people we invest in are doing. Having some vision of where regulation is going and how they're going to get there and having a clear indication they want to keep it simple, straightforward and fostering innovation.

Bob Diamond (70:58)

You can't ask for more than that. And I think it's Put frankly, the US in the last 12 months has moved from being a laggard to a leader in digital assets and digital asset innovation. I think Europe is beginning to fall back a bit and is going to need to catch up. And we want everyone turbocharged here. We don't want it to be the US ahead of this person. We want it to be like a race to be the best. And I think we're moving in that direction slowly. And as I said earlier, Steve, in my mind, when we fast forward two or three or four years, one, there'll be an integrated regulatory environment for financial services, two, there'll be more of a level playing field of the matrix economies around the world. And three, there'll be a recognition that we're not just trying to, to add digital capability to banks. What we really want is we want digital banks. And that's a big difference. And that's what, that's what, that's what hyperliquid is, is teaching.

Steve Ehrlich (72:03)

Us.

David Seamus (72:05)

Yeah. And you know, back to your question about HIP3. I mean the, the, the, let's say, you know, for argument's sake, someone listening to this right now says, you know what? These guys convinced me, you know, perps are a pretty cool product. There's a lot you can do with it. And you know, I want to, I'm going to go build something. You know, the thought of building your own perp exchange, right. The thought of creating an order book and all the programming and the, and the, and the work behind that, to do it yourself, it is daunting. It's really hard to imagine doing that. But you don't have to because you could, you know, use hyper liquids. They built it already. You can use their systems with it. As a HIP3 builder, it takes a half a million hype tokens, so you can't do it for free. You have to have some substance, have to have some capital. But, you know, that is so much less both in time and cost than it would take to replicate it. It's just super impressive. And, and again, this is just where we are today. People in the ecosystem are talking about HIP4. That's not officially been announced. I don't think they're, I'm not sure that's, that's even officially being thought of by the, by the foundation. But there's been a some user suggestions on, on Twitter around hip4, which is basically, it's sort of, it's sort of a similar thing, but for prediction markets. Prediction markets are different, right? Because you know, something can go from a 1% chance to 100% chance very quickly. So you have to have the systems be somewhat different than a normal perp market. But think how cool that would be, right? Like we have two, we have polymarket and Kalshi. Right now they're, you know, both big and both kind of dominant. Although, you know, they're big relative to where they came from before, which is zero. But they're not, you know, there's still a lot of growth ahead of them. Same concept, right? If someone listening to this wanted to go compete with Kalshee, you know, holy cow, that's a lot of work to build your systems, your backend, to be able to do all that stuff. But wait a second, what if there's something you could just use that someone else already built to build your own front end? Like, wow, that's pretty exciting. And that's a really great way to bring more competition to these growing.

Steve Ehrlich (74:13)

Markets.

Steve Ehrlich (74:16)

So speaking of competition, I want to just talk a little more about the market and the defensibility of what Hyperliquid has built. I mean we all were tracking, I think there was a chart showing certain like Hyper liquid growing market share vis a vis Binance and but since then, Binance launched Aster and I think last month actually was the first month where Aster had higher volume than Hyper a little bit, even though both were obviously very large. And you pointed out that you see a very large TAM that could probably make everyone happy. But like what lessons do you think could be learned from that? And in a world now where every major exchange, the Robinhoods, I mean they're all getting involved in perps in the US around the world prediction markets. Everyone I've spoken with has been very impressed with how Hyper Liquid was able to bootstrap this liquidity and get off the ground with their HLP and et cetera. But how do they keep doing doing that and how do they defend their turf in a world where, I mean Binance and Binance is launching their own.

Steve Ehrlich (75:24)

Prediction market now too, where people that have these huge user numbers already could not quite copycat. But I think you know what I'm.

David Seamus (75:32)

Saying. Yeah, look, I love Bob's opinion on this too, but I would say that a couple things, one is it's absolutely impossible to have thought that there would never be any competition here, right? You look at the success that hyperlicate has had over the last three years, particularly over the last year, and change. Like, of course there's going to be competition and of course others are going to come in and generally speaking, you know, competition makes everyone better.

David Seamus (75:59)

You know, the idea, you know, you know, no one's sitting here saying, you know, how can there ever be more than one bank in the United States? There's lots of banks in United States. It's still a pretty good business for lots of them.

David Seamus (76:11)

So the idea that there wouldn't be ever be any competition is kind of crazy to think, you know, imitation is the highest form of compliment or whatever that term is. And I think like any business, hyperliquid is going to have to work hard to stay ahead of the competition and to provide their customers with the best experience and all the usual things.

David Seamus (76:31)

It's not like, you know, they have some immortal position that they, you know, they don't, you know, you know, they're not subject to the laws of gravity. Of course they are. We're pretty confident in their ability to execute. And I think frankly the biggest challenge they have and a lot of people have here is just getting the sort of word out to the outside world. You know, lots of people in crypto know what hyper liquid is, but a lot of people don't. Believe it or not, we were raising this capital. You know, I reached out to someone, I'm not going to mention his name, but he's a relatively well known and a very large bitcoin holder. I never heard of, never heard of hyperloop. Um, maybe today I was in sort of June, July, maybe today has. But you know, there's a whole world out there of people that will find things to do with this. You know, whether it's HIP3 or whether it's what, you know, builder cruisers, lots of stuff out there. And you know, if, you know, to me it's more about the, the expanding TAM than it is fighting with ASTER over, you know, 2 percentage points of market share, that that's where the future.

Bob Diamond (77:39)

Is. Listen, we, we, we didn't do all the work from July till, till two days ago to get this publicly listed to kind of sit on our laurels and watch the market. The work actually starts now. And David and I and our team are in this not just for the medium term, but really for the long term. And what we see is we, we built a structure. Serious.

Bob Diamond (78:10)

You know, hype position, serious cash position. A plan going forward that this will be the dominant blockchain where builders can come in and build other exchanges on top of it. It, as David said on CNBC yesterday, there's a lot of people running around saying this is going to be on chain. That's going to be on chain. This traditional business will be on chain. Hyper Liquid is actually doing it. You know, we have, we have US equities trading in per form on hyper liquid. We're actually doing it and we're three years old. We have over a billion dollars in cash flow. We're just beginning. And this is not only the exchange and exchanges of the future, the blockchain is the financial underpinnings of the future. And you know, three, four, five years from today. I do believe that the blockchain will be the underpinning of financial services writ large. I don't think it will be specialized in sector. And you're going to see more people like Bob diamond and David Shamus who grew up at Salomon Brothers and Morgan Stanley and Barclays who are now really, really comfortable with what's happening in the blockchain and stablecoins and exchanges. So we're on a journey here, Steve. This journey is very, very early days. We've done a tremendous amount of work and thinking and have some great partners to get where we are today. But man, the work's just starting. You know, we have a really good structure with a really strong cash.

David Seamus (79:44)

Position.

David Seamus (79:46)

Steve, I just pulled up, while we're sitting here, a chart. Total, sorry, Top chains by fees in the last 24 hours. This chart looks pretty similar every single day. But hyper liquids at 2.4 million, Solana is at 670,000 and Ethereum's at.

Steve Ehrlich (80:04)

425,000. Is that.

David Seamus (80:06)

On? How do we determine world. What's.

Steve Ehrlich (80:08)

That? Is that from token.

David Seamus (80:09)

Terminal? No, I'm using Artemis.

Steve Ehrlich (80:12)

Analytics. Artemis.

David Seamus (80:15)

Yeah. I assume they're all similar enough. But the point is like, you know, how many people you think really understand that and that, you know, this, that, that, that the tokens are trading at levels that are like sub s and.

Steve Ehrlich (80:28)

P500Pmultiple. Yeah, it's actually like.

David Seamus (80:32)

That. Think about.

Steve Ehrlich (80:33)

That. When I was at Forbes, one of the. I wrote a big story in the magazine, called them the $20 billion crypto zombies. And I pointed out like $20 billion layer ones and looked at their fees as one of the metrics. And I mean some of these companies or projects had made like less than a million dollars a year. In fees and it was just all traded anyway. I know we're close to time, but I just want to, before we wrap up, I want to look a little bit to the future. I know you filed for a billion dollar shelf offering. I don't know if any of that has been sold yet or, or like what the plans are, especially again going back to this difficult debt climate where it's hard to raise money when you're trading at below one. So it's kind of like, what's the plan there? To continue to.

Steve Ehrlich (81:22)

Accretively.

Steve Ehrlich (81:24)

Accumulate.

David Seamus (81:25)

Hype.

David Seamus (81:28)

Yeah, look, I would say, you know, first and foremost, we are fiduciaries to our shareholders. We are, as you can tell, we're really into hyperlic, we're really into the ecosystem. We are not religious zealots. So we're going to do over time what we need to do to accrete our nav per share, create our book value per share, which is what you're supposed to be doing when you're a fiduciary to a public company. What does that mean? That means when we're trading at premiums, we're going to be thinking about issuing stock, as you said in our, our, in our S1 that we filed. And in the opposite time, we're trading at discounts, we're going to think of the opposite. We're going to look at doing the opposite. And you know, again, we're not zealots. We are, we are looking to be good fiduciaries to our share. Needless to say, you know, when, you know, when we're trading at a discount, we're not going to be operating the same way as if we're trading at a.

Steve Ehrlich (82:21)

Premium. And before we wrap up, because I know we're just about of time, I'd love to just hear any final thoughts from, from, from, I guess maybe both of.

Bob Diamond (82:28)

You. Listen, I said mine already. I think, I think we're, we're just beginning. There's been a lot of hard work that's been done since July when we announced this initiative. We hit a critical point of going through all the complexity of regulatory approvals, shareholder votes and NASDAQ approval. And we're a publicly listed company with real scale, a real strong cash position. We have our options open. As David said, we're not, we're not in this to, you know, do daily trading kind of thing. We're in this to create a, a listed opportunity for US Equity investors to invest in an ecosystem that is at the very, very early stages of being one of the dominant institutions in the. In the digital space, and that's Hyper Liquid. We're in it for the long run, not the short run. This is an investment of our time and our resources. And I think it's very early days. We're very excited about it. Steve, as I said at the beginning, and I'll finish with it, we think this is the most exciting opportunity in the digital space.

David Seamus (83:39)

Today.

David Seamus (83:42)

Yeah, look, I would say that if you spend time with the Hyperlucan people at their big event in Singapore during token, they had a big banner up that said the blockchain to house all the finance. These guys are thinking really big. This is a super competent, super hardworking management team. Not in crypto terms, in any terms. I put these guys against anybody, any management team on almost any business around the world, and they're thinking big. And there's so many paths to get that big. And, um, again, there's not a super high cost to enter this, and there's not a super high cost to, to. To be part of this future growth. And it just seems to me that, you know, in the future, more and more people are gonna know what Hyper Liquid is and they're gonna be wondering why they didn't get in.

Steve Ehrlich (84:30)

Sooner. All right, well, with that, yeah. Thank you, David and Bob, both for your time. Thank you to everybody for, for watching and listening. And be sure to tune in next week for more episodes of the Bits and Bips, the Interview and Unchained Live.