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- [00:00]
A
This has been like the first time that like governance has been like fun and it feels like years and I think frankly like the competitiveness of the proposals is going to deliver like a really awesome outcome from the hyper liquid community, regardless of what happens.
- [00:19]
B
Hey everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host Laura Shin Mantle is pioneering blockchain for banking, a revolutionary new category at the intersection of TradFi and web 3. Follow mantelfficial to learn more. So I'm here with Nick VanEck, CEO and co founder of Agora and Beau Cotecha, co founder of Paxos Labs. Welcome Nick and Beau.
- [00:44]
C
Thank you.
- [00:45]
A
Thanks for having us.
- [00:46]
B
So in case you were busy, you know, touching grass this weekend or you're living under a rock, there was a frenzy when the Hyperliquid foundation announced that it was going to have voting for the SDH ticker in Hyper Liquid for a stablecoin. So that prompted a slew of proposals over the weekend, including by both of your companies, Agora and Paxos and you know, Quick Glance, they seem to be the ones that are getting the most engagement. There's some others that also have high engagement, you know, but just for listeners who, like I said, if you, if you happen to actually enjoy your weekend, you may not know that basically there's deadlines coming up. So that's the reason why there's a lot of activity about this right now. So the first deadline is the proposal deadline which is 9-10-@10 UTC. Validators then have one day to declare which proposal they're going to be backing. And so then users will have until September 14th to move their stake to a validator that supports the proposal that they would like to vote for. So you know, Nick and Bo, why don't we just start with this one basic question before we dive into to your proposals. Why is the USDH ticker so important here? Because that's literally the only thing this competition is about is that particular ticker. So Nick, why don't you, why don't you start?
- [02:12]
A
Yeah, I think the reason why it's so important is one of the few tickets, it was the only ticker that was actually reserved by the team and I think this is really going to be the community alliance stablecoin. And so there is a huge opportunity for an issuer or one of the proposers to really take part in offering a public good to the hyper liquid community, which is one of the most active and engaged communities in the entire space. I think One that everyone certainly, at least on this call, believe is going to continue to grow and be a large part of transforming financial markets. And so it's just a ticker, but I think there's an opportunity to do something really unique that is aligned with the hyper liquid ethos in community and that's certainly why we're interested in it. I imagine BO feel similarly, but we'll let him opine.
- [03:05]
C
Yeah, I mean, I think Nick's spot on. I think the community alignment is there. I think having launched stablecoins previously at Paxos, having launched products previously, especially for something like crypto native ecosystem, being able to build with your users I think is so powerful. Right. We were going to go work in hyperliquid. No matter what, we were going to launch products in hyper liquid. We already have products live in hyper liquid, but the ability to actually build with community feedback is such a powerful mechanism and really this proposal has enabled that. We've gotten more feedback in the last, whatever, 48 hours, which I know have been fun for Nick and I, then we can possibly get on any other product cycle. And so being able to get that close to the community, build with them and get that feedback has been amazing. And look, we want to build a product that really resonates with the community is hyper liquid aligned. And this is an amazing way to do it. It's not that you can't do it with another ticker, but this is a way that you can kind of really get close to the community and build what resonates with them.
- [04:05]
B
And so for both of you, if your team does not win, you will still build a stablecoin in the hyper liquid ecosystem or what would be your plans then?
- [04:15]
A
Of course, yeah. I was asked this question earlier today, like of course I don't think there's an option not to.
- [04:21]
C
Right.
- [04:21]
A
This is one of the most active ecosystems in the space and you need to be here. Right. It's the number one trading ecosystem. So obviously if we don't win usdh, we'd have to figure out what we want to do. Whether it's something with AUSD or other white labeled partners that are either active in the ecosystem today or would want to come to the ecosystem. So it'd be a little bit of a TBD, but I think we would 100% be there.
- [04:46]
C
Yeah, we're going to be there. Funny enough, I believe it was Thursday night or Wednesday night. We did buy a USD ticker in hyperliquid auction and so it just feels lucky coincidence that the very Next day that they dropped this, maybe could have saved me some money there, but it's all good. And so I mean that's how it goes. Yeah, that's how it goes, right? It's like you, you. Anyways, I believe it was Wednesday night or Thursday night. We bought a USD ticker on IP liquid auction. And we've been planning this, we've been working towards this and then you know, Friday night we, we had a fun evening and weekend for the entire team. But yes, to answer your question, we're going to build and I feel like we're going to keep building. We already have a team that's been building there and plan to continue to do so.
- [05:27]
B
Okay, so you've got something in your back pocket. Can I ask which ticker it was that you bought?
- [05:32]
C
I won't share it yet.
- [05:34]
B
Okay. My guess would be usdp, but anyway. Okay, so let's now talk about the proposals, why don't we, we'll start with Nick. So go ahead and you know, for those of you who missed this on Twitter or Discord, go ahead and explain what you guys are proposing.
- [05:51]
A
Yeah, so maybe I can, I'll even start with like sort of our whole process. Right. I was like on my way to work on Friday morning, got a DM that the ticker was, was going to be opened up. I had a stacked Friday. So I actually started working on the proposal Friday night. And at the time it was, you know, the one proposal there was the sort of pre baked native markets one. And I think Bo will appreciate this as well. But there's about 5 to 6 billion of USDC on hyper liquid today. Right. This is like one of the largest exchanges like on planet earth certainly when it comes to crypto. And you need infrastructure that can scale. And so you know, one of the first value asset we thought that we could provide is having institutional infrastructure built for scale on day one. Right. And what I mean by that is having GCIB banking partners. Right. So State street, which is 49 trillion in assets under custody, is our cash custodian. And then VANAC, which is, you know, a multi decade 100 billion plus asset manager, manages the reserves. Right. And so you have blue chip institutions that makes this an infinitely scalable stablecoin, but also is safe and secure. Something that we also have believed at Agora since day one is that like digital dollars should be public goods. That's actually what our original slogan was. And so we proposed 100% revenue go back to the community. And then lastly I would say is like we wanted to build this coalition first. Right. You know, obviously we power, you know, I think fairly robust institutional grade issuance, but there's plenty of other partners that you can bring to really expand USDH's reach. And it's why we reached out to Rain Layer 0 and a number of others. We keep getting in bounce on people that want to be supportive of this. I think they reached out to us and said yes because they trust us and respect us, but they should work with whoever I think ultimately wins this. Right. And so we were sort of coalition first and that's really the proposal that we put forward. Yeah, happy to dig into any of those points, but I think. Right. It's being institutional first and safe, driving maximum value back to the community and then being coalition first.
- [08:14]
B
Yeah. One comment I'll make is just I heard this, honestly, I'm pretty sure I heard this on the chopping block and it was like Tarun just saying something like he traveled to Argentina or Turkey, I forget where, but he said something like, oh, I found out that USD lost significant market share after the SVB incident. And so I understand that point you made about just like you want big players, you don't want anything to go wrong, you want people to have utmost trust in this particular asset. And then the last thing I'll say is like, kudos to State Street. You know, you would imagine that a really old company like that would be super slow moving. But I'm guessing you reached out on Friday. You're like, hey, this thing just dropped.
- [08:59]
A
I will say, to be fair, when your family runs $130 billion asset manager that parks all their money at State street, like, you know, they say yes to some things, right. So we've been using that for a long time. But your point about the USDC deep is real, right? I mean, like, you can see, you saw how that impacted Circle for years. Right. And I actually, you know, my prior career before starting Anora, I was on the venture side and was very close to many founders, whether, you know, they were building Lemon in Argentina or other fintechs. And they had actually pushed their users to use USDC because they had perceived it to be safer and got a lot of, got a lot of blowback. Right. And so there is like real damage. You know, I think these are some of like the things that people don't, you know, in the weed, things that people don't think about with stablecoin issuers. They're like, oh, it's like money in a bank, like, how hard could it be and there's actually a lot of, a lot of things that are, you know, especially challenging. And, you know, that I think Bo knows as well from his experience at Paxos. And, you know, that's why I think we wanted to really, like, make some, some of those points in our proposal. Because, look, even if we don't get chosen, we care about the community, we want this to be a successful launch, and, like, those things matter.
- [10:09]
B
Okay, so, Bo, go ahead and describe the Paxos Labs proposal.
- [10:13]
C
Sure, yeah. And so I think, you know, when we first looked at the proposal, the three things that stood out to us were hyper liquid first, hyper liquid aligned, and compliant. Those are the three things that stood out to us. And, you know, I'll kind of take them one by one on why, you know, where we thought we were a perfect fit. And I'll start with the last one from a compliance standpoint.
- [10:31]
A
Right.
- [10:31]
C
Paxos has been doing this for over a decade. We are a regulated state trust in New York where obtaining an OCC federal trust. We are one of the only MICA compliant issuers out of the eu. We're issuing out of Singapore, we're issuing out of uae. We have been doing regulated safe stablecoin issuance for longer than anyone in the industry. And to Nick's point, like, I think this stuff gets glossed over, right? It like, this is the most important part of building a stablecoin. Are the funds safe? Are the customers funds safe? And doing that with partners and people that have done it at scale before I think is really important. And we've done that across a bunch of different customers. We've worked with the best banking partners, the best custodians globally. We have relationships with every single regulator across the world, really, many of whom use our standard as their template for what new companies wanting to issue out of the jurisdiction should do. So we've been doing this for a long time at a really high standard. And so our compliance, you know, the compliance checkbox, I will say, is ticked from a hyper liquid first, hyper liquid aligned perspective. Some of the origins of Paxos Labs. Right. Over the last couple years, we've launched several stable coins out of Paxos, including PayPal's PyUSD, including USDL, which is a yield bearing stable coin in USDG, which was a consortium, stablecoin with Robinhood, Kraken, Anchorage OkX, several others. We learned a lot. And just what we learned was getting to day one of issuance is really hard. Getting the regulation right. All the stuff Nick talked about all that stuff is really hard to get to day one, but there's a whole journey you need to go on after that. It's like, how do you actually grow in crypto native ecosystems? How do you actually build compelling products and utility around stablecoins? And so this is something we were thinking about really deeply last year as we kind of went through this stretch of stablecoin launches. And this is where Chad see, who's the CEO of Paxos, and I kind of like put our heads together and said, hey, we really need a team and a business unit that's focused on this growing in crypto native ecosystems. And that's where we kind of started to build the origins of Paxos Labs. At which point we got to meet a team based out of New York here called Molecular Labs that has been building in Hyper Liquid since day one. They launched two structured products. One is L Hype, the other is whlp, which are two primitives that power the hyperliquid ecosystem since the very first day of Hyper EVM launch.
- [12:55]
B
Yeah, and one is loop type and the other is wrapped type.
- [12:58]
C
Yep, exactly. And it's not just the fact that there's two things that really appeal to us about this team. One, we clearly saw Hyper Liquid as like kind of an up and coming ecosystem that was going to be a cornerstone of kind of this like merging of traditional finance and decentralized finance. If there was a chance of any platform actually kind of coming into the world that we're used to playing in. On the Paxo side, it was Hyper Liquid. So there's that. But two, they were really building out a lot of our thesis. Our thesis was, yes, you can have a stablecoin, yes, you can have native assets, but you actually need to build compelling experiences and products around them. And so that's when we decided to bring that team in. And a lot of that DNA is now impacts those labs. Obviously we've got now $100 million of TBL across these two hyper liquid products today. And so we have been building, we have DNA of this team, from this team in the Hyperliquid ecosystem and bringing them and combining that expertise that, that experience in hyperliquid with Paxos history of compliant issuance. You know, I think we, we really kind of like tick all the boxes, if you will, for what Hyperliquid and the foundation is looking for.
- [14:04]
B
Yeah, I mean, honestly, that's the, the commentary I see on Twitter a lot is people talk about this like Hyper Liquid alignment. I'd be Interested to hear a little bit more on like why you think that is so important or why it is that you see like people kind of noting that this is something that they would like, a criteria that they would use to evaluate these proposals.
- [14:27]
C
Yeah, I mean, look, I think it's. They've built an incredible community and ecosystem, right? And when you have something amazing, you, you want to maintain it. And I totally understand it and I. That's something that I appreciate about how they operate, right. They, they have a certain set of values and ethos and hyper liquid and they want to maintain them and I think that's really important. And like anything that gets off the ground and is a successful, it has a secret sauce. Right. And for them, some of that secret sauce is how deeply involved their community is and they want to keep that going. And I respect it.
- [14:59]
B
And Nick, you didn't really talk about that in your proposal, like alignment with hyperliquid. So can you describe, you know, how you think the Agora proposal shows alignment?
- [15:10]
A
Yeah, so I think for us, right, it's like having native deployment on day one, but it's also like maximum revenue back to the community and also having active governance. Right. Something. One of the results of this being sort of sprung on us so quickly is like actually a lot of the fine print wasn't decided. And so a lot of our proposal has even evolved within the last 24 hours where I've actually thought quite a bit of how do you actually really so many crypto communities try to solve for effective governance. And I actually think this is a perfect opportunity to have a reoccurring governance vote on a quarterly basis. Like, okay, what do we actually do with 100% of the revenue from this ecosystem token? And so that I think is one way to express alignment. Another one is we've spoken with a hyper liquid team in the past, right, Even before hyperevm about what bringing like a white label and native stablecoin to the ecosystem could look like because you are giving up hundreds of millions of dollars in revenue. And then I'd say like beyond that, a lot of people like to attach, I guess my family businesses to my activities, whether or not I work there or not. But like the trading team and the VC team there has been very active in the ecosystem. I'm trying to get them to open their mouths and hopefully getting on the phone with the boss later today so that they can actually talk more about what been doing because they are very involved, they talk to teams every single day and so hopefully more info can be coming, coming out after this because he was just calling me as we were getting going. But I think ultimately the alignment will be expressed in how successful USDH is in delivering revenue and value back to the ecosystem. I think one of the innovative ways that we can do that is through actually growing it beyond Hyper evm. That's why I mentioned Rain and some of these other providers. Moonpay is working closely with us and we're figuring out how we can implement builder codes and light that up across all of the wallets that they support because we know that USDH will be successful within the hyper liquid eco. How can we go outside of that ecosystem and expose new users, whether it's retail traders, institutions, to this asset and to these markets?
- [17:34]
B
Okay, so yeah, I mean you guys started to go into one of the differences that at least people are talking about quite a bit, which is the difference in the rev share that you're proposing. So Nick, as you mentioned, you guys are proposing that you would offer 100% of the revenues back to the hyper liquid ecosystem. So you know, when I was just thinking about this, I was like, okay, so this business is going to spend a lot of time on building out this usdh, but then they're going to literally make zero money from it. So what's in it for Agora? Why would you do that?
- [18:06]
A
Yeah, so I think what's in it for me personally is I got into crypto and digital assets because I think this is a once in a generation transformation of market infrastructure and money. Right. I think hyper liquid and the hyper liquid ecosystem is like the place for that. And so if we can spend our time building a public good for this ecosystem, that is time well spent. Right. I think beyond that, obviously this is like the Super Bowl. A lot of eyes are going to be on this. If we do a really great job, that'll translate into success in other aspects of our business. And we have other products and other lines of business that can subsidize this. We already an issuer, we have the entire stack built. And so spinning up an additional asset on this infrastructure is a marginal cost to us that we're willing to eat. And again, like I said, a lot of people that we know, whether they're on our team or friends or, you know, peer firms are involved in the ecosystem already. And so it's something that they want to do because they're part of the community and, and feel like this is like a, you know, public good. Right. So that's why.
- [19:10]
B
And would you propose that like just in perpetuity, 100% of the revenues go back because.
- [19:17]
A
Absolutely. Then you just have quarterly governance votes on, okay, do we buy back hype? Do we give it to the assistant fund? Do we give it a stakers? We don't want to make any money on this.
- [19:26]
B
Interesting. Okay, so, Beau, your proposal differs. You know, you are proposing that or Paxos really is. Paxos Labs is proposing that you'll share 95% of the revenue. So explain why you chose that figure.
- [19:40]
C
Yeah, totally. And I think a lot of it is like, I believe incentives are really powerful. And, you know, I think no matter how much you care about an ecosystem or how much you're aligned, it. It really is hard to keep investing in something that has. Has no impact to your business whatsoever. And again, what we learned launching all the stablecoins we launched over the years at Paxos is, yeah, we can launch a new stablecoin with, like, minimal cost. We can do it no problem. It's everything that comes after, right? It takes time to go actually integrate with everyone. There's BD spend, there's marketing spend. We want to hire people. We want to put all of our weight behind this asset. Right. And so can we do it for nothing? Totally. Right. But I think the goal isn't just issuing it. We think this is going to be the biggest stable coin in the world. And how do we do that? Well, it's like, hey, circle has a thousand people, right? And I'm not saying I want to go hire a thousand people. I really hope to God I never get to that world. But it's like, hey, we need to staff the team. We need to go put people out there. We need to actually invest in this business. And so it's not so much like, I'm going to take that dollar and put it in my pocket. It's I want to reinvest. I want to make this great. I want to make this big. Like, I don't want to just issue it once and then be like, yeah, we did it. Like, I want to make this a massive asset. I wanted to make it the biggest asset in the world. And that takes investment time and incentives. The other thing I'll add to this is, like, there's been a lot of debate around, like, to Nick's point, like, where does it go? Does it go to stakers? Does it go to assistant funds? We are, you know, ears wide open for, like, listening to the community and in terms of, like, where those funds go. But I will say one other. Learning from our history of launching stablecoins and trying to scale them is that people don't just switch their stablecoin provider overnight. You need to provide incentives to all the ecosystem players that are going to make USDH big. Right. And there are some ways to do it. You can do the system's fund and presumably everyone's a hype holder and that's great. But I think we need a balance there. In my ideal world, it's like, hey, maybe we start with a 95% and then some of that is going to the assistant fund and some of it's going to actually system integrators. Right. Like the integrators and the platforms that are actually adopting usdh. And then let's say over some time period we get that to 99% going to the system fund. Amazing. Like we have achieved our goal of making this, you know, a $500 billion asset, a trillion dollar asset. Awesome. Like let's send it all to the system fund. And that's kind of the thing I would encourage the community to think about is like, what does it take to make it really big? Not just what does it take to issue it.
- [22:08]
B
Yeah, I mean, yeah, it's kind of interesting. So Nick, the way that you described yours, it's like the uber model of we're just going to kind of throw whatever money we have into just like getting market share. That's sort of like, you know, I, it's basically a pretty common.
- [22:26]
A
I think that's like a, that's like a fair, a fair way to articulate it.
- [22:29]
C
Right.
- [22:29]
A
Because we already have other lines of business and are profitable in other ways. So it's like we can reinvest profits from other activities of the business into the ecosystem. Right. And like something that we committed to is like we can see this with 10 million from our balance sheet from the get go. We have partners that have called us over the last 24 hours and said, hey, we can set up a vault and we'll put nine figures in from day one to seed this. So I think that's one of the benefits of having a broader business too is we can run some things on a public good basis. And it was our original slogan, right. Is digital dollars are public goods and we have a lot of OGD5 DNA. One of my co founders, Drake, was the lead dev at FRAX before he started Agora with me and they felt similarly. So kind of want to bring that to bear here.
- [23:13]
B
Well, you know, on the flip side, I also see Bo's point where, you know, Just at companies they kind of like will do, you know, their financial analysis and be like, oh well this unit's not really performing. So I can see it both ways. I don't know if I necessarily like see one as being like this is more hyper.
- [23:31]
A
I think they're about, they're just about the same. 95%. They're just about the same. 5% isn't that much, right?
- [23:38]
B
Yeah, that's true.
- [23:39]
C
Yeah.
- [23:40]
A
I think we, you know, both, at least Beau and I are aligned that we want to get it as close to 100% as, you know, as we possibly can. Right. And so I think that's why it's like if you look at any other proposal, right. If they're not do 95 to 100, they almost shouldn't even be in the conversation.
- [23:54]
B
Yeah. Okay, so let's say your team wins. You know, for both of you. Describe what it is that you would try to do within the first six months. You know, what would be your game plan for ensuring that USDH becomes the top stablecoin in the hyper liquid ecosystem that it can take on usdc, which as we mentioned it's got, I think it's like $5.4 billion in hyper liquid right now. Tether is a distant second at 189 million. So yeah, I'd be curious to hear what you are thinking and I know you guys just spun these proposals up for the last weekend, so I'm interested to hear what you have to say about this.
- [24:33]
C
Yeah, I think the first part of my answer will be boring but pragmatic, which is in the first six months we got to make USDH as liquid and cost efficient as USDC is today in hyperliquid. Make sure that the current users of hyperliquid can have the same or better experience with USDH as they do with USDC today. And what does that mean? That means on and off ramps, that means liquidity pools. That means all the things that we need to do to make access to USDH as simple as possible, as seamless as possible. Right. That I think is the entire focus in the beginning of this project. Making sure the users can get into USDH in the most cost efficient way possible, least friction way possible. From there I think it's continuing to go through the entire ecosystem and working with all the platforms, all the different protocols to ensure that they are kind of moving to USDH and building network effects within hyperliquid. And from there I think we really lean into one of Paxos strengths.
- [25:32]
A
Right.
- [25:32]
C
We have A global enterprise distribution network. Not just from a stablecoin perspective. There's over 100 partners that are integrated with packs of stablecoins today. But our crypto brokerage is a service product, right? Again, this is not an exchange that people come to. We're fighting for end users. This is an infrastructure product. So PayPal, Venmo Interactive Brokers, Nubank, Micro Libre, many other large FIs use our brokerage product. And a big part of our pitch here is like, we're going to bring hyperliquid to everyone that doesn't have access to hyperliquid today, right? We're going to go integrate the hype token to our brokerage offering. We're going to open up access to billions of users, we're going to bring USDH to all these users and we're going to help build utility around that, right? And so I think really the core of our proposal is like, yes, let's keep what makes hyperlicate great, let's keep it great. But how do we 10x this, how do we 100x this ecosystem by connecting it to this kind of massive network that Paxos has. And that's not just from our crypto brokers product. But hey, since we're going to be the issuer of both USDH and PY USD and USDG that's being used by all these massive enterprises, well, guess what, we can make those one to one interoperable with no slippage, right? And now HyperLiquid and USDH token get day one network effects of building with Paxos, right? And so I think that's like the phase three, that's like the really exciting stuff where we bring hyper liquid to the masses. But the honest answer is the first six months will be like, how do we get liquidity and swaps to be as tight as possible, as efficient as possible and make sure everyone can get access to high quality stablecoin and hyper liquid.
- [27:05]
B
And just for me to understand the network, so you know, you guys have your existing stable coins, so are you just saying that like, you know, I, so I, I'm going to make it up like, because I, I actually don't know the specifics but like, are you saying that the different partners that you have used for those stable coins, like you're going to like, would it be, I don't know, like a Venmo type thing or like just kind of give a little bit more specific example. So you know, you maybe haven't like, you don't have the specifics, but as Hypotheticals.
- [27:34]
C
I'll give you an example, right? Like 2, 2 of our stable coins today, USDG, which is global dollar, which is this consortium product that is issued on the behalf of Global Dollar Network, which includes Robinhood, Kraken, several others. And then one of our other stable coins by USD, which is the PayPal stablecoin. Because we are the underlying infrastructure provider for both, we can truly treat those as one to one interoperable, right? Because we actually can move the money between the banks ourselves versus if you have different issuers, I can't actually give you 1 of stablecoin A in exchange for stablecoin B until I liquidate stablecoin B and move the dollars and actually move the funds. And so it's kind of like this network of networks, right? If you consume each Stable coin is its own network. And as we start to spin up, we are the issuer of multiple stablecoins. These can all connect to each other and they themselves start to get network effects. And then on the brokerage side, obviously it's like we have a reach of hundreds of millions of users today already through platforms that are using our crypto brokerage as a service product. And the goal is how do we bring Hyper liquidity, the token, but also its products to those customers that we power.
- [28:46]
B
Okay, got it. And Nick, what about you? Six month plan out of the gate if you win.
- [28:52]
A
Yes, this is maybe getting a little too into the boring details, but like the first eight to 12 weeks I think is actually getting this set up, right? So deploying the stable, getting the liquidity pool set up, working with third party providers, whether it's rain, Moonpay or someone else, you know, the dozens of people that have reached out to us to get this ready on day one. Because what we would want to do is light this up across Moonpay's Wallet network, Rains Card Network and Visa Network day one and then see liquidity pools on Hyper Liquid. So that this is to Bo's point, just as good as usdc. That is going to be the major hurdle. It's going to take a lot of dollars and a lot of money to get that going. But I think frankly, just based on what we've seen from the community, whether it's us or Paxos, it should happen relatively seamlessly. And then it's like, okay, how do we actually go beyond, right? Is it getting it set up on other blockchains, is it other exchanges? I think that's going to be a big focus, but really being able to pay with hype Having a USDH card. There's many things that we've contemplated over the last 24 hours with some of our partners, but I think it's all about making it a first class citizen in the same way that USDC makes USDC a first class citizen everywhere, that they operate right and working with partners to do so. Because you can't do this alone. And I think there's a lot of people that are eager to be very supportive of USDH wherever it goes.
- [30:23]
B
All right, so in a moment we're going to talk a little bit more about the various proposals and criticisms and commentary. But first a quick word from the spots who make this show possible. Mantle leads the establishment of Blockchain for Banking as the next frontier. UR is the access layer that transforms Mantle Network into a purpose built vertical platform. The Blockchain for Banking that enables financial services on chain UR unifies and vertically aligns Mantle's focus on payments, trading and assets. MI4 Meth Protocol functions of BTC supported by developer grants, ecosystem incentives and the industry leading distribution platform through the UR App rewardstation and BYBIT launch pool. All economic activity within UR will be captured by Mantle Network to further drive value to token holders and establish its significance in Blockchain for banking. Follow MantleOfficial to learn more. Back to my conversation with Nick and Beau. So, you know, listening to you guys talk, here's how I would characterize the Agora proposal. It's sort of like defi mullet style maybe where there's sort of these like, you know, on chain partners that are going to be more like front ends and then you know, there's tradfi in the back. It's like, you know, State Street, Vaneck.
- [31:46]
A
Like it's like the inverse defi mullet. Yeah, I think, I think that's.
- [31:50]
B
Oh, right, right, right. Sorry. It's the inverse. You're. Oh, you're right, you're so right. And then Bo, I think about how you have kind of these more mainstream names that would be how people would connect to users. But then you also have the Molecular Labs acquisition with the ties to the LHype and WHLP which sort of is more squarely in the hyperliquid ecosystem. So would you guys agree that those are kind of like the, the two different ways that you're approaching this?
- [32:25]
A
I think that it's, it's, it's relatively close. Right. I would say, you know, both of us have like pretty good institutional bones as well. You know, for us I think it's thinking about all the partners that, that we can light up. Right. Because we're not as vertically integrated as Paxos. Right. We're a much younger company. And so it's thinking through like, okay, you know, who else can actually, you know, maybe to Beau's point earlier, like, some folks do want to be incentivized, right. And so even if we operate it as, you know, a public good, right. There is on and off, you know, on and off ramps or other partners that might see this as a way to get users to their platform for the first time. Right. And maybe offer fearless transfers and those things as a way to capture users. Right. And that's why I think, you know, Moonpay and some of these folks are so eager to work, reach out to us is because we don't really compete with them and we're just a neutral issuer that has the stack that can, that can support something like this.
- [33:16]
B
Yeah. And I actually, I just remembered one other bit that I want to ask Beau about, which is, you know, Agora has this cross chain component. They have Layer zero as a partner, but I don't, unless I missed it, I don't feel like I noticed anything like that. Like, you know, you talked about how it would tie to this network of these other stable coins, but, you know, is that like something that.
- [33:36]
C
I've been working with Layer 0 since the launch of PyUSD, which was two, three years, three years ago now. So we're deeply integrated with Layer 0. You know, we work with a lot of these players, we're integrated with raid. And so look, I think all those teams are great and I would be surprised if there's anyone in the ecosystems that's not working with some of these guys. But, you know, we've been working with Layer zero. We work with Chainlink as well for certain products, so, you know, we definitely have cross chain capabilities. You know, it was something we chose not to highlight in our, in our proposal. As, you know, we felt what was most important to the community was kind of sharing kind of our alignment to hyperliquid as a community. And that's kind of where we focused our proposal on.
- [34:12]
B
Okay, all right, so imagine that your proposal didn't win if you were to guess why it is that the community, you know, opted for any other proposal. It doesn't have to be, you know, one of the two that's being featured here, you know, but just like, why, why do you think yours didn't win? What would be the weakness that you think would have been one of the reasons either one of you can go first.
- [34:35]
A
Yeah, it depends on how spicy we want to get. You know, I think maybe, maybe I'll put it this way. If neither of our proposals win, I think it's probably because, you know, there was maybe more of a focus on some, some of the early, you know, one of the early proposals or one that was more community oriented that didn't come from a reputable issuer. And so I think, and maybe that translates to, if we were to not win, it's probably because someone went with a more community oriented post or group that used a third party issuer. Right. And it wasn't an issuer because something actually a question I got asked to another live stream earlier today. They're like, oh, how have you been involved in the hyper liquid ecosystem in Agora? And it's like, actually it's kind of funny, right? Like all like the, the institutional grade issuers have actually, other than circle, been blocked out like up until six months ago because there was really no way to, to get involved. And so I think, you know, it sounds like BO and they had a similar perspective. They're sort of waiting for the right time to, to get involved. And then we figured that this would be a good one. Obviously they have molecular labs, you know, we, we haven't acquired any teams and that definitely makes them closer, I think to the metal from a team perspective. But if either of us lost, or if we lost, I think it's probably because they went more for someone that was homegrown. But I think there's some drawbacks from that as well.
- [36:06]
B
Yeah, I have seen, I can't remember who tweeted it. So somebody literally was like, oh, maybe it was Ryan Watkins. He was like, actually, does it make more sense to go with. Yeah, kind of like a hyper liquid native group. But anyway though, what about you?
- [36:21]
C
I mean, that's my take too. Right. Like, I think, as I'll reiterate, like Coxos has been the de facto white label stablecoin issuer for a decade. Right. The biggest brands go with Paxos and I think Hyperliquid is one is already and going to become one of the biggest brands in finance. And you know, if they are operating that way, you know, I think it would makes sense for them to go with someone like us. But if they didn't and if neither of our proposals won, you know, I kind of agree with Nick. It's like, you know, maybe they're really optimizing towards kind of this like, you know, homegrown team, potentially that that really isn't doing anything else outside of Hyper Liquid and, and you know that's, that's their call and that's the validator's call. But you know what I would, I would really push the community for is like you know if we're, we're trying to 100x the hyper liquid ecosystem we have to think really big and we have to think about kind of like global distribution and with players that have done it before at scale.
- [37:19]
A
And what I will say is like and if neither of us win, hey, we'll both be involved in the hyper liquid ecosystem anyways. Maybe we'll do with AuSD, USDP or some other stable coin, right that we white label. So I think both of our teams are here for the long term obviously. I think both of our teams are excited about being community aligned with the USDH ticker and giving back but you know if another team is chosen, both of us will still be here I imagine.
- [37:45]
B
So yeah, you may not lose, sorry, you may not win the ticker but you might still win top stable coin on USD.
- [37:51]
A
And yeah it's funny I was actually think, I think you know this has become bigger right than you know, just the ticker but it's like in traditional finance like tickers go for like nine figures for like, for sure, you know, having a little bit of insight into that as well. So like you know there's a lot of brand value to this and I think both teams are going to be here for the long term and I think are excited about growing this ecosystem and I think also the weekend, the support of the weekend from a bunch of different people, a lot of non issuers that have been outside looking in clearly are as well. And so I think this whole proposal process has been nothing but a success for Hyper Liquid which is kind of fun to see. I was kind of joking, I was like hey look even if we lose at least we got someone else to commit 100% back to the community.
- [38:38]
C
I will add there like you know the, the winner might be decided on Thursday or Saturday or Sunday or whenever it is. But again like what we have learned time and time again launching stablecoins is this is a multi year journey and execution really matters and, and you know, so like we'll be happy for whoever wins. I hope it's us but like look you get the ticker, congrats. But like there's a multi year journey ahead to win this, this, this ecosystem and to win be the winning stablecoin and you know all I can say is like, we are committed to doing that regardless if we have the ticker or not. And so, you know, we're excited to. To compete and have the winning eco. Winning stablecoin in the ecosystem, whether it's called USDH or not.
- [39:23]
B
All right, so I did want to ask you guys about one other criticism that I saw, which I thought was interesting, but, you know, I'm not a trader, so maybe I. Maybe there's some stuff I don't know about this situation, but Dio Casares tweeted that he found it quite concerning that most of the team. Most of the teams that have proposed stablecoins he called have terrible liquidity. He noted that Paxos's PyUSD has non zero slippage on relatively small size. I have to remember what that screenshot was. It was like, maybe.
- [39:55]
A
So I saw this tweet. This is on. So I would say maybe in defense of both of us, this is on Ethereum mainnet. We're very, very few applications are today.
- [40:03]
B
Oh, so you feel like it's okay?
- [40:05]
A
Well, mainnet certainly hasn't been a focus for us because, you know, it's. It's not really the place where applications have been built since we started this company.
- [40:15]
B
Okay, so you feel like that's the reason. Yeah, the screenshots were like, terrible.
- [40:20]
A
Oh, terrible. And you could ease. And like, the thing is, right, it's like you can pay for liquidity. Right. And I think specifically in this case as well, like, the liquidity will come. Come regardless.
- [40:31]
C
Yeah. And yeah, thanks, Nick. And I think that that's exactly right. Like, I would love to see that screenshot for Solana. Right. Because, you know, between Solana and Paxos and other partners, there's over, you know, $100 million of liquidity that have been ceded for PyUSD and USDG over the years there. And pretty sure that it's quite tight there. I. What I also say is you can go find any pool that has terrible slippage, right? To Nick's point, it's like, where are you investing the liquidity in? Right. I might have one kind of range on Curve, but it might be something else on unisoft. And it's because I haven't invested in building up liquidity in one of them. Right. And so it's one of those gotchas where it's like, I could probably go find any pair of any stable coin and be like, ha, look, you have 10 slippage. And it's like, well, you picked, you know, a random pool or you Put this or you pick that, like, and so with that said though, like, I understand the, the desire for the community to have like really tight pairs there and it's something we invest in and both from our own balance sheet, but also, you know, we have deep relationships with market makers and, and we again, we'd work with the community and be like, hey, what are the most important liquidity venues for you guys? Right? What do you care about? Where do you care about?
- [41:42]
A
What are the pairs?
- [41:42]
C
Yeah, where are the pairs and where do you want it?
- [41:44]
A
Right?
- [41:45]
C
And we'll go work with them on it and we'll go work with all our market maker relationships. We'll work with our own balance sheet. Every stable coin we've launched, we've ceded at least $100 million liquidity. Right? And so, you know, this is no different and we'll do that. And it just comes down to where the community wants it and where's the most utility for it.
- [42:00]
B
All right, so let's now talk about some of these other proposals because there's so many. There's one, you know, from FRAX or something.
- [42:07]
A
I'm definitely not caught up, so please don't.
- [42:09]
B
Yeah, I mean, like, there was just no way for me even to, to try to do that. But I did see, you know, I saw some spicy comments about some of the other ones just probably just in, in like discussion forums and stuff like that. But I was curious like, you know, out of the other competitors, are there any that you think are strong contenders? Are there any that, you know, you feel like wouldn't be in the best interest of the community for, for some reason or another? Or are there any particular, you know, things that you think that voters should keep in mind for when they go to, to make their vote of like what they should be looking for in a proposal or what should be kind of like a red flag or yellow flag? So. Yeah, yeah, you can either name names or not.
- [42:52]
A
Yeah, I'll clock myself to last night since, you know, I've, you've been doing other, you know, I've been working today, so I haven't not fully caught up on what's been going on in the discord. You know, I would say obviously, like, you know, community aligned or oriented proposals are interesting. Right. Where it's like the native teams where all they've built is in hyper liquid. Like, I think those are interesting and they're compelling and they deserve attention. You know, obviously I think the community needs to factor in the risks of maybe not using someone with their own Infrastructure, But I think those are, those are interesting, but other than those, like, I don't really see anyone else other than the Paxos guys that I think is worthy of attention. But I could be behind in missing people. So I'll caveat that a general comment.
- [43:37]
C
I'll make is, you know, as people are evaluating these proposals, to really think deeply about who is like a neutral infrastructure provider in this scenario, I'll use a completely different example as to why do people use Paxos as crypto brokerage, as a service product. Coinbase has the same offering. Coinbase has it. Why don't people use Coinbase? Coinbase is Coinbase.
- [43:58]
A
Right.
- [43:58]
C
Well, the reason is because the people that integrate this product see Coinbase as a competitor. They're fighting for end users. And so there's a conflict of interest there. And Paxos's position has always been to be a neutral infrastructure provider. And so what I would encourage, you know, folks that are looking at these proposals and thinking about them for the other providers, are they neutral? Are they neutral in terms of how they position themselves against hyper liquid, and are they really going to have the hyper liquid ecosystem's best interest in mind in perpetuity? Right. For example, Paxos doesn't have a blockchain, doesn't intend to issue a blockchain. Right. We are neutral in that sense. And so that is the thing that gives me the most pause for anyone else. Right. It's again, if the goal of this is to have a very community aligned proposal, how do we make sure the provider of arguably the most important asset in an ecosystem which is a stablecoin is neutral and aligned in perpetuity?
- [44:52]
A
Yeah, I think that's right. No one should be using a provider that is a competing blockchain.
- [44:56]
B
Okay. All right, well, is there anything that I didn't ask either of you that you feel like should be said on this topic?
- [45:03]
A
No, but I think I would add, like this has been, I think, you know, obviously Beau and I were very busy these this weekend earlier that our fiances weren't too happy with us yesterday. But you know, I, I think this has been like the first time that like governance has been like fun and it feels like years. And I think you frankly, like, the competitiveness of the proposals is going to deliver like a really awesome outcome from the hyper liquid community, regardless of what happens. And so like, it's been fun and I feel like it's kind of captured a little bit of the magic of crypto again, which is been fun and so we're excited to see where this goes. We're going to keep working and trying to improve our proposal. I'm sure Bo will as well. But it's been fun and I think a little bit of the magic of crypto is coming back, so it's good.
- [45:52]
B
Yeah, it's really funny, actually, because I can't remember when this was. A few months ago, we were actually going to run a story. Are daos dead? Because it was like, you know, the other side, not hyper liquids. Yeah, Like. Like the. The bored ape Dao disbanded and then meow. Or sorry, Jupiter's dao went on pause. And I can't remember if there were others where we were like, we should do a story. And then we actually never. Or whoever was working on that didn't get to finish it. But the. But the point is, like, I actually was thinking the same thing. I was like, this is a vote where, like, people actually care. Like, it's not just going to be like a quiet little sleepy thing that happens over in the corner that the whales dominate or whatever. I mean, the whales might still dominate, but.
- [46:36]
C
Yeah, And I would add to that, right, where it's like, I hope this reinvigorates the desire to, like, have public debate and discussion over what's the best solution. Right. You know, I think Sam from Praxis saying this earlier today is like, hey, like, the mega thing just came out today. I think, you know, they're doing something with Athena that's awesome. I'm happy for those guys. But, like, at the same time, like, I would have loved to hear about that. Right. I would have loved to talk about how we could help them. Right. And it'd be amazing to get into a world where you can do, like, less backroom deals and, like, be out in the open, talk about the merits and, like, I think it gets the best product for the ecosystem, best product for the end users. But also, as a company, getting the feedback in the open is amazing. Right. I've gotten so much quick product feedback over the last couple days, which is, you know, may take us weeks or months to get that quick, iterative feedback on what we're doing. And so I think it's a win, win, win. And I hope more ecosystems do this in the future.
- [47:26]
B
Yeah, that's a good idea. Well, hopefully we'll have some people who are managing those types of things, some BD people who are like, maybe we should make this open.
- [47:37]
A
Yeah, let's PvP all the competitors together.
- [47:42]
B
Then I can do more live streams called such. And such throwdown. We had fun with anyone? This one. All right, you guys, well, this has been super great chatting with you both. Thank you so much for coming on Unchained.
- [47:54]
A
Thanks, Laura.
- [47:55]
C
Thanks, Laura.
- [47:56]
B
Unchained is produced by Laura Shinn with help from Matt Pilchard, Juan Aranovich, Margaret Curia, and Pam Majumdar. Thanks for listening.