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What happened on Hyperliquid?
Recorded: March 27, 2025 Duration: 0:57:56Space Recording
Short Summary
In today's discussion, we explored the latest trends in the crypto and NFT markets, including GameStop's $1.3 billion investment in Bitcoin, the rise of AI-generated art, and Wyoming's upcoming stablecoin launch. The conversation highlighted the dynamic nature of the industry, showcasing both growth opportunities and the challenges posed by volatility and competition.
Full Transcription
Good morning. Good morning, everyone. Welcome to the modern market where every day we discuss
everything to do with the modern market. That is the crypto market, the NFT market, and
the hyperliquid jelly, jelly market. If you're wondering what on earth has been going on,
we haven't explained it today. Cannot wait to get into it. We've got a hyperliquid conversation to
have along with a bunch of reactions from centralized exchange leaders and other notable
people on the timeline.
We've got GameStop offering $1.3 billion convertible notes to buy Bitcoin following in the footsteps
of MicroStrategy.
And the Ghibli meme runs to $25 million as the timeline is taken over by AI generated
images.
We'll discuss that, what's possible and showcase some of the interesting
stuff that we have been seeing to try to leverage for ourselves. We've also got the latest on price
action on crypto and NFT, some macro conversation as well, plus a general discussion on where things
are going. I am joined by Legendary today, my co-host seat. We're ready to get into it,
but just a reminder, friends, that nothing that we say here is financial maybe even today legal advice just as a reminder this market is very risky there's a lot
of things that are up in the air and we don't always know for certain we're kind of live reporting
sometimes so just bear that in mind do your own research and proceed with caution and exercise
your own judgment with that out of the way legendary it is thursday it is the 27th of march pretty
eventful day yesterday how are you doing how are you feeling gmgm pretty eventful day yesterday
indeed and also today is an eventful day for me i told you that potentially this could be the last
day in the modern market for me as a co-host because after the show, I will pick up my stack of 20 new supplements
and compounds that the AI agent has picked for me and I will start the self-experimentation.
So let's see. Let's see how that goes. I mean, I do have some confidence because I did show that
stack to my mom. She's done medical research her entire life. She's a scientist. And she basically wasn't like, you
know, the most enthusiastic, but about about my idea, but she was like, it's safe to do that.
But it's a lot. So let's see how it goes. And let's see what I will be able to report on that.
Yes, that will be interesting to see one, one suggestion, perhaps could be, maybe if the AI
has been created or suggested all of these
different supplements individually why not just uh ask it ask it if it's okay what does it said
is it okay to take these 20 at the same time maybe that's a reasonable question yeah like it even
said like when to take uh which of the the individual compounds and like both daytime and
also which one uh which one should be taken
together which one should be spaced out over today so it it did that as part of you should ask it
like on a day when hyperliquid is tanking and i'm over leveraged in my own position which of these
supplements would uh suit me best can you ask that question i? I probably can, yeah. Depends on how bad it actually is in the HLP vault, what it will then recommend to you.
Like it.
So obviously we're going to get into the HLP stuff in just a little bit.
Let's get into the headlines and the price action to get you up to speed with what is going on.
Then we'll get into the bigger conversation today.
Starting with the price action. As usual, we've got Bitcoin starting pretty steady, just down a percent to 87k. We've
got ETH down a couple of percent to 2k. We've got XRP down 4% to $2.36. We've got Solana down
almost 5% to $138. BNB is flat at $636. Getting into the meme coin side of things, we have Doge down almost 4%
to 19 cents. We've got Pepe down 6% as well. Trump's down 4%, Bonk's down 10%. Remember,
a lot of this stuff was green yesterday, so it feels like a bit of a pullback across the board.
Fartcoin is down 8%. SPX is down seven whiffs down seven pengu is down seven also
um just trying to see if there's any ai related with mog is down 11 ai 16z is down 15 peanut is
down eight okay seems like a general trend here on the meme coin side of things although most of
this is still green on the week uh because there was a bit of a bounce in general getting into the headlines
themselves number one bitcoin holding steady around 87k on the united states announcement
of 25 tariffs on all cars that are not made in the usa we'll touch on that briefly in a bit keeping
our you know just keeping on top of the macro stuff i think is kind of important got hyper
liquid down in the more crypto side of things.
Biggest news yesterday for sure, hyperliquid being down 10% after traders self-liquidates as part of an attack on the HLP. Many centralized exchange leaders spoke out against the hyperliquid
centralized decision to settle the jelly short order much lower than the market price. What
does that all mean? We will dive into that in more detail a bit later if that is confusing.
We've got GameStop in another headline to offer $1.3 billion convertible note to buy
Bitcoin following in the strategy footsteps.
And we had Ghibli meme running to $25 million, pulled back to $17 million now as the timeline
is taken over by these Ghibli ai generated images pretty
interesting fun to see um i want to talk a little bit about what we're finding cool there later in
the show and what's possible and then also some consequences i had an interesting conversation
with someone a big collector uh kind of drawing some interesting conclusions there um but that
those are the headlines is there anything going on on the NFT side
that we need to know about?
Yeah, absolutely.
There is one collection to pick up.
But before I do that, just quickly,
the majors have corrected down a bit.
They are still looking good.
I'm only going to reference Board Apes.
They're still above 14 ETH.
They went to size 14.5 yesterday,
but they are down a couple of percent at 14.15 ETH.
Good vibes. Club is continuing its
recovery quite, quite strongly. It's up another 30 percent, back to a 0.4 ETH floor almost.
But the thing I want to pick out actually is the chitogenesis collection, which is up
20 percent on the day. It's back at a 2.6 ETH floor. And that is on the back of the news that it won't be a box much longer it will be converted
to an actual pfp which is quite fun because i remember when i had mine i was jokingly saying
should i pfp it when it was getting close to 10 eth and now it will actually become pfp which i
think it's pretty fun that is pretty fun um that is pretty cool. Interesting to note. The Kaito, well, I'll get into it a
second. There's more news out of Kaito as well today, which I will share in just a moment.
Getting into the rest of the Web2 roundup to get up to you with everything else happening. French
tech consulting firm, The Blockchain Group, buys 580 Bitcoin in its largest Bitcoin purchase to
date. Seems like maybe, I don't know if you'd call it a stampede yet,
but there seems to be more companies deciding to move towards a Bitcoin, or at least a proportion
into Bitcoin. We had Wyoming announcing its plan to issue a stablecoin by July this year.
That was pretty interesting. Fidelity announced their own plans for a stablecoin too.
interesting um fidelity announced their own plans for a stable coin 2 cz launched a site reach me.io
where you can pay to dmcz the rate set currently at 120 which i think is kind of a reasonable rate
all things considered uh getting into just a couple of other bits of news kaito yappa payouts
announced where five thousand dollars in state k Kaito will be split amongst the top 50
Yappers and the top 50 emerging Yappers every week. Nice little incentive there. I wonder if
that's big enough to get people to be super incentivized, but you know, obviously trying to
get the economy moving. And then finally, big piece of news on the outside, Ripcash sells out 64 um on-chain editions of pattern recognition uh for 2.22 each each which
is um quite a lot so that was 144 each was it 144 i think i put that in the tweet about 140
each rates uh for one of one well there was there was 64 editions, each piece being a unique piece.
So real strong demand for the top digital art still. And I think my thesis there is
going to get even stronger when it comes to seeing all of these AI generated images everywhere.
Providence will, I think, increasingly matter. So that is that.
That's the WebD roundup to get you up to speed.
Legendary, is there anything catching your attention there
before we get into the main stuff today?
I have a couple of thoughts on how AI and art will evolve,
but we'll keep that for later
since we do have a headline specifically to touch on that.
Again, stablecoin news, as always,
very, very interesting to me to see coming from
Fidelity, given that they're such a large asset manager. However, the thing that I want to talk
a bit more about is the KITO news. There's quite a few things happening there. You have the PFP
stuff you have this payouts which you set as part of the snapshot also it was i think last week that
stuff, you have this payouts, which you set as part of the snapshot. Also, it was, I think,
yuhu the founder bought the kaito token to the extent of 1.4 mil with his own money decided to
lock that up and have the contingency of hitting a certain revenue from from the kaito business model
or two revenue goals which are the only conditions where that stake is unlocking
again. So it's very interesting to see, A, to have the self-conviction of, well, putting a quite
significant amount of your own money. I don't know you whose total net worth, but let's assume that
1.4M is not nothing to him into this protocol and not having a time lock, but really having this revenue-based
goal tied to that, which is kind of in line with some of the things that we've been speaking about
on the show when we said that VCs now are looking more at revenue models, liquid funds, family
offices coming into the space, investors looking into Web3 gaming.
So much more is now centered around the revenue model,
which is a very, very healthy development, in my opinion.
And also, quick shout-out to English in the YouTube comments saying,
four hours until wizard auction.
I think it's the last 90 remaining wizards that will be auctioned.
He says, don't fade pumping my bags, guys.
So here you go.
Here's the shout out for the Taproot Wizards Mint,
which we'll definitely also be reporting on tomorrow.
Where do you think, do you have any thoughts on that, Ledger?
I think they sold out between 0.1 Bitcoin and 0.2.
Now I think the auction is going to start at 0.4
and then it's going to go down.
So it's like a reverse auction in that respect.
Do you think it just sells out at 0.4?
There's not many left, right?
Like 95% of them are sold.
So there's only a small percentage left.
Because there's just 80 of them left, not 90, as I said English, correct me.
And the auction starts 0.42 I think there's enough people
with having having a strong enough incentive and enough Bitcoin to want to see that sell out
at 0.42 to have a very good indicator to establish a higher floor from the get-go
so I wouldn't be surprised to see it sell out pretty pretty quickly
okay then where does it go from 0.4? Like if, if we're thinking it's going
to sell out English, you're in the comments, where do you think it goes then? If, if, if,
if people want it to sell out at 0.42, where, what's the, what's the ceiling on it? Uh, where's
it going to go straight after it up to 0.6, 0.7, 0.8? Like, is there, there seems to definitely
be sufficient demand to like buy this, there seems to definitely be sufficient demand
to like buy this stuff on primary.
Is there sufficient demand to be buying more of them?
Like who's the marginal buyer?
That's the kind of question I'm always wondering,
like who's the marginal buyer who wants to buy this
from the people who've bought at 0.3 to 0.4,
at 0.5, at 0.6, that would be my my question are you a potential buyer at the price
level no no i'm not um i i really like i mean i think it would be important for ordinals to have
well i think it'd be really good for ordinals to have like this really expensive um collection i've always thought that
any like you know how well i think the quantum cats were always doing a bit better because um but then you had node monks and what was the other one what's the crazy one on ordinals
i'm just completely blanking the the the the the punk lake the ombs no no no the um the bitcoin puppets the puppets
the puppets um so yeah i think whenever the first was the node monks for puppets like the 10k i
thought for the premiere collections on ordinals i think that's too low i'd probably be buyers of underneath that region um
but yeah i mean this is obviously like very very expensive as you as you're going to 0.5
um and general just getting a bit more conservative with bitcoin i think um what are your what are
your thoughts i very much um agree with that english also in the meantime has come back with
some of his thoughts on potential floor price.
He's saying bulk case is 0.6,
but I think for floor 0.35 could be 0.35 to 0.4
or 0.4 to 0.45 even.
The premium is for minting
a rare potentially.
Yeah, fair enough.
I think it's a reasonable question.
I'm not sure that,
yeah, the question I'm asking
who's the marginal buyer?
Maybe people are pretty happy to buy at that price.
Can it go significantly higher?
I'm not sure, but I think the cult is strong.
The cult is strong.
That's for sure.
I think that's already been demonstrated in what they have, how they've been kind of
have uh how they've been kind of building stuff out and the purchasing demand um okay moving away
building stuff out and the purchasing demand.
from that mint which is later i wanted to also touch on what's the other thing i want to talk
about i think it was just a little bit of macro here like we're going to get into the hyperliquid
stuff for everyone who wants to know what's going on there we've got like a detailed section on that
coming up we've got the gamestop news where they're going into bitcoin and the
ghibli stuff which i think is worth mentioning not just from a price uh perspective on the meme coin
but from a more general outlook of how are we going to start leveraging this tech to be useful
and to remain useful as humans um but i thought it was interesting that yesterday i'm going to share
actually i'm not going to share the screen but but yeah, Trump announced 25% tariffs on car imports to the US.
And so this was just like a quick bit of news.
Obviously the market has been concerned about tariffs over and over and over again for a
long period of time.
And at least in part, that's what the price action is reacting to a lot every time you hear uncertainty
about it or that we're going to put tariffs on whether it's enemies or whether it's our allies
um i think the markets responded pretty poorly but i guess what i've noticed more recently
is that in all of the announcements even though there might be similar in tone, the reaction by
the market has been more and more muted the more times it happens. So either I guess all of this
kind of rhetoric is being priced in, or the market is just not that concerned with it or they don't believe
that it's going to go through anymore and well I think all of those things are kind of happening
at the same time so it's being priced in not that concerned about it anymore given where the price
has already gone to or they think maybe he's not even going to go through that I think those are
all of the possibilities so this one specifically what they said was Trump said he announced a new import tax
of 25% on cars and car parts coming into the US, said the latest tariffs would come into effect on
April the 2nd. So that's next week with charges on businesses, importing vehicles starting the next
day. Taxes on parts are said to start in May or later. So that's actually much later. In their opinion, they said the measure would lead to tremendous growth for the industry,
promising it would spur jobs and investment in the US because you don't have to pay that
stuff if you then relocate to the US.
But analysts have said the move is likely to lead to the temporary shutdown of significant
car production in the US, increased prices and strained relations with allies.
The latest move threatens to upend global car trade
and supply chains, according to the BBC article.
The value of this is reportedly,
well, the US imported 8 million cars last year,
accounting for about $240 billion worth of trade
and roughly half of overall sales.
So interestingly, Mexico is the top supplier of cars
to the US, followed by South Korea Japan Canada and Germany so you know arguably it's you
know their intention is to obviously raise a lot of money here but my
perspective is more thinking about how is the market reacting to what I guess
it's known about for quite a long time. And my thought here, Legendary, is I think the market's kind of done with this news now.
Yes, we could still struggle.
And yes, there could be consequences from actually going through with it.
So in terms of the stocks, I think general markets...
I have some data on the stocks.
If I quickly take over. GM did react to that, but not as strongly.
They only lost 3%.
Ford lost 2%.
Mercedes lost more.
Mercedes was down 4% on the news.
The other German manufacturers, BMW, Volkswagen, down anywhere between 2% and 3%.
However, one of the stocks that actually reacted the strongest, which was interesting to see, was Tesla.
Despite Tesla having that claim of being 100% manufactured in the States, Tesla was down
5.6% over the last 24 hours after having had quite a nice rally last week, where it was
up a total of 20%.
And the interesting thing to see was in the Twitter timeline that on the chart where you
saw the different car manufacturers and how much of that is being manufactured in the Twitter timeline that on the chart where you saw the different car manufacturers
and how much of that is being manufactured
in the US and again Tesla was
there on top with 100%
Elon was also commenting on that saying
no no no the tariffs will affect us as well
because it's like some small
electronical parts which they are importing
and which will be slapped with tariffs
it was interesting that Elon kind of came in
and tried to paint himself as sort of the victim
in this story who's also affected,
is not enjoying a better status
because he's, well, very close A to this administration,
but the tariffs will also make him a loser,
not a winner of this.
And so it was interesting to see that the stock market
did seem to share the same perspective
although with all that being said tesla on the pre-market will open in a bit is already up one
percent so let's see if it basically will continue to have the run up or if it stays a bit muted as
a result of the tariffs Yeah, good additional numbers.
What are you thinking?
My thought, though, as it relates to crypto, at least,
is Bitcoin's down a percent.
It feels like crypto, specifically,
is completely unaffected by this latest piece of news.
I think people think that crypto will move first and
fastest when it comes to risk so when people start to get worried crypto is the thing that will get
sold off hardest and fastest i think that's probably happened here already um it feels like
this range is you know it feels like this range for at least Bitcoin is pretty solid, at least at the moment.
It doesn't seem to want to react any worse to announcements that are starting to implement the tariffs,
or at least one of the tariffs, amongst many others, potentially.
Any thoughts here, Ledge, on that?
Yeah, I think the key shift is tariffs went from being an unknown unknown,
because the first tariff announcement was surprising to a known unknown. Now we know that Trump is playing
around with tariffs. It's something we can expect. We don't know who and what is being tariffed with
whatever percentage, but it's still a known unknown and that's less uncertainty, hence less volatility in the market.
Agree.
I think that is what's happening.
And I think that's part of the reason why I have been in the last week or two, you know,
I said, I think it was last week or maybe even the week before, you know, some of these
prices are better than what they were a while ago.
If you like something and it's 50% down or 35% down,
it's a better time to buy it than it is to sell it.
So I had a nibble at Bitcoin a little bit ago, not here.
Well, I think I did have one around at this point.
Then I had another one when it went lower.
And I did the same with
hype when it was i don't know 12 or 13. i did the same with hype again yesterday actually on that
kind of big liquidation candle but maybe that's a nice way to get into hype now i think this is a
very complicated topic there's all kinds of things happening at the same time. So what we'll do, Lej, we're going
to pass over to you. There's obviously big news happening out of Hyperliquid yesterday with this
attack. One, you set it up and tell us everything that happened. And then we'll take it from there.
Consider what the most important questions we need to answer is. Yeah, absolutely. Yesterday,
Hyperliquid was at risk to get fully liquidated up to the
entire $230 million that were in the HLP vault. So I'll try to break down what happened and then
we'll go into some of the commentary on the timeline. There was a trader who opened a massive,
massive short position on the Jelly token, which is one of the meme coins we already had talked
about. It did see a very, very solid
run when it was still the season, but faded into being irrelevant. However, he opened a short
position, a couple million more relevant, up to 40% of the token supply on the futures platform.
And then what the trader did in his next step is basically he got himself liquidated.
And in the case of Hyperliquid, what then happens is that Hyperliquid's liquidity pool,
the HLP pool, is taking over that position. That is basically the liquidity provider, which you have used, which I have used,
which many people have used to deposit some USCC into it.
And suddenly this pool now has a massive massive short
for the jelly token
and the next thing that then happened
is that basically
that trader allegedly
tried to then
pump the price off
that jelly token massively
to get it to
and he got it up like to a three or four X,
even of what it traded before.
And the goal there was to pump it so much that Hyperliquid,
who now had to take on the short position,
would have been liquidated on the short.
And again, if they were liquidated and the token would have pumped so much,
they would have risked almost the entire liquidity that was in the pool, which people realized pretty quickly.
So the community, not the community, some of the depositors started to remove liquidity from the HL pool already, which then again also had an impact
on the liquidation price.
And what then happened is that
as this basically short squeezing action
trying to liquidate Hyperliquid was going on,
Hyperliquid's validator set
intervened pretty, pretty quickly
and they voted to delist the jelly.
Just one thing before that, Legendry,
wasn't there something about the centralized exchanges
listing the token in a way that was almost encouraging
positive price action, right?
So the goal here seemed to be to pump the price
to get the Hyperliquid vault liquidated.
And just before this intervention that you were just about to say,
certain centralized exchanges listed, what exactly is the list i'm not i'm not 100 sure there were both
like listings as well as rumors uh that it will get listed on finance or on other exchanges as
well so this narrative was also basically um evolving at the same time which kind of would
have been bullish for obviously the jelly spot
price. And then as a result of that negative for the short position that Hyperliquid had on.
So Hyperliquid had to react pretty, pretty quickly. And the validators did so delisted
the jelly futures from the platform as a result of this suspicious trading activity. Hyperliquid
has also made a statement on that, where they confirmed exactly that. And what they also did is they forced the
settlement of this jelly position at $0.095, which was trading, and that was like one of the
criticisms or reactions to that, massively under under the market value just to avoid being fully liquidated in the pool.
And as a result of that, basically, we've seen two things happening.
One is that the hyperliquid vault, and you can see a dent in there, where it was unfolding, was down 12 mil at some point, but has fully recovered from that.
But also the hyperliquid price clearly was impacted as a result of that as well.
It is still down almost 12% over the last 24 hours.
So just to sum it up, Trader had a massive short, got liquidated to push the short to hyperliquid.
Then there was a coordinated action going on to try to pump the price and get hyperliquid liquidated to push the short to hyperliquid. Then there was a coordinated action going on
to try to pump the price and get hyperliquid liquidated
and basically risk the entirety of the funds,
the 200-something mil that were deposited at that time.
Excellent summary.
As you said, pretty complicated stuff.
And there have been interesting
and important reactions coming out of this i think a hyperliquid has been you know its risk
management and reputation there's like i guess a question mark against that in the sense that it needs to have, I think,
it needs to have things in place to mitigate for these types of things. And I think that's
the first question. And then there's also a whole host of questions going on about the
centralized exchanges roles in this. We saw multiple centralized exchange CEOs coming out yesterday, kind of in a relatively
coordinated fashion, talking about hyperliquid in a very derogatory way, very negatively.
I think we had the OKX CEO do that, saw the BitGet CEO do that, possibly others too.
do that or the bit get ceo do that possibly others too and this is how if i if you had to
steel man the other side because i think there's a lot there are two sides to this i think on the
one side you have maybe a lot of crypto twitter potentially and you have people who maybe are
hyperliquid fans maybe hyperliquid has made them a lot of money and they're saying look centralized exchanges are worse hyperliquid is not perfect um but we we like want to support hyperliquid as an alternative to
centralized exchanges on the other side you've got the centralized exchanges whose position i think
can probably be best summarized with this tweet that was in a thread
with
Conversation with ZacXBT and the founder of DeFi Llama
Where it seems to be the case that
Hyperliquid basically this is the position that the other side would take
Hyperliquid want the perks of decentralization
Which means something like no oversight,
no accountability, but in the end, they made a centralized move when it suited them.
What was that centralized move specifically?
It was the move to settle the short at a price which was not the market price.
If they had done it at the proper market price, they would have lost loads and loads of money.
They, in a centralized way, decided they were going to settle it at a
non-market price in the end, that loss moved over to the trader, right?
It went back to the trader.
With, with an important caveat, yes, centralized decision to settle under the
market, but in an official statement, Hyperliquid also did say that they basically flagged the addresses who lost money as a result of that, and those addresses
will be made whole from the Hyper Foundation. So yes, they did settle to contain the damage,
and yes, there's obviously losses that people incurred as a result of that. It's still a
centralized move that does not change the fact of that, but those people
think it's important to add for context will be paid out from the Hyper Foundation.
Okay. That is helpful context, but I think it's worth going through these like different,
because there was a few interesting takes in this thread of like how people were reacting to it.
The founder of DefileArmor said, in my opinion, the explanation for why the centralized
exchanges helped Bybit when Bybit obviously got hacked not so long ago for more than a billion
dollars, but ganged up on Hyperliquid is simpler. After the FTX failure, the whole of crypto market
went down and confidence in crypto tanked. So they want to avoid a repeat of that systemic risk.
And they see the Hyperliquid HLP as as an isolated risk so if people are wondering well why
why would you help bybit when they got completely wrecked the other day when they were hacked for
more than a billion dollars and why would you go after hyperliquid well a i think the numbers are
different like one is significantly bigger one would maybe have more lasting implications for the industry, whereas I guess they're
thinking, this is his position anyway, they're thinking this is a more isolated thing.
I think I maybe leaned towards the Zach take, though, which was just underneath, where he
said, previously, centralized exchange teams faced billion-dollar fines and even jail time
by regulators for weak compliance early on.
Hyperliquid has recently seen the same illicit flows has said they are decentralized so cannot
do anything now hyper liquid made a centralized decision um with few validators um the control
the majority of the stake to quickly close the position at an arbitrary price for an entity using the protocol as intended.
So I think, yeah, I think that's part of the point. So I probably feel a bit wrong seeing the attention on crypto Twitter brought to them while making centralized decisions like you did
without the same consequences. I think that's what is at its core. And, you know, someone said
in the comments before they interested interested my legal take on it,
I'm definitely not giving a legal take here just because I was a lawyer at one point in
time in the past.
But, um, I think if you're thinking about it from a business perspective, it becomes
hard to look money laundering is a, is a thing that people are not allowed to permit.
Look, money laundering is a thing that people are not allowed to permit.
And if you are a centralized exchange, I suspect you have all kinds of regulations which say you need to do X, Y, and Z in order to make sure that these funds are not going through your wallet.
And if they are identified, you're going to have a whole host of things that you need to do.
So I'm sure, look, money laundering happens everywhere, to be clear. Money laundering happens
in your favorite banks on the high street or everywhere. But when it does happen, then there's
a bunch of things that you are compelled to do in order to mitigate it and to make sure the right
thing is done, whatever that might be. And I think the position here is if you want to be able to say that you can't do something when you know
some other illicit funds are going through your protocol because you're decentralized and because
you know because you're decentralized you can't comply with certain regulations in a way or you
don't have to comply then you can't necessarily use that as a get out clause when something goes wrong.
And then say, well, actually, we do have the power to take further action here because we can get our validators together and kind of make a quicker decision.
That's the alternative perspective, which I think will actually have merit for the people who are regulating.
I don't know the specific legal ways that hyperliquid are presenting themselves.
All legal things you need to look at in significant, significant detail to get on top of precisely how people are presenting themselves,
exactly what regulations they need to be complying with is not possible to say that unequivocally on a show after reading up on it
uh over the night but that would be the position of why they are maybe coming under criticism and
why it might not be super straightforward for them uh moving forward uh legendary gonna stop there
forward for them moving forward.
Legendry, going to stop there.
What are your thoughts based on the conversation so far?
I honestly agree very much with Zach XPT, who pointed out a couple more details in the
comments, and one of his posts, one of his replies sums it up perfectly.
He says he dislikes it when teams LARP is decentralized, saying they cannot help victims
but make centralized decisions when it suits them and also on the on the liquidation of the jelly or on the on the
settled price of the jelly token it was an arbitrary price because people said it was not an arbitrary
price the last oracle traded at 50 cents and it was settled at 0.095 dollars way, way below the Oracle price. And the point that Zach is basically making is exactly that he wished Hyperliquid was
more consistent.
Like someone said, you know, decentralization is a spectrum and Hyperliquid should basically
pick a spot within that spectrum and stick with it.
And also on that narrative of coordinated attacks,
this is me basing on what Zach has said.
I did not do the research on all the individual posts myself.
He said that all the centralized exchanges who then started to comment on that
did that after the fact.
So while this was still an ongoing situation,
none of the centralized exchanges,
that is again what ZachXBT is saying.
And I mean, I can hold it on screen here.
And confirming with some screenshots
that they clearly made the posts after this decision
to delist and settle at that arbitrary price.
So if I put myself in the shoes of Binance
and other exchanges and think like,
you know, CZ has been to jail.
There's been massive pressure and fines on that.
I can understand
why it might feel to them that
Hyperliquid is trying to cherry pick
and be decentralized, don't have the
regulatory oversight and
why you would not step in
because A, all of those reasons and then
B, it's too small of an amount
to do so. I thought about that from the perspective of the show, right?
So say something happens to Captain and Steve, who is hosting right after our show.
They're very close to us.
They would be basically our peers.
So if something would happen to them and we can step in to help them, I would do that.
But if something happens to the BBC, I'm like,
I don't really give a fuck about that.
Interesting.
I think I kind of agree with both positions.
I'm trying to have a stronger take because it's not that I agree with everyone.
It's just that I think everyone was justified to do the things that they do.
So for example, I can, I can, I can confidently say, I think that, yeah, they're trying to
have it both ways.
They're trying to be decentralized sometimes, but then not be decentralized sometimes.
However, when it comes down to that, like decision-making thing, when they're seeing
that happen, where they're seeing the liquid liquidation becoming more and more likely after they've taken on that position, what would I have done as hyperliquid?
I think I would have done the same thing.
So I'm not saying that they did the wrong thing as such. in that position and you need to defend your protocol and defend that vault, I think it
would be justified to do the same thing.
And then you have to think about after now.
The aftermath is, right, how centralised are we?
How decentralised are we?
Are we going to be able to navigate these regulations?
navigate these regulations like yeah have our have our actions and uh decisions had any
consequences for the way that we frame ourselves and how we should be regulated um and then you've
just got to figure that out as the next step but i think it was probably justified for them doing
what they did and i'd you know you'd probably do that if you're if you were the business person
watching that happen uh i have a feeling you feeling you'd probably want to protect yourself first and then
figure it out after. Final thoughts there, Ledge? I think that I think ultimately hyperliquid is too
small to be decentralized or fully decentralized. And that kind of reminds me of someone who did it
very well in the initial communication. And that's the little, not the little nouns, the noun style per se, where when
the first nouns were being auctioned off each and every day, they said, look, we are building a
DAO, but in the beginning, we're going to keep the core team, we're going to keep a veto right.
If something goes wrong, if something would be massively against that, what we want to build,
we're going to act in a centralized way to prevent that from happening, unless we're confident enough
that we're big enough and decentralized enough to go fully decentralized. And ultimately,
yes, Hyperliquid is a super cool protocol, and has hundreds of millions in there. But it clearly
shows that because you can have so much leverage in there, that you can destabilize or put that
system at risk with a rather low seven-figure
amount.
I know a couple mill is a lot.
We've seen that with the other whale trader as well.
But ultimately, a lot of people have a couple millions available to do whale games, which
then to me says, it's just too small of a platform yet to be fully decentralized.
And if that were the stance that we're like, look, we aim to be decentralized in the future,
but as we are growing,
there might be situations where we need to intervene
in a very centralized fashion to protect ourselves.
If that were like a more clear communication
or stance by hyperliquid,
I think that in future events,
because this potentially still can happen again
in different ways and forms
and it has happened before in similar ways as well i think having a clear stance on that would
be very helpful correct me if i'm wrong so i think there's two things moving forward which people can
do to hyperliquid do to mitigate this one is i i think you're correct this can't happen every week and as you say look yes a few million
dollars is a lot of money but in crypto it's not that much a bunch of people would be able to attack
you doing this on a routine basis if it was going to continue i think there's two things one and you
can correct me if i'm wrong because you probably understand the stuff better than me a you've got
to reduce the amount of leverage that you're offering. Maybe that can be a
protective measure. But then B, is it viable, do you think, to be offering these perps on these
truly ridiculous tokens? Like Jelly Jelly, I don't care who launched it. It doesn't matter
if they're from a web two company that, you know,
sold that's really valuable. Like that's a joke token and it's a meme token. It's going to be a
really volatile token. I suspect a lot of this is like, I suspect you can't do this with Bitcoin.
For example, you can trade spot Bitcoin on hyperliquid. I'm guessing, or I'm assuming,
unless you tell me otherwise, that you can't't do this you can't do this kind of attack on the more solid assets you can do
these kind of attacks on incredibly illiquid meme coins where you where and you know an individual
or a small group of individuals can wildly manipulate the price so not being able to offer that might be one of the most obvious mitigating options to
position themselves and secure themselves better. What do you think?
I mean, reducing the leverage and also increasing the margin requirements for larger positions is
something that had happened after that massive ETH position
that also got self-liquidated.
In that case, it was a nine-figure position
if you include the leverage on it,
which kind of shows you can play these games
with ETH as well on Hyperliquid
because again, it's still rather small,
but I do agree having different leverage caps
and then thinking what you actually want to offer there is is a thing what you can
also do is like try to limit the amount of position sizes that you can have but then again
you can circumvent it by having multiple accounts etc i think kane from infinex said there is not a
real solution to that that was back when the east thingy happened. What you can do is just force people to KYC,
which is exactly against what you want to build
with a decentralized platform.
But other than that, you just can make it harder
and improve the risk management.
But there's no way, in his opinion,
to completely prevent something from happening.
Okay.
Well, I mean, my thinking would at least be
in the interim, I mean, my, my thinking would at least be in the interim, stop listing like
really, really volatile tokens. You've got amazing products with spot Bitcoin. You've
got an amazing product with hype. You're offering all this other cool stuff. That feels like
an obvious one, but funky your hand was raised. Welcome to the stage, my friend on this hyper
liquid conversation. What would you like to add
i cannot hear you funky if you are speaking ledge can you hear him
um fortunately i cannot Unfortunately, I cannot. Oh, okay.
Maybe you want to drop down and pop back up.
Clearly something's not working there.
But we are probably going to, okay, yeah, try and drop down and come back up and we'll
see if we can get you up to hear you again.
You back with us?
No, he has disappeared.
That is a shame. Okay, maybe we'll just keep...
Oh, he's back. Can you guys hear me now? Yeah. Yes, we got you.
So you guys did a fantastic job breaking down this whole situation. I was just going to bring
up something I brought up on the show a long time ago, which was the decentralization aspect. As an
infra provider, we've tried to run, and it seems... And I saw a great ICO beast. I don't know if you
guys saw it. He had the Italian comedian thing from the keck meme where they did like the whole story
it was really funny and he said jeff's got six computers in his office those are the validators
but you know i think it really just kind of to the point that legendar is bringing up
you know the slow decentralization of like with now and now just trying to you know you know that you're
running something that is very novel um you know i think it just strikes to the philosophical part
about like how important is decentralization in this industry because had the decentralization
you would have never been able to coordinate the validator set to do what they did just full stop
so and it would have probably crumbled the whole hyper liquid ecosystem if if
that had been pulled off the attack so i just wanted to give you guys kudos did a very thorough
breakdown but just to kind of chime in about the decentralization part from the validator perspective
yeah i think that's an important part right because in practice what are you supposed to do
you're supposed to i think i saw a screenshot where someone had asked, I mean, I don't know if it was real or not, but yeah, in practice to reach quorum
on that, whatever decision they decided to take, you need to go very, very fast. And if you are
super decentralized, there's all kinds of factors, which would, which would make it hard to come to
consensus very quickly, I think. So, okay. That is that hope that was a helpful breakdown because we
kind of complicated there was a lot of things going on a lot of different reactions and that's
our take I hope that was helpful let's keep it moving we've got only nine minutes left for the
show legendary I think it's probably best to go straight into the Ghibli stuff because that's the
most viral most exciting most interesting and stuff because that's the most viral, most exciting,
most interesting and fascinating stuff that's been taking over the timeline in the last
24 hours.
You want to talk about the financial side and also just the AI side and what's possible
here?
Yeah, absolutely.
I'm just going to quickly bring up the chart for Ghibli, the token.
There we go.
As you perfectly said, did run up to a bit more than 25
mil is currently trading at 16 mil came seemingly out of nowhere because the timeline was trending
I'm going to get into what that exactly is with Kylano did a thread on that with Ghibli style
pictures Ghibli studios is a Japanese anime studio which is very, very
famous for this specific style
and as I also showed it yesterday on the show
actually pretty
early when I started to play around with that
ChatGPT
4.0 with the new image generating
algorithm allows you to create those
images, upload any image
or HajiPenguin, PFP, whatever you want
to upload to that and create a Ghibli styled image.
And I think the very, very important
or like fascinating thing to me to note is
if you look at a typical studio Ghibli movie,
just to get a sense of how much work goes into that.
So look at a typical movie,
it's 60 to 70,000 hand-painted frames,
which all are watercolcolored by hand as well and it's like one famous movie that has a scene in there where it's basically a very very packed
crowd and everyone's moving around which typically anime movies try to avoid because you will have
like two characters talking background rather static which is way more feasible to draw and
this scene alone five seconds
the animator was working on that it took him 10 months to paint all of that so just to get a
perspective how much work goes into that and contrasting that someone yesterday spent a total
of nine hours to recreate the lord of the rings trailer in Ghibli style based on the real trailer.
And again, like you have this one guy
who worked for 10 months,
get a five second scene in a movie
and then something,
and you're going to bring that up on screen for us.
Like the Lord of the Rings trailer now can be done
in a couple hours.
It looks actually pretty insane.
Yeah, this is pretty crazy.
Let's see if we can uh play this with the sound
and the image if you're watching in you'll be able to see this if you can't you'll be able to hear it
but legendary we'll just give a quick summary after as well change and some things that should
not have been forgotten were lost but the ring of power has a will of its own. Evil is stirring in Wadah.
Ring has awoken.
Sauron needs only this ring
to cover all the lands of darkness.
What must I do?
The ring must be destroyed.
It's just crazy.
I know what answer you.
They're coming.
They will find the ring and kill the one who carries it you have my sword my bow and my axe you carry the fate of us all little one
this task was appointed to you so this just gonna stop it there this so legendary this cost a thousand two hundred fifty
dollars in credits um but now this is this is able to be done super fast or did someone re-edit
this a little bit so getting into the process because it's actually pretty cool what that
person did is first of all screenshot 102 shots in the trailer, in the actual movie trailer.
Remix that into Ghibli style, which he did in OpenAI's Sora,
that is the video editing platform.
And then animate that both with KlingAI and Luma Labs
and bring it, I think, then back to Sora to sync it with the trailer.
And you can basically see some of the screenshots here
from the movie trailer
and then some of the Ghibli-style footage
that was created with OpenAI.
And yeah, basically have the storyboard in Sora,
different prompts to get that going.
And I think the majority of the work
was basically to sync it with the trailer um that
it one-to-one looks the same and again this this process took a total of nine hours only for a
trailer that is one minute and 53 seconds which is insane one day of work just one day of work
um i mean we've been experimenting
with it a little bit you've been playing with it
around a little bit I saw some interesting
takes on the timeline on like
what the implications of
this are I'll share my thoughts
here a lot of people say like okay
you know your whole you know designers
are going to be out of a job artists be out of
a job because you can just do it yourself
I don't think that fully appreciates the skill it takes to the conceptual stuff.
I saw Bold, for example, the, you know, very beloved comic artist, NFT artist, but like, you know, does NFTs, also just does funny comic strips every day.
Like, you can't repeat that like if you're
someone who thinks um thinks you can do that i i i'd be skeptical to think that other people can
do the thinking and planning required in order to create that humor unless and this is i guess the
big question unless you can train it on their previous comics
or a body of work of previous comics and not only are you training on the art style which is
obviously getting good at now but you can also train it on the humor and tone and apply that to
like the latest news and i think all of those things are not quite possible at the moment
you can't get well the art seems to be getting pretty good
and you can do that nicely.
But even for example, today I was just checking with Grok
and I checked in with Grok to say like, okay, well,
how do you best describe the hyperliquid situation
or something like that?
And I don't think it gave me a sufficient answer.
And then when you're also aiming for something humor or emotional,
where you want to elicit a human emotional response from someone,
I think it would be hard to triangulate those three things,
like create art, which is timely.
So it's like it takes into account some things that happened on the day
and it needs to elicit a human emotion.
I don't think it can do
those three things quickly yet so that's my first thought although you know i think for a lot of
rudimentary things say for example allegedly you you had an artist to create your background um
sorry not your background your what's it called the the thing above your profile picture the banner
you had someone to do that i've got a feeling for something maybe a bit more rudimentary like that.
You'd be able to create something very, very similar, similar now with this kind of skill.
So the, the, the level of artist or the skills the artist, the artist needs to bring these
to be a bit higher because it has to lean in to the conceptual stuff.
My second thought, which is more interesting for us being in the digital space
is I think this is like just perfect for NFTs again. Like if you want to value provenance,
if you want to value like human creation, and if everyone is able to proliferate your style
so easily across the internet, which is exactly what's happening to this specific art style over the last 48 hours.
The person who's created that on the blockchain with the provenance,
if you're wondering where the value goes, hopefully the thinking is it should go there.
I think this is incredibly bullish for NFTs, for creators. That'd be my final thought.
that'd be my final thought.
Lej, what are your thoughts there?
What are your thoughts there?
I think the thing I would like to add to that is
Ghibli, a lot of people know it
and a lot of people have emulated those images
with mid-jundy already,
but a lot of people had no idea what that was.
Like our good friend Sammy posted on the timeline,
I had no idea what this was,
but now I'm creating Ghibli images.
And that got so much more exposure
and got millions of millions of views
and so many threads
that people would have not otherwise
known about before that. So maybe this will
be a metric in the future. Is your style
so unique, so impactful
that AI will pick it up
millions and millions of times on the one hand?
And then that
kind of connects me to the idea of story
protocol.
I know I criticize story protocol
for being too early with that concept,
but at some point in the future
that could be the reality of seeing,
basically, the original creator of that art style,
of that artwork, whatever it is
that AI is drawing the inspiration from,
and seeing all the derivatives
and all the financial impact
or financial value that has been generated from them
and being then back, redistributed
to the original artist, creator, whatever.
I do think that prompting in itself is already a skill.
It also might become an art form.
And ultimately, I think to your point
on those individual things like create an image that evokes a strong emotion that is like timely commentary on what's happening.
I feel like individually, different AIs can do that already. world, pick something that is very, very important, have another AI, like, draw up a storyboard
or a concept around that, and then have ChatGPT trying to come up with a picture that is, like,
strong, powerful, meaningful.
I don't think it's, we're still, like, far away from this being a fully integrated process.
But I do think we'll get there faster than people are expecting that to happen.
And provenance, as you said, will become an important thing.
Last thought on that, because I posted about this in my timeline,
and someone had this interesting point.
Maybe we'll value art more than has been created in the pre-AI era.
And English kind of said something similar in the comments.
He said, like, imagine this was out before the Azuki follow the rabbit short.
Everyone would be like, meh, Azuki, not too impressed with it.
So maybe we'll have this like cut pre and post AI creativity or art forms that have been, well, created, produced.
Interesting.
Very, very interesting stuff.
I think there's definite knock-on effects for people in the creative industry.
I think in the end, you've got to leverage your stuff.
You've got to play around with it.
You've got to get creative with it.
Leveling up and playing around with it, I think, is the way to go,
whether you're in the news industry like us and doing opinions and commentary
or whether you're on the pure, more creative side,
figuring out in what ways
you can interact with it. I think that's ultimately the way to go because this stuff is powerful as
we have just seen. So guys, I hope that was an interesting conversation today. That is
the end of the show. We kind of went on a variety of things there, macro to hyperliquid to the
future of AI, art and provenance. But just a reminder, we do this every
single day, Monday to Friday, 7am Eastern time for one hour. We cover everything that is to do with
the modern market. That is the crypto, NFTs, or whether that's like being creative and figuring
out how to leverage the tech so we can be better and more successful online. Hope you enjoyed the
show. Thanks to Ledge as always for co-hosting with me.
Thank you to Funky for your contributions as always.
Have a wonderful day everyone.
Take care and we will be back with you again tomorrow.
Bye bye.
