Translation: Baihua Blockchain

Host: Hello Ryan. Can we quickly do an audio test?

Ryan: Sure, the sound seems perfectly normal now.

Host: Okay, equipment is adjusted. Before we start, I reflected on my early experience with Robbie when we first invested in HYPE, considering that we actually did not capitalize on that wave of market momentum. Experiencing two 80% corrections on an asset facing regulatory resistance was indeed panic-inducing. However, we have been tracking this asset for over two years, and it has remained a core pillar of our portfolio. Luckily, the portfolio achieved significant excess returns during the bear market, and we have retained the complete proof of our positions. You turned the situation around, as a friend of Chris Berniski and a firm HYPE super bull. We are very much looking forward to hearing your thoughts. Recently, Jeff released the proposal for HIP-3 Star, which is a new original language to push Hyperliquid into the U.S. market. Where were you when Trump publicly mentioned Hyperliquid? What was your reaction at the time?

Ryan: I was sitting in the same position, talking to co-founder Dan. During the call, I received a ton of messages from the team, telling me that the price of HYPE had soared to around $70. Just a few minutes ago, it was around $59, and then the price spiked vertically. Initially, we had no idea why that happened until we learned that Trump had mentioned Hyperliquid directly in a televised press conference. It was indeed a crazy moment.

In fact, as early as July and August, Hyperliquid had deployed the Stars-related features on the public testnet for the first time. The team only pushes core functionalities to the public testnet when they hope the public starts experimenting and preparing. Data analysis shows that Hyperliquid takes about three months on average to move from the public testnet to the mainnet, and never more than six months, so we anticipated that progress was brewing and about to materialize. Although we did not expect senior politicians to mention the project publicly, the team was strategically well-prepared. Many past investors' core skepticism about Hyperliquid was: "The data and growth are indeed excellent, but how to respond if U.S. regulators take restrictive measures?" Now that major obstacle is gradually being removed. The U.S. capital market is the largest and most important center of financial liquidity in the world, and breaking through this checkpoint opens up a high ceiling for Hyperliquid's growth.

From On-Chain Dominance to "Everything Trading Platform": Reshaping Core Investment Arguments and Metric Iterations

Host: Excellent investors always dynamically adjust their hypotheses based on the latest information. Can you review the core logic you established when building your position initially, and with the current developments, how have your investment arguments and future outlook evolved?

Ryan: In the early stages of the project's launch, the investment argument was relatively pure and straightforward. At that time, its valuation was about $3 billion, with annual revenue reaching around $200 million, maintaining a very high growth trajectory. Except for airdrop recipients, there were almost no chips circulating in the market; the only way to acquire tokens was to bridge assets to Hyperliquid itself across chains. This mechanism was strategically very clever, as any fund or individual wishing to build a position had to use the trading platform directly, thereby creating real users for the platform, with no institutions holding pre-set cheap shares. In the industry landscape at that time, it was already one of the top four applications and public chains in terms of revenue, and many leading projects did not have lasting fundamental support. At that stage, the asset had an extremely high revaluation space; even if it rose three to five times, it was still undervalued.

Meanwhile, we have long been working on the macro-level hypothesis of the "Everything Trading Platform," which aims to realize the free trading of any global asset on a permissionless public chain network, with derivatives as the core long-term track. At the beginning of 2025, through in-depth communication with core trading teams and market-making units, I established a deep belief in intergenerational holding. There has long been an inherent misconception in the market: to limit on-chain perpetual contracts within the Web3 native ecosystem for stock competition. However, the true strategic goal is to penetrate the global mainstream financial system, with the primary phase being capturing market share from leading centralized trading platforms like Coinbase, Bybit, and BN, and the ultimate goal is to benchmark traditional financial giants like CME. The key data we have been monitoring is not just the market share relative to on-chain competitors but its proportion relative to BN and Bybit. This metric has steadily risen and continuously set historical highs, establishing a strong growth narrative.

Looking ahead, with the full portfolio margining system, spot market, HIP-3, and regulatory frameworks (regulated HIP-3 and HIP-4) being put in place, Hyperliquid's underlying vision is gradually materializing: the platform will evolve into the ultimate place allowing users to trade any financial asset in the world using nearly any mainstream asset as full collateral. This unique institutional advantage of blockchain architecture unifies the settlement of global assets running on the same baseline permissionless ledger. Currently, we are still in the very early stages of realizing this massive vision. Even focusing solely on perpetual contracts, their trading scale in global contracts for difference (CFD) or retail option volumes penetrates less than 1%, while the generated cash flow and protocol revenues are already quite impressive.

When a protocol possesses strong intrinsic compound growth capability, investors should not be troubled by short-term data fluctuations; instead, they should focus on the long-term structural pattern. The past industry was filled with high liquidity funds' rotation and cyclical speculation, swiftly returning to zero once macro assets corrected. The industry is now gradually entering an irreversible structural path: the number of real on-chain traders and trading volume settle in a composite growth pattern each year, while the actual commercial revenue captured by underlying protocols keeps expanding, making it one of the most certain long-term mainstream lines in the current financial market.

Host: We completely agree on the need to break away from cyclical anxiety and overfocus on monthly income fluctuations. Before that crucial news landed, when HYPE fluctuated around $40, some market voices raised doubts due to the short-term fee pullback, neglecting the deeper fact that HIP-3's proportion in overall trading volume was steadily rising. You initially focused on its market share relative to centralized trading platforms, later shifting to its penetration into the traditional derivatives market. Based on the current situation, what do you value the most, and what core metrics best represent the system's sustained compounding?

Ryan: Evaluating this system cannot rely on a single metric; rather, a comprehensive matrix of indicators needs to be constructed: first, the fluctuating market share relative to top institutions like BN, Coinbase, and Bybit; second, the penetration ratio of the platform's total volume of global CFD, futures, and options trading; third, the absolute growth rate of total platform trading volume and the compound growth rate of net income accumulated by the protocol; and fourth, the net recharge funds flow and the growth curve of on-chain average account net assets. As long as these underlying operating indicators continue to achieve compounding growth, short-term price fluctuations in the secondary market are nothing to fear, because the bottom of the system's intrinsic value is being irreversibly lifted.

The Choice of Barbell Strategy: Winners Take All in Real Income Cash Flow and Value-Storing Assets

Host: We have also adopted a barbell structure in crafting asset allocation: one end heavily invested in on-chain businesses with strong self-sustaining capabilities, vast long-term potential market space (TAM), and sustainable token economics; the other end allocated purely to value-storing assets. We have core positions in Bitcoin, gold, and HYPE and are gradually expanding to applications that produce real cash flow while excluding infrastructure lacking business barriers and excessive L1/L2 intermediaries from the portfolio. How do you view this cash flow-based configuration framework, similar to a traditional equity investment perspective? Additionally, what are your insights on the return of privacy assets like Zcash to value-storing discussions?

Ryan: High-quality on-chain businesses that essentially act as "profit machines" are reshaping the industry narrative. Within the traditional physical financial system, the core aim of commercial organizations is to utilize capital to create real profits. The crypto industry has long deviated from this common sense, relying on false liquidity indicators and attention battles to drive valuation reconstruction. As the macro environment changes, crypto assets are no longer the only speculative outlet for global excess liquidity; any protocol must demonstrate its intrinsic value and fundamental support.

It should be clear that generating real income is just one manifestation of a healthy fundamental situation. Some businesses choose to retain the generated cash flow and fully invest in ecological expansion rather than immediately distribute it to token holders, which is also a reasonable capital allocation method. For example, Morpho's representative borrowing balances and real demand continue to show a hockey stick-like steep growth, and its founders choose to invest the generated value entirely into protocol expansion instead of unlocking fee switches, which is highly rational during periods of rapid growth. The mechanism like that of Hyperliquid executes buybacks and burns through completely transparent on-chain smart contracts, akin to Ethereum's deflationary settlement. Regardless of the method, the core lies in whether the system continues to create positive total economic value. This differentiation in fundamentals greatly enhances the clarity of asset discernment, and when market capital gradually converges on at least a few genuinely well-operating businesses, the entire investment logic will become very clear.

Host: As the market matures, the entrepreneurial environment is harsher than before. In the past, founders could rely on narratives to raise capital even in the absence of underlying business support, but now institutions and the secondary market conduct extremely stringent horizontal comparisons: faced with efficient business paradigms like Hyperliquid, Lighter, Pump, or Morpho, mediocre competitors find it hard to gain attention and capital allocation. This makes asset selection somewhat clearer, but also forces startup teams to engage in direct confrontation in extremely hardcore fundamental dimensions.

So on the other side of the barbell strategy, regarding assets with value-storing properties like Bitcoin and Zcash, which inherently lack operating income and cash flow models and rely more on reflexivity and consensus mechanisms, how do you assess the evolutionary path of this sector?

Ryan: In the pure value-storing market, the underlying competitive rule is an extremely brutal "winner-takes-all" or "absolute monopoly at the top." Throughout the thousands of years of human monetary and precious metal evolution, gold has dominated most of the market value share worth hundreds of thousands of billions of dollars, while secondary metals like silver are far behind and the subsequent tiers have almost completely lost monetary premium. In a fully globalized, permissionless open competitive market-like blockchain, this power law will manifest even more thoroughly; typically, there are only one or two lighthouses among value-storing assets that can cross cycles.

Bitcoin has undeniably secured its core position with its impeccable first-mover advantage, the fixed supply cap of 21 million coins, and a global liquidity network. If we were to select potential synergistic competitors, the most qualified would not be single-function forks that replicate traditional currency attributes, but rather core native assets of major public chains housing the largest scale of real economic activity, deepest liquidity, and highest demand for collateral. As a value-storing asset, its core necessity is an extremely large holding populace, abundant settlement depth, and global collateral universality, often fostered only by top smart contract networks.

The early idealism of the cypherpunks building Zcash was strong, but through several industry cycle changes, the purely geek vision has been somewhat marginalized. Currently, some market forces are attempting to repackage it into an institutional-level "privacy Bitcoin" narrative, but from on-chain behavior, very few capitals have genuinely treated it as a high-frequency privacy currency or daily value measure. Privacy, in a technical sense, is a functional module that can be achieved through upgrades in the technical stack of universal smart contract public chains; and in the absence of absolute liquidity depth, the market does not need a second Bitcoin with overlapping functional positioning. The monetary system itself has strong network externalities, and once network effects settle at the top, they will continuously reinforce themselves in a nonlinear manner.

Transparent Ledgers and Social Trading: Reshaping Global On-Chain Finance as an MMORPG

Host: In your recent lengthy article on the evolution of social trading, you likened the current on-chain trading ecosystem to the "largest MMORPG game in the world." There has been a phenomenon where many traders have become top public figures, with some individuals displaying extremely exaggerated unrealized gains and losses in the public domain, their attention-grabbing ability and profit scale even surpassing traditional top professional athletes. Is the explosion of social trading a short-term speculative frenzy, or a paradigm shift in on-chain financial native experiences?

Ryan: From a fundamental logic perspective, whether it is Hyperliquid, Pump, or Solana, their cores point to the same fundamental question: around-the-clock operation, barrier-free access, and global liquidity for free trading are currently the most irreplaceable killer applications of blockchain technology. Once tools for issuing and trading assets with low friction are given to anyone globally, along with the evolution of speculative cycles, it will inevitably generate a vast scale of financial gaming scenarios. Speculation is the inherent spirit of the financial development history and will not disappear with the end of the cycle.

In past cycles, social trading was often fragmented: users discussed market trends and trading strategies on traditional social platforms, relied on third-party screenshots to prove performance, and then executed copy trading through complex cross-platform operations. The core paradigm innovation now lies in the entire experience being highly integrated into a unified native closed loop on-chain. Based on immutable and fully transparent distributed ledgers, the historical gains and losses of any account, position changes, and entry points are cryptographically verified; at the same time, smart contracts can support copy trading instructions executed atomically at the same moment. This transparency and verifiability along with real-time settlement capabilities are institutional advantages that traditional centralized platforms cannot replicate.

In previous cycles, while there were massive wealth myths, due to a lack of a unified identity aggregation protocol, on-chain excess returns typically manifested as isolated anonymous hash addresses, preventing the establishment of enduring social credibility. Today, the transparent on-chain ledger and durable on-chain identity binding make individuals publicly showcasing millions of dollars in gains and losses into financial influencers with strong dissemination properties. This mechanism attracts massive funds and attention to flow into the ecosystem for liquidity matching and strategy following. Although purely relying on low liquidity meme assets-driven speculation has cyclic and zero-sum characteristics, the product form of social trading exhibits extremely strong business extensibility.

Meme assets effectively serve as wedges to attract general attention into the on-chain ecosystem. As infrastructure improves, the application scenarios for social trading are rapidly expanding from high-risk memes to mature perpetual contracts, tokenized equity assets, and even traditional financial derivatives. Under a unified transparent ledger structure, user groups are naturally diversifying and forming investment communities with different risk appetites, and the explosion of this vertical track is currently only in its initial stages.

On-Chain Creator Economy and Financial Entertainment: The Next Generation of Super Brands and Paradigm Shift

Host: This new form has systematically restructured traditional on-chain speculation models. In the past, the industry was filled with high-threshold paid communities and copying frauds, while now the on-chain verified real-time gains and losses directly replace hollow marketing rhetoric, becoming objective evidence of traders' credit ratings. Meanwhile, the introduction of creator incentive mechanisms and dynamic leaderboards directly stimulates the desire for entry from retail investors and market-making capital. Many users, having witnessed the publicly displayed fund growth and transparency on-chain, find their emotions rapidly mobilized. However, ordinary investors often overlook the actual depth of underlying liquidity pools and the slippage gap between high unrealized gains and losses. How do you assess the strategic role of creator incentives in reconstructing this ecological mechanism?

Ryan: The creator reward mechanism is essentially a compliance and modernization upgrade of the traditional paid community business model. In traditional models, due to the lack of performance audit mechanisms, they often evolve into fraudsters selling anxiety to information disadvantaged groups, lacking real profitability abilities. Under on-chain transparency mechanisms, traders' earnings and reputations directly depend on the real effectiveness of their strategies and their user conversion rates. Top traders previously worried that public strategies would lead to alpha revenue erosion, but nowadays, on-chain protocols provide certainty of returns that can even surpass their own position volatility by scaling back transaction fees and creator incentives. For instance, some leading platforms award tens of millions of dollars weekly to top strategy creators, with annual funding accumulation surpassing $100 million, making it possible for top strategy providers to achieve millions of dollars in income solely from creator shares.

This ecology is spilling over vigorously: in addition to the usual shares of token deployers, business collaborations inside and outside the platform, exclusive market-making support, and invitations to offline top summits are propelling top on-chain traders towards high positions as super personal brands. More importantly, this underlying logic can be reused for more diverse financial asset categories. The future on-chain experts will not be limited to leverage traders but can include seasoned credit analysts focusing on fixed-income protocols, strategy operators in predictive markets, or experts in tokenizing physical assets; the product boundary of on-chain finance is endlessly expanding.

In this highly interconnected digital world, "finance as content" has become an obvious trend. Even if many users do not engage in high-frequency leveraged wagers, they still maintain the behavior of logging into relevant terminals daily, as the real-time fluctuations of on-chain assets, publicly verified wealth reshuffling, and high-intensity long-short contests themselves constitute highly sticky entertainment content. This network form, combining transparent financial settlement with high-frequency interactions, possesses both high entertainment properties and attention stickiness; as more diverse asset classes are incorporated into the on-chain settlement system, the growth curve of this industrial narrative is only just starting to emerge.

Host: Indeed, the deep binding of on-chain performance with personal IP is reshaping the operational forms and attention distribution rules of the entire industry. As core assets like HYPE continue to build a more solid bottom and hit new highs in the secondary market, the development path of the entire track becomes increasingly clear. Thank you, Ryan, for bringing us this deep overview and insightful insights today. We look forward to continuing to witness your explorations and breakthroughs in the upcoming evolution of the cycle.

Ryan: Thank you for the invitation. It has been a great honor to discuss these profound changes with everyone. See you next time.

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Source: https://www.youtube.com/watch?v=B35yv-QsZRs