‘The FUTURE of finance’ on Hyperliquid, says Bob Diamond

Key Concepts

• Hyper Liquid Strategies: A digital asset platform that went public via a reverse merger with Sauna Biotherapeutics.
• Hype Token: The native coin for the Hyper Liquid platform.
• Hyper Liquid: A decentralized exchange (DEX) and blockchain enabling trading of perpetual futures.
• Perpetual Futures: Financial contracts that do not have an expiration date.
• Decentralized Exchange (DEX): An exchange that operates without a central authority, allowing peer-to-peer trading.
• Blockchain: A distributed, immutable ledger that records transactions across many computers.
• Tokenization: The process of converting rights to an asset into a digital token on a blockchain.
• Reverse Merger: A method for a private company to become publicly traded by merging with an existing public company.
• Free Cash Flow (FCF): The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Hyper Liquid Strategies: A Digital Asset Platform's Public Debut

Hyper Liquid Strategies, a digital asset platform, has recently entered the public market through a reverse merger with Sauna Biotherapeutics. The company's stock experienced an initial high of $4.65 but subsequently saw a decline of 17% to $3.52%. The core focus of Hyper Liquid Strategies is the accumulation of the Hype Token, which serves as the native cryptocurrency for the Hyper Liquid platform.

Hyper Liquid: Decentralized Exchange and Perpetual Futures

Hyper Liquid is described as a decentralized exchange (DEX) and blockchain that facilitates the trading of perpetual futures. Perpetual futures are financial instruments that, unlike traditional futures contracts, do not have a set expiration date. It is noted that perpetual futures are not yet approved for trading in the US or Toronto.

Bob Diamond and David Schuetz on the Excitement in Digital Finance

Bob Diamond, a former traditional banker and former CEO of Barclays, expressed his enthusiasm for the digital world, particularly the advancements in blockchain technology. David Schuetz, CEO of Hyper Liquid, highlighted the evolution of the digital space, moving beyond the initial excitement around blockchain and stablecoins in 2021. He emphasized the current focus on the blockchain itself and the decentralized exchanges built upon it.

Schuetz pointed to the significant impact Hyper Liquid has had in terms of trading volume, not only for other digital assets but also for traditional equities like NVIDIA and Tesla. He suggested that the platform's architecture allows for the development of exchanges for more traditional securities. Schuetz described this as the "most exciting thing we've been involved in in a couple of years."

The Growing Acceptance of Digital Assets and Tokenization

The conversation touched upon the increasing acceptance of digital assets and cryptocurrencies. Schuetz mentioned the influence of the current administration and figures like J. Clayton and Scott Bessent, as well as the Treasury, in fostering this acceptance and integration. He cited CEOs like Larry Think, who projects that $1 trillion in assets under management will be tokenized over time. This trend signifies a blurring of lines between what was traditionally considered "digital" and "traditional" finance, with blockchain technology at its core. Hyper Liquid is positioned as a platform aiming to be "the future of finance."

The Hype Token: Utility and Valuation

The discussion then shifted to the Hype Token and its role within the Hyper Liquid ecosystem. Bob Diamond explained that Hyper Liquid was founded as an exchange and has not raised any outside capital, boasting a run rate of $1 billion in free cash flow. The Hype Token, issued a year prior, was distributed to the platform's best customers. The company has utilized the majority of its resources (99%) to buy back the token.

Diamond described the Hype Token as "equity-like," with the company repurchasing it daily and applying traditional valuation metrics. He characterized the token as a compelling investment within the crypto space, aligning with the "high growth commerce" and "future of finance" narrative.

Understanding the Value of the Hype Token

When questioned by Liz about the tangible value of the Hype Token for a traditional banker, Diamond explained that the team, led by Jeff Flow in Singapore with a team of 11 people, has generated tremendous trading volume on the exchange. This volume, coupled with the $1 billion in free cash flow and a lean team of 11 employees, contributes to the valuation being created. The expectation is that other traditional exchanges will learn from the blockchain's ability to trade 24/7 at a reduced cost, especially with the ongoing development of perpetual futures trading.

Initial Trading Performance and Long-Term Outlook

Liz expressed a cautious approach to the first day of trading, noting that while the crypto saw an increase, these events often require a few trades to establish a trend. Bob Diamond indicated a long-term perspective, suggesting that his concern would be the platform's performance a year from now. The segment concluded with Liz acknowledging Bob Diamond's due diligence and expressing interest in observing the future trajectory of Hyper Liquid Strategies.