How a Top 100 Hyperliquid Trader Finds the Next Big Trade

Host: I'm here with Cool Crypto. He is a big Kool-Aid man on Crypto Twitter and also a top 100 perps P&L trader on Hyperliquid. At least that's in his bio. Cool, what does it take to be a top 100 perps P&L trader? How do I and the listeners become one of those?

Guest: There's a good case to be made that some of it might just be survivorship bias, if I'm being completely honest with you, of the people in the top 100. Honestly, I would say just like all of crypto is just not blowing up. It's so much more about risk mitigation. I literally never use more than 1x leverage on the entire portfolio, or incredibly rarely. For most of the guys who are there, they just avoided big blow ups more so than they necessarily capitalized on big opportunities. The big opportunities in crypto are so readily apparent in my opinion. There are some massive dislocations that happen in crypto. As long as you're just alive to take advantage of them, then you naturally drift up in terms of P&L.

Host: In terms of capturing P&L upside, is it more about being statistically correct, or is it one single trade that you held on for size over a long period of time that climbed up the P&L leaderboard the most? Or is it more about consistency on smaller wins, like singles or home runs?

Guest: It's a good combination of both. This year in particular, I've had a couple of big home runs on some actual spot tickers, like Derive or Kinetic or some other things. As far as the perps, funnily enough, a lot of the perps P&L on Hyperliquid specifically comes from different times of hedging Hyperliquid on perps while still holding some on spot. A lot of those were just generally identifying local tops, hedging, and then buying back and closing it out lower. There wasn't really any one big massive short that I hit on Hyperliquid. There are a couple of guys on there who have one massive trade that they became almost associated with and known for, like Near and Zach. Definitely not my style. On perps especially, it's much more singles, whereas on spot with long term holdings, it's a bit more home run.

Host: Do you think the perps leaderboard itself is signal at all? Or is that just noise based on who's ahead in the moment that doesn't actually give any unique insight?

Guest: I've actually done quite a bit of analysis on this, specifically on what it looks like to copy trade guys. There's a little bit of signal. It's obviously good to know if you're in a position and there's some massive Hyperliquid whale who's long 30 million of Near or something like that, and what they're doing with it. You can go stalk them. But in terms of actual long term, who makes sense to copy trade, the problem is you just don't know what's going on across the board. For you, there's no way of knowing that I might be long 50,000 Hype on there, but I might be short somewhere else. It's pretty difficult to separate out. Some guys are doing delta neutral. It's always funny to me when guys point out a massive whale who's short $200 million of Bitcoin, and they don't know that's just a Braxis Capital delta neutral funding rate arbitrage fund. A lot of guys will whale watch and see the biggest P&L of the day was this guy, but that guy was just farming funding rate. It's difficult to tell guys who are doing that from actually taking directional trades. I definitely think you can get a decent bit of signal by curating a good list of guys who consistently win, looking at what they're doing, understanding it, and contextualizing it. You have to ask: is this actual delta neutral or are they taking directional trades? And you need to understand their worldview, how they trade, what type of style they have, and see if that fits your style as well.

Host: How much time would you spend going through other traders on Hyperliquid or Lighter or wherever to see who has positions open? How useful is that, and how do you fit that into a broader pattern of behavior to make a position happen?

Guest: I did one pretty big deep dive where I wanted to go see. Hyperdash is pretty interesting for it. They have a pretty good UI that shows very profitable guys and gives them a copy trade rating. I looked at some of the analogs on there to see, and when I figured out that there's not a tremendous amount of signal you can glean from it consistently, at least broadly, I don't spend a ton of time. But if I'm in a huge trade on any particular single ticker, I'm definitely going to be watching what the biggest position holders on that are doing. For that, it's more like a live update, just making sure no one's doing some massive TWAP out that might influence my limit orders.

Host: So it's better to inspect these things when you have exposure to a particular trade and you know exactly what to look for, but it's not necessarily as informative about making a trade or entering a position. It's more after the fact. Is that what you're saying?

Guest: Definitely. Yeah, exactly.

Host: Can you give me and the listener a little bit of background on who you are? As I said in the intro, you're a Kool-Aid man on Twitter, so you're semi-anonymous. What's your perch in the crypto industry? What do you focus on? How have you sharpened your stake?

Guest: Sure. I've given this background before on other appearances. I was very early to crypto, mined Bitcoin quite early on, and ended up getting very deep into DeFi very, very early on. I really enjoyed the fact that it felt like a really big zero to one jump in terms of the actual use case of crypto. It went from being a pet rock hedge against inflation, a tokenized gold type of asset, to actually being useful. We can trade, borrow, and lend. I was very, very big into DeFi early on. I ended up starting a fund a couple of years ago to long the expression that DeFi would actually change the world. I was extremely early and wrong, actually, on the revenue meta. I thought the revenue meta was going to happen a lot earlier than it ended up. I kept trying to say that tokens like GMX, for example, were so cheap on a PE ratio back when people were blasting billions of dollars into meme coins. My frame of reference for a lot of crypto right now is more from the point of view of revenue meta, DeFi, et cetera. I don't actually have any real TradFi background. I never worked traditionally in any sort of banking or trading setting. I'm entirely self-taught in crypto. I've been close to a lot of that side of the industry, increasingly so over the past couple of years, seeing what institutional trading ends up looking like, but I never had any experience in it myself beforehand.

Host: For the Minkwell Sussner's foreign chronically online on Twitter, revenue meta is this meme where there would finally be a rotation into revenue-generating assets. We would leave this era of fake value capture tokens and meme coins behind, and people would rotate into quality. I would say lately, at least in 2026, that has decently happened. Pump generating a ton of revenue, Hyperliquid generating a ton of revenue. Do you think there is more revenue meta rotation ahead of us? Have we kind of completed that? Is revenue actually valued as much as it ought to be in crypto? Where do you think we are in the expression of the revenue meta?

Guest: It's actually a really interesting question that goes into a broader theme. Especially with recent midterm results, you're actually potentially going to see a rotation out of the revenue meta tokens because they're a little bit more sensitive to regulations. People are more so long the store of value tokens. Bitcoin and ZEC are positioned like you saw gold rally with the midterm results. There's this presumption that rates down and the spending bazooka to infinity is back on, which is more favorable and supportive of the store of value assets. That's not to say the revenue meta is over. I would actually say quite the opposite. I do think there's still going to be a very pronounced flight to fundamentals in crypto. A lot of that comes down to whether your token actually generates revenue. But from a regulatory perspective, those tokens tend to be more under threat than the store of value tokens. We might see an interesting rotation out of some of those revenue meta tokens into more of the Bitcoins and ZECs of the world.

Host: Are you in the camp that there are store of value coins, Bitcoin and ZEC, and revenue generating coins, Hyperliquid, Pump, Derive, and that's it? If you're anywhere in the middle of those two things, you're in a bad spot and you need to pick a direction. Kind of like the Tulip King's "either you are money or you make money" type of thing.

Guest: I would say to an extent, yeah. It might be a little bit of an oversimplification. ETH is a really good example of something that falls in between. I don't necessarily know that it's fair to value Ethereum either as it makes money or as it pertains to being considered money. There's this concept of Lindy-ness with regards to how broadly a credibly neutral settlement layer can be adopted and how we value that. I'm not really sure it just fits into that binary framework of either is money or makes money. But generally speaking, if your token is not generating money, very attractive PE ratios, and is trading at a relatively favorable amount of revenue compared to float, you better hope there's some external value being placed on that token that's not just sentiment based. You need it to have the Lindy-ness of Bitcoin, for example. I think that's even kind of a problem that ZEC has right now. It wants to be a store of value token, but there's just such a gulf between it and Bitcoin with regards to how it's perceived. ZEC still kind of trades almost closer to a meme coin. Not to say that it is a meme, but it trades closer to a meme coin with regards to sentiment and momentum as an expression, as opposed to Bitcoin which has a lot more Lindy-ness and backing and support and just time-hardness to it.

Host: Go into that a little bit more. What contributes to the gap between Bitcoin and Zcash? Is it just that Zcash is younger and doesn't have the same sort of recognition? What goes into why Zcash is so far away from Bitcoin?

Guest: Bitcoin is synonymous with crypto. When you talk about crypto, that's what most people's minds jump to. If there is an argument to be made that there could be this globally accepted store of value token, Bitcoin is orders of magnitude more likely to be adopted than something like Zcash. The problem with Zcash is that it fixes a lot of problems that normies or non-crypto natives don't even know to think about or exist. When you talk about quantum resistance or all these other things, it almost just educates people to the fact that quantum is a problem for Bitcoin more so than it promotes the benefits of Zcash. The interesting thing with Zcash right now is that it is such a crowded consensus crypto trade. It's the perfect environment for it. If your worldview is that quantum is going to be a problem, or even on a more political level, if socialism is going to be on the rise in the United States over the next couple of years and there's going to be more flight to assets that are private, it has the privacy and the quantum resistant narratives going for it. It's the perfect setup. You couldn't ask for a better setup for Zcash right now. The problem is that as with all assets that are too crowded in crypto, you need some external capital coming into it. You just don't really have a sailer for Zcash right now. There's obviously a DAT or two for it, but it's just not nearly the same level of size. You really need people to come in and actually bid Zcash externally. If everybody in crypto is sitting in it, hiding in their Zcash longs, you really need a lot of people to come in. The way to get a lot of other people to come into that trade is just price action. You need price to go up. If everybody's already quite long, that's when you run into a bit of an issue. That's the same with any crowded trading in crypto. Another part of that is the selling point of Bitcoin and also the problem with Bitcoin: the ossification of the code. People know exactly what it is. It's the most predictable schedule of halvings. These are terms even regular people are familiar with. The problem with Zcash and what makes it beneficial is that the code isn't really as ossified. There's an actual dev team working on it. There are updates being planned for it. The problem is that also increases the attack surface area for potential hacks or exploits. You saw that with the whole Orchard fiasco where people were worried about infinite minting on shielded tokens. As a store of value, you can't necessarily have that level of uncertainty with regards to what it will be in the future. When people go back and look at a Bitcoin chart, they see massive 60, 70, 80% drawdowns in the past, but it's been holding up relatively well recently. It's difficult to look at a Zcash chart recently and say, "Oh yeah, this is a predictable store of value." That's the issue there, the volatility as well.

Host: Let me throw some thoughts your way, because I have some opposing views. I take the point that external capital out of crypto is not readily coming into Zcash, but I wouldn't necessarily say that's my thesis behind Zcash. I also think there is evidence to suggest that is partly not true. There is at least some external capital that is skipping over Bitcoin and going into Zcash. I think that's why Naval has become this shadow main character. He doesn't really go on podcasts and do circuits, but he's very into Zcash, specifically because of the privacy. Naval circles are outside of crypto, external to crypto, and they're wealthies. You only need a few handful of billionaires outside of the circle of crypto to understand the value of uncensorable private money. It doesn't take a social zeitgeist for that in the same way that we had in 2021. It doesn't take too much big public awareness of crypto adoption to really move Zcash in the same way that it moved Bitcoin in 2021. That's one thought. Also, when I hold Zcash, I'm more looking at it as a percentage of Bitcoin's market cap because the buyers of Zcash are going to be Bitcoiners who defect from Bitcoin. Very rarely does this ever happen. Bitcoiners are known to lock arms and never break ranks, only buy Bitcoin. Everything else is a shit coin. But there's this clip from an interview we did on Bankless with Suzu in 2021 where he was talking about Bitcoiners flying around the world to retrieve their cold storage so they could sell Bitcoin for Ether because Ether was the coolest thing ever. Every once in a while the stars align and Bitcoiners decide that hedging their massive Bitcoin exposure by 1, 2, 3% into the cool new thing actually does happen. The last time it happened was with ETH, and it is happening now to some degree. It actually doesn't take too much external capital to get Zcash up to three, four, or five percent of Bitcoin. Those are my two theses. How do you take those?

Guest: I actually agree with a lot of that. I want to clarify that I was painting the bear case for Zcash, but I'm not bearish Zcash because of those exact same things. It's not that hard to see a couple percent of Bitcoiners saying, "Just in case. Just in case quantum's a problem. Just in case I need this privacy feature." The problem I would push back on is it's difficult to say to what degree that's already happened and priced in. If I'm playing at some poker games and there's a billionaire shilling Zcash already, part of it makes me feel like, is this like the Uber driver talking to me about some coin? No, you're 100% right that billionaires and multi-deca-millionaires are actually taking Zcash as one of their first exposures to crypto right now. You're absolutely right that it does not take a ton of money externally from them to say, "Just in case, I'll put 1% of my couple hundred million into Zcash." The problem is to what extent has that already happened? I would say probably more so than some people would necessarily expect. It's actually a similar argument people used to make with Bitcoin. I remember talking to a fund manager a couple of years ago. He was super anti-crypto, calling it a scam, your typical TradFi guy. He asked me what percent of global wealth was in Bitcoin at the time, and I think it was maybe 30 or 40 bips. A light bulb kind of went off in his head. He said, "If nothing else, just to not be wrong, a bunch of guys are going to put 1% of their money in just in case." I think it's a similar argument for Zcash. You're going to get this ratio where guys will put an amount into Zcash just in case they're wrong. All the edge there is figuring out what percent that is. Are we already at that point? Is that point another couple multiples away from here? You are definitely betting on the big fundamental driver there being ultra wealthy, ultra high net worth individuals who value that privacy. If you think that's not really fully played out yet, then Zcash is in a ridiculously good setup right now. Amazing long to have. It's also such a great trading asset. It trades so purely based on momentum and sentiment. It's like the whole Silicon Valley meme where if you have revenue, that's also a limiting factor. Hype is never going to trade at a 500x multiple on its revenue. Whereas Zcash has nothing, so it can trade like a meme coin. When I say trade like a meme coin, I don't mean it disparagingly. I mean it can actually just go to whatever valuation. It's ungated by the revenue meta. I think Zcash deserves a place in most people's portfolio. It's just deciding whether it's too crowded right now and you're going to get to bid quite a bit lower, or if you think it's going many multiples higher. That's where all the edge is. It's not very useful, but that's just the situation.

Host: I can imagine that Bitcoin is Bitcoin. If you are one person trying to shill another person, either a normie retail person outside of crypto or a billionaire outside of crypto, and you're telling them about Zcash, it's harder to differentiate Zcash from the sea of shit that is the rest of crypto assets than it is Bitcoin. To them, it's just another ticker, another crypto asset, another shit coin.

Guest: Exactly. Granted, there are people like the Winklevii and Naval actually legitimizing this thing. It has an ETF, so there's something there, but it's still like... people not inside of crypto just don't want to be shilled crypto tickers. That's an unpalatable thing. There's this natural aversion to alternative assets in crypto. Altcoins have performed so poorly over the past. When I made some inroads with talking to some more institutional guys, if they hear something's trading at a two or three X PE ratio, like Pump was for example, they say, "That's interesting." You have to contextualize whether this revenue is as durable and predictable as other forms of revenue, but it at least stokes their interest. Why are these crypto assets trading at such low multiples relative to their revenue? When you present to them an alternative store of value asset that's not Bitcoin and it's an altcoin, it sets off a lot of alarm bells and red flags. They think it's a flash in the pan. What's the difference between this and a meme coin? That's the pushback you'll see. There's also one other slight issue. Zcash is to Bitcoin almost as Bitcoin is to a lot of TradFi assets. Some Bitcoin maxis have a bull thesis for Bitcoin that is very much a "king of the wasteland" type of thing. When the dollar goes into hyperinflation and the world is melting down, people are going to want our Bitcoin. That's a bit tenuous because all risk assets tend to sell off when correlation goes to one. The really big bull case for Zcash would potentially be some black swan events in Bitcoin specifically that prove quantum resistance is necessary, or that the government is coming and seizing people's Bitcoin, or Satoshi's wallet gets exploited. These would be massive attention-gathering onboarding events for Zcash. The problem is that in that "king of the wasteland" situation, if Satoshi's coins move, do you really think Zcash isn't also potentially plummeting down with it? Would it be the fastest one to rally outside of that situation? Almost definitely. But in that moment, that's how BlackRock identifies Bitcoin. BlackRock has a report about Bitcoin that went into this moment. Yes, in the moment, correlations all go to one, but Bitcoin historically has rallied the most coming out of those events. There's an actual BlackRock report talking about this. In the same way that TradFi views Bitcoin, it's kind of the same way that more crypto natives use Zcash relative to Bitcoin. Crash insurance zoomed out might be a really good way of putting it. What if Bitcoin fails to some degree? But if Bitcoin fails, you're probably going to get a chance to bid Zcash significantly lower than whatever it is at that point in time. There's that interesting dynamic. None of this is to say bearish Zcash. I see so many people putting out the bull case of Zcash, but there is also a commensurate bear case to it. That's also why it's such a pure trading asset. It's an amazing asset to have in your portfolio at different weights, different prices, different times. Options for Zcash are also extremely interesting right now. If you have these massive swings and your worldview is that Zcash is going many multiples higher or crashing back down to $200, options are the best way to express that. Trading options on Zcash is kind of how I've...

Host: Going back to the whole "Zcash is a pure trading asset" idea. In the same way that the best advertising for Bitcoin is its price, the same rule applies for Zcash. Ultimately, we don't know the future, but if the herd mentality gets sparked by ZEC and ZEC does the next leg up, the fundamentals are literally improving as price goes up. I know that's a meme on Twitter, but that is how it works.

Guest: No, it's so true. For things like Bitcoin and Zcash, it's only more attention, more adoption, more acceptance. It has this massive innate reflexivity. That's what I'm getting at. Zcash can't just go up at a 10% CAGR. It's either going to step function up with massive bouts of adoption and price begetting more adoption and more price increases, or it's just going to bleed out as it has in the past. To me, being in just a perps long on it is not necessarily the most interesting way to express that view. Zcash is one of those things where if you zoom out in a year, it's going to 200 or it's going to 5000. It's difficult for it to just chug along.

Host: Can you go into that a little bit more about why, because of the nature of Zcash, you prefer options over perps?

Host: Just like unpack that more basically for me.

Guest: Yeah, I mean, it's when I see guys talk about these price targets like, "Oh, Zcash could go to 10,000, Zcash could go to 20,000, Zcash going to like 5% of Bitcoin," these types of things. The problem is that in the process of going there, it's not going to be a straight line up. You're going to get multiple 60, 70 percent drawdowns. People have to look at early Bitcoin fractals, right? Where it goes from eight bucks to 400, then back down to 20, then back up to 1,200, then back down to 200. It's going to have that same type of adoption curve.

So it's incredibly uncomfy to be in just a perps long. If you just want to put Zcash into cold spot, zoom out, log off for 10 years and come back, it could be many multiples higher, and you completely forego a lot of that liquidation risk. But if you're trying to get maximum exposure to Zcash going to a price target many multiples above where it is now, you have to have a level of self-awareness. You have to ask yourself, "Did I get pushed out from the Orchard exploit? Did I sell my Zcash then? Would I have been liquidated in a 60, 70, or 80% drawdown?"

What's nice about options is you avoid that liquidation risk, but you also get to lever up on the exposure. If you genuinely think Zcash is going many multiples from here, the best way to get levered exposure that's not going to be liquidated is through options. To be fair, the volatility of Zcash is built into and priced into those options as well. It goes both ways. If you hold a bunch of spot and think Zcash is not that interesting for a time period, selling calls against it is extremely interesting because they trade so rich relative to vol. Options on Zcash is going to be a really, really big point that's going to pick up quite a lot of adoption, kind of like what happened with hype.

Host: So when you are interested in an asset and you're trying to do a derivative, either options or perps, how do you make that choice? When is options the right call? When are perps the right call?

Guest: To be honest with you, the answer is kind of always both. There's always circumstances where I would be trading both. The nice thing about options relative to perps is that with perps, there's almost always a view you can put on, but it's pretty much just long delta or short delta. Price up, price down. You can put on a sideways view by going delta neutral and farming funding, but that's not extremely attractive. You're more of a yield optimizer at that point.

Host: Yeah, exactly.

Guest: With options, there's always a trade to be had. You can be long vol, short vol. You can get levered exposure to a tiny bit of upside. You can get levered exposure to a very deep out of the money, massive gamma squeeze type of upside. You can be short a specific pocket of price. Options are just a lot more flexible. You can always express a view through options, and there are a lot of views you can express through options that you can't express through perps.

At the same time, if you are trading options correctly, you should probably be hedging a lot of that exposure in and out via perps. The way I see it is I will put on these longer term overarching theses through options trades. But on a day like yesterday, for example, Bitcoin at 70,500 might have been a really interesting perp long just for a quick scalp up to 76. That's not necessarily a trade I want to go in and cross the spread on options for. I'm always trading in and out of some of the delta I have from my options via perps. Most people should combine both of them.

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Host: I want to learn about the token categories that you see in crypto. The most simple one I see are the exchange token businesses: the Hyperliquids, the Lighters, the Derives. And then there's also the AMM versions: the Uniswaps, the Arrows. Broadly, what are the categories of assets that you're generally looking at on a daily or weekly basis?

Guest: Truthfully, everything in crypto is getting a look from me. I'll look at Pump. I'll look at cards. I'll look at Near. I'll at least look at everything. I just find the most edge for me to express is in more of those DeFi revenue meta things that actually have multiples.

The really big reason is because they just have more data to look at. But I would also say it's because a lot of people don't know how to contextualize that data properly. A really good example is why does Lighter and Hyperliquid and Pump all trade at radically different multiples on their revenue? Especially Hyperliquid and Lighter. The logic would be that they should trade at relatively close multiples. In TradFi, a higher growth, typically lower cap stock is going to trade at a higher multiple. So why has Lighter historically traded at lower multiples relative to Hyperliquid?

It's important to understand how to contextualize that. In crypto, perhaps Lendiness gets rewarded more. The front runner gets rewarded more because people assume that when TradFi money comes in, they're going to crowd into the number one asset and not go much further out on the risk curve. Things trade very differently in crypto relative to TradFi, and they trade at very different multiples for specific reasons. Pump is another good example, because a lot of people can't underwrite that the mean reversion rollercoaster is going to go on forever. They assume the revenue it's generating right now is almost at the detriment of future revenue. There's only so much they can suck out of the industry.

Some people will look at multiples in crypto and say, "Oh, this is trading relatively cheap to its peers." But you have to do a lot of contextualizing as to why it should potentially trade cheaper to its peers. You have to look at individual assets and say, "Is it trading cheap relative to what it has historically, and what has potentially changed?"

Another really good example would be with Hyperliquid. With the AQA V2 USDC revenue coming in, that's extremely durable. That's ARR at that point. That is essentially treasury yield. That trades very differently and should be priced at a very different multiple than trading revenue, which is a bit more cyclical. Because Lighter doesn't have that very predictable ARR coming in through treasury yield, it gets assigned a different multiple. Deep diving into what the actual fundamental levers of growth are for these assets has a lot of edge to express.

Host: For you to be right in your analysis, you're looking at all the data and trying to reason about why Hyperliquid's revenue is more durable than Lighter's. Do you ever worry that there's just not enough people like you thinking like you in order for you to be right? Because it requires other people to also come to the same conclusions as you, and there's only like seven of you in all of crypto?

Guest: That's a phenomenal question I ask myself a lot. This year has been very gratifying for me because I was putting out these investor letters trying to tell people there are so many fundamentally undervalued assets in crypto, and they were just getting zero bid. Nobody gave a shit. Everybody was just piling into meme coins. Quarter after quarter after quarter, I'm like, "These fundamental assets are mispriced. They're going to reprice aggressively." This year has been amazing for that thesis. It's been gratifying to know that maybe I was early to some things, but eventually I was right.

A lot of the tokens I'm long, the nice thing about them is I don't actually really need other people to identify that. With hype, derived, lit, error — these tokens that do pretty aggressive buybacks relative to their revenue — if they're trading cheap relative to revenue, it's just going to get manifested into the chart naturally. Hype is buying three times as much hype back when it was trading at 30 bucks versus when it's trading at 90 bucks, assuming they're still doing two or three million dollars a day of revenue. It might not have this immediate pop. You still need a little bit of people to come in and speculate on that. But if the revenue is there, it does have this fundamental floor, same as equities.

That's where your store of value assets don't necessarily have that fundamental floor. If hype is still generating two, three, four million dollars a day of revenue and it's trading at 30, 40 bucks, it's a much comfier time to say, "You know what, I might be wrong for a couple of months, but eventually this is going to manifest into the chart." Whereas with something like a ZEC, if it starts going down to 200, you can't really say that. It has a kind of reflexivity in both directions. Price goes up, it becomes a much better store of value to people. Price goes down, there's not really that fundamental floor setting feature that these tokens with revenue buybacks have.

I will say too that when you are looking at technical indicators, you do want to be looking at the same thing everybody else is looking at. Everybody's going to bid the 50-week moving average, the 200-day moving average. Some people make this big mistake where they try to find some esoteric and generally overfit technical indicator. "If I look at the 22-session two-hour moving average and put two standard deviations away from it, it bounces at this." Sure, in a regime that could fit a couple of times. But when people try to backtest some of these strategies with clawed, it has no predictive power. It's all just overfitting.

You do want to be looking at the same things everybody else is looking at. As much of a joke as they are, the Fibonacci retracement numbers — there's enough people looking at those that there is at the very least a tiny bit of predictive power. You can make the argument that some people are bidding this silly level.

I would actually say it's kind of the opposite with fundamental data. You do want to be seeing stuff that nobody else is seeing ahead of time. With technical indicators, I want to be looking at what everybody else is looking at to see what levels are likely to be hit and what levels are likely to bounce. With fundamental data, there's quite a bit more edge to be seeing what other people aren't really seeing yet, because eventually they will. I'm okay being early for a couple of months if I think it's going to get borne out in the price automatically anyway through these automated buybacks.

I think that's a big regime change that Hyperliquid really ushered into crypto. Now the expectation is that the marginal buyer of your token is your token essentially. That's what I think really kicked in the outperformance for me personally in the last year or so. That really changed the whole game for everybody else.

Host: Interesting. Which do you think is the faster horse from here on out, Hyperliquid or Lighter?

Guest: It's tough. The way I put it with other people is that I think Lighter is a better hold for the next three to six months. You can maybe even make the argument that the recent political events might have a little bit more favor towards Lighter. I got some flack for it, but whether people want to accept it or not, Hyperliquid was at least a little bit of a Trump bet. He said it in his press conference. The CFTC is openly quite pro-Hyperliquid. All the lobbying money they've spent through the Hyperliquid Law Foundation — they were at the very least slightly Trump-aligned, or Trump was aware of their existence.

I think that is obviously going to change. Hyperliquid is completely capable of being neutral. I don't have anything against Hyperliquid necessarily. They didn't throw in with Trump to the same way that Elon did, where Elon is probably just going to be persecuted for the foreseeable future. I'm not trying to say there's any persecution that's going to happen towards Hyperliquid. But all else equal, if the slate is blank, I think Lighter might have a faster, cleaner path towards regulatory clarity than Hyperliquid.

I also think it's kind of part of their bull case. They are going more aggressively after the U.S. market than Hyperliquid is. Hyperliquid is kind of going more aggressively after the global market. They're a bit more agnostic to the U.S. market. Obviously the U.S. market is a big prize for both of them. I just think Lighter is leaning in a bit more heavily to that.

I would even say too that there's an interesting case to be made that could be where Lighter is wrong. I've heard some other funds and analysts talk about how untapped the U.S. market is. You kind of see that play out with Kalshi or Polymarket data. Everybody was already accessing Polymarket via VPN. Everybody thought with U.S. regulatory clarity there was this massive untapped consumer base, and there might actually not be. That's an interesting bear case for Lighter potentially — the people who want to be trading perps in the U.S. largely already are.

But over the next three to six months, almost just by virtue of recent price action, I think Lighter probably can do a better multiple than Hyperliquid can in the same regulatory environment. All else equal, they both get CFTC clearance in three months. I think Lighter pops a couple multiples, whereas Hyperliquid might just pop 20, 30, 40%.

But at the same time, I trust the Hyperliquid team more long term. I would rather go into a coma for a year or two holding all hype than all lit. I see Lighter as a bit more of a trade that's really attractive for the next couple of months. Whereas I see Hyperliquid as a potential multi-year hold type of asset. It trades kind of like BNB is a good example of the price action — it just goes basically up in the long run quite nicely and trades at many multiples higher from here.

Host: Yeah, I go back and forth on the same subject. Hyperliquid just fits the mold of Binance, right? Binance is orders of magnitude larger than Coinbase. Lighter is trying to do the onshore trusted regulatory thing and win the U.S. market. But Binance is clearly where the value is because crypto is inherently an offshore phenomenon. That's what we are. It's in our DNA. Crypto is offshore.

Granted, at the same time, the untapped retail audience who just deposits on Coinbase or Robinhood and trades on Robinhood — that market is firmly untapped. The people who won't be bothered to turn on a VPN to go trade. But also at the same time, perps are a retail-oriented instrument. The massive institutions out there are probably going to stay in options land. The perp penetration in the onshore compliant world is probably just the retail audience. That's probably why the Robinhood partnership is so important to Lighter.

Granted, LIDR will also be doing options and it has some novel technical infrastructure with the zero-knowledge circuits. It's probably going to be, in terms of actual exchange execution, the number one most performant exchange of all time, inclusive of all the other exchanges on the New York Stock Exchange and NASDAQ. It's nice to have an asset that is technically superior. I don't know how far that takes it. These are all kind of my thoughts.

Guest: No, you're exactly right. That escape hatch functionality — these are types of things that eventually you would imagine regulators and massive institutional allocators and traders will care about. Eventually. But now the question is, it's almost kind of what we were saying before. If nobody else is looking at these things, does it really reflect into the price? Kind of hard to say.

I would also say that liquidity is so much more of a moat than people realize. Everybody kind of hand waves it away. "Oh, they have these better features, or there's this new perp DEX that launched that's more performant." Nobody cares at all. As a trader, I can accept that Lighter in my opinion has a better UI and a better UX than Hyperliquid. They've had features earlier than Hyperliquid. They've allowed you to cancel and select certain types of orders better than Hyperliquid. But I still do most of my trading on Hyperliquid because it has so much deeper liquidity.

That's slowly starting to change. You are starting to see better fills on Lighter on the majors specifically. But if you want to trade altcoins, Hyperliquid is still generally going to get you a lot better fills at size. And even then, people have to realize that the altcoin markets on Hyperliquid are only fractions as liquid as on Binance too. You still have all these stat arb guys and guys trading large baskets and market making on altcoins that are not there on Hyperliquid. They're only doing it on Binance because it's an order of magnitude deeper liquidity there.

I would also stress to people that these are markets that trade and settle in the quadrillions. I fully expect both to capture multiple percents of that, which is orders of magnitude higher than what they're doing right now. I genuinely believe both can be trading at many multiples higher than they are right now in the future. It's not to say that I would express this view as "I'm long lit and short hype." I hate the concept of being short either in this market. That seems like you are way too online on crypto Twitter if you're trying to make that trade.

Host: Right, exactly.

Guest: But I did post that I really like the concept of if you hold spot hype here, selling some calls against it at 100 bucks makes a lot of sense to me, and buying some lit calls. Because in the next couple of months, you might see a much bigger pop on lit than you will on hype. Trading some upside of one to the other is fine. But betting on downside of one versus the other, I would be afraid to take that bet. Hype could just put in 20, 30% candles regularly, like you saw with the recent Druck and Elon situation.

Host: Yeah. So there have been some people who have gone back and forth on what the total cap is that's a fair valuation for Hyperliquid. You can put Lighter in this camp too. It's an exchange business. If you comp it to all the other exchange businesses out there, it's already pretty fully expressed. The upside has been fully expressed just because it's fairly valued versus the other gargantuan exchanges that exist. Assuming further revenue growth from here is actually just not a given. Do you have a take on what the actual upside constraint is on Hyperliquid, like the fully diluted valuation in the fullness of time? Or do you think it's actually relatively unconstrained?

Guest: That's a great question. This gets back to what we were talking about earlier about how you really have to be able to contextualize the differences between this and an ICE, a CME, a Binance. They trade so differently. The other thing people have to realize is that because of the amount of buyback and burn that happens on hype, hype in five years can be trading at the exact same market cap as it is right now and be trading at multiples higher on the current price. You're long the price, right? You're not long the market cap. Hype in five years at a 100 billion market cap looks very, very different in price than what it is right now just because of that mechanic. Same thing with Lighter to a degree.

With the amount of trading that is likely to come on chain, and like I said, that is a precipitation they are making there, you are betting that more trading will come on chain. If you're in this industry, I would assume that's a bet you're willing to be comfortable with. I do think there are multiples left for hype to eat into the traditional exchange businesses. I also think it's very apples and oranges. To what degree do those businesses have fees that have already been compressed? Have they been commoditized? To what degree is this opening up net new users abroad? How much appetite is there for trading perps on US equities in Asia, for example? That's just not really being expressed right now. There are a lot of moving parts in that equation and a lot of extra variables that exist for hype that don't necessarily exist for a CME valuation or ICE valuation. Those are much more well understood. Hype is a bit different.

I agree with the sentiment that hype is not this massive asymmetric trade anymore. You're not going to put $10,000 into hype and wake up in five years with 2 million bucks. If people are expecting that level of asymmetry out of the trade, I would definitely push back on that. Hype can do multiples potentially from here in the longer run, but it's not going to be doing a 10x here necessarily. A lot of the upside has been captured, but that doesn't necessarily mean it's capped to what it is right now.

Host: Would you communicate where we are in the options war? Deribit has been decently liquid on options for a long time. Derive has really come onto the scene pretty aggressively. I think you were in that trade pretty early. It seems very early in the grand arc of how options get expressed in the context of crypto. How would you explain just where we are on that arc?

Host: Much earlier than wherever we are in perps. I think perps have hit much more of a saturation point than options. You've kind of seen that played out in this last year where actual perp volume is not dramatic. It's nice, too, because we just kind of had the anniversary of 1010, which killed a lot of perps OI and volume. And it hasn't even fully recovered back on a lot of those pairs since then. It's not to say that I think perps is topped out. Obviously, I still think that there's quite a bit more growth left for perps yet. But it's definitely hit more of a sticking point and saturation point.

Guest: Options, on the other hand, is just a straight hockey stick graph up essentially in terms of actual adoption and notional. Like I said earlier, TradFi settles quadrillion — a huge portion of that is notional options trading and a lot of other derivatives that are a little more adjacent to options. I think there's so much more untapped volume to come in. I actually don't think even the people who subscribe to the Derive bull thesis fully understand it. I'm one of them. I'll hear about new structured products and new instruments being built on top of it, and I'm like, "Oh shit, that's such a cool idea. This is going to be amazing. People are going to love to use that."

Options is such a deep rabbit hole to go down into — all the cool stuff that people can build on top of using options. They're a much more flexible instrument. I think even a lot of the Derive bulls don't really fully understand how much the options market will grow in crypto. The big bet there, though, is: will that be captured by Derive? Will it be captured by other participants? You're never going to have a situation where there's this massive, evergreen, huge growth spot that doesn't have a ton of competition. That's why the mental model I put out is that the options space in crypto could very easily five to ten times next year. But if that happens, it's almost impossible to imagine that Derive keeps its 90% to 95% plus market share. That's just not how markets work.

Host: Really? Is it how much market share Derive has?

Guest: Yeah. Derive regularly is doing 85%, 90%, 95% of daily notional and daily fees. It's been that way for an entire... It's actually been pleasantly surprising to me to see how long they've kept that. It's been a big part of the thesis there. But it's unrealistic to expect them to keep that if options is to grow as much as I think it is. I'm quite long the options market, and the best way to express that right now is Derive. But like you said, Lighter is probably going to roll out options in a couple of months here. I expect them to be a competitive product. There's other competitive products out there — Paradex, Hypercall, a bunch of other stuff. There are other options for options, essentially.

But I do still think that Derive has a special place, almost by virtue of their new architecture being built much more similarly to Lighter, directly on top of Ethereum. I think all the different options protocols have their own unique value proposition and niche they're going after. But if we want to talk about the one that's going to be the most readily built upon and adopted, Derive is still the pretty clear frontrunner there.

Host: Hyperliquid is not in this race, is it? They're not trying to build options, are they?

Guest: I try to express this to people all the time. The problem is you really have to get into the technical weeds to explain why Hyperliquid's risk engine and architecture and infrastructure is not extremely well suited for building options on top of it. When Jeff recently gave his speech in Singapore, he kind of said, "Oh, I think it'll be cool if people build options on top of Hyperliquid." I interpreted that as: they've given people the tools with HIP-1 such that they could try to build what I would consider a bit of a bastardized version of options, where it's just leveraging prediction markets to give you a version of a covered call or a call spread or put spread.

From them, they have this more hands-off approach, which is to say they technically have something that people could build options on top of. You're seeing that with Hypercall and some of the HIP-1 deployers doing options-adjacent stuff. But I don't think Hyperliquid is natively going to put out options anytime terribly soon. I think that's part of the other bull case of Lighter versus Hyperliquid right now — Lighter is very clearly committed to having options live in the next couple of months. It's very likely they're first in that market. If I'm long the options market writ large in crypto, that involves checking a column in Lighter's favor as opposed to Hyperliquid.

That said, Hyperliquid's team is phenomenally talented. If they put their minds to it and saw that there was a big enough opportunity in options, they would 100% join that market eventually. I don't think this is a thing where Hyperliquid never touches options natively, but it might be nine months out or twelve months out, as opposed to Lighter which might be two months out or three months out.

Host: That kind of goes back to what my current understanding is. Really, the only two assets to buy if you're trying to express an options trade are Derive and Lighter. Derive because it currently has the trophy of all the options volume and will likely continue to have that. And then you would buy Lighter if you think that Lighter is just a technically superior platform for exchange and resumption broadly, as I mentioned before. They've stated they are going to be adding options as a feature because they're trying to be an everything exchange — spot, perps, options, regulatory compliance. But beyond those two things, that's it. That's the only two ways I see actually expressing that trade. You're generally right.

Guest: Yeah. I would push back a little bit on Lighter being technically superior. Derive, by being built as an options-first DEX, does have some built-in advantages over what Lighter is currently doing with their architecture. You're getting into a real technical rabbit hole there that I'm probably not even fully equipped to go down into in terms of the trade-offs both teams are making. You could make the argument: is Derive a perps DEX that's going to be strapped on top of an options DEX that's more native? Is Lighter going to have options stuff kind of strapped onto a perps DEX that was more intended for perps in the first place? There's probably some levels of trade-offs there where both teams wish they could have done something different if they were trying to build for the alternative use case.

But no, I think Lighter is going to definitely be a pretty big power player in the options market, if nothing else because the relationship with Robinhood is pretty favorable for them. There are definitely a couple of other smaller ones — Dime for Paradex, Synapse for Hypercall. They're trading quite low, quite cheap right now. Low eight figures or even seven figures in terms of actual market cap. Those are tiny relative to Derive and Lighter. You're probably going to see new ones too. Variational Pro is kind of going after that options, derivatives, OTC, multi-dealer market. They've actually specifically talked about structured products. I think structured products is this huge niche that nobody's really doing enough of a deep dive about in crypto right now, because it actually fits quite a few cases very well in crypto.

Like I said, next year I think the options landscape will be probably very different. There probably are going to be a lot of new entrants and a lot of shifting of market share. The mental model I have is that Derive might only be 55% or 60% of the market share next year, but the market share might be five to ten times higher. It's a much, much bigger pie, but probably a smaller chunk of that pie just by the way things tend to go.

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Host: Well, this has been a great conversation. I've learned quite a lot. When I let you go here in a few minutes, you get back to your desk. What are you going to be looking at? What's your focus for the last two months of this year as we round out 2026? What excites you? Where are you paying attention to?

Guest: For me right now, the way I would put it is we're at this peak career risk level of crypto allocation. You have peak risk but also peak reward. For people who don't have investors — imagine that you did, for example — you're looking at the AI bubble clearly popping to some degree. You just had this massive regime change politically. You longed crypto into that. That's largely priced in now. So you're at this inflection point of maximum risk, maximum reward, in my opinion as a crypto allocator. You have to put your mind inside the head of a more institutional whale crypto allocator. Would institutions be looking at crypto favorably here?

The AI bubble popping to some degree is actually kind of a boon for crypto. Crypto used to benefit from being seen as the fastest horse, highest beta asset. When crypto is trading at relatively low valuation relative to semiconductors and AI companies, a lot of money became apathetic towards crypto. I don't think institutional guys became bearish on crypto necessarily. They were just like, "Why would we be here when the clearest, fastest horse, highest beta play that's most tech-adjacent is more so AI and semis?" If that cools down for a little bit, and a lot of that risk-chasing money wants to find a new home because they find AI potentially a little less interesting, you actually could have this interesting period of regime change where crypto now gets much more of a bid.

But from a career perspective, if you're running a fund and you say, "I think crypto is going to go broadly and equities are going to continue to go down," that's an incredibly controversial and pretty hard opinion to defend. I think you're going to see a lot of guys be pretty reticent to try to put that trade on. That's why we're at this inflection point of maximum risk, maximum reward. When people are afraid to step into crypto and afraid to express that view, you're going to have a lot of price dislocations. A lot of things are going to trade quite cheap.

There's also the concept that crypto has already front-run a lot of this. People need to realize that the AI bubble might be popping to some degree and coming down from all-time highs, but Bitcoin is trading well, well below its all-time high. Crypto already had its massive sell-off previously in this year, as opposed to what's happening right now in tech more broadly. Looking at the macro environment and deciding, "Is this basically the beginning of the end or the end of the bear market for crypto?" should be on everybody's minds. You have to build out your worldview. You have to have a very top-down view of crypto right now.

If you think the 10-year is going to be trading considerably lower than it is right now, if you think that war is likely to end abroad, then yeah, you should be slamming everything into risk assets. The next follow-up question you should be asking yourself is: have the recent events been more accommodative of the store value trades as opposed to the revenue meta? Has the revenue meta topped? That's another interesting thing I think a lot of people should be looking at. I'll be taking a more investigative look into whether Hype is just a less interesting trade for the next two or three months, and whether it's more interesting to go long Zcash. That's something that could be interesting for some people to ponder.

At the same time, there's also the question of whether Zcash and Hype are just perma-tops and everybody's crowded into them. If crypto goes down quite a bit, those are the last assets you're going to want to be holding on to. I think this is probably the most interesting time to be investigating a lot of those questions and really building out your three to six month worldview, because there's a ton of opportunity in the market right now. We're at this really big inflection point where if you're right, you're right gigantically. And if you're wrong, you're also kind of wrong gigantically. So it's an interesting time.

Host: How did you pick a Kool-Aid man as your Twitter PFP?

Guest: The guy who put me up to making a Twitter, his nickname was Kool. So I was just like, "Oh, cool. I'll just make it Kool-Aid or whatever." It kind of just stuck. KoolKrypto was initially started as a good joke because I thought social media in the past was kind of silly and that Crypto Twitter was this clown fiesta. I was like, "I'm going to pick the cringiest, silliest, almost joke on there." Then I was like, "Well, shit, I kind of need a profile picture now." So I just went with the Kool-Aid man. Very little thought was put into it, but it kind of stuck. So I'll keep it.

Host: All right. I've learned a ton. Thanks for coming on the podcast and sharing all of your thoughts. I appreciate you.

Guest: For sure. This was a good conversation. Thanks for having me.

Host: Linking station. Y'all know the deal. Crypto is risky. You can lose what you put in. But this is the frontier. It's not for everyone. I'm glad you're with us on the Bankless journey. Thanks a lot.