By GLC Research

Compiled by: TechFlow

In this episode, we dive into an interview with Hyperliquid Strategies hosted by Keisan @Keisan_Crypto and Monk @defi_monk. This interview features Hyperliquid Strategies founders Bob Diamond @rediamondjr and David Schamis @dschamis, who share a single goal: maximizing the value of each share of $HYPE.

The discussion was so insightful and exciting that we can’t wait to share some of the key takeaways with you.

If you missed the call, now is the perfect time to stop by and learn why we are bullish on $HYPE!

Not only are we bullish on $HYPE, but smart investors like Keisan and Monk are also confident in it. Bob and David, two veterans with outstanding resumes in traditional finance, are also betting on $HYPE.

Bob and David are no ordinary investors. Having held key positions at renowned institutions like Morgan Stanley, Barclays, and Salomon Brothers, they possess decades of experience in traditional finance. They have long been active observers of the digital asset sector, and now, they believe it's time to fully enter the industry.

Here are some highlights from the interview:

Question 1 (Monk): Why did you decide to create a DAT company focused on $HYPE?

Throughout their careers in traditional finance, Bob and David have focused on financial services businesses—those that generate significant cash flow. Their investments in banks, insurance companies, and especially brokerages and exchanges have given them a deep understanding of this business model.

Because of this background, they believe that buying tokens that do not have product-market fit or a revenue base is not rational. Therefore, in the past few years, they have chosen to wait and see on the sidelines of the crypto industry and not rush into it.

That all changed when their partners introduced them to $HYPE, an exchange business model they were thoroughly familiar with. $HYPE had solid fundamentals, generated over $1 billion in free cash flow annually, and used that free cash flow to repurchase its own tokens. The opportunity became clear and almost impossible to ignore.

They quickly put together a plan of action. Their initial goal was to raise $300 million, but they soon discovered that Paradigm and other major companies were also exploring the same idea. To avoid competition, they opted for collaboration.

In a very short period of time, the amount of funds raised reached a staggering $888 million, far exceeding expectations. This not only reflects the strong interest of traditional financial investors in Hyperliquid, but also demonstrates the huge appeal of $HYPE.

Of this funding, 65% was raised directly in HYPE, 35% was raised in cash, and approximately $300 million has not yet been invested in HYPE.

Question 2 (Monk): How do you measure the potential demand for Hyperliquid Strategies?

They believe that the potential demand for Hyperliquid Strategies will be very large.

Currently, most digital asset treasury firms focus on traditional crypto assets like Bitcoin and Ethereum. However, $HYPE stands out because it's not easily accessible. Hyperliquid's exchange is not available to US users, making it nearly impossible for the average American investor to directly purchase $HYPE.

Another important factor is that Hyperliquid is the only relatively new project to break into the top 10 crypto assets, as opposed to decade-old projects. This creates a huge opportunity for them to educate investors about Hyperliquid in the coming months and years.

Furthermore, they highlighted the quality of investors behind Hyperliquid Strategies, which includes well-respected institutions such as Galaxy Digital, Pantera Capital, D1 Capital, Republic Digital, and 683 Capital.

With $900 million in funding committed at launch, they are already operating at a scale far larger than any current or potential competitor.

Therefore, they are confident in the strength of the investor team and the scale of capital, which they believe will drive Hyperliquid Strategies' success and attract strong market demand.

Question 3 (Monk): Has Hyperliquid Strategies started acquiring $HYPE?

The company announced the transaction in mid-July and expects it to close in the fourth quarter. Due to the transaction being subject to shareholder approval, it was completed on a sign-and-close basis. This structure also allows $HYPE contributors to exchange their holdings tax-free, thus avoiding taxable gains on low-cost positions.

Therefore, as a result of this transaction structure, the Company has not acquired any $HYPE and has not received any cash proceeds. Once the transaction closes, management plans to invest the majority of the cash on the balance sheet into $HYPE, while retaining a small portion for operating expenses and the ongoing needs of being a public company.

Question 4 (Keisan): What is your management strategy after accumulating $HYPE?

From day one, they plan to stake their $HYPE holdings to earn a yield of slightly over 2%. After a few months, they will begin exploring and carefully evaluating potential DeFi opportunities on Hyperliquid that may offer higher returns.

However, they stressed that these opportunities must come with little or no additional risk.

According to them, any further participation in the ecosystem only makes sense if the incremental benefits can reasonably offset the increased risk exposure.

Question 5 (Keisan): What do you think of $HYPE’s valuation indicators?

First, they focus on Free Cash Flow, which can be a bit complicated due to the circulating supply and unlocking mechanism. But even if a large unlocking occurred tomorrow, they believe $HYPE would still maintain an attractive trading level, although they don't believe this will happen.

When they say $HYPE looks “cheap,” it’s not just based on traditional valuation metrics, but also on growth potential. First, they believe Hyperliquid still has the opportunity to capture market share from other perpetual contract market players, allowing for some organic growth.

Additionally, they mentioned that @hyperunit has added spot assets and native deposits on Hyperliquid, and believe that growth will also come from Unit and spot trading itself.

Regarding Builder Codes and HIP-3, they believe these two areas are just beginning to show their potential. They were impressed by the team's execution and pointed out that other front-ends or wallets can integrate perpetual contract trading into their own applications with just a few lines of code.

@phantom is a successful example, with impressive revenue performance from this integration. They also mentioned opportunities for HIP-3 in other asset classes that may eventually be traded through perpetual contracts.

For example, they say that if someone wants to start a stock trading business in a certain country, rather than building a new exchange or trading infrastructure from scratch, it would be more efficient to directly plug into Hyperliquid's core architecture.

They were excited about the idea of trading pre-IPO companies on the perpetual market and found it very appealing. They cited Circle as an example: as shareholders, they were eager to see price discovery before its IPO, which was priced at $31.

In summary, they believe the core business is already highly valued. Combined with developer code, HIP-3, and other features that can be built on Hyperliquid, this will generate revenue for the protocol in a permissionless manner without significantly increasing operational costs. For example, the Phantom integration did not require any additional staffing; the existing team of 11 was able to complete the work.

Finally, they shared an interesting anecdote: when they were preparing to appear on CNBC, a well-known figure in the crypto field told them: "You should go on CNBC and say that Hyperliquid will surpass Nasdaq one day."

As crazy as it sounds, it's not impossible for them.

Question 6 (Keisan): How aggressively does Hyperliquid Strategies plan to acquire $HYPE after its launch?

Keisan posed a question about Hyperliquid Strategies' acquisition strategy after launch, comparing it to that of Bitmine's Tom Lee.

They explained that as long as the company trades at a premium to its net asset value (NAV), they will continually seek to raise additional capital to acquire more $HYPE.

In addition, they plan to explore the use of other financial instruments, but with a focus on those that are not accessible to individual investors alone. The goal is to enhance the net asset value (NAV) premium through the use of specific instruments, while always ensuring the security of the underlying asset $HYPE.

Question 7 (Keisan) – Under what circumstances do you think you would sell $HYPE?

David said he wouldn't completely rule it out, but the only scenario he could think of where they would choose to sell $HYPE is when the company's stock is trading at a significant discount. He emphasized that he hopes that scenario never happens, but ultimately, they have a fiduciary responsibility to Hyperliquid Strategies' shareholders.

In his view, the goal of any public company is to increase per-share book value for investors, and his preferred way of achieving that is for the company to trade at a premium, enabling it to issue shares and acquire more $HYPE.

Question 8 (Monk): What misunderstandings do you think the market has about DAT?

Bob emphasized that $HYPE is fundamentally different from other DATs (digital asset treasuries). He pointed out that the exchange has performed very well in terms of cash generation, continuous buybacks, trading volume, efficient use of operating expenses, and rapid market share capture.

In his view, Hyperliquid Strategies is objectively creating a very valuable DAT because it will enable US equity investors to gain exposure to $HYPE.

David added that there's still a significant amount of capital that can access the US stock market but can't access the crypto market. While the crypto market has performed exceptionally well over the past decade, it's still far smaller than the stock market. To him, this is precisely why DATs are necessary and why they should trade at a premium.

Especially for Hyperliquid Strategies, this is even more important considering the difficulty of obtaining $HYPE.

Finally, he concluded that whatever MicroStrategy's premium is, Hyperliquid Strategies' premium should be even higher.

Q9 (Keisan): Is there anything else you would like to share about $HYPE and the broader ecosystem?

David said they are very much looking forward to introducing $HYPE to global audiences on platforms such as CNBC and Bloomberg, and are also excited to interact with the community and the broader Hyperliquid ecosystem.

In response to a question from @andyhyfi on @HypurrFi, they explained that the current macroeconomic and regulatory environment is a significant improvement from the Biden administration, when Gary Gensler took a highly repressive and negative stance towards the crypto industry.

In their view, the current situation shows that the United States is taking more steps in the right direction, creating a more favorable environment for innovation and progress. They pointed out that many of the most influential figures in the United States have publicly praised the encryption industry, and the largest companies are also making significant investments in the blockchain field.

Against this backdrop, it’s hard not to feel optimistic about the industry’s future.

Conclusion (@GLC_Research)

Thank you for reading this far. We really enjoyed the process of compiling and creating this interview.

Fresh and insightful voices are rare in the crypto community, so we particularly valued the fact that experts from traditional finance (TradFi) joined the discussion and spoke so passionately about a compelling crypto asset like $HYPE.