# Institutional DeFi Adoption and US Regulatory Risks

**Podcast:** The Milk Road Show
**Published:** 2026-03-31

## Transcript

These are absolutely crucial protections because if we don't have them in the bill, all we're doing in market structure is handing the next hostile administration that wants to go back to the era of Gary Gensler the gun that they need to shoot us with.
What's up, everybody?
It's LG Doucette here, and welcome to The Milk Road Show, the daily crypto show that's determined to make crypto policy interesting.
even if it means making it all a bit degen and fun today is march 31st 2026 listen guys i say this almost on every show it's a bear market we know this and this is the time where you not only stack but you also learn to listen and add new skills like i told john gillen on yesterday's show i didn't know any of this macro and legal stuff in the last bear and now through doing this show i've been given the chance to deepen my knowledge on how all this actually works behind the scenes and you have that opportunity as well Today's episode is one of our favorite guests from the past, Jake Chervinsky, the CEO of Hyperliquid Policy Center and a legal expert in the industry.
No one is closer to the market structure bill than this guy.
And he's also a megabull on protocols like Hyperliquid, so much so that he's created the official policy center to help develop new rules that are going to help Americans access decentralized markets like...
hyper liquid and all the fun stuff that happens on the weekends, especially.
I'm really excited for this one.
So make sure you lock in and we're gonna have a great show.
Today's episode is brought to you by Midnight, bringing rational privacy to blockchain and some turn crypto tax chaos into confidence.
Jake, welcome back to the show, man.
You were last here, I think in March 2025, around a similar crisis time.
This one's a little worse.
Yeah.
Hey LG, it's great to be here.
And yeah, glad to be back a year later.
Let's talk about what you've been up to lately.
Last week, you were at DOS, and we've only had one episode so far on the show to talk about this.
I want to pick your brain as well, especially as somebody who's so involved on the legal side of everything.
What are you hearing at DOS?
What was the main message you'd take away from all the industry professionals that were there?
Yeah.
So I mean, being at DAS honestly was the exact opposite of what you get from being on Twitter.
The vibe there is extraordinarily positive, right?
But really what has happened is after many years of us saying, the institutions are coming, the institutions are coming.
We are at a moment now where the institutions are here.
And literally they are here in the sense of being at one of the premier crypto conferences, listening to panel after panel about the institutional opportunity to engage in finance on chain and on public permissionless blockchains in particular.
So, you know, what you see on Twitter is, of course, the bear market, like you said, right?
This is not the best time for token prices.
And definitely sentiment is down within the industry and within the crypto community.
But the sentiment within TradFi is basically an understanding that we are moving into a world where finance is going to happen on chain.
Part of that is coming from just the opportunity and the efficiency and the enhancement, the upgrade that is public permissionless blockchains as compared to the traditional financial system.
A lot of this is also coming from the positivity out of Washington, D.C., where I'm based and where I spend my time working with policymakers, where we have a chair of the SEC who has been out there now for almost an entire year saying, we are going to upgrade the financial system so that all finance can migrate on chain.
So traffic institutions understand this is going to happen.
They're at a point where- By and large, they have accepted that this is going to meaningfully affect their business.
And they're starting to look for where is that opportunity?
Who are they going to work with?
Who are they going to partner with?
And how do they make sure that they are making the most of this upgrade and not being left behind?
So really, the sentiment at Das was extremely positive and constructive in sort of a one to two year time frame of a lot of institutions starting to use this technology in a really meaningful way.
How do they make the most of this, Jake?
I think there's a couple ways, and it depends on the institution.
I think for most of them, what they are thinking about is how they use the technology to improve the products and services that they are now offering to their own customers.
So consider the example of an institution like BlackRock, one of the biggest asset issuers in the world.
BlackRock is trying to figure out how do we replace the ETFs that we've had trading on traditional securities intermediaries, on NYSE and NASDAQ, on the traditional exchanges, replace that through tokenization, where we can save a whole lot of money on the back end and have an asset on chain that is also accessible to a much broader audience of potential purchasers and users.
So I think one way of looking at this is just how does the technology itself change the financial system in a way that existing institutions can benefit from by offering new and better products and services.
The other is where there are opportunities for investment, right?
And part of that is through mergers and acquisitions.
So we see things like the Intercontinental Exchange, one of, if not the largest derivatives exchanges in the world, making investment after investment in poly market, trying to take advantage of the prediction markets.
sector within the industry and then you see you know other companies that are literally looking at tokens trying to figure out where is value going to accrue within the crypto industry and how can we get exposure to that before the market comes roaring back and before everyone else understands where that opportunity is so we're seeing it on both the building side and also on the investing side Everything you're listening to today is also covered in our daily crypto newsletter.
And on Sundays, we even recap the best parts of the entire week's worth podcasts.
So check it out at the link below.
So it sounds like there's a lot of optimism, especially even that last line you said before the market comes roaring back.
Is that something across the board?
Everybody, there's like a consensus there.
I was like, yes, the crypto will come back with a fury at some point.
I mean, look, everyone likes to speculate on market conditions, and I'm not sure that I or anyone else is that great at predicting with a crystal ball what's going to happen in the market.
But by and large, what you hear from institutional asset managers is that their expectation is, yes, we're in a bear market, but about one to two years from now, we're going to start seeing some of these new products rolling out.
We're going to have sort of the washing out of the...
products that got launched in the last cycle and were maybe really large fads, things like meme coins that were maybe sort of transparently valueless and were more for entertainment purposes, but not necessarily going to be that long lived, perhaps with a couple of exceptions there.
We're going to see all of that activity sort of wash away as we often do throughout bear and bull cycles in crypto.
And we're going to start to see maybe for the first time, real meaningful financial activity migrating on chain and real products that are genuinely developing and accruing value on chain.
And I do think that that's one of the things that has gotten the traditional finance space much more excited about crypto in 2026 than they were in 2021 or 2022, or, you know, going one cycle back 2017 and 2018.
You know, back then we had the ICO bubble, which most people viewed as just an end run around the securities laws where people were engaged in capital formation without providing the types of disclosure.
that a typical public company would provide.
So there wasn't a lot of interest in investing in that.
Sort of the same in 2021, 2022, right?
There were a lot of NFTs and that was definitely not something that most traditional investors were able to understand.
The metaverse was not a thesis that most people really wanted to put money behind.
And then, of course, in the last cycle, we had the meme coin craze.
And that also was not something that an institutional investor looked at and thought, there's a lot of value here that's going to be durable that we want to invest in.
Now they're looking at the industry and they're seeing the reality of DeFi, right?
public permissionless decentralized infrastructure on which real financial transactions can happen and where there are platforms and protocols that are generating massive amounts of fee revenue.
So I'm sure we'll talk later about Hyperliquid.
I do think that this is the best example of this where you have an asset in the hype token that is not just some valueless governance token or some meme coin.
It is a genuine value accruing asset where the more activity there is on Hyperliquid, the more value is accrued.
that token.
And we're starting to see, frankly, the whole industry sort of shift into this model of having real value accrual in those tokens.
This is just something that the traditional finance space is capable of understanding in a much different way from what the industry has created before.
So I do think that we're at this moment where TradFi understands there's a real opportunity here.
There's a way to value these assets.
And so there's a lot more institutional interest in investment.
I mean, that's really encouraging to hear, Jake.
I think that that's kind of what we were hoping the message is.
would be at dos um and kind of what we want to hear from you is this what what would you say and we'll talk about market structure and this will probably a good segue into it but of the people you're speaking to the people you talk to these days and at dos and everywhere what is the biggest barrier for all this happening like what's what's the biggest worry or thing that they the biggest catalyst that they they are unsure if it'll happen or not or what does that what does that look like and market structure is an obvious one but is there maybe we can talk if there's anything else besides market structure we could start there and then we'll move to clarity yeah so i i mean i do think that generally speaking policy and regulatory clarity is very important i honestly wouldn't say it's necessarily the only or even most important issue for for most traditional financial institutions yes of course they have compliance departments.
They are concerned about how the government is going to view their activity.
They want to make sure that they are in compliance.
But I still think even before we get to the policy and regulatory issues, there is still a lot of education that needs to be done about the commercial opportunity of engaging in DeFi.
So like I said, a lot of institutions now really understand that this is happening.
But usually an institution has a couple of guys, right, like a few men and a few women who really understand the opportunity in crypto.
And they're working really hard to convince everyone else at the institution who still thinks.
Bitcoin is all of crypto, right?
They do not understand the difference between Bitcoin and a smart contract platform like Ethereum or an on-chain order book like HyperCore.
And they still need to be educated that the goal of crypto is not to end the Fed and replace the dollar with a cryptocurrency.
So I still think that there's just a sort of education.
issue within the institutions to get them to understand what the opportunity is.
I think after that, yes, the market structure bill matters.
I don't know that legislation, in other words, for Congress to amend federal statute is necessarily the gate for institutions to get into crypto.
What they want to understand more broadly than that is.
are they going to run into some enforcement action or some regulatory compliance issue if they engage in this ecosystem?
We can get that clarity from the agencies in addition to from Congress.
And I would say the most important issue that they think about right now is illicit financial activity on chain, right?
And this is sort of the core promise.
of a public blockchain is that anyone in the world can access the system without having to ask for permission, without having to get some credential issued to them by some government that may or may not be as trustworthy as the United States government or other governments in developed countries.
The downside of this, of course, is the financial institution, which is used to knowing exactly who its counterparty is in all cases.
is now involved in finance in a pseudonymous environment where all they can see is a public address and sometimes not even that.
And they're very concerned about whether the counterparty on the other side of their transaction is a sanctioned entity, someone in Iran or someone in North Korea, where they will be strictly liable for violating the sanctions laws, even though they had no way of knowing who that counterparty was.
So one of the main policy challenges, which frankly, the market structure bill does not answer for them is how institutions can engage in financial transactions on chain without just having the ordinary white list that says we're going to identify every single user of the blockchain in order to feel comfortable that there aren't bad actors in the system.
So it sounds like privacy is also a pretty big sector to think about when it comes to how all this evolves, regardless of clarity or not, right?
Would you say that's accurate?
Because it kind of sounds like you're referencing, maybe indirectly referencing something like Tornado Cash, which is one of the more popularly famous legal cases the last five years, right?
That was an on-chain protocol, let people make anonymous transactions, but the founder's in jail.
right and um that they don't want i guess i guess the market structure bill is kind of omitting any regulation that would that would prevent them from persecuting those types of people that they an app that they classify as as allowing this type of activity is that kind of what you're hinting at That's exactly right.
And calling out Tornado Cash directly, I think, is important because Tornado Cash is, to your point, the watershed case for how the United States government treats the developers of technology that allows users to maintain their privacy.
And I will say from a philosophical and principled perspective, to me, this is one of the core promises of decentralization and public permissionless blockchains, is that instead of living in a financial system that excludes That includes billions of people from access just because they don't have the right credential from some government or they're viewed as undesirable and can be excluded from the financial system.
The point of crypto is that everyone can access this system, right?
And that doesn't mean that we don't care about illicit finance on chain.
We obviously don't want bad actors to abuse the system.
But at the same time, what we don't want to do is just take the same old failed approach.
of trying to identify every user to exclude bad actors and then transpose that onto this brand new system that offers this benefit of permissionlessness and accessibility to everyone in the world.
Positive as this government has been, and the Trump administration and the Republican Congress, and also many Democrats within Congress and elsewhere, have been very pro-crypto in their approach to this space.
And especially the leaders of the financial markets regulators, the SEC and the CFTC, extraordinarily constructive in wanting to encourage innovation in the United States.
The Department of Justice has not taken that view.
The Department of Justice continues to prosecute Roman Storm, the developer of Tornado Cash, for money laundering and sanctions violations.
And they decided very recently, just a couple of weeks ago, to retry Roman on two charges for which the jury was hung in the original trial.
And that is a signal from the Department of Justice that I think is...
categorically opposed to what the rest of the Trump administration is saying, that we want to encourage the development and use of this technology in the United States.
And that's scaring a lot of people away from building this technology here and also makes institutions pretty uncomfortable engaging in a system where they can't just identify their counterparty the same way that they always have before.
So do you feel like there's a chance that crypto kind of gets, and I think maybe you would kind of mention this in a tweet recently, Is there a chance that crypto gets accidentally, I guess, regulated into something that only banks can use as a result?
You know, is that kind of maybe one of the fears here?
What could be one of the after effects of something like clarity omitting this and even kind of the picture you're painting?
I do think that that's a reasonable fear.
I guess I'll start, though, by saying.
Public permissionless blockchains will always be public and they will always be permissionless, right?
There is nothing that the United States government or anyone else can do about that.
So the real question is just, what type of system will Americans be allowed to access?
And that's true for both individuals and also for institutions.
The sort of second question is, what types of systems will American entrepreneurs be able to build and develop and launch?
And the only question really is where is this technology going to get developed?
I think it is unquestionable that crypto is going to eat the financial system bit by bit.
And the question is whether it's going to be American developers who are doing that or whether this is going to happen offshore.
But to get to the clarity question, if it's worth doing, I'd be happy to explain what the key issue is in clarity that affects this issue.
I think I would love that, Jake, because we talk about it so much.
We comment on it so much when there's news.
But like I said in the intro, nobody is closer to what's actually happening and actually discussing that with the policymakers than you are.
So we want to hear it from you.
I'm happy to do that.
And I'll say that the media coverage has mostly focused on the stable coin yield debate, which we can talk about, but to me is not the most interesting or most important issue in the Clarity Act.
DeFi developer protections.
And this is because, for the reason we were just discussing, the precedent set by the last administration and not undone by this administration was to misclassify developers of non-custodial software as financial institutions subject to the Bank Secrecy Act, meaning obligated to perform KYC and identify every user of the software that they created.
This is why Roman Storm is being prosecuted despite the fact that Tornado Cash was non-custodial and he had fundamentally no way to exclude people from using it or to force them to turn over their sensitive personal identifying information to him as the government says that he should have been doing.
So the key in the Clarity Act is a section called the Blockchain Regulatory Certainty Act, the BRCA, section 604, for those of you who want to pull up the multi-hundred page bill and look at it yourselves.
And what the BRCA says is, a non-controlling developer or provider, meaning a developer who does not have custody or control of user funds, cannot be misclassified as a money transmitter or financial institution under the Bank Secrecy Act.
The bill also has two other sections, sections 207 and 601, which together say that DeFi developers, again, who lack custody and control of user funds, cannot be misclassified as securities intermediaries or another type of intermediary forced to register with the SEC or the CFTC as an exchange or as a broker as Gary Gensler was trying to force all DeFi developers like Uniswap Labs to do in the last administration.
These are absolutely crucial protections because if we don't have them in the bill.
All we're doing in market structure is handing the next hostile administration that wants to go back to the era of Gary Gensler the gun that they need to shoot us with that we did not allow Gary Gensler to have and is how we survived his onslaught of regulation by enforcement in the last administration.
Here's the problem.
There is another section that was snuck into the bill in January before the bill went to markup in the Senate Banking Committee, Section 301, which is colloquially known as the decentralized in name only provision, which says if you are a developer of a protocol that is not appropriately or sufficiently decentralized, you can still be treated as a money transmitter or as a securities intermediary.
even if you do not have custody and control of user funds.
What it says is if you are a developer that has any ability to materially alter the functionality of the protocol in any way or how it is used, then you too can be regulated in this way.
And this eliminates basically everything in DeFi that's working right now, right?
We have upgradable protocols.
We have decentralized governance.
We have front end applications like wallets and web applications, which are not decentralized.
They're just non-custodial front ends that allow users to connect to DeFi protocols.
All of that is at risk if Section 301 stays in the bill as it is right now.
And that has to get fixed if the bill is going to pass.
So right now, this is the key challenge, trying to address these provisions of the bill that would subject DeFi developers and other non-custodial software developers to inappropriate regulation, which would pretty much stop anyone from being able to use crypto in the United States.
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Wow.
Okay.
I see what you're saying.
So if this doesn't get addressed now and have some kind of policy that addresses it and finds the middle line for letting these people build the apps and not get prosecuted, even though they don't hold any funds when they're just making the app.
You're letting yourself open to an administration change that then, like what you said, you're just handing them the gun to just shut all that down because you're not offering them protection policy-wise, despite being a crypto-friendly administration, basically.
Right, and I think you can think about this, zooming out from the details of the bill, as...
clarity having two main goals.
One is to establish good regulation and a strong, robust market structure that give these traditional financial institutions we've been describing the confidence that they need in the integrity of the market, right?
So that they feel comfortable participating in this new financial system.
That's really important for unlocking the power of crypto.
But the second, and I think equally or even more important goal of clarity is to protect the industry from a to a hostile administration.
And if we only achieve the first, but we abandon the second, then we're trading short-term gain for long-term stability.
And that's not a good trade-off for us to make.
So we all want the Clarity Act to get done.
But the truth is, and the way things work in Washington is, we have one shot at this thing, right?
Congress doesn't pass a lot of legislation.
And once they do something, they usually do not come back to it to change it, right?
We see this in Dodd-Frank 16 years ago.
We're still battling.
with the impact of Dodd-Frank and seeing rulemaking come out of the agencies from it.
So we have to get this thing right in the first instance.
And it's really important that we make sure we have a good bill and not just any bill at all.
Can I ask you, and I want to move to hyperliquid in a minute, but can I ask you then, since this is still, and maybe this is not irrelevant, but because this is still such a huge question mark, why are we seeing these deals happen or these investments, I guess, or whatever you call it.
I'll give you an example, like Apollo investing in Morpho, right?
And I think it was BlackRock investing in Uniswap.
Are these institutions not worried that in a year or two or in a couple of years, all those applications could be totally wiped off the map in terms of their usability in the US?
Or they're just trying to make their move first?
before this kind of regulation happens so that they can front run it.
How do you explain that?
Because those are pretty big, those seem to me like pretty significant moves into DeFi protocols for these massive institutions.
Yeah.
No, it's a great point.
And I think the way to think about it is that these institutions in some ways are hedging.
right?
They're hedging their bets.
So they don't want to get left behind if crypto ends up eating the financial system as we expect that it will, but also worst case scenario, right?
They've made an investment in one project they think will succeed.
It doesn't succeed.
They go back to their ordinary business where they are the incumbents with a regulatory mode built around them and they're already sort of winning that game.
So I think a lot of institutions are viewing it that way.
That's not to say that their excitement about crypto isn't genuine.
I think they do view this as a massive opportunity.
But also many of them just don't want to get left behind.
And, you know, even an investment of tens of millions of dollars for many of them is a write off in case it doesn't end up working out.
It's true.
Yeah, that's fair.
Yeah.
Okay.
Thanks.
Thanks for answering that.
I've been curious about that.
Okay, let's jump over to Hyperliquid, man.
So, you know, I've never been shy about my Hyperliquid fandom.
And as a Canadian, I can use it as much as I want, Jake.
I could just go on there any time of day and do whatever I want.
And on the American side, you guys are still pretty restricted.
So tell us about the Hyperliquid Policy Center and kind of what led you to launch that and kind of what your goal is.
Absolutely.
Well, in many ways, it's my jealousy of your ability to use Hyperliquid that led to the creation of the Policy Center.
But to give a little more context, the Hyperliquid Policy Center is an independent research and advocacy organization.
We're based in Washington, D.C.
Our main goal is to advance new rules that allow Americans to access decentralized markets, starting with markets for perpetual derivatives, which, of course, are the number one product on the hyper liquid blockchain.
And also, frankly, one of the key innovations that the crypto industry has delivered to the world in recent years.
That's not to say we'll stop at perps, right?
We want to make sure that Americans can benefit from all the innovation that's happening on chain.
But our vision of American leadership in DeFi is that we want Americans to use this technology.
And we also want Americans to be able to build this technology.
So that's what we're focused on doing.
In many ways, that is a legal challenge more than anything else.
Our view is that the agencies, the SEC and the CFTC, already have all the statutory authority that they need in order to open up access for US retail investors to trade DeFi perps.
it's just a matter of them engaging in the rulemaking process to explain why it should be permissible for americans to access those markets even though the regulations that we have right now are not written to allow that type of activity so this isn't so much a congressional or lobbying challenge as it is a challenge of having really great lawyers help the agencies to understand what is the benefit here how can we address the underlying policy concerns and how can we write new rules that will allow americans to use hyperliquid Got it.
And that's good.
That's, that's what you guys were focused on.
Wait, hold on.
Can we just rewind for a second?
Why can't we use hyper?
Why can't you use the hyperliquid in the US?
Because you can use a lot of other stuff that feels similar.
Polymarket also can't use in the US, but calcium, you can't.
I feel like maybe you can kind of just tell us like, what's that?
What's that thin line that's maybe a little hard for the normies to see of like, why you can't use this?
It's a great question.
And to be more clear, there are many products on hyperliquid that are totally permissible for use in the United States.
The key product that US investors cannot access is perpetuals.
And the reason for that is because the law that the CFTC enforces, the Commodities Exchange Act, regulates all trading of derivatives in the United States.
And the CEA basically says, there must be a centralized intermediary in the flow of funds or in the execution of transactions for all derivatives with only a couple of exceptions.
And in part, this was, as I was mentioning before, a result of Dodd-Frank after the global financial crisis.
And the reason was because after the global financial crisis, the regulators looked at what had happened and said, the reason for this crisis was because of a buildup of leverage in the financial system in the form of very exotic synthetic derivatives that we did not understand and did not have transparency and insight into.
So to stop this from ever happening again, we have to make sure that we can monitor how and where leverage is building up in the system.
And at the time, the technology was such that the only way for the regulator to observe leverage was to force all derivatives to flow through centralized intermediaries that could then report on those transactions to the regulator.
Enter the public permissionless blockchain, right?
A permanent immutable ledger of all transactions that any person, including the regulator can look at in real time to assess how much leverage is building up.
So there's a very strong reason why we no longer need mandatory intermediation for derivatives contracts like perps, but that requires the CFTC to rewrite the rules to say, for example, a decentralized protocol like Hyperliquid does not need to come in and register with us as a designated contract market, a DCM, the type of registrant that is lawfully allowed to offer derivatives contracts in the United States.
It also requires them to say, for example, that the non-custodial front-end interface provider, the wallet or the web app provider, doesn't need to come in and register as a futures commission merchant because again, it's Business is fundamentally different from that type of intermediary.
But that's a rulemaking challenge the CFTC has to take on.
I'm glad to say that I think that Chairman Selig, the chairman of the CFTC, has been pretty clear in his public statements that he does want to see onshoring of DeFi perps.
He talks about wanting to see...
on-chain markets for the trading of derivatives.
So I think we have leadership that is very constructive on figuring out how to do this the right way, but it's a big challenge to figure out how do you address all of those risks that the traditional regulations were designed to address in a decentralized environment.
Why is it so important for people to be able to access perps?
to me perps are the best form of derivative in the world right i mean there's still some reasons why people might want to use futures and might want to use options but the vast majority of people who are trading those instruments are better served by perps right perps much more closely track the price of the underlying asset as opposed to a future which converges on that price over time or an option which is extraordinarily difficult to value and understand for the average person uh perps are also much more deeply liquid because instead of fragmenting liquidity across a number of different expires, you have all the liquidity concentrated in a single asset.
They're also just simpler for people to use.
Instead of having to think about rolling contracts as they expire, you can just buy the perp and then stay exposed to the price of the asset in that way.
So perps are just a fundamentally better type of derivative for the vast majority of people.
The other thing is DeFi is better infrastructure for the vast majority of people, right?
costs that you pay by having to deal with all those intermediaries in the traditional financial system.
You get to cut all of that out.
You get the benefit of self-custody.
You get the benefit of near instant settlement and far lower cost and greater access.
So you add these two things together, right?
A much better form of derivative with a much better form of financial infrastructure.
And I genuinely think what you have is a massive upgrade on the traditional financial system in the form of DeFi perps.
And that's why, to me, I wanted to get involved in hyperliction.
And we can talk more about why that is, but to me, Hyperliquid really does have the promise of changing the global financial system in a way that nothing I've seen in DeFi has really promised to do before.
Is that why you wanted to be involved?
That is exactly why I wanted to be involved, yes.
You gave us the answer.
And also, I will say the other piece to add is...
You know, I've had the pleasure and the honor of getting to know the Hyperliquid Labs team over the course of this process.
And I have to say, I just think that they are the highest integrity builders and the best executors that we've seen in the space.
And so what I've just described is one product that's very active and very successful thus far on Hyperliquid.
I think it alone is enough to get really excited about Hyperliquid.
But we could also talk about HIP4, the outcome markets that are about to come online.
And we can talk about the Hyper-EVM, an ecosystem of other developers who are coming to build their own applications that benefit from being part of this environment.
And so it's not just DeFi perks that got me into this.
promise of the house of all finance that I think is coming to fruition slowly but surely.
You've been talking lately, and this is where everybody is going to want to know your thoughts, Jake, because you've tweeted about both things I'm going to say.
You've said that bear market is where you kind of plant the seeds for next year.
No, you didn't say that.
You said this crypto winter feels like...
All the others, the details are always different, but the shape is the same.
Prices are down and people are quiet or angry.
Meanwhile, the new things built last cycle that work are starting to really work.
Peak pessimism is the bottom, not the end.
And I feel like even that tweet is probably about hyperliquid or referencing it in some way.
And I think that that's what we're doing on Milk Road too, right?
We're trying to understand what those things are that are going to really...
really sore uh when when great conditions come back uh to crypto at least on the price action side and hyperliquid is definitely on the radar it has been the revenue story outside the stablecoin leaders for a very long time um and you said recently and i don't remember what this was maybe it was a tweet that you maybe you were having trouble understanding you're hinting at hyperliquid's valuation because you were saying that it makes way more money than ethereum and yet ethereum is worth 10x more can you maybe give us a little bit more about that thinking and and and tell us is does that mean that uh one of them that does that mean that ethereum is overpriced or that hyperliquid is underpriced or is the is that is that even an apples to apples kind of way of looking at it Yeah, well, so I saw that tweet.
I did not write it, so I won't take credit for it.
Oh, you didn't?
Oh, did you retweet it?
I might have.
But yeah, I'm just a lawyer, so I try not to do too much speculation on where market prices are going because that's not my expertise.
But I will say to address the point that you're making.
This is definitely bear market time, right?
I mean, that's how you started the conversation.
And I think it's undeniable that that's where we are.
And if you look at most token prices, especially the tokens that launched this last cycle, most of them are down 85 to 95%.
And I will say this is my third full bear market working in crypto, right?
I've been doing this for the better part of a decade.
And it always feels this way at the bottom of the bear market.
And I think what people...
miss when they haven't experienced this before is exactly what I did say in the tweet that you read, that peak pessimism is the bottom, not the end.
People think that when you get to the very bottom, it's when people start to become excited again.
And that's the exact wrong way to look at this.
The bottom is when the last person capitulates and gives up on crypto.
i've seen this this time and time again where the moment that you can start to sense that you're getting near a bottom is when an objective fundamental view on what's happening in this space departs very significantly from the sentiment in this space.
And that's also how we started this conversation.
You look at what's going on at DAS and you see all these products like Hyperliquid, as we were discussing, generating massive amounts of fee revenue, not because there's some ideological belief in it or some other sort of false or fleeting reason, but because there's a genuine product that's really taking off and really showing product market fit.
And then you see the sentiment totally ignoring all of that and not reacting to any of the good news.
And I think this sort of signals to you, not that it's the bottom, like far be it for me to call the bottom today, but I do think we're in the sort of bottom period where there's just a real mismatch between the things that are working, not just hyperliquid, stable coins.
obviously working prediction markets obviously working right a lot of things in in crypto that just make a lot of sense and aren't just flashy as meme coins or nfts or icos are really showing their true value and yet i think that there's sentiment that just doesn't match that so personally speaking i'm very optimistic i do think that heroes are made in bear markets right it's the people who are willing to sort of stick it out and not get distracted by the noise and not get washed out by the pessimism who end up benefiting from it one, two, or three years later when everyone says, oh, you were just lucky.
You were just here at the right time.
And it's like, no, actually, it takes a lot of work and a lot of effort to make that happen.
I think that's where we are right now.
You showed up every day.
That's the most important part is to stick around and keep listening to Milk Road and follow people like Jake who are working on cool things.
Can you tell me a little bit more about the background of Hyperliquid PC?
Is this something that you're self-funding as a fan or how's this operating?
You guys are hiring as well.
For anybody in Washington, D.C., there's quite a few roles that Jake is looking to hire up right now.
How are you guys putting this together?
For sure.
So we announced when we did our public launch about six weeks ago that we were initially funded by the Hyper Foundation.
And the Hyper Foundation also made an announcement that they had given us an initial grant of 1 million hype tokens.
At the time, that was valued at about $29 million.
Thankfully, the price of hype is up.
And so we're also benefiting from that at the policy center.
And that's how we're primarily funded.
We are also talking to some other...
contributors who will help to fund us beyond that period.
But 1 million hype tokens is a definite good amount of resources that will carry us along for quite a long time and will help us to achieve this first and foremost priority of opening up the US market for retail access to DeFi perps.
We are hiring.
So although we are funded by the Hyper Foundation, we're an independent organization.
So we have already four members on staff, including myself.
We're looking to hire a government relations professional.
We're looking to hire a head of communications.
And we're fully operational here in Washington.
So it's exciting days, but definitely a lot of work ahead.
Awesome, man.
Well, good for you guys.
And best of luck doing that.
We'll keep enjoying Hyperliquid up here in the north, but eager for you guys to join the party sometime soon.
Jake, it's been a pleasure, man.
Thank you for breaking this all down for us.
Hopefully we can have you back soon as well.
Hopefully, you know, once this next round of clarity kind of goes through, whatever happens at the end of April, maybe sometime in the summer we can have another chat and you can tell us where we're at on the legal side.
But otherwise, it's been a great show and good to see you, man.
Awesome.
Thanks for having me back.
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