Author: kaledora
Compiled by: TechFlow
Multiple viewpoints can be valid at the same time:
Hyperliquid’s airdrop marks a turning point, embodying a radical rejection of the market’s trend toward insider-backed infrastructure “software” projects that often allocate only minimal stakes to the community.
Raising huge amounts of money at ridiculous valuations, then launching at ridiculous fully diluted valuations (FDVs), only to eventually see the stock price continue to fall and be sold off to retail investors, is bad behavior.
For most projects, unless the founders have made tens of millions of dollars before, it is difficult to do without raising funds and without "insiders", even team members.
Here are some thoughts on how to make sense of these seemingly contradictory views.
Hyperliquid’s success
Hyperliquid’s airdrop is an important event in this cycle. I particularly appreciate the following four points:
- It resets expectations about how, when, and to what extent token ownership should be distributed.
- It re-establishes the importance of DeFi and user-centric applications in the industry.
- It proves that selling pressure should be resolved quickly rather than dragging on.
- Cultural aesthetics of the community
The cleverness of Hyperliquid is to combine the token timeline of venture-backed projects with the distribution mechanism of ICOs. Build the product first, launch without tokens, iterate multiple times with users, gradually adapt to enhance the behaviors that are most valuable to the protocol through multiple seasons of points, and then release tokens more than a year later (rather than raising funds before the product launch). But distribute tokens to users like community-funded projects.
Ironically, in a space where many founders were keen to reduce sell pressure by limiting distribution and liquidity at the time of the initial coin offering (TGE), Hyperliquid has managed to have perhaps the strongest buying pressure post-launch and the widest distribution of any major protocol in years.
Regarding selling pressure: the more protocols try to artificially distract from the selling pain of short-term speculators, the more selling pressure will increase, making it almost impossible for true long-term supporters to hold tokens (because the complex supply dynamics in the medium term will have a greater impact on price than the strength of the project).
My final, though rarely mentioned, point of appreciation for Hyperliquid is the cultural aesthetic of its community. By “community” I mean the people who actually use the product. Crypto’s love of community has morphed into an implicit requirement that every product needs to have its own pseudo-religious cult, whether real or bot-generated, filled with exaggerated visual logos, slogans, and Discords of possibly real, possibly bot-generated profiles that relay some version of the same few slogans every day. Building a cult around an image or slogan that has nothing to do with the underlying product is a replacement for the cult that should be built around your product itself.
The cult of Hyperliquid exists, but it’s — or at least started out to be — a cult of users, not followers. Its most obsessed users, as far as I can tell, don’t even have their own consensus self-referential name. I’ve heard “bozos” as the de facto term, but overall, HL’s crypto-signature traits are minimal. I’m not sure I’ve seen any HL pepes; there’s PURR the cat and PIP, but that’s basically it. Aesthetically, it’s a clean brand that takes itself seriously, with posts not filled with cartoon characters.
Yet, Hyperliquid’s cult is exploding and its social media presence is being thoroughly botted. Its followers appear to have tripled in the last few weeks, but when they started processing billions of dollars in volume per day, there were only about 30,000. Compare that to other projects that have hundreds of thousands or even millions of followers on Twitter (and you don’t know a single user!).
Even if you can’t (or don’t want to) copy them, you can still learn something from Hyperliquid
Ignoring the product, most founders who are building serious projects can't simply not raise money, for the obvious reason that they don't have $5-10 million to fund a small development team for several years. Those who have that privilege should consider investing the money and reaping the outsized returns that could come if executed well. If you're starting out of college or are an average person in any way, this may not be an option for you.
Even though Hyperliquid in some ways sets unrealistic expectations for people who can’t afford not to raise outside capital, I think this reset is actually a good thing if you’re not raising a huge round of funding.
Readers need only look at the type of announcement that confers the biggest status boost and consistently triggers the most bot-driven growth: the fundraising announcement. Over the past few years, the fundraising announcement has become the defining status marker in crypto; the bigger, the better. This creates a natural pressure on founders to raise more and more money at higher and higher valuations, regardless of how much capital they actually need to get to the next stage. This is not unique in crypto, but it is certainly not good for crypto if you believe in its underlying ethos in any way.
Even if you can’t not raise money, you can raise more reasonable amounts, focus on product, and avoid playing the game of who can raise the biggest round. Instead, compete on who can build the best product — that will be more fun and hopefully better for crypto as a whole.
Summarize:
HL puts DeFi at the forefront and redefines the model of token distribution
- Selling pressure should be resolved quickly
- Reject groups that are not product focused
- The market has allowed you to focus more on product development rather than financing
