Compiled & translated by: Deep Tide TechFlow

Guests: Arthur Hayes, CIO of Maelstrom; Illia Polosukhin, Co-founder of NEAR

Hosts: Andy; Rob

Podcast source: The Rollup

Original title: Arthur Hayes & Illia Polosukhin: Privacy Is The Last 1000x (NEAR & ZEC)

Broadcast Date: May 25, 2026

Key points summary

This episode of The Rollup features Arthur Hayes and Illia Polosukhin discussing macro liquidity, privacy assets, NEAR Intents, AI and on-chain execution layers, and the investment logic behind HYPE, NEAR, and ZEC. Arthur argues that war, the AI arms race, and supply chain restructuring are driving the US, China, and Europe to continue supporting their economies through debt and monetary expansion, with liquidity ultimately spilling over into Bitcoin and a few crypto assets with real narratives and income. Illia emphasizes that for blockchain to enter everyday payments, salaries, invoices, and the AI agent economy, privacy is not an option but a prerequisite for widespread adoption. Both agree that the crypto market is transitioning from indiscriminate speculation to a fundamental screening phase, with privacy, sovereignty, real income, and token value capture becoming the most important themes in the next stage.

Summary of key viewpoints

Macro liquidity and the AI arms race

"AI has become part of national defense. Drones, AI intelligence, and battlefield decision-making are all being incorporated into the war system, and governments print money to win wars."
"In the past, countries have built their food and energy supplies on numerous assumptions, but when critical shipping lanes like the Strait of Hormuz become unstable, holding U.S. Treasury bonds cannot help them feed their populations."
"These savings, held in the form of U.S. Treasury bonds, ultimately need to be sold to purchase real goods, build redundant supply chains, and energy corridors."
"The advantage of Bitcoin is that if there are more fiat currency units tomorrow than today, its price will mathematically increase—that's pure mathematics—but everything else relies heavily on narrative."

L1 public chain integration and the return of crypto market fundamentals

"Block space is already a very common commodity, and supply far exceeds demand. The only problem in the past was that this commodity was highly non-fungible. NEAR's bet on chain abstraction and intent is to make them fungible. That is, every chain, every asset, and every user can truly connect without having to think about which block space they are using."
"The old logic is disappearing: we buy an asset because a bunch of retail investors will come in and buy more. Now, retail investors have a much lower risk appetite. People are more concerned about whether they can afford oil and food next year, rather than whether they want to speculate on a particular asset."
"The market is shifting its focus to which assets are truly generating revenue and have real products and users."
"For a Layer 1 public blockchain, complete dilution is crucial. Many projects still face enormous institutional unlocking pressure, while NEAR already has relatively clean overhead space."

Zcash and privacy assets are undervalued.

"Nothing is more normal than having private currency on the internet. Zcash and Monero represent precisely this demand."
"As big technology, governments, and AI become increasingly able to track everything in our lives, cryptographically proven financial privacy will become extremely important."
"If you hold Zcash but don't use a pattern to hold it, then why do you hold it in the first place?"
"Zcash and NEAR form the core of my privacy investment philosophy: in a world where AI, big technology, and big government coexist, privacy will be rediscovered by the market, and Maelstrom will profit from it."
"I believe NEAR has 20x potential in the next year, while Zcash might be around 5x."

NEAR Intent, Privacy Transactions, and Mass Adoption

"If we want blockchain to truly enter everyday life, it cannot happen without privacy; privacy is actually a prerequisite for the widespread adoption of encryption."
"If I pay at a coffee shop, I don't want the shopkeeper to know how much money I have, nor do I want the whole world to know I just spent money there."
"The privacy intent aims to address more than just the holding of a private asset; it seeks to enable the confidentiality of transfers, transactions, payments, earnings, and much more across all assets."
"Payroll, invoices, and many other use cases that were once considered suitable for cryptography are actually very difficult to realize in a completely transparent on-chain environment."

AI agents and on-chain execution layer

"In the future, we will use computing through AI, and blockchain will become the means of execution for everything."
"AI also needs privacy. You don't want labs harvesting your data to train better models and then selling the service back to you through subscription fees."
"AI is a new computing interface, intended for the underlying business layer."
"When we started in 2017, our core judgment was that AI would become the way we build software and interact with computing."

Hyperliquid and the Dream of Decentralized Finance

"What's one of the killer applications in the crypto industry? Exchanges. Who's the richest person in the crypto industry? Exchange owners."
"The most important thing about Hyperliquid isn't how new perpetual contracts or decentralized exchanges are, but that it got the token economics model right."
"There was no venture capital funding for sales; it was all distributed by the team, and almost all the revenue went back to token holders, which is very rare for a project of this size."

AI Labor Replacement and Political Risks

"The impact of AI on the workforce is highly dependent on where you live. High-income white-collar workers on the US coast will be protected, while workers in overseas back-office processing centers will immediately lose their jobs, yet few people care."
"I believe the replacement has already begun, but it's also unevenly distributed. The only opportunity is to be at the forefront. We've always said that you need to leverage these technologies, enhance your capabilities, and learn and apply them faster."
"What could truly bring music to a halt isn't necessarily a major IPO, but politics. People will ask: AI companies are becoming incredibly wealthy by leveraging all of humanity's knowledge and interactions, but what have we gained?"
"If AI profits are subject to a massive progress tax, it's not that these companies won't make money, but rather, would you still be willing to pay 100 times your revenue for a company that might be subject to a 50% AI tax? Of course not."

Arthur's Macro Investment Theory

Host Rob: Arthur, you were quite cautious for a while, reminding everyone to be aware of the risks, but then you became completely bullish. What happened in between? What changed your mind?

Arthur Hayes :

At the beginning of the year, I wrote an article arguing that Bitcoin was anticipating a credit event triggered by AI deflation. My judgment was that monetary authorities wouldn't print enough money before witnessing a financial crisis. My argument at the time was that while the Nasdaq had essentially leveled off after Bitcoin hit its all-time high, Bitcoin had followed the US investment-grade bond ETF IGB in its decline, falling from $126,000 to just over $60,000. I believed this was a credit event.

Then, on February 28th, the US launched an attack on Iran, igniting the war situation and making the market realize that this would be a liquidity-friendly event. Firstly, AI is already part of national defense. Drones, AI-powered drones, and AI intelligence systems are already participating in some aspects of warfare for all belligerent parties. Governments print money to win wars, and since AI is part of warfare, both the US and Chinese governments will underwrite AI capital expenditures.

We've already started seeing bank loans and equity investments flowing to chipmakers. At least in the US, companies like Intel have received support, and similar announcements have been made regarding quantum computing, such as a $1 billion investment in IBM's related projects. These are all part of the same theme.

On the other hand, many countries have made numerous assumptions about food and energy supplies in the past, believing they could obtain supplies through disputed waters like the Strait of Hormuz. But now the situation has become more difficult, so they are starting to think: Why should I still hold these US Treasury bonds? If I need to feed my population, or if I'm on some isolated island without even aviation fuel, holding US Treasury bonds won't help me, especially if my ships can't even pass through the strait.

Therefore, they need to build redundant supplies of all critical resources , especially food and energy; they need to invest in new trade relations; and they need to build new pipelines so that oil can bypass the Persian Gulf and flow out through places like the UAE. All of this means that savings held in the form of US Treasury bonds need to be sold and exchanged for real goods.

The US won't allow this sell-off to cause the market to collapse. It will print money to fill the hole and ensure the market doesn't spiral out of control. So I think February 28th was a catalyst for the market. The US, China, and Europe will all print money to fund wartime economies and AI capital expenditures, and this money will ultimately flow into Bitcoin, which is why Bitcoin has performed so well.

Heavily betting on NEAR, ZEC, and HYPE

Arthur Hayes :

We're now seeing a small number of coins start to rise, including several I hold, such as NEAR, HYPE, and Zcash, which have performed exceptionally well since February 28th. That's my general logic.

I didn't actually make many trades in the first quarter. I did make a few more after the war started, but essentially, we had these assets at very good prices a long time ago. Now the market is starting to validate why we bought them 6 to 12 months ago.

Host Andy : The entire crypto Twitter community is discussing whether this deal has become a consensus, while we've already heavily invested. We've been following the macro picture and have also watched your shows and read your articles on CoinDesk. Initially, the market was quite volatile, but then assets like NEAR, HYPE, and ZEC suddenly started rising, so everything is gradually piecing together during this consolidation phase.

Layer 1 public chain integration has begun.

Host Andy: Illia, I'd like to hear your thoughts on market consolidation. This isn't the first so-called bear market you've experienced; we've seen phases like this before, but this one feels especially real because the market itself is evolving.

Institutional investors have entered the market, and the macroeconomic environment is highly unstable, leading people to view the industry as one of "adapting to the institutional era or being eliminated." Furthermore, the industry as a whole is becoming more mature and complex; you need products, revenue, real users, and a truly sustainable and robust token economic path.

From the founder's perspective, what exactly happened in the market over the past 6 to 8 months? Why did things change so rapidly? And how did NEAR navigate through this phase?

Illia Polosukhin

I think several threads are converging, let's start with the logic of the first and second layers. I remember giving a speech in 2019, where I said that we would first experience a major explosion, then enter a consolidation phase, and ultimately only a few projects would survive. We are now approaching that phase.

Block space is already a very common commodity, and supply far exceeds demand. The only problem in the past was that this commodity was highly non-fungible. NEAR's bet on chain abstraction and Intents is to make them fungible. That is, every chain, every asset, and every user can truly connect without having to think about which block space they are using.

The second trend is the return to fundamentals. You've been talking about this for over a year, maybe even several years. And now it's definitely happening. Both the market itself and the institutional investors who truly analyze it—and I'm not referring to BlackRock and Fidelity, but rather funds and professional investors—are all shifting.

The old logic is disappearing: we buy an asset because a bunch of retail investors will follow suit. Retail investors' risk appetite has decreased significantly. As Arthur just mentioned, people are more concerned with whether they can afford oil and food next year than with whether they want to speculate on a particular asset.

So the market started asking: Which assets actually generate income? Which assets provide the products we're currently using? If I stake them, can I gain new capabilities? For example, HYPE, staking it can earn lower fees and more market access. ZEC's logic is different, but it also offers privacy capabilities. NEAR is similar, providing cross-chain, intent, and computation-related capabilities.

These are the new capabilities that market participants want. As a result, these assets are starting to take center stage, rather than tokens that, while holdable, are difficult to define in terms of their actual value before the fee switch is turned on. I believe these two lines are converging and shaping the broader environment of the current crypto market.

Why does Arthur like Zcash?

Host Rob: This industry seems to be undergoing a restructuring. It seems like the people on the Bankless side have parted ways; David Hoffman sold all his ETH, and Merck is no longer supporting Solana, instead going all-in on Zcash. Arthur, why are Zcash and privacy so important to you? Is this the core spirit of the crypto industry? What role does NEAR intend to play here?

Arthur Hayes :

Zcash's current popularity is certainly a recent phenomenon, but I remember before its mainnet launch in 2016, it was the hottest commodity on the market. Back then, I was at BitMEX, and we launched the first Zcash price derivatives. The market was incredibly volatile that year; the price on Poloniex even reached around $3,000 at one point. If you remember that exchange, there were even instances where 7 Bitcoins could be exchanged for 1 Zcash.

That was a crazy day. The price then crashed due to a rapid increase in supply caused by block rewards. But Zcash did have some issues at the time. For example, the trusted setup meant you had to trust Zooko, Eli, and the other participants to ensure they weren't acting maliciously during the key generation ceremony. There was also the issue of the team receiving a 20% block reward subsidy, which was controversial in the market at the time.

But those problems are now in the past. The protocol has been upgraded, the trusted setup has been removed, we know it's cryptographically secure, and the 20% subsidy is gone. Now it has a clean start, with enough supply to form a real market instead of the wild fluctuations of its inception.

Naval changed Arthur's opinion.

Arthur Hayes :

During Token 2049 last year, I attended a dinner party where Naval was also present. He started talking to me about Zcash. At that time, Zcash had risen from around $30 to around $120, and I asked him why he was bullish on it. He knew I held a lot of Monero at the time.

He told me that Monero's ring signatures weren't as strong as people thought. Japanese law enforcement had successfully deanonymized transactions in a criminal case. After hearing this, I felt this person was clearly reliable, so I went back and bought millions of dollars worth of Zcash.

I also noticed something: I had many brokers, but only two were willing to quote me a price for Zcash, because many institutions would say, "We don't deal in privacy coins." My reaction at the time was, if it's difficult for me to buy, then I want it even more.

After that, I did more research to verify some of Naval's claims. Then I continued to buy, and kept adding to my position. Zcash became popular in 2016, essentially because everyone knew that Bitcoin was a pseudonymous system, not completely private. Many people do value privacy in certain situations. There's nothing wrong with wanting to have private currency on the internet, and that's exactly what Zcash represents, as does Monero.

As we increasingly see that big technology, big government, and AI have the ability to know everything about us and track everything that happens in our lives, cryptographically proven financial privacy will become absolutely essential. That's why I made Zcash my second-largest holding. Even though I bought it after it had bounced off $30 and quadrupled in value, it has still performed exceptionally well.

The next issue became user experience. The best app, formerly called something else, is now called Zashi, where users can use shielded Zcash. One of the biggest problems with Zcash in 2016 was that it did work, but almost no one could hold it in shielded form. Everyone was using transparent Zcash, which was essentially just a poor version of Bitcoin. What's the point if you can't hold it privately?

The situation has changed. Apps like Zashi allow you to hold shielded Zcash on a decent mobile device, and when combined with cold wallets like Keystone, you can hold shielded Zcash in cold storage. I strongly recommend that everyone holding Zcash hold it in shielded mode; otherwise, why would you hold it at all?

NEAR intends to exchange with anonymity

Arthur Hayes :

The user experience is already great, but now for the more interesting part. We invested in a funding round for Zashi. Then, within the Zashi app, I can anonymously send any crypto asset to anyone on the internet by blocking Zcash and the NEAR intent. For example, I can start by blocking Zcash, then switch to USDT on Tron, and then anonymously send it to the recipient.

This is very important. Looking at NEAR's price, like other assets in the crypto industry, it has fallen significantly from its all-time high and has gone through a cycle. I thought at the time that if the privacy narrative becomes a major theme, Zcash would be the first target; the second would be who can enable people to anonymously send value across any blockchain. This capability is equally enormous.

NEAR's economic model will catch up, presenting a very asymmetric opportunity. Of course, my allocation to NEAR isn't as large as mine to Zcash, but I believe NEAR has 20x potential over the next year, while Zcash might be around 5x. You'll allocate different amounts of capital based on risk. This is why these two assets form the core of my privacy investing philosophy: in a world where AI, big tech, and big government coexist, privacy will be rediscovered by the market, and Maelstrom will profit from this.

Privacy is a prerequisite for mass adoption.

Host Rob: Illia, when you look at NEAR from the perspective of a capital allocator like Arthur, it's clear that the AI narrative is a major theme, including supporting identity management, payment networks, and the various infrastructures needed for AI agents. But actually, the core that truly unlocks the value of the Zcash ecosystem lies in intents, because it makes these privacy coins more efficient and practical.

Here are some figures: NEAR Intent's historical total transaction volume is close to $20 billion, and currently it's around $18.9 billion. NEAR Intent has generated $33 million in fees from these transactions, a large portion of which comes from Zcash, as it's practically the only place to complete this type of transaction. Arthur also mentioned that Privacy Intent will generate positive cash flow for the protocol.

Could you talk about how you plan to monetize NEAR's intents? What is NEAR's current cash flow situation? And how do you plan to expand NEAR's intents to better serve the entire NEAR ecosystem?

Illia Polosukhin

The core point Arthur just made is that we need on-chain privacy. I would even go a step further: if we want blockchain to truly enter everyday life, it cannot happen without privacy; privacy is actually a prerequisite for the mass adoption of crypto.

If I buy coffee at a coffee shop, I don't want the coffee shop to know how much money I have, nor do I want the whole world to know I just paid for it there. I also don't want someone already waiting for me the next time I go there. The recent Twitter discussion about someone's on-chain credit card transaction, which everyone can see, is absurd in itself.

Therefore, privacy is a prerequisite if we want cryptocurrencies, stablecoins, and other assets to become everyday currencies in real-world transactions. Even for just investing, I now need multiple addresses for each investment—one for sending money, one for receiving money—each address must be segregated, and I need to manage them using spreadsheets. This is unacceptable in the normal world.

The privacy intentions we're aiming to deliver go beyond just Zcash's sovereign, censorship-resistant, and private assets. Zcash itself is very important, and we certainly need it. But we also want to address another issue: how to confidentially complete transfers, transactions, payments, earnings, and other operations between the more than 150 assets we support.

Privacy Intent essentially creates a private shard on top of NEAR. Users can enter this private shard and conduct transactions internally, with external access unable to see what happens. It doesn't require users to perform complex cryptographic operations on the client side; all cryptography is handled internally. Therefore, it is lightweight and programmable. You can write smart contracts and deploy them within it.

This means we can already support transactions, transfers, and privacy-focused payments. More features will be rolled out in the future through partnerships and integration with the entire ecosystem. I'm excited because I believe this is the execution layer of the privacy investment thesis, making privacy truly widespread, usable, and accessible.

For example, payroll . Nobody uses crypto to pay salaries because everyone can see how much each person got; and invoices , and many of the use cases we've been saying crypto should do, don't really happen when everything is completely transparent. So this is very exciting because it can help us increase transaction volume and the number of transactions.

We will collect a fee from every transaction and use those fees to buy back NEAR. This economic model is very straightforward. Our goal is to continue doing this. Meanwhile, we have already reduced inflation across the entire ecosystem. Last November, we effectively halved inflation. NEAR is now fully diluted, and I will continue to push the community to further reduce inflation. As ecosystem revenue increases, we can gradually balance the ledger, allowing NEAR to begin to deflate, truly achieving economic sustainability and profitability.

Arthur Hayes :

Let me add to Illia's point. Complete dilution is crucial, especially when discussing whether a Layer 1 blockchain can truly perform well in a rising market. Many Layer 1 blockchains do all sorts of fancy things, but they still have a huge amount of unlocked tokens from venture capitalists that could be dumped at any time.

What you want is clean overhead space. NEAR has that simply because it has been around long enough to have completed that clearing process. It's a great asset because there's open sky ahead, and nobody's waiting to dump their chips on me.

AI Blockchain Vision Since 2017

Host Rob: NEAR is one of the few fully diluted tokens, especially within the L1 blockchain, and it already has over $30 million in cash flow, with Intent being one of the main revenue drivers. Illia, could you elaborate on NEAR's other AI features, such as NEAR AI, IronClaw, and your current product suite? What excites you most about this product suite? How does it align with Intent for Privacy? If possible, could you also discuss the revenue potential of these products and how they ultimately impact NEAR's overall economic situation?

Illia Polosukhin

The underlying logic is that in the future we will use computing through AI, and blockchain will become the way everything is executed. So we are doing both of these things simultaneously and truly connecting them.

AI also needs privacy. You don't want labs harvesting your data, using it to train better models, and then selling the service back to you through subscription fees. You want to give models more context and more access permissions, but it's dangerous if it's running in the hands of a third party and you don't know how they'll use those permissions. For example, if you give away access to encrypted accounts or bank accounts, the other party could collect that data and even initiate transactions on your behalf without your knowledge.

What we're doing on the AI side is creating intelligent agent experiences centered on privacy and security. Essentially, it's an execution arm. Today you manually complete payments; in the future, many things, perhaps almost everything, will be done by your intelligent agent. As long as you trust it and give it sufficient context, it can handle a range of operations, from everyday shopping to building hedging spot positions on Hyperliquid, and even incorporating prediction markets.

For example, you could say, "I want to establish a position. I believe something will happen tomorrow, please help me create a suitable strategy." It will then find the right assets, the right portfolio, and help you establish the position. Doing this manually today would be extremely cumbersome.

IronClaw already has an example. You can enter your own encrypted address, and it will analyze all your assets and positions, suggest better profit opportunities, and tell you how to reconfigure between different protocols. This can be greatly expanded in the future.

So these two parts work together. AI is the new computing interface, and intent is the underlying business layer. It's not just used for ordinary payments, but also for supply chains, goods, and transactions in a broader sense. All of this flows through intent because AI finds transactions, negotiates them, and settles them much better than traditional mail, invoice, and billing systems.

We have a very concrete example called the agent market . Agents can hire other agents to perform tasks or deliver goods. This is a glimpse into the future, and although it's still early, real-world businesses are already using it. For example, you could hire an agent to help you procure parts for your supply chain, or to help you build a marketing website, construct an application, or write investment copy.

These agents run on our verifiable computing. You know what they're doing and can check what's happening. They run on our secure infrastructure, so you can grant them access to contacts or internal data. In the past, one reason we hired people was to give them access. But historically, giving access to third parties was difficult. Now, if an agent runs in a verifiable, secure computing environment, you can give it access to information within the company.

What I'm describing is actually changing the way labor and supply chains work. So the market we're targeting here is the total serviceable market for all labor and supply chains, allowing them to operate on this intention.

Host Andy: We can see the intersection between AI and intent: agents use intent to transfer value, and users also want to use privacy intent to use Zcash or transfer value. Some people might say that NEAR's direction is too scattered, but from the beginning, it seems that you actually had this main line very early on.

Illia Polosukhin

Yes. When we started in 2017, our core judgment was that AI would become the way we build software and interact with computing. That was in 2017. Later, we realized that to truly achieve this, we needed blockchain. So in 2018, we started focusing on NEAR Protocol. These parts have been part of NEAR's DNA from the beginning.

Hyperliquid has realized the dream of DeFi.

Host Andy: Arthur, I think everyone would like to hear you talk about Hyperliquid. HYPE is now priced at around $61. Zcash and NEAR represent privacy transactions, which are very different from Hyperliquid's logic, but they are like pieces of the same puzzle.

Privacy is paramount; it's a core part of this industry, granting freedom. Yet, in today's world, especially in the realm of money, privacy is severely underestimated. On the other hand, Hyperliquid represents the best opportunity for DeFi and decentralized exchanges to potentially surpass centralized finance. Many have forgotten that we entered this industry, to some extent, to replace traditional finance, or at least to become a genuine alternative system.

In the past, this dream was consumed by things like overly diluted valuations, low liquidity, fraudulent projects, and infrastructure narratives. But Hyperliquid seems like a promising project that could make this dream a reality again. Although these two investment philosophies are very different, they attract many of the same people. What are your thoughts on Hyperliquid? Where is it headed? Why are you so bullish on it?

Arthur Hayes :

What's one of the killer applications in the crypto industry? Exchanges. Who are the richest people in the crypto industry? Exchange owners. BNB is currently the fourth or fifth largest crypto asset by market capitalization, but it's not actually a cryptocurrency in the true sense; it's CZ's servers and a blockchain he launched.

We know how to make money in the crypto industry. It's just that many people like to complicate things, like infrastructure, real-world assets, and so on. Exchanges are about making money, that's clear. The ultimate goal of exchanges is: we have the internet, we have blockchain, so let's make it possible for anyone, anywhere to trade anything, plus some leverage, to make things even more interesting.

Having worked in the centralized exchange industry for a long time, I've always known the industry would move towards decentralized exchanges. The earliest example was dYdX, the first star project in the decentralized exchange space, which performed exceptionally well in price from 2020 to 2021. However, it later deviated from its intended path. dYdX essentially aimed to do the same thing as Hyperliquid, but Hyperliquid executed it better, while dYdX's token economics model had problems.

Then, during the downturn of 2023, GMX emerged. Its model was good, but there were areas for improvement in token economics and the number of listed assets. That's when Jeff and his team came along. They came from high-frequency trading backgrounds, were excellent engineers, and indeed delivered very good code. But their most important contribution was fixing the token economic model. Perpetual contracts aren't new; we created them back in 2016. Decentralized exchanges aren't new either; they existed around 2018 and 2020. The key is getting the token economic model right.

Hyperliquid doesn't have venture capital-backed sales; it's distributed solely by the team, and almost all revenue goes back to token holders. No other project has achieved the scale of revenue generated by HYPE. This is why it's so successful and why people are so deeply involved in its ecosystem.

When they launched HIP-3, allowing users to list on the market without a license, everyone could trade assets like Nasdaq, S&P 500, and oil. These were relatively small markets last December and this January. But because politicians liked to create trouble on weekends, traditional markets lacked price discovery, giving them a three-day window for public opinion. Now, with Hyperliquid, it has become the sole price discovery location on weekends, with sufficient liquidity, and everyone can trade.

This isn't just a crucial price signal that only those with US brokerage accounts can trade. Now, traditional financial media are also writing about Hyperliquid because they have nowhere else to go. If they could be at the CME on Saturdays talking about oil futures, they would definitely be there and completely ignore Hyperliquid. But they can't. So they can't ignore Hyperliquid because it's the only place where it's tradable. Everyone has access to the data, and everyone can trade.

This created a flywheel effect. More and more people learned about Hyperliquid and understood that the revenue would return to you, the token holder; if you staked enough HYPE, you could get a fee discount; you could also participate in listing your own market on Hyperliquid, and so it began to become a self-fulfilling prophecy.

I believe it has already broken all-time highs and will go much higher. This is because its easiest market to penetrate is centralized exchange trading volume. Hyperliquid currently probably only accounts for 7% to 8% of that, but this will only continue to increase as it lists more assets, offers higher leverage, and is easier to use.

Even if Hyperliquid only captured 10% to 15% of Binance's perpetual contract trading volume, its price would be much higher than it is now. It doesn't need to reinvent the wheel; it just needs to capture existing traders. These people already hold stablecoins or other crypto assets, trading on centralized exchanges and paying hefty fees. They want a different experience and to truly own a part of the exchange.

AI as an investment model for labor substitution

Host Rob: Illia, you mentioned the total market for all human labor. To give viewers a more intuitive understanding of this concept, the total global wages and compensation amount to approximately $11.7 trillion annually. At the same time, we are seeing AI agents gradually becoming an important part of the labor market.

Arthur, in your theory of AI replacing labor investment, you also mentioned that this would lead to a collapse in consumer credit. There might be a bumpy road ahead, but ultimately it will lead to massive money printing. I'm curious about your views on AI replacing labor. How will it develop? Will it eventually evolve into intelligent agents? Will these intelligent agents be on the blockchain? How will the economy react? Arthur, please speak first, and then Illia, could you also share your thoughts on how we should prepare for this inevitable change to ensure that the process proceeds as smoothly as possible?

Arthur Hayes :

The impact of AI on the workforce is highly dependent on where you live. Let's start with the United States, because many of you in the audience are likely from or live in the US. Those currently unemployed in the US are among the most protected groups: high-income, white-collar, college-educated professionals in coastal areas.

When China's low-cost labor force was introduced into the global labor market, causing blue-collar workers in the US Rust Belt to lose their jobs, no one was discussing this issue as we do today. No one seriously discussed this problem when the US Rust Belt was hollowed out in 2005. Later, Donald Trump and other politicians gave them a voice, but that was after they had already lost their jobs.

The situation is different now because in the US, the unemployed are college-educated, coastal residents, high-income earners, and highly politically engaged. They will be protected; I don't know the specific solutions, but they will definitely be protected.

Meanwhile, workers in India, Bangladesh, and the Philippines who do back-office processing for American companies will immediately lose their jobs, and no one will care what happens to them. They might end up on the streets, starving, and facing all sorts of social problems. Real violence might break out there. You might not see it in the mainstream news, but that's the difference.

They can't solve the problem by printing money; they'll face a very difficult situation. The US can alleviate it by printing money because the dollar remains the reserve currency. This will affect financial markets, which are primarily concerned with high-net-worth individuals in the West. So unfortunately, I think there will be very polarized situations in different regions.

Illia Polosukhin

I believe the replacement has already begun, but it's also unevenly distributed. The only opportunity is to be at the forefront. We've always said that you need to leverage these technologies, enhance your capabilities, and learn and apply them faster.

There is a tremendous opportunity now. Because if you don't know something, AI does, and can guide you through it. Even if you're not in a specific country, you can start a business that accepts global currencies through intent and, more broadly, cryptographic systems. The opportunity truly exists; now is one of the easiest times in history to do things and to operate a business globally.

But the prerequisite is that you have to take action. You need to be proactive and have a sense of sovereignty to execute it. I believe this is also the source of the investment theory behind Zcash, HYPE, and NEAR: people want to rediscover their sovereignty and truly take action, which is almost a return to the original core of the crypto movement.

Therefore, I believe this is the time for anyone willing to seize an opportunity to get involved.

Host Rob: Arthur, from a capital allocation perspective, isn't the logic here that we might see consumer credit under pressure, with a period of volatility, so it's not a market where everything rises together? But this also explains why we are seeing a more structural bull market. Illia is describing sovereign investment and the privacy narrative, both of which are responses to a larger narrative.

Arthur Hayes :

Liquidity doesn't flow to everything. The advantage of Bitcoin is that if there are more fiat currency units tomorrow than today, its price will mathematically increase—that's pure mathematics—but everything else is highly dependent on narrative.

Looking at global capital markets, the only truly performing sector is AI stocks; most other sectors are performing poorly. This is because most people are negatively impacted by AI. You might be a company selling products to the unemployed, or your own customers might stop consuming, or a segment of the workforce might disappear. You could also be squeezed out of the credit market because AI mega-corporations are absorbing all available credit.

Every government now believes it needs to finance the AI capital spending boom, and is therefore putting other things aside for the time being. So, while we all feel it's an amazing bull market right now, and some crypto assets are indeed performing well, the real core driver of the market is actually AI stocks. I think these stocks will continue to rise, but this isn't the kind of broad-based market where all boats are lifted up by the tide.

Political risk scenarios

Host Rob: You mentioned a similar point in a recent article. So, when do you think this "music" will stop? If it does stop, what signals should we be watching for? When will we realize that perhaps the money printing driven by AI capital expenditures will decrease?

Arthur Hayes :

I think it might be the IPO of some super-large company, though I don't think SpaceX's IPO is big enough. They seem to be planning to raise around $75 billion in new capital in the IPO, but I haven't looked into the specifics yet.

But I'm increasingly convinced it's politically motivated . At least in the US and Western economies, where capital is most concentrated, a message is emerging, and I think it's very compelling: human-to-human interactions provide the data that has made Elon and others so incredibly wealthy—where is our share?

AI cannot exist independently of the sum total of all human knowledge and interactions over the past 10,000 years. But what have I or my community received now? Higher electricity prices, water pollution, and the depletion of mineral resources for data center construction. So what have we gained?

Therefore, I believe a very logical political message will emerge in the US that will entice both Democratic and Republican voters to support a Democratic challenger. I think this person could be AOC, who will become the 2028 Democratic presidential nominee. Investors will panic as a result.

While I disagree with much of what she says, there's a lot to it if you're not someone whose assets have increased 50-fold in the past year. Investors will begin to realize that if AI profits are to be subject to a massive progress tax, it's not that these companies won't make money, but rather, would you still be willing to pay 100 times your earnings for a company that might be subject to a 50% AI tax? Of course not.

If she starts to close the polls to Rubio, JD Vance, or any Republican candidate who comes after Trump, you start thinking, "Maybe I should cash in a bit." Once you start asking yourself these questions about the future, the market is over before there's a clear result after the election.

Therefore, while the listing of a mega-corporation could potentially trigger a market shift, I increasingly believe that a greater risk may lie with AOC or similar political figures. In developed Western economies, they could gain increasing influence through such political messaging. Investors might think, "While I don't agree with her views, her arguments are indeed appealing to many ordinary people, so I need to reduce my holdings in advance."

Host Rob: AOC's odds of becoming the Democratic presidential nominee in 2028 are currently around 9%. According to Arthur, that's an underestimate.

Arthur Hayes :

Yes. Who are the others? Gavin Newsom? I think he carries a lot of baggage from his governance of California, and it's hard for him to shake it off. AOC is starting to get to the point: AI capital expenditures are causing inflation, making many American communities poorer, but they don't have enough financial assets to participate in the rise. She can make a penetrating statement about these issues that affect so many people.

Host Andy: Illia, I heard you're currently in San Francisco and have been there for almost a quarter of a year. Do you have anything to add about the situation there? What's the atmosphere like? Is it as exciting and enthusiastic as the 2021 cryptocurrency conference? Do you think there's a bubble in the market right now? Have you been involved in many investments there yourself?

Illia Polosukhin

Everyone's definitely working on AI right now. You're in line to buy food, and everyone around you is talking about intelligent agents. It really is both a bubble and a fundamental shift that's already happened. Every company is turning to some kind of AI, and if they don't, they'll become obsolete in some way sooner or later.

We're seeing this in the crypto industry as well. Crypto itself is shrinking, with not many new founders entering the field. So from an early-stage angel and seed round investment perspective, it's quite difficult. AI is now polarized: on one hand, some people raise $1 billion in seed rounds, and you start to wonder if investing $50,000 yourself is worthwhile; on the other hand, there's a more traditional entrepreneurial approach, such as creating a software-as-a-service product for a specific use case.

The problem is that these people are actually competing with the people in the company who are actually doing this work. That person only needs to use an AI agent to accurately describe their needs in natural language, and the software can generate the necessary components directly for them. What the entrepreneurs are doing is trying to catch up with the capabilities of experts, who can already describe their needs directly in English and have the software automatically build the solution.

Therefore, it's difficult to determine whether they can achieve escape velocity before general-purpose tools become good enough. By then, users may not need engineers to code their business requirements into software at all.

Therefore, this field is very interesting and exciting. But at the same time, we also see from companies like Anthropic that small teams of three can release a product and directly enter a specific vertical market. The reality is that if you have a platform that is general-purpose and horizontal enough, it can be customized into anything.

When will NEAR deflate?

Host Rob: Do you two have any questions for each other? Illia is a builder, and Arthur is a capital allocator. Arthur, do you have any questions for Illia that might influence your investment views in your next article?

Arthur Hayes :

My question is, considering the revenue sources you just mentioned, is it possible for NEAR to transition to a deflationary state instead of relying on token inflation inherent in the protocol?

Illia Polosukhin

Our goal, of course, is to achieve deflation next year . At the same time, we will continue our efforts to reduce inflation.

I think many builders in the blockchain industry have already discussed this issue: we are actually paying too much for economic security, and these costs don't necessarily match its actual value. At the same time, from a political economy perspective, reducing inflation is not easy. Therefore, we have been building governance mechanisms to make this more directly enforceable.

I am quite confident that we can guide the community to a stage where , as incomes grow, lower inflation is reasonable, truly achieving a balance between income and expenditure. Next year, incomes will increase on one hand, and inflation will decrease on the other.

Additionally, we are exploring some interesting ideas to see if we can fund security and validators in different ways, rather than relying solely on traditional inflation.

Arthur's price target

Illia Polosukhin

Arthur, do you think the current market uptrend will mainly focus on a few leading assets, or will it quickly spread to other areas of the industry? If this expansion is too rapid, will it negatively impact the current pattern where a few market-leading assets attract funds and maintain market stability?

Arthur Hayes :

Every vertical market will have some star assets that stand out, while others will underperform. The success of these star assets often, in turn, provides a reason for the existence of the weaker ones. For example, in the privacy and decentralized exchange sectors, there will be both outstanding projects and relatively weaker ones. Exceptional traders can leverage this market differentiation to find trading opportunities.

But for a capital allocator like me, I don't want to stare at a screen all day. I've already selected my assets and will hold them until the macroeconomy changes. I have price targets, such as HYPE at $150. But as everyone knows, if the macroeconomy changes, I'll immediately change my mind.

If a government says it will no longer fund all AI capital expenditures with debt, especially after those expenditures ultimately lack sufficient cash flow to repay, that's a negative sign. The Iran war spiraling out of control is also a negative sign.

But until then, I will continue to be strongly bullish. The trend is a friend until it is no longer a friend.

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