Hyperliquid Has 0.1% Of Wall St's Trading. At 1%, Fees 10x | David Schamis - HYPERLIQUID STRATEGIES INC

Financial Performance:

• High Political Strategies (HPS) reports a rare positive P&L in the crypto sector, attributed to outperforming token selection, specifically HYPE.
• HPS currently trades at a market value above its Net Asset Value (MNAV > 1), a feat achieved with 95% of value derived from the initial strategic allocation to the HYPE token.
• HPS holds significant cash reserves on its balance sheet, possessing no debt and a highly credible board, positioning it to deploy capital or buy back tokens.
• Hyperliquid generated roughly $3 trillion in annual volume a year ago, representing approximately 0.1% of the combined CME and ICE volume (over $3 quadrillion).
• HPS acknowledges that 95% of its historical value creation came from the initial token choice, with current efforts focused on generating operational revenue to maintain MNAV above 1.

Guidance and Future Outlook:

• Management anticipates a significant expansion of the Total Addressable Market (TAM) as Hyperliquid transitions from a crypto-native exchange to a platform hosting Real World Assets (RWA) via HIP3 (Hyperliquid Improvement Proposal 3).
• Forecasts suggest that regulatory clarity, particularly in the U.S., will unlock substantial volumes from both U.S. retail/institutional investors and non-U.S. institutions seeking compliant access via U.S. regulatory rails.
• Expectation is for Hyperliquid volumes to grow multiple times the current $3 trillion baseline over the next 12-18 months as HIP3 markets go live.
• Long-term vision positions Hyperliquid as infrastructure (comparable to AWS) where the team enables third-party builders to launch specific asset markets (e.g., oil, Tesla, Chinese stocks) rather than building them in-house.
• Management projects that the total market size for crypto is currently only ~50% of NVIDIA's market cap, implying massive upside potential for the asset class and Hyperliquid's infrastructure.

Business Segments and Product Lines:

• Hyperliquid has launched HIP3, enabling the integration of Real World Assets (RWA) and the hosting of other exchanges on its blockchain.
• Successful third-party application "Trade XYZ" is highlighted as the "tip of the iceberg" for the ecosystem's potential, currently driving RWA volume.
• The platform supports perpetual contracts (perps) with significantly lower liquidity fragmentation and bid-ask spreads compared to traditional equity options.
• HPS is actively evaluating potential deals to support Hyperliquid's U.S. entry, potentially leveraging its own capital, cash reserves, and regulatory credibility.
• No specific new product launch dates were confirmed beyond the general expectation of multiple HIP3 markets launching within 18 months, ranging from commodities to equities.

Market and Competitive Landscape:

• Competition includes traditional exchanges (CME, ICE) and crypto exchanges (Kraken, Binance, Gemini), but HPS argues Hyperliquid's structure (perps) offers superior liquidity and lower costs compared to fragmented options markets.
• Regulatory actions by CME against Hyperliquid's perpetuals are dismissed as short-sighted, with the argument that crypto growth has historically increased, not decreased, traditional exchange volumes through hedging activities.
• Kraken is identified as Hyperliquid's likely first U.S. partner, with speculation that other major traditional institutions may follow.
• A recent rumored $320 million OTC block trade of HYPE tokens occurred, with speculation it was a traditional institution (potentially ICE) rather than HPS.

Risks and Challenges:

• Regulatory Uncertainty: The path to U.S. compliance remains a primary hurdle; lack of a regulated stack currently limits institutional participation.
• Dependency on Leadership: The business is described as a "bet on the team," specifically CEO Jeff Yan, though management notes this is standard for financial services where execution quality matters more than unique assets.
• Capital Allocation Discipline: Criticism exists that Hyperliquid's aggressive buyback strategy (99% of revenue) may forgo higher-growth reinvestment opportunities, though HPS defends this as superior to traditional corporate capital misallocation.
• Market Education: A significant portion of the institutional market lacks awareness of Hyperliquid and the technical mechanics of HIP3, requiring substantial educational outreach.

Management Commentary and Tone:

• Tone is confident and optimistic, driven by the belief that the "pie" of global derivatives trading is expanding due to the availability of new instruments and choices.
• Management emphasizes humility, crediting the success to the "Jeff Yan" leadership style which allows external builders to compete rather than stifling them.
• HPS leadership explicitly states their fiduciary duty is to their shareholders, not the HYPE token, and is not ideologically bound to never selling tokens if it benefits shareholders.
• There is a strong contrast drawn between the transparent, automated buyback mechanics of Hyperliquid and the discretionary capital allocation often criticized in public tech companies.

Analyst Questions and Answers:

• Q: Does regulation increase the total market size or just shift volume? A: Regulation and new options (perps) increase the total pie by enabling hedging strategies previously unavailable and attracting institutions that require regulatory compliance.
• Q: Is HYPE better than traditional equity? A: HYPE is argued to be superior due to automated daily buybacks (99% of revenue) removing management discretion and capital misallocation, acting more like an equity with guaranteed capital return.
• Q: What is the future token supply? A: Total relevant supply (circulating + team-locked) is estimated at $475M, serving as the true "shares outstanding" equivalent.
• Q: Who bought the $320M OTC block? A: HPS CEO confirmed they did not buy it; speculation points to traditional institutions like ICE, but no official confirmation exists.

Other Key Points:

• Hyperliquid's tokenomics are described as "pristine" and distinct from other crypto projects, successfully aligning token holder value with platform success.
• The platform is positioned as a utility layer where 50% revenue shares are offered to external builders, encouraging ecosystem growth.
• A significant portion of institutional investors require 45-minute detailed explanations to understand Hyperliquid's infrastructure model, indicating a "knowledge gap" opportunity for growth.
• The call included a paid promotion for Kalshi, noting it as the first CFTC-approved U.S. exchange offering perpetuals with low fees and yield on cash.
• The market currently underestimates Hyperliquid's potential to capture market share from traditional finance (TradFi) instruments like oil and equity derivatives.