SOL vs HYPE: Forward Industries and Hyperion DeFi Debate the Treasury Company Playbook - FORWARD INDUSTRIES INC

Thank you for joining Panoramic Content Suite Singapore Edition alongside Token 2049, MBS in the Backdrop. We've got exciting guests today. This is the debate podcast. We've Got Garrison, CMO of Ford Industries here and Hyunsoo, CEO of Hyperion. So two super exciting companies join us and debate, you know, why Ford Industries, why Hyperion? And we'll get into the depths of it. but yeah well thank you for joining us super excited to have you guys here great to be here likewise to kick things off um just wanted to go straight into it um i want to ask you each bet the public company's balance sheet on one chain um forward on solana hyper liquid hyperion on hyper liquid um so yeah make the case that why you know you guys made the smarter choice between the two yeah for us it was pretty straightforward um when the uh hyper hyper liquid team implemented the assistance fund uh buybacks mechanism after the tge in november of 2024 we saw that they were taking value accrual probably the most seriously that we have ever seen in the industry and at the same time hyper liquid was just starting to generate uh you know it's it's meaningful amount of substantial recurring revenue month over month day over day. And annualized last year, I believe it was around $750 million. We're on track for that or a little bit more, which includes AQA V2 or the fees generated from stable coins, USDC stable coin available on the blockchain. So that annualizes to almost a billion dollars or more revenue per year. And that's all going back to buying back the hype token off the open market. So it was a kind of marginal buyer that is always supporting the amount of supply available on market and it made a lot of sense to us to add that to our balance sheet. But more importantly, Hype has a lot utility and being able to stake it for trading fee reductions or launching HIP3 and HIP4 markets, it actually allows us to build an operating business around the token, which is what Hyperion was intending to do from the beginning. For us, the reason why SOL is our treasury asset of choice is because SOL has a level of leanness to it that I think a lot of other ecosystems do not. And for Ford, our vision is to build what we call Sol++. And so the idea is that we want to deliver a vehicle for public markets investors that outperform Sol when price is rising, outperforms Sol on the way down. And Sol++ effectively represents the Sol we hold plus the yield that we earn in both Sol denominated yield as well as US dollar denomimated revenue. And then the investments that we can make to give our shareholders unique access and upside to the Sol ecosystem as it grows. In order to do that, right, to deliver the Sol++ value proposition, you need an extremely robust ecosystem, right? For us, we look at Sol and Solana broadly, and we see incredible growth in things like tokenized real-world assets, in things on RE, we see a very vibrant DeFi ecosystem that has obviously weathered been around for multiple cycles and we see really different pockets of activity and things like meme coins on chain trading now we're seeing tokenized equities grow and this this diversity and vibrance and the different things that people are building allows a vehicle like ford to have a lot of optionality and ways that we can build value and create value for our shareholders right it's something that has a lot of room to work with and then you have an underlying asset that represents that growth amazing amazing so i think i'm kind of seeing a little bit of the main topics that are being touched here which is um yield yield and revenue which seems like an important approach from both sides of the of the parties here i think that initially we saw as a holding company just for digital assets underlying digital assets but now it's that's just doing that isn't enough you gotta make assets productive utilize it earn yield or revenue and then ideally that goes back into the company and ideally the holders benefit from it as well and second part is part of this yield strategy or revenue strategy i guess differs between solana and hype because of the different ecosystems you guys reside in um maybe it'd be interesting to dive a little deeper into some of the opportunities you guys are seeing uh in terms of you know your respective ecosystems and how um you know why why is it a better ecosystem to generate revenue with the assets you hold yeah i can take that one first so obviously solana is one of the ecosystems that has you know i'll say relatively higher space signal today right and um as we know with the recent sgps that passed that that seeking is actually going to the disinflation rate is going to increase right so we'll hit terminal terminal inflation rate a little bit faster which ultimately is a tailwind for the asset price right international market but even besides uh base seeking yield right one of the reasons why we find salon a very interesting yield perspective is that again the diversity of businesses and companies are being built on Solana means that there are a lot of opportunities for a company like us right to not only generate Solana denominated yield which is again ultimately a double down on the trajectory of sole price as the underlying asset but more importantly diversifying our yield with U.S. dollar denomicated non-correlated yield. As a public company vehicle, our goal is not only to accrue share, to deliver absolute sole growth for investors, but also to make a vehicle that doesn't have an inherent drag on us just simply holding. So I think this goes back to, regardless of what ecosystem ADAT is investing in pushing forward, the concept of ADAT is really interesting in terms of ways that we can deliver differentiated value to investors, right? I know this is a bit of a tangent, but if you're an investor and you're thinking about getting exposure to an asset, whether it's Sol or Hype or ETH or what have you, the question you have to ask yourself is, what is the price that you are paying for that exposure? And how does the shape of exposure change from vehicle to vehicle? And so there are some vehicles out there that are effectively just leverage beta with the underlying, right? And for that leverage beta, you are paying op extra because the data has fixed costs. They're paying salaries, right, whatever. For an ETF, you're paying a fee, a management fee, right. Both of these vehicles get you access to staking yield, typically like a base rate staking yield. And if you want leverage, right there are other products as well. getting options and curves so for that's what's what most important is that the goal is forward our goal is that differentiated value right the the us dollar dynamic yield the sole yield the investments the goal to create a package of things that um most investors would typically not so that could be uh capital markets access that could be our advantageous cost of capital right we're borrowing at you know around 3.4 3.5 percent average for for our borrow with institutional lenders and then redeploy that capital in a way that is you know using our our balance sheet and deploying it into tokenized years our yield um that is investing in ecosystem companies using our our access and relationships that most investors have access to and again bringing it back to the original question right we think salon is a really great ecosystem for driving that yield because it is very robust right it's been around for a very long time there's enormous diversity of builders it's a much more mature ecosystem relative to some some other ecosystems and chains and that gives for the opportunity to deliver something that is a little bit more how do i put this a little a little more unique and a little bit more nuanced than just simply holding an asset you get to see what the best in class team is doing on solana uh with solana 100 right 100 i think for us you know there's this really unique idea you know especially on the private investment side right that at our scale and our size and with our access you know being backed and sponsored by both galaxy and jump you know as well as kyle who's been very very involved from Solana from day one, we often have the opportunity to be a catalyst for our own investment. So, you know, Henri is the example that we frequently use. But when we invested in Henri, I think their TVL was maybe in the low $100 million. After our investment, their TVl grew more than $200 million. And so you can see that for Ford, we both made the private investment as well as the LP deployment as an allocator. And that in and of itself can drive value to our investments while also driving value for the protocol and for Solana. And so for investors, when you think about total yield, for investors when you Think about this idea of total yield and you think About what you're getting back and holding the shares, to be holding shares in a company that is making these investments but also having levers to pull to impact these investments i think is a really interesting and valuable proposition yeah yeah you guys do have a lot of soul to make those impactful decisions we do have a lot but that is very true we have a so i would say we operate pretty similarly uh we knew from the beginning that being a passive vehicle for any ecosystem is not really additive so as i mentioned previously that Hype has a lot of utility within the Hype ecosystem. So currently to date, we've diversified across five different business lines, which covers validator operations, DeFi monetization, which encompasses the Hypes as a use service and being able to deploy Hype directly to teams that are building on the ecosystem, such as Entropy and SKU, which covers HIP3 and HIP4. We've earned ecosystem rewards. So similarly, being able to invest or participate in building institutional products with our partners, not only getting share of the revenue but having equity and or token upside to their growth over time we think it's substantially more important in the hyper liquid ecosystem because a lot of these projects are much more nascent or earlier we've seen the trend again and again where the lead token you know continues to accelerate people get more attention on the ecosystem and those ecosystem projects also move as kind of like beta to the leader we also have yield enhancement strategies which covers volatility on the base asset in addition to other assets that we hold and we're able to use that in tandem with partner protocols like risk or hyperlend so being able to take collateral potentially borrow or lend against it use those assets and generate yield so kind of building a carry trade into the d5 system on hyperliquid and of course the portability between hyper core and hyper evm means that all these assets are able to move across seamlessly so being able to support the perps the binary and scalar markets in addition to institutional credit vault strategies private trading rfq is something that we see as a very cohesive financial system and hyperliquid has kind of evolved from being like an app chain for finance and also being a mechanism for like financial infrastructure that can be distributed through front ends like phantom and metamask and so forth so we think that the trend will continue to accelerate with like major exchanges such as valor and kraken getting involved and hyperion's role is to continue to build products and services that can aid and actually accelerate these use cases as they move more into them amazing um yeah i think these utility revenue all super important but in the end what's the mo what the most important thing is the price of the token um we don't want to speculate on the price too much but uh i think given the trends this year so far hype has been the talk of the town the blue chip to invest in uh hitting over ninety dollars uh also getting mentioned by trump as well which is uh which is a interesting feat um that said i think it's the market is efficient and um we will continue to see how the markets develop wanted to see get your take on you know will hype ever flip soul or will which coin will outperform in the coming few years you want to go yeah sure uh i think obviously anything is possible we've the the list of like top 10 or top 20 tokens has changed every cycle but you still see some some tokens that despite not having so much utility or users or fee generation uh there's a lot of mispricing that i think still exists hyperliquid in in both its own benefit and potentially its own draw uh kind of headwind is that because it generates real revenue right you can kind of do a discounted cash flow model and say this is like quote-unquote the fair value of the token just based on the amount of revenue that it generates on the other side of that i think that there is still a lot of meaningful catalysts such as excuse me the expansion of hfp4 so like is it does it deserve to be uh add the value of polymarket or cal street to its existing market cap uh and further integrations on the institutional side and obviously being able to enter the u.s market and what does that mean for uh real like rias or other kind of pension funds uh firms that require regulatory clarity to participate in hyperliquid? And what does that value addition mean to the value of the token? So we look at those components. And then on the other side of that, you just have unique mechanisms underlying the hype token, right? So net today, it is deflationary. I think it's one of the few deflationery layer one blockchain tokens, right. And in addition to that, the buyback mechanism, the existence of other DATs, ETFs, and those kind of flows as hyperliqid is still relatively unknown outside of crypto from the conversations that we've been having. And so I think that there is always a moment where if we are heading into a bull market and there is, you know, animal spirits and there's only so much capital that can go to few tokens that are understood and generate revenue and call it legitimately able to continue to grow and expand into incumbent financial markets, I think there's still a lot of upside remaining so i will i mean you have to you have to say that uh from our view yeah i i would say so i think it can even be on track to getting close to where ethereum is valued as well yeah go for the king oh is tom lee is tom lee watching yeah you know so so i think that um you know you bring some really fantastic points and i think this idea of revenue generation being able to run dcf and having people understand like how things can be valued is both a tailwind as well something that could be a headwind right um you know for us we ultimately think that all this little extremely early innings and to his point he said that in in a bull market right you you see a lot of things that are mispriced rationally priced temporarily irrationally priced i mean we saw xrp flip a bunch of things you know lately last cycle as well right and so i think the most important thing that that we think about is solana as as an asset right from a price perspective and as i said has has demonstrated a true level we've seen solana make new highs and then make you know some serious lows right between cycles and then come back and retest highs and this cyclical nature of price and being able to survive through that right a couple of times allows for the holder base to grow uh stronger right create better market structure and and ultimately means that uh other players can feel a little bit more comfortable coming into this market i think if we think through you know early l1 cycle evm killers right professor coins guys remember that um we saw a lot of tokens only for for their first cycle in their first year and and this this is not me i have a crystal ball right i'm certainly not saying anything about hype um but look like new tokens are kind of better than old tokens tend to go up and and i think that um these positive feedback loops in a more challenging market can rapidly turn into negative feedback loops right when you have a lot of concentration holders when you have a little whales early insiders there has not been meaningful distribution and reaccumulation cycles price can be very volatile right and so i think uh we may see near-term dislocation right and near-turn you know the rational relative pricing on what these what these assets represent for us we think that long-term sold out that the reality is that if we look at the trajectory of soul today obviously it's much more difficult to run like a dcf console because it touches so many different things right but i think for us like we actually see a lot more torque because solano today supports a lot of different things and we are seeing on-chain trading from from retail right like when you think when people think crypto your average person thinks crypto they think solana you go on the street and you ask someone what crypto they've heard of and it's bitcoin uh salon is also moving forward in the RWA space. Solana is moving forward in the institutional space. There's a lot of work on on-chain AI. A lot of these different portions of Solana are nascent for growing. And I think even if you're doing a naive sum of parts and thinking all the different things that could happen in that ecosystem, it gives us a lot of confidence and conviction that Solana will outperform. And in the long term, something that is heavily heavily focused on institutional trading hyperliquid is just likely not sure as much high right as not as much value as what salon can offer yeah i'd have to say uh i think samsung just announced salon integration to support usdc payments which is uh very very impressive um yeah congratulations on that i think that is an example of retail adoption uh through institutions of course but yeah we'll see who gets to apple pay first so uh yeah this is a bit of an aside but you know i think um broadly speaking when you look at crypto overall something that people should be looking for more often is whether or not an ecosystem or protocol or the combination of the two is actually bringing uh marginal stables on chain that would have otherwise is never have been on a chain, right? So when I think about Hyperliquid today, right, obviously there's just like really large institutional push, but the question that I always have is, are we share-shifting from finance? Is Hyperliqid just share-shift from finance, and for good reason, right. Plenty of fantastic reasons why Hyperliiquid should be share-shifting from financing point business of the world, but these are dollars that were already destined to make it into crypto, right where we're certainly moving them to a better experience better product in my opinion but this is money that was already going to get to crypto when i think about solana and i think about these tokenized ways and i thinking about some of these other protocols are being built these are marginal stables that would not have ended up in crypto right because because just use tokenized rbs for example reinsurance right this is hundreds of millions of dollars billions of dollars in the traditional reinsurance industry that would ended up in a traditional reinsurer right and so when these assets get packaged and tokenized solana you're bringing marginal staples on chain right the partnership with samsung is the same thing these are these are dollars that would have ended up uh mobile wallets right or fintech products that are not on and so by by doing these partnerships like what's long announced with samsung you're you know bringing marginal dollars for our marginal users right that are truly incremental and and whether that is a nascent amount today or something again like on read that's in more than hundreds of millions of dollars it's really that incremental dollar that is super important especially when we're thinking about long-term value capture and like where where the terminal value of these ecosystems can my counter to that would be even if more dollars are brought into certain chains it doesn't necessarily equate to you know it could result in more fee uh more activity but it doesn' necessarily mean that the fees themselves are inherently profitable or the value is returned to the base token. I think it's quite similar to Ethereum and the Layer 2s, where Layer 2 is like Arbitrum are being used for use cases like Hyperliquid and Robinhood, but the value capture has actually gone more to ARB than to Ethereum Layer 1. And so I think that for Hyperliqid, the more USDC that's actually available as TVL, 90% of that interest revenue that's generated that would go to Circle or Coinbase is actually returning to the assistance fund and going towards buybacks. And so that's another mechanism where you can see the direct impact of TVL or use cases kind of accelerating the buyback. And I think that narrative flywheel of, oh, this token just continues to grind up over time and more eyes are on it, and they say, oh we need to buy this, we want to launch per markets, we want reduce our trading fees, we want use it as collateral, that also creates that natural demand for the hype token. The other part of it that I thought was kind of interesting to your point is Solana as a general purpose blockchain, I think, is very valuable because it has diversified across numerous use cases, right? Agentech trading, RWAs, institutional and retail push. But I've also seen like PumpFund is probably like the story of the year, right, is it's as an application has captured more of the value of a lot of users and trading activity on Solana than the Sol token itself. Whereas I think for Hyperliquid, as mentioned previously, all of that activity kind of really focuses back and returns to Hype. I think that differentiated flow of value capture is what makes Hyperliqid really exciting and potentially a competitor to Flipping Solana. I think you're making great points. I think this idea that the base token for Hype is sort of the destination for a lot of the value that's being created today is truly a tailwind. And I think that one of the reasons why Hype has done so well as an asset and has actually displayed a level of dislocation from crypto overall lately is because of this value accrual narrative that's very easy to understand for revenue better. I think for those of us that have been in crypto for a while, we've seen the buyback met up before. And I'm certainly not saying that it couldn't change. and certainly hype has more much more durable revenue than a lot of protocols but i i think we know that at what was it like 90 billion dollars today uh in in terms of market cap that it's probably not the live acts that are supporting this right uh and i i also think it off top of my head i'm sure the hype at current fee generation run rate the the inflation is actually more there's There's net issuance, I think, relative to the buybacks. It's very close. Either a wash or there's actually some net inflation. But then you look at Solana as well. Solana has, for a very long time, inflation on Solana, the economic policy of the token has been highly debated. It's one of the reasons why they want to accelerate the disinflation rate. But despite the disinflation rate, you could still see positive trending price. So, again, I kind of go back to revenue is so important. right at some point we have to think about these ecosystems these technologies these assets as being productive and measuring them on the revenue that they can generate but in terms of price especially short to medium term i i think that coming to a conclusion that um one token will perform the other on the basis of kind of value accrual from revenue alone is i think just like doesn't really it's it is part of the narrative that narrative might drive might drive uh incremental or marginal buying behavior, which then might create this self-perpetuating loop that then leads to that token outperforming. But I think functionally, that's not the reason why the token would outperform. You brought up a really great point on protocol versus layer value pool, right? Because you have these really large tokens like Pump that have existed on Solana. And ultimately, the way that I think about this is like, I think think about the value of a market overall right like you think about maybe like the us stock market as an example the u.s stock market is the largest in the world because we've created a bunch of different companies right in the united states that are all extremely valuable extremely productive and i think that it is probably a more bullish signal that salon is able to spawn and support applications like pump fund that can have multiple billions of dollars in in terms of floyd diluted market cap um that's probably more bullish for solana rice than it is bearish although i know a lot of people say well if marginal dollars are flowing in a pump are those marginal dollars flowing into solana uh and i think in in a in a vacuum especially in sort of today's more nascent market uh that argument holds water right but i think ultimately we're chasing something that is significantly larger and everything that we're doing today is actually trying to attract a lot a lot capital is not in crypto today right i think the reality is crypto is still just such a tiny tiny market compared to other asset classes and so it really comes back to looking at today's relative price action value rule is is not a good prediction for where things are going in the future right i think if if people are really thinking about what asset is going to be priced higher in the picture you know certainly there's sort of this like long-term uh long-time consideration of of you know inflation right people think about because Because if you're looking on a 10-year basis, how much issuance is there over 10 years? But what's much more important is, if 10 times more money was to come into the industry, where is that money most likely to flow? And that's the best way to answer the question of which assets can outperform. Because Solana supports such a broad, diverse set of use cases, we believe that it's much more likely that Solana captures this cycle. Yeah, of course. I mean, I've been in the trenches in DeFi for quite a long time, and Solana's ecosystem, playing with it for the first time back in 2021, 2022, is really exciting. The speed, the ability to really be able to transact fast, very cheaply, I think changed the game for participation in DeFI. and obviously you know you you had the real first like mean coin season on solana and then being able to use applications like jito jupiter how they rewarded you early users as well right creating like these kind of economic incentives to kind of return back to the chain and to your point right what i think was really really impressive was during ftx right and solana everyone was like this is really dead right it was hard seeing solana go from like 200 plus back down to eight and seeing it get all the way back to all-time highs, right? So I think that is a testament to the nature of the builders on Solana, those that have been committed for a long time, the global user base. I really do think it is incredibly admirable what has been built in terms of all the Layer 1s and Layer 2s that exist in the space. At the same time, I do think that there is a need for applications or blockchains that are highly specialized. And I thinkthat was what personally made me move towards the hyperliquid ecosystem after being in thespace for a longtime. And really the focus on value accrual and infrastructure that can, as we like to say, like the DeFi mullet, right? People don't even know that they're using blockchain inside. And I think that abstraction being solved for is also quite valuable. But overall, we're really excited to see that the reality is that we are still very early in what all of these networks will become in the far future. Yeah, and for us, right, I think, you know, look, the elephant in the room that we as the Solana ecosystem have had to address is really this evidence that Solana missed the boat on bonkers. That's just the truth, right? And I think that obviously there are teams that are trying to address this, right. You have Backpack, Sunrise, Phoenix, a lot of really fantastic companies that are try to tackle this in different ways together. I think there's a new wave of blockchain equities that really could usher in a lot of new activity in the industry as we've seen but the other thing that I think is really admirable of the hyper-liquid ecosystem is truly their speed I think that there's an element of this which is small teams decentralization in terms of a protocol is something that we're all striving for in this industry but decentralized development and operation of a company right is inherently slow and i think one thing that hyperlink has done really fantastically well is their ability to see needs see a demand in the market of that team right which is small tight-knit to execute and create something right you know we think about like development of one the purpose product to uh the execution of you know on-chain equities, on-chain equities perps. I think silver and crude specifically, I really captured a lot of attention there because they were able to move very quickly. Whereas on Solana, you have a lot of teams that kind of came up at the same time to try to create a competitive purpose product, right? I think we've seen, you know, like GEO has one, right? There's a number of different products that are expensive nowadays. Ithink this decentralized approach, multiple teams approach, which theoretically can end up creating a much better product because competitiveness breeds innovation. But it also means things are moving more slowly. I think that's something that's on ecosystem is going to have to kind of think about on what priorities make sense for there to be a lot of collaboration between teams and what things are much better approach from a more decentralized type of angle. I will say this, I think ultimately in terms of value capture, it's a double-edged sword. If you're a small team and things are built relatively centralized, like Hyperliquid, the value accrues back towards the core team versus the ecosystem. And it's a fine balance. At some point, if the core protocol is so large and so incumbent and so good at building things, the Hyper-EVM is going to struggle to become really robust because if you're a builder, you know that when you build, you're competing with the protocol. And on Solana, the ecosystem, again, is really robust and really diversified, very vibrant, very wide. There are a lot of people building on Solanas foundation and labs. It's a huge company spanning hundreds of countries and tens of thousands of builders and users that often don't even know what each other are doing. There's a lot localized markets and localized innovation. And I think that, again we go back to this idea of in 10 years, what ecosystem is best position to capture the bulk of the marginal dollars that we all believe are going to flow in. And I think the larger your net, the more likely it is you're going to catch big fish. I have to agree with everything you guys both said, but I do especially agree with that we are early. We are all early. I'm a believer that all boats rise with the tide and excited to see what type of growth that we achieve in the coming few years altogether. But thank you much for joining us it's glad amazing having you today and uh yeah let's wrap up token 2040 2049 um with these beautiful debates thank you