no mention of hype dats makes this an unserious guest post they objectively make the most sense since the underlying is actually challenging for non crypto natives to buy.
At a high level to buy hyperliquid one would have to first be familiar with wallet security and self custody to get on chain. Once on chain they have to bridge to Arbitrum. Download or selfhost a VPN, go to hyperliquid's front end, bridge their USDC from arbitrum to hyperliquid perps, bridge again to hyperliquid core and navigate the orderbook to buy the Hype token. thats enough friction to put people off of buying the underlying.
Long degeneracy = long hype as the impatient are unable to simply stack spot and chill so they get hooked on messing with the leverage slider to "make it". The brilliance in hype is the tokenomics. there is a constant passive bid on the token from the Assistance Fund where 99% of revenues generated go back to buying the token. This past year Hyperliquid has generated more than $1.2B in net income, surpassing NASDAQ’s 2024 net income of $1.13B. Those are numbers that turn heads on wallstreet. While not “equity”, that’s a straightforward enough dynamic to approach HYPE as genuinely having cash flows. This likely makes it more attractive to tradfi, who have always had issues with underwriting the fact that most crypto token valuations are a pure function of reflexivity and belief. At the same time they don't have mandates to let them easily buy this token so they can get exposure through the DATs tickers HYPD and SONN.
HYPD is a more crypto native team and aligned with the team that just won the USDH stable coin ticker from the recent governance song and dance between the stable coin providers. companies like circle, paxos +paypal, ethena, and the likes were all doing the pick me dance for the ticker knowing it would unlock hundreds of millions if not billions in potential liquidity and use of their stablecoin.
SONN is run by former Barclay's CEO Bob diamond. They raised 888mil (auspicious) for their treasury company. 583 million of in kind hype and 305 mil in cash which they have yet to deploy
under this current administration I feel like no but who's to say how the midterms go / 2028. (not a lawyer). I'm not going to be in the trade long enough to find out time horizon 6 months or less to exit
The case of MSTR has a couple mechanical parts that need to be talked about when looking at its outperformance relative to the underlying price of Bitcoin. MSTR benefitted from the launch of single name leveraged ETFs (MSTU) that initially helped to drive the premium north of 200% as the flows into these products had a greater multiplier effect on share price than purchasing actual MSTR shares. Market makers also moved the delta higher on the listed options to lower their gamma exposure, higher delta options increased the number of shares that needed to be purchased to hedge these contracts. The newer DATs should be pushing for launch of single name ETFs on their shares to help drive their shares higher and increase the premium.
The case made by d00dguy is also important. Saylor launched MSTR prior to institutional access via the ETFs which made his shares both a speculation and investment vehicle for BTC. The launch of the ETH and BTC ETFs change the landscape for the newer DATs vs the original. DATs for assets that are harder to access make more sense as a proxy vehicle for tokens in traditional markets.
"If mNAV < 1, the company can use cash on hand (or issue debt) to buy back shares, increasing the concentration of ETH per share."
This is an oversimplification. If the company doesn't have excess cash, or reasonably wants to keep their excess cash as a buffer, the logical move is to sell some ETH and buy back their shares with the proceeds. But once they do that, the treasury company narrative falters and you may see a brisk selloff, leaving any company with a discount to NAV and low levels of cash on hand in a lose-lose position. Saylor, love him or hate him, has convinced the world Strategy won't sell BTC unless someone puts a gun to his head. ETH doesn't inspire that kind of cult belief, just as there are gold bugs, but there are no oil bugs.
For REITs or other asset class there are a variety of assets in that asset class which you can purchase which therefore requires some skill/proficiency to manage (hence why asset managers take a clip) and maybe a premium is paid over NTA.
With DATs if you buy Saylor's stock he is just buying BTC. To me there is less very little reason to pay the premium over NTA for this (other than maybe holding assets off exchange or timing of trades). But surely this is a very small premium.
Issuing capital to buy an asset with no yield (so speccing the price is going up) and then re-issuing more capital to buy more asset does sound like ponzi to me but happy to be corrected.
"ETH can 10x like BTC did" seems to be the crux of this thesis.
BTC has the gold narrative (amongst other things), so I don't think its too comparable.
ETH does about $1 billion in weekly revenue, which is great, but not enough for a 10x of the ETH price. The 10x can only happen off of pure vibes/narratives, which can definitely happen, not ruling it out, but boy is it hard to see. I can better see BTC 10x from here at some point than ETH getting close to that accomplishment.
There's some debates about what the mNAV premium should indicate and whether BTC/share is a valuable KPI for investors, especially as Strategy has been raising using lots of ATM offerings, increasing the BTC/share KPI but without the stock price following BTC in the last year and compressing mNAV.
Some argue that mNAV should correspond to how cheaply debt can be accessed since essentially this is the advantage a corporation holds over individuals and is at the root of the arbitrage play going on here (short fiat, long BTC).
A funny example of BTC/share KPI is a company doing a reverse stock split due to poor performance of the stock. In turn, BTC/share will skyrocket. Not useful.
First one started this week. $CWD (Caliber). But this is a stock that is down 95% in the past 2 years, and they only have $6.5M worth of Link. I'd like to see something that still meets the minimum requirements to trade on the Nasdaq lol.
no mention of hype dats makes this an unserious guest post they objectively make the most sense since the underlying is actually challenging for non crypto natives to buy.
Sure provide an overview!
At a high level to buy hyperliquid one would have to first be familiar with wallet security and self custody to get on chain. Once on chain they have to bridge to Arbitrum. Download or selfhost a VPN, go to hyperliquid's front end, bridge their USDC from arbitrum to hyperliquid perps, bridge again to hyperliquid core and navigate the orderbook to buy the Hype token. thats enough friction to put people off of buying the underlying.
Long degeneracy = long hype as the impatient are unable to simply stack spot and chill so they get hooked on messing with the leverage slider to "make it". The brilliance in hype is the tokenomics. there is a constant passive bid on the token from the Assistance Fund where 99% of revenues generated go back to buying the token. This past year Hyperliquid has generated more than $1.2B in net income, surpassing NASDAQ’s 2024 net income of $1.13B. Those are numbers that turn heads on wallstreet. While not “equity”, that’s a straightforward enough dynamic to approach HYPE as genuinely having cash flows. This likely makes it more attractive to tradfi, who have always had issues with underwriting the fact that most crypto token valuations are a pure function of reflexivity and belief. At the same time they don't have mandates to let them easily buy this token so they can get exposure through the DATs tickers HYPD and SONN.
HYPD is a more crypto native team and aligned with the team that just won the USDH stable coin ticker from the recent governance song and dance between the stable coin providers. companies like circle, paxos +paypal, ethena, and the likes were all doing the pick me dance for the ticker knowing it would unlock hundreds of millions if not billions in potential liquidity and use of their stablecoin.
SONN is run by former Barclay's CEO Bob diamond. They raised 888mil (auspicious) for their treasury company. 583 million of in kind hype and 305 mil in cash which they have yet to deploy
Cool pinned your comment so people can decide what they like and don't like
Are there any legal concerns with Hyperliquid DATs in the US? Given that you can't use the platform in the US.
under this current administration I feel like no but who's to say how the midterms go / 2028. (not a lawyer). I'm not going to be in the trade long enough to find out time horizon 6 months or less to exit
Why invest in a DAT vs buying IBIT or ETHA or another ETF? Is this the difference between buying a in hedge fund vs the S&P500?
DAT was great, thanks. Here for the puns
Great post.
Read their paper "The Bull Case for ETH".
Curious their "short-term" price of $8K they note in the paper is that 12 months price or more so 24-36 months?
The case of MSTR has a couple mechanical parts that need to be talked about when looking at its outperformance relative to the underlying price of Bitcoin. MSTR benefitted from the launch of single name leveraged ETFs (MSTU) that initially helped to drive the premium north of 200% as the flows into these products had a greater multiplier effect on share price than purchasing actual MSTR shares. Market makers also moved the delta higher on the listed options to lower their gamma exposure, higher delta options increased the number of shares that needed to be purchased to hedge these contracts. The newer DATs should be pushing for launch of single name ETFs on their shares to help drive their shares higher and increase the premium.
The case made by d00dguy is also important. Saylor launched MSTR prior to institutional access via the ETFs which made his shares both a speculation and investment vehicle for BTC. The launch of the ETH and BTC ETFs change the landscape for the newer DATs vs the original. DATs for assets that are harder to access make more sense as a proxy vehicle for tokens in traditional markets.
"If mNAV < 1, the company can use cash on hand (or issue debt) to buy back shares, increasing the concentration of ETH per share."
This is an oversimplification. If the company doesn't have excess cash, or reasonably wants to keep their excess cash as a buffer, the logical move is to sell some ETH and buy back their shares with the proceeds. But once they do that, the treasury company narrative falters and you may see a brisk selloff, leaving any company with a discount to NAV and low levels of cash on hand in a lose-lose position. Saylor, love him or hate him, has convinced the world Strategy won't sell BTC unless someone puts a gun to his head. ETH doesn't inspire that kind of cult belief, just as there are gold bugs, but there are no oil bugs.
Yet ETH is Useful like Oil
Hmm not sure about DAT.
For REITs or other asset class there are a variety of assets in that asset class which you can purchase which therefore requires some skill/proficiency to manage (hence why asset managers take a clip) and maybe a premium is paid over NTA.
With DATs if you buy Saylor's stock he is just buying BTC. To me there is less very little reason to pay the premium over NTA for this (other than maybe holding assets off exchange or timing of trades). But surely this is a very small premium.
Issuing capital to buy an asset with no yield (so speccing the price is going up) and then re-issuing more capital to buy more asset does sound like ponzi to me but happy to be corrected.
"ETH can 10x like BTC did" seems to be the crux of this thesis.
BTC has the gold narrative (amongst other things), so I don't think its too comparable.
ETH does about $1 billion in weekly revenue, which is great, but not enough for a 10x of the ETH price. The 10x can only happen off of pure vibes/narratives, which can definitely happen, not ruling it out, but boy is it hard to see. I can better see BTC 10x from here at some point than ETH getting close to that accomplishment.
There's some debates about what the mNAV premium should indicate and whether BTC/share is a valuable KPI for investors, especially as Strategy has been raising using lots of ATM offerings, increasing the BTC/share KPI but without the stock price following BTC in the last year and compressing mNAV.
Some argue that mNAV should correspond to how cheaply debt can be accessed since essentially this is the advantage a corporation holds over individuals and is at the root of the arbitrage play going on here (short fiat, long BTC).
A funny example of BTC/share KPI is a company doing a reverse stock split due to poor performance of the stock. In turn, BTC/share will skyrocket. Not useful.
Link DATs next?
First one started this week. $CWD (Caliber). But this is a stock that is down 95% in the past 2 years, and they only have $6.5M worth of Link. I'd like to see something that still meets the minimum requirements to trade on the Nasdaq lol.