Multiple viewpoints can be established at the same time:
Hyperliquid’s airdrop marks a turning point, embodying the market’s outright rejection of a trend dominated by insider-backed infrastructure called “Airsoft,” which typically allocates only a minuscule share to the community.
Raising huge amounts of money at a ridiculous valuation, then launching at a ridiculous fully diluted valuation (FDV), ultimately causing the stock price to continue to fall and be dumped to retail investors, is bad behavior.
For most projects, unless the founder has made tens of millions of dollars before, it's difficult to do it without raising money and without "insiders," even team members.
Here are some thoughts on how to make sense of these seemingly contradictory ideas.
Why Hyperliquid succeeds
Hyperliquid’s airdrop is an important event in this cycle. I particularly appreciate the following four points:
- It resets expectations about how, when, and to what extent token ownership is distributed.
- It re-establishes the importance of DeFi and user-centric applications in the industry.
- It proves that selling pressure should be resolved quickly rather than lingering.
- cultural aesthetics of community
The clever thing about Hyperliquid is to combine the token schedule of the venture capital support project with the distribution mechanism of the ICO. Build the product first, launch it without tokens, conduct multiple iterations with users, gradually adapt to enhance the behaviors most valuable to the protocol through multiple seasons of points, and then release the tokens more than a year later (instead of after Raise capital before product launch). But like community-funded projects, tokens are distributed to users.
Ironically, in a space where many founders were keen to reduce selling pressure by limiting allocations and liquidity at the time of the initial offering (TGE), Hyperliquid managed to have perhaps the strongest buying pressure post-release, and in years Achieving the widest distribution of any major protocol to come.
Regarding selling pressure: the more protocols try to artificially spread the pain of selling by short-term speculators, the more the selling pressure intensifies, making it almost impossible for true long-term backers to hold the token (as the impact of complex supply dynamics on price in the medium term will exceeds the strength of the project).
The final thing I appreciate about Hyperliquid, although it's rarely mentioned, is the cultural aesthetic of its community. “Community” refers to those who actually use the product. Cryptocurrency’s love affair with community has evolved into an implicit requirement that every product need its own pseudo-religious cult, whether real or bot-generated, filled with over-the-top visual logos, slogans, and maybe A Discord of real, possibly bot-generated profiles, delivering some version of the same few slogans every day. Building a cult around an image or slogan that has nothing to do with the base product is a substitute for the cult that should be around your product itself.
The cult of Hyperliquid exists, but it is - or at least begins to be - the cult of its users, not its followers. As far as I know, its most obsessive users don't even have a consensus self-referential name of their own. I've heard "bozos" is the de facto term, but overall HL has very few cryptographic signatures. I'm not sure if I've seen any HL pepe; there are PURR cats and PIPs, but that's basically it. Aesthetically, it’s a clean brand that takes itself seriously, and posts aren’t filled with cartoon characters.
However, Hyperliquid's cult is exploding and its social media is being completely botized. Its followers seemed to have tripled in the past few weeks, but there were only about 30,000 people when they started handling billions of dollars in daily trading volume. Compare that to other projects that have hundreds of thousands or even millions of followers on Twitter (and you don't know a single user!).
Even if you can't (or won't) copy them, you can still learn something from Hyperliquid
Ignoring the product, most founders who are building serious projects can't simply not raise money, for the obvious reason that they don't have the $5 million to $10 million to fund a small development team for several years. Those with this privilege should consider investing their money and reaping the outsized returns that could be possible if executed well. If you are a college graduate starting a business or are a regular person in any way, this may not be an option for you.
Even though Hyperliquid in some ways sets unrealistic expectations for people who can't afford not to raise outside capital, I think this reset is actually a good thing if you're not raising huge amounts of money.
Readers need only look at the type of announcement that grants the biggest status boost and consistently triggers the most bot-driven growth: fundraising announcements. Over the past few years, fundraising announcements have become a defining status symbol in cryptocurrency; the bigger, the better. This creates natural pressure on founders to raise more and more money at higher and higher valuations, regardless of how much capital they actually need to get to the next stage. This isn't unique among cryptocurrencies, but it certainly doesn't do it any favors if you believe in its underlying ethos in any way.
Even if you can't not raise money, you can raise a more reasonable amount, focus on the product, and avoid getting into the game of who can raise the biggest round of funding. Instead, compete to see who can build the best product — that would be more fun and hopefully better for crypto as a whole.
Summarize:
HL puts DeFi at the forefront and redefines the paradigm of token distribution
- Selling pressure should resolve quickly
- Reject groups that are not product focused
- The market has allowed you to focus more on product development rather than raising capital
