How a Top 100 Hyperliquid Trader Finds the Next Big Trade

David Hoffman:

[0:02] Bankless nation i'm here with cool crypto he is a big kool-aid man on crypto twitter and also a top 100 perps p&l trader on hyper liquid at least that's in his bio uh cool what does it take to be a top 100 perps p&l trader how do me how do i and the listeners become one of those

KoolKrypto:

[0:24] You know there's there's a good case to be made that some of it might just be survivorship bias if i'm being completely honest with you of the people in the top 100, well honestly i would say just like all the crypto is just not blowing up like like it's it's so much more about risk mitigation like i literally never use more than 1x leverage, on like the entire portfolio or incredibly rarely and so i think i think for most of the guys who are there they just avoided big blow-ups more so than they necessarily even capitalized on big opportunities because like the big opportunities in crypto are so, readily apparent in my opinion like there's some massive dislocations that happen in crypto.

KoolKrypto:

[0:56] So as long as you're just alive to take advantage of them, then you're kind of naturally kind of drift up in terms of P&L. So, yeah.

David Hoffman:

[1:02] In terms of capturing P&L though, upside, I Is it more about being statistically correct or is it like, is it one single trade that you held on for size over a long period of time that climbed up the P&L leaderboard the most? Or is it more about just like the consistency on smaller wins, like singles or home runs?

KoolKrypto:

[1:25] It's a good combination of both. I would say this year in particular, I've had a couple of big home runs on some like actual spot tickers more so, like Drive or Kinetic or some other things. As far as like the perps, you don't go, funnily enough, like a lot of the perps, P&L and Hyperliquid specifically is actually like different times of hedging Hyperliquid on perps while still like holding some on spot. And a lot of those are just like there wasn't really any like massive short that I hit on Hyperliquid. It was just kind of like, you know, generally identifying local tops hedging and then like buying back and, you know, closing it out lower. So, yeah, there's not really any one big, you know, huge perp trade. Like I know that there's a couple of guys on there who have like massive like near and Zek. Like they just have one massive trade that they just became almost associated with and known for. Definitely not my style. Kind of the same thing there is I would say on perps, especially it's much more singles, whereas like on spot kind of like long term holdings, it's a bit more home run.

David Hoffman:

[2:13] You think the like the perps leaderboard itself is signal at all? Or is that kind of actually just like a noise based on like who's ahead in the moment, but doesn't actually give any sort of like unique insight?

KoolKrypto:

[2:28] No, no, no, no, definitely. Yeah, I've done quite a bit of analysis in this actually specifically of like, what is it? What does it look like the copy trade guys? There's there's a little bit of signal like it's good. It's obviously good to know if you're in a position. And there's some massive hyper liquid whale who's long, you know, 30 million of near or something like that, like what they're doing with it, obviously, you can go kind of stalk them. But it's terms of like actual like long term, like who makes sense to copy trade. The problem with it, too, is that you just don't know what's going on across the board, right? Like for you have no idea of knowing that like, oh, I might be long. 50,000, like hype on on there, but it might be short somewhere else. Right. And so it's one of those things where it's pretty difficult to separate out. Some guys are doing like delta neutral, like it's always funny to me, like guys will point out, it's like, oh, there's this massive whale who's short $200 million of Bitcoin. And they don't know that that's just like a Braxis Capital, this delta neutral, like funding rate arbitrage fund. And so like a lot of guys will kind of like whale watch and see like, oh, like the biggest P&L of today was this guy. And it's like, dude, that guy was just, you know, farming funding rate, essentially. And so it's, it's, It's difficult to tell guys who are doing that from actually taking directional trades. But I definitely think that you can get a decent bit of signal by curating a good list of guys who, you know, consistently win, kind of looking at what they're doing, understanding what they're doing, contextualizing what they're doing, I think is important, too. So, yeah, I think there's some signal, but you definitely have to contextualize it and say, like, OK, is this actual like delta neutral or are they actually taking original trades? And then also kind of understanding their worldview, like how they trade, like seeing like what type of style they have as a trader and seeing if that fits your style as well.

David Hoffman:

[3:52] How much time would you spend, would you say, actually kind of going through other traders on Hyperliquid or Lighter or whatever who have positions open? How useful is that? How much time do you spend doing that activity to just ascertain what people are doing in the market? And how do you fit that into a broader pattern of behavior in order to make a position happen?

KoolKrypto:

[4:15] I did one pretty big deep dive where I wanted to go actually see. For example, Hyperdash is pretty interesting for it. They have a pretty good UI where it's nice to see. It'll show you very profitable guys. They'll give them a copy trade rating. I looked at some of the analogs on there to see. When I figured out that there's not a tremendous amount of signal that you can glean from it consistently, at least like broadly, like I said, maybe on like a per ticker basis you can, then I don't spend a ton of time. But like I said, like if I'm in a huge trade on any particular single ticker, it's like I'm definitely going to be watching what the biggest position holders on that are doing. And so for that, it's more like a live updating, just making sure, you know, no one's doing some massive TWOP out and like that might influence my like limit orders or something like that, right? Like, you know, wick catch.

David Hoffman:

[4:57] Right. So it's better to inspect these things when you have exposure to a particular trade and you know exactly what to look for, but it's not necessarily as informative about making a trade or entering a position. It's more after the fact. Is that what you're saying?

KoolKrypto:

[5:12] Definitely. Yeah, exactly.

David Hoffman:

[5:13] Yeah. Yeah.

David Hoffman:

[5:15] Maybe, can you give us, me and the listeners, a little bit of background on who you are? As I said in the intro, you're a Kool-Aid man on Twitter, so you're semi-anonymous. What's your perch in the crypto industry? What do you focus on? How have you sharpened your stake?

KoolKrypto:

[5:28] Oh, sure. Yeah, so I've given a background. It's kind of the same thing, as I've said before, on other appearances. I was just very early to crypto, mined Bitcoin quite early on, ended up getting very deep into DeFi very, very early on. Really really enjoyed the fact that it felt like a really big zero to one jump in terms of like the actual use case of crypto going just like okay cool this is like pet rock hedge against inflation type of type of you know, tokenized gold type of type of asset and see like oh this is actually useful we can trade we can borrow we can lend all these different things, and so yeah very very big into defy very early on and then i ended up starting a fund a couple of years ago to to kind of long the expression that like oh i think defy is going to actually you know somewhat change the world. And I was I was extremely early and wrong, actually, on the revenue meta, like I thought the revenue meta was going to happen a lot earlier than it ended up. So you know, I kept trying to say like, you know, tokens like GMX, for example, it's like, oh, they're so cheap on like a PE ratio back when people were like blasting billions of dollars in the meme coins. And so, My my like frame of reference for a lot of crypto right now is is more of from the point of view of of like, you know, revenue meta, DeFi, etc. But I don't actually have like any real tradfire background. Like I never worked traditionally in any sort of, you know, banking or trading setting.

KoolKrypto:

[6:46] Yeah, exactly. Yeah. Entirely self-taught in crypto. And so I've been close to a lot of that side of the industry, like increasingly more so over the past couple of years of seeing like what institutional trading like ends up looking like. But never, never really had any experience in myself beforehand.

David Hoffman:

[7:00] Yeah, for Minkgo's S.N.I.R. is former Chronically Online on Twitter, revenue meta is this meme where there would finally be a rotation into revenue-generating assets, and we would leave this era of fake value-capture tokens and meme coins behind, and people would rotate into quality. I would say lately, at least 2026, that has decently happened. Pump generating a ton of revenue, Hyperliquid generating a ton of revenue. Do you think there is more revenue meta rotation ahead of us? Have we kind of completed that? Like revenue is actually valued as much as it ought to be in crypto? Where do you think we are in the expression of the revenue meta?

KoolKrypto:

[7:40] It's actually like a really interesting question that kind of goes into like a broader theme, which is the fact that especially with like recent midterm results, for example, you're actually kind of potentially going to see a rotation out of the revenue meta tokens because they're a little bit more sensitive to regulations. And then people are kind of more so long the more store of value tokens. And so like Bitcoin and Zek are kind of positioned like you saw a gold rally, for example, like with the midterm results. And so it's this presumption like, OK, like, you know, rates down, spending bazooka to infinity back on. And so that's more favorable and more supportive of the store of value assets. It's not to say that the revenue meta is over. I would actually say quite the opposite. Like, I do think that there's still going to be a very, very pronounced like, you know, flight to fundamentals and crypto. And a lot of that just does come down to like, you know, does your token actually generate revenue? But I will say that it's like, yeah, from a regulatory perspective, those tokens tend to be more under threat than the store of value tokens. And so we might see an interesting rotation out of some of those revenue meta tokens into more of the Bitcoins and ZECs of the world.

David Hoffman:

[8:39] Are you in the camp that like there's a store of value coins, Bitcoin, ZEC, and there's revenue generating coins, hyperliquid, pump, derive, and that's it. It's like if you're anywhere in the middle of those two things, you're in a bad spot and you need to pick a direction.

KoolKrypto:

[8:54] Kind of like the tulip king either you are money or you make money type of thing.

KoolKrypto:

[8:59] Yeah I would say to an extent yeah like I think, I think that it might be a little bit of an oversimplification I think I think ETH is a really good example of something that kind of falls in between I don't I don't necessarily know that it's fair to value Ethereum either as as it you know makes money or as it pertains to like being considered money I think there it's like there's this kind of concept of like lendiness with regards to like how broadly can a like credibly neutral settlement layer be adopted and like how do we value that and if there is a really good precedent for it and I'm not really sure that it just fits into that binary framework but either is money or makes money, But I would say, yeah, generally speaking, it's like if your token is not generating, very attractive like PE ratios and is trading at like a relatively favorable amount of revenue compared to float. Yeah, you better hope there's some external value that's being placed on that on that token. That's not just like, you know, sentiment based, right? You kind of need it to have the lendiness of Bitcoin, for example. I think that's even kind of like a problem that Zach has right now, too, where it's like it's kind of different. Like it wants to be a store of value token. But it's just, there's just such a gulf between it and Bitcoin with regards to how it's perceived that it's, Zekai still kind of think trades almost closer to a meme coin. Not to say that it is a meme, but it just trades closer to a meme coin with regards to sentiment and momentum as an expression as opposed to Bitcoin, which has a lot more lendiness and backing and support and just kind of time hardness to it.

David Hoffman:

[10:27] Go into that a little bit more. What contributes to the gap between Bitcoin and Zcash? Is it just like Zcash is younger and doesn't have the same sort of recognition? Or what goes into why Zcash is so far away from Bitcoin?

KoolKrypto:

[10:39] Yeah, I mean, Bitcoin is synonymous with crypto, right? You know, when you talk about crypto, that's what most people kind of like minds jump to. And so like, if there is an argument to be made that there could be this globally accepted store value token, you know, Bitcoin is orders of magnitude more likely to be adopted than something like Zcash. I think the problem with Zcash too is that it fixes a lot of problems that I guess like normies or non-crypto natives don't even necessarily know to think about or exist. It's like when you talk about the fact that it's like quantum resistance or all these other things, it's like it almost just educates people to the fact that quantum is a problem for Bitcoin more so than it promotes the benefits of Zcash. I think the interesting thing with Zcash too right now is that it is such a, crowded consensus crypto trade because of the fact that it is the perfect environment for it. It's like if your worldview is that quantum is going to be a problem, it's that even if on a more political level, like socialism is going to be, on the rise in the United States over the next couple of years, and there's going to be more flight to assets that are private, and I guess private and somewhat of air quotes for Zcash. But, you know, as more of a narrative, it has kind of like the privacy, it has the quantum resistant narratives going for it. It's the perfect setup, right? Like you couldn't ask for a better setup for Zcash right now. The problem is, though, is that it, as with all assets that are too crowded in crypto, like you need some external capital coming into it. And you just don't really have like a sailor for Zcash right now. Like obviously there's a DAT or two for it, but it's just not nearly like the same level of size.

KoolKrypto:

[12:04] And so you really need people to come in and like actually bid Zcash externally. If everybody in crypto is sitting in it, they're kind of like hiding in their Zcash longs, you really, really need a lot of people to come in. And the issue is that the way to get a lot of other people to come into that trade is by just price action, like you need price to go up. And so if everybody's already quite long, that's kind of when you run into a bit of an issue. And that's the same with any crowded trading in crypto. though. I think another part of that, too, is just the fact that like the whole selling point of Bitcoin and also the problem with Bitcoin is the ossification of the code. Like people know exactly what it is. It's the most predictable schedule of, you know, happenings, etc. Like these are terms even like regular people kind of are familiar with. The problem with Zcash and what makes it beneficial is the fact that the code isn't really as ossified. Like they are, there's an actual dev team, right, that's working on it. There's, you know, updates that are being planned for it. And the problem is like that also increases the attack surface area for potential hacks or exploits. And so you kind of saw that with the whole Orchard fiasco where people are like, oh my god, are these like infinite minting on shielded tokens? And so the problem is like as a store of value, you can't, necessarily have that level of uncertainty with regards to what it will be in the future. And so when people go back and they look at like a Bitcoin chart, yeah, sure, they see massive 60, 70, 80% drawdowns in the past, but it's been holding up like relatively well recently. It's kind of difficult to look at a Zcash chart recently and say like, oh yeah, this is a predictable store value, right? And so that's kind of the issue there is the volatility as well.

David Hoffman:

[13:30] Let me throw some thoughts your way in because I have some opposing views where I take the point where external capital out of crypto is not readily coming into like Zcash. But I wouldn't necessarily say like that's my thesis behind Zcash. Now, I also think that there is this evidence to suggest that that is also partly not true in that like there is at least some external capital that is skipping over Bitcoin and going into Zcash. And I think that's kind of why like Naval has become this like shadow main character where like he doesn't really go on podcasts and do circuits, but like he's very into Zcash and he's very into Zcash. Specifically because of the privacy. And, you know, like Naval circles are outside of crypto, external to crypto. And in fact, they're like wealthies. And so you only need like, you know, a few handful of billionaires outside of the circle of crypto to like understand the value of uncensorable private money. And so it doesn't take like a social zeitgeist for that in the same way that we had in 2021. It doesn't take too much of a big public awareness of crypto adoption to really move Zcash in the same way that it moved Bitcoin in 2021. So that's one thought.

David Hoffman:

[14:38] But also when I hold Zcash, I'm more looking at it as a percentage of Bitcoin's market cap because the buyers of Zcash are going to be Bitcoiners who defect from Bitcoin. And very rarely does this ever happen. You know, Bitcoiners are known to like lock arms and never break ranks, only buy Bitcoin. Everything else is a shit coin. But and there's this uh clip from an interview that we did on bankless to suzu in 2021 where he was talking about like oh yeah i know bitcoiners who are like flying around the world to go to retrieve their cold storage so they can sell bitcoin for ether because ether this was like may april may 2021 and ether was like the coolest thing ever and so like every once in a while the stars align and like bitcoiners like decide that like hedging their massive bitcoin exposure by like 1, 2, 3% into the cool new thing actually does happen. Like the last time it happened was E and potentially is happening now. And it is happening now to some degree. And so it actually doesn't take too much external capital to get Zcash up to like three, four or five percent of Bitcoin. So these are my two theses. How do you take those?

KoolKrypto:

[15:41] No, I actually agree with a lot of that. I want to clarify, too, that it's like I know I was kind of painting like the bare case for Zcash, but I'm not I'm not bearish Zcash because, I think those exact same things, too, that it's not that hard to see a couple of, you know, a couple percent of Bitcoin are saying, you know what, like, you know, just in case. Right. Just in case quantum's a problem, like just in case I kind of need this privacy feature. I think the problem there, though, that I would push back a little bit is it's difficult to say to what degree that's already happened and priced in. Like, you know, if I'm playing at some like poker games and there's like a billionaire that, you know, there who's like shilling Zcash already, you know, part of it does make me feel a little bit like, oh, is this kind of like that? Like, you know, Uber driver who's talking to me about like, oh, have you heard of like X? Yeah, it is actually. No, you're 100% right that that that billionaires and, you know, multi deca sets of millionaires, they are actually yeah, you're like, like Zcash is actually one of the first exposures of crypto that a couple of them are taking on right now. And you're absolutely right that once again, it does not take a ton of money externally from them to say, you know what, just in case I'll go put 1% of my couple hundred million into Zcash. The problem is like, to what extent has that already happened is I would say probably more so than some people would necessarily expect. But it's actually kind of a similar argument that people used to make as well with Bitcoin even, where it's like, you know, I remember talking to a fund manager a couple of years ago, And he was super anti-crypto in general. He was like, this is bullshit. This is all upon me. This is a scam. You're just like your typical trap guy, right? And then he asked me, he was like, oh, like what percent of like global wealth.

KoolKrypto:

[17:08] Is in Bitcoin right now? And I think at the time it was like maybe 30 or 40 bips. He was like, you know, and it kind of like a light bulb kind of went off in his head. He's like, you know, if nothing else, just to not be wrong, a bunch of guys are going to be like, I'm just going to put up 1% of my money in just in case, you know, essentially. And I think it's kind of like a similar argument there where like you are going to get this ratio that guys will just be like, you know, just in case I'm wrong, I'm going to put this amount into Zcash. But all the edge there is kind of figuring out like what percent is that, right? It's like, are we already at that point? Is that point, you know, another couple of multiples away from here? But I will say that it's like, yeah, you are definitely betting on like the big fundamental driver there is ultra wealthy, ultra high net worth individuals who value that privacy. And so, yeah, like if you think that that's not really fully played out yet, then Zcash isn't a ridiculously good setup right now. Amazing long to have. And so I think it's also like such a great trading asset as well. Like it trades so purely based on momentum and sentiment. It's kind of the nice thing. It's like the whole Silicon Valley meme where it's like, oh, if you have revenue, that's also like a limiting factor, right? It's like hype's never going to trade at a 500X multiple on its revenue. Whereas Zcash has nothing. So it can trade like a meme coin. And when I say trade like a meme coin, I don't mean it like disparagingly. I mean, it can actually just go to whatever valuation, right? And so it's ungated by the revenue meta. So yeah, like I said, I think Zcash deserves a place in most people's portfolio. It's just deciding whether it's too crowded right now and you're going to be able to get to bid quite a bit lower. Or if you think it's going, you know, many multiples higher, that's kind of where all the edge is. So it's not very useful, but that's just the situation.

David Hoffman:

[18:33] Yeah, I guess I can imagine like Bitcoin, of course, is Bitcoin. And so if you are like one person trying to shill another person, either just like a normie retail person outside of crypto or a billionaire outside of crypto, and you're telling them about Zcash. It's harder to differentiate Zcash from the sea of shit that is the rest of crypto assets than it is Bitcoin. And so like to them, it's just like, okay, there's just another ticker that is a crypto asset.

KoolKrypto:

[19:01] It's another shit coin. I've never heard of it before.

David Hoffman:

[19:03] It's another shit coin. Exactly. Right. And so granted, there are people like the Winklevii and like I said, like the Vol actually like legitimizing this thing. It has like an ETF. And so there's something there, but it's still like, I can imagine like people not inside of crypto just don't want to be shilled tickers. Crypto tickers. Like that's like an unpalatable thing.

KoolKrypto:

[19:23] There's this natural aversion to like alternative assets in crypto as well. Like altcoins have performed so poorly over the past. And especially when you're trying to like there was at least like I made some inroads with talking to some more institutional guys about the fact that it's like, oh, like if they hear something's trading at like a two or three XPE ratio like pump was, for example, they're like, you know what? That's interesting, right? Like you kind of have to contextualize why like is this is this revenue as durable, as predictable as like other forms of revenue. But it's at least kind of like stokes their interest. Like, why are these crypto assets trading at such low multiples relative to the revenue? When you try to present to them like, oh, there's this alternative store of value asset that's not Bitcoin and it's an altcoin, it sets off a lot of like alarm bells and red flags with them where it's like, oh, this is the flash in the pan. Like, what's the difference between this and a meme coin? Like, you'll kind of run in it. And it's not once again, it's not to say that these are real arguments, but it's like this is kind of like the pushback you'll see. There's also one like other slight issue with it, which once again, it's kind of like Zcash is to Bitcoin almost as Bitcoin is to a lot of like TradFi assets where you're.

KoolKrypto:

[20:17] Some Bitcoin maxis, almost kind of like their bull thesis for Bitcoin is very much like this king of the wasteland type of thing where it's like, oh, when the dollar goes into hyperinflation and the world is melting down, people are going to want our Bitcoin. And it's like, that's a bit of a tenuous thing to think because all risk assets kind of tend to sell off when you have this correlation goes to one moment. So it's one of those things where it's like the really big bull case for Zcash would potentially be some black swan events in Bitcoin specifically, right? That proves the fact that the quantum resistance is necessary, that proves that, you know, privacy, like the government's coming and seizing people's Bitcoin, you know, Satoshi's wallet gets exploited. Like these things would be like this massive attention gathering, onboarding event for Zcash. The problem there, though, is that it's like I said, you're kind of this like king of the wasteland situation where you really think that if Satoshi's coins move, that Zcash isn't also potentially plummeting down with it. Now, would it be the fastest one to rally outside of that situation? Almost definitely. But in that moment...

David Hoffman:

[21:08] That's how BlackRock identifies Bitcoin. BlackRock has like a report about Bitcoin that went just into this moment and were like, yes, in the moment, correlations all go to one. But Bitcoin historically has rallied the most coming out of those events. There's like an actual black rock before talking about this.

KoolKrypto:

[21:25] Yeah, as I'm saying, so it's like in the same way that like Trad5 views Bitcoin is kind of the same way that more crypto natives use Zcash relative to Bitcoin. So it's one of those things where crash insurance zoomed out might be a really good way of putting it with regards to like, okay, like what if Bitcoin fails to some degree? But if Bitcoin fails, you know, you're probably going to get a chance to bid Zcash significantly lower than whatever it is at that point in time as well. And so there's that interesting dynamic there. But once again, none of this is to say, bearish Zcash is that I see so many people kind of putting out the bull case of Zcash that like there is also kind of a commensurate bear case to it as well. But that's also why, like I said, it's such a pure trading asset. It's such an amazing asset to kind of like having your portfolio different, different, different weights, different prices, different times. I think options for Zcash too, it's also extremely interesting right now. Because like, if you have these massive swings, and like, like your worldview, Zcash is going many, many multiples higher or crashing, you know, back down to $200, like options are the best way to express that. And so I think I think trading options on Zcash is kind of how I've expressed some of those views now.

David Hoffman:

[22:20] Yeah. Going back to the whole Zcash is a pure trading asset. In the same way that the best advertising for Bitcoin is its price, the same rule applies for Zcash too. And so ultimately, we don't know the future, but if just the herd mentality is... It's sparked by Zek and Zek does the next leg up. Like the fundamentals are literally improving as price goes up. And I know that's a meme on Twitter, but that is how it works. No, it's so true. For things like Bitcoin and Zcash.

KoolKrypto:

[22:48] Yeah, it's only more attention. It's only more adoption. It's only more acceptance. So yeah, it has this massive innate reflexivity. And that's kind of what I'm getting at where it's like Zcash can't really just kind of go up at like, you know, a 10% CAGR, right? Like it's kind of just either going to like step function up like massive, you know, bouts of adoption and price beginning more adoption to getting more price increases, or just kind of going to bleed out as it kind of has in the past. And so it's one of those things where it's like, yeah, like, like, that's why to me, like I said, like being in just like a perps long on it is not necessarily the most like interesting way to express that view. Like Zcash is one of those things where it's either going to like, if you zoom out in a year, it's going to 200 or it's going to 5000. Right? It's kind of difficult for it to just chug along, necessarily. So, yeah.

David Hoffman:

[23:32] Can you go into that a little bit more about like why the because of the nature of Zcash, why you prefer options over perps? Just like unpack that more basically for me.

KoolKrypto:

[23:40] Yeah, I mean, it's when I see guys talk about these like price targets of like, oh, Zcash could go to 10,000, Zcash could go to 20,000, Zcash to going to like 5%, you know, Bitcoin, like, you know, these these types of things, it's like. The problem is that like in the process of going there, it's not going to be, a straight line up like you're going to get multiple 60, 70 percent drawdowns like like people have to look at like early Bitcoin fractals, right, where it goes from, you know, eight bucks to 400 and then back down to 20 and then back up to, you know, 1,200, then back down to 200. It's going to have that same type of adoption curve. And so it's incredibly uncomfy to be in just like an answer. Like if you just want to put Zcash into, you know, hold spot, zoom out, you know, log off for 10 years and come back and it could be, you know, many, many, many multiples higher and you completely forego a lot of that liquidation risk. But if you're trying to do some sort of like, I want the maximum exposure to Zcash going to a price target that's many, many multiples above right now, it's difficult to like, you kind of have to have a level of self-awareness to say that it's like, okay, did I get?

KoolKrypto:

[24:41] Pushed out from like the orchard, like exploit or, you know, being quotes of like what people thought it was, right? Like, like, did I sell my C cash then? Or would I've been liquidated in my in my position in a 60 or 70 or 80% drawdown potentially? And so what's nice about options is like, you kind of avoid that liquidation risk, but you also get to lever up on the exposure of, oh, I think this is going to many, many multiples from right now. So like, if you do genuinely think that, you know, like, if your whole thesis is, oh, AOC is going to win, socialism is going to be on the rise and start seizing billionaires money, this is going to get so much adoption, your price targets should be astronomical, right? They should be many, many multiples above what they are right now. I mean, the best way to get like levered exposure to that, that's not going to be liquidated is through options. So I think Zcash is, and to be fair, like the volatility of Zcash is built into and priced into those options as well. And so it goes both ways as well. Like if you're someone who thinks, you know, Zcash is not that interesting for a time period and you hold a bunch of spot, like selling calls against it is extremely interesting because of the fact that they trade so rich relative to vol. And so options on Zcash, I think is going to be a really, really big point. And that's going to pick up quite a lot of adoption kind of like the same thing happened with hype as well.

David Hoffman:

[25:42] So when you are interested in an asset and you're trying to either do you're doing a derivative either options or perps how do you make that choice? Like when is options the right call when are perps the right call?

KoolKrypto:

[25:54] To be honest with you the answer is kind of always both like there's always circumstances where I would be trading both. The nice thing about options relative to perps is just the fact that there's almost always a view that you can put on with perps it's pretty much just either your long delta your short delta like that's it price up price down You can kind of put on a sideways view by going like Delta neutral and funding, like farming funding, but that's not extremely attractive. Whereas you're more of just.

David Hoffman:

[26:17] A yield optimizer at that point right yeah

KoolKrypto:

[26:19] Exactly yeah yeah yeah whereas with options there's always a trade to be had you can be long vol short vol you can be i want to get leopard exposure to this tiny bit of upside i want to get leopard exposure to this very deep out of the money you know massive gamma squeeze type of upside i want to be you know short this kind of like pocket of price, and so i think options are just a lot more flexible you can always express a view through options and there's a lot of views that you can express through options you can't express through perps at the same time though it's like if you are trading options correctly, you should probably be hedging a lot of that exposure in and out via the persons. And so like the way I kind of see it is I will put on these more longer term, overarching theses through options trades. But then on a day like, you know, yesterday, for example, you know, Bitcoin at 70, you know, five, two might have been a really interesting perp long just for a quick scalp up to back up to like 76. And that's not necessarily a trade that I want to go in and like cross the spread on options as much for. And so I'm always trading in and out of some of the delta that I have from my options via perps and so i would say most people should combine both of them.

David Hoffman:

[27:15] I want to learn about the kind of the token categories that you see in in crypto so just broadly the most simple one i think that is in the like i see say is are just like the exchange token businesses and these are like hyperliquids the lighters derives and then there's also like the amm versions of these so the you know swaps the arrows like broadly what are the categories of assets that you're generally like looking at on a daily or weekly basis

KoolKrypto:

[27:40] So i mean truthfully everything in crypto is is getting a look from me like i'll look at i'll look at pump i'll look at cards i'll look at you know near i'll, like everything i will at least look at i just find the most edge for me to express is kind of in more of those decks revenue meta things that actually have multiples, um i think the really big reason and this is because they.

David Hoffman:

[27:59] Just have more data to look at

KoolKrypto:

[28:01] I would, yes, but I would also say that it's because of the fact that a lot of people don't know how to contextualize that data properly. Like a really good example is this, is that like, why does, why does lighter and hyperliquid and pump all trade at radically different multiples on their revenue, right? It's like, especially hyperliquid and lighter, they should, they should, you know, the logic would be that they should trade it like relatively close multiples. You know is it the and and in trad fi you know if you have a higher growth tent you know typically lower cap stock is going to trade it at a higher multiple right and so like why does why is like lighter like historically traded at some lower multiples relative to hyper liquid and so it's important i think to understand, how to contextualize that as to as to say like oh okay like in crypto perhaps you know like lendiness gets rewarded more like the front runner gets gets rewarded more because of the fact that people assume that when trad fi money comes in or if even when it comes and they're going to crowd into the number one asset and they're not really going to go much further out on the risk curve than that, right? And so things trade very differently in crypto relative to Tradfine. They trade at very different multiples for specific reasons. Pump being another good example because of the fact that a lot of people just, you know, can't underwrite that there's like meme euthanasia rollercoaster is going to go on forever. And they all kind of assume that it's like, oh, like the revenue it's generating right now is almost at the detriment of future revenue that it could. Like there's only so much that they can kind of like suck out of the industry for lack of a better term.

KoolKrypto:

[29:18] And so I think some people will look at multiples in crypto and say like, oh, this is trading relatively cheap to its peers. But you kind of have to do a lot of contextualizing as to like, why should it potentially trade cheaper to its peers? And so like identifying crypto. You kind of have to look at individual assets and say, is it trading cheap relative to what it has historically and what has potentially changed historically? Another really good example of this would be like, for example, with Hyperliquid, with the AQA V2 USDC revenue coming in, that's extremely durable. That's like ARR at that point, right? That is just treasury yield, essentially. And that trades very differently and should be priced at a very different multiple, potentially, than trading revenue, which is a bit more cyclical. And so because of the fact that lighter doesn't have that very predictable ARR that's coming in through treasury yield, it kind of gets assigned a different multiple there. And so like really kind of deep diving into like what are the actual fundamental levers of growth for these assets, I think has like a lot of edge to express.

David Hoffman:

[30:09] For you to be right in your analysis here, like you're just looking at all the data and trying to reason about, well, hyperliquids, revenue is more durable than lighters, like all this stuff. Do you ever worry that like there's just not enough people like you thinking like you in order for you to be right because it requires other people to also come to the same conclusions as you and there's only like seven of you in all of crypto?

KoolKrypto:

[30:34] That's a phenomenal question I ask myself a lot, actually. And and you know i i will say this year has been very gratifying for me because of the fact that i like i i said in other things too like i was putting out these investor letters at times trying to tell people it's like oh there's so many fundamentally undervalued assets in crypto and they were just getting zero bid and nobody gave a shit and everybody was just piling into meme coins right and so like you know quarter after quarter after quarter i'm like okay these fundamental assets are mispriced and you know they're gonna they're gonna reprice aggressively so this year has been amazing for that thesis and so it's been gratifying to know that you know Maybe I was early to some things, but eventually I was right. I will say that a lot of the tokens that I'm long, the nice thing about them is I don't actually really need other people to identify that that's the case.

KoolKrypto:

[31:16] With hype, derived, lit error, like these tokens that do pretty aggressive buybacks relative to their revenue. If they're trading cheap relative to revenue, it's just going to get manifested into the chart naturally, right? It's like hype is buying three times as much hype back when it was trading at, you know, 30 bucks and when it's trading at 90 bucks, assuming that they're still doing two or $3 million a day of revenue. And so it might not have this immediate pop where, yeah, you still need a little bit of people to actually come in and speculate on that. But if the revenue is, you know, it does have this fundamental floor and same thing as equities. That's kind of where like your store of value assets don't necessarily have that fundamental floor. And so it's one of those things where, I mean, if hype is still trading, or if hype is still generating, you know, two, three, $4 million a day of revenue, and it's trading at 30, 40 bucks, it's a much comfier time to say, you know what, I might be wrong for a couple of months, but eventually, this is going to kind of manifest into the chart. Whereas with, yeah, exactly like something like a ZEC, it's like, well, you know, if it starts going down to 200, you can't really say, it's like we were talking about before, it has a kind of reflexivity in both directions, right? Where price goes up, it becomes a much better store of value to people, but price goes down, there's not really that fundamental floor setting. Feature that these tokens that have like revenue buybacks have. I will say too that when you are looking at, technical indicators, for example, right, you kind of do want to be looking at the same thing everybody else is looking at, like everybody's going to bid the 50 week moving average, the 200 day moving average. And so I think some people make this big mistake is that they'll try to find this like really esoteric and generally overfit technical indicator of like, oh, if I look at the.

KoolKrypto:

[32:41] 22, you know, session two hour, you know, moving average, and I like put two standard deviations away from it, it bounces at this and it, you know, and it bounces at that. And it's like, yeah, sure, like in a regime that could fit a couple of times and you can try to trade that. And I think what a lot of people realize when they try to like back test some of these strategies with like Claude, it has like no predictive power. It's all just back. It's all just overfitting. And so you do want to be looking at the same things everybody else is looking at. It's actually kind of as much of a joke as they are, like the Fibonacci retracement numbers. It's like there's enough people looking at those that there is at the very least a tiny bit of predictive power, right? Like you can make the argument that some people are bidding this silly level or whatever. I would actually say it's kind of the opposite with fundamental data like you do kind of want to be seeing stuff that nobody else is seeing ahead of time and so whereas like with technical indicators i want to be looking at what everybody else is looking at just to kind of see like what levels are likely to be hit and what levels are likely to bounce, fundamental data i think there's quite a bit more edge to be seeing what other people aren't really seeing yet because eventually they will and so i think there i'm okay being early for a couple of months if i think it's going to get borne out in the price automatically anyway through these like automated buybacks and And I think that's like a big regime change that Hyperliquid really ushered in the crypto is that now that's kind of like the expectation is that it's like the marginal buyer of your token is your token, essentially. And that's what kind of I think really kicked in the outperformance for me personally in the last year or so is that that really changed the whole game for everybody else.

David Hoffman:

[34:04] Interesting.

David Hoffman:

[34:05] Which do you think is the faster horse from here on out, Hyperliquid or Leiter?

KoolKrypto:

[34:09] It's tough. The way I put it with other people is that I think Leiter is a better hold for the next three to six months. I think you can maybe even make the argument that the recent political events might even have a little bit more favor towards Leiter. I got some flack for it, but whether people want to accept it or not, Hyperliquid was at least a little bit of a Trump bet. But, you know, he said it in his press conference. Zelig was like openly like the CFTC is openly like quite pro hyperliquid. All the lobbying money that they've spent through the hyperliquid, you know, like law foundation, like, you know, they're there.

KoolKrypto:

[34:44] They were at the very least like slightly Trump aligned or Trump was aware of their existence. Right. I think that that is obviously going to change. And hyperliquid is completely capable of being neutral. Like there's no reason that there should like there's no inherent reason that Democrats should have anything against hyperliquid. Necessarily like they didn't like throw in with with with trump to the same way that like elon did for example where it's like elon is probably just going to be persecuted for the foreseeable future and so like i'm not trying to say that there's any sort of like persecution is going to happen towards hyperliquid but basically all else equal if the, you know slate is is blank yeah i think lighter might have a faster cleaner path towards regulatory clarity than hyperliquid i also think it's kind of like part of their bull cases i think they are going more aggressively after the US market than hyperliquid is. And I think hyperliquid is kind of going more aggressively after the global market, right? And they're a bit more agnostic to the US market. Obviously, the US market is a big prize for both of them. I just think that lighter is leaning in a bit more heavily to that.

KoolKrypto:

[35:41] I would even say, too, that there's an interesting case to be made that that could be where Lighter's wrong. I've heard some other like funds and analysts talk about like how untapped is the U.S. market currently. And you kind of see that play out with some like, you know, Kalshier Polymarket data of like, oh, like, you know, everybody was already accessing Polymarket via VPN. And so everybody thought like, oh, with some like U.S. Regulatory clarity, like there's this massive untapped consumer base and there might actually not be. And so that's like an interesting bear case for Lighter potentially is that the people who want to be trading perps in the U.S. largely already are.

KoolKrypto:

[36:12] But yeah, I would definitely say over the next three to six months, almost just by virtue of like recent price action too, I think lighter probably can do a better multiple than Hyperliquid can in the same regulatory environment. Like all else equal, they both get CFTC clearance in three months. Yeah, I think lighter pops a couple, you know, a couple multiples, whereas Hyperliquid might just pop, you know, 20, 30, 40%, right? But at the same time, I trust the Hyperliquid team more long-term. Like I would rather go into a coma for a year or two holding all hype than all lit. So I see, I see lighter as a bit more of a trade and that's really attractive for the next couple of months. Whereas I see hyperliquid is like, okay, yeah, no, this, this could potentially be a multi-year hold type of asset where it trades kind of like a, like, oh, a BNB is a good example of like the price action. You potentially see where it just goes just basically up in the, in the long run, you know, quite, quite nicely and trades at many multiples higher from here. So yeah.

David Hoffman:

[37:03] Yeah, I go back and forth on the same subject where hyperliquid just fits the mold of, well, it's Binance, right? Binance is quarters of magnitude larger than Coinbase. Lighter is trying to do the onshore trusted regulatory thing and win the US market. But man, Binance is just clearly where the value is because crypto is inherently an offshore phenomenon. Like that's what we are. It's in our DNA is like crypto is offshore. And granted, at the same time, the untapped retail audience who just deposits on Coinbase or on Robinhood and trades on Robinhood, that market, I would say, is firmly untapped. The people who won't be bothered to turn on a VPN to go trade.

David Hoffman:

[37:46] But also at the same time, like perps are a retail oriented instrument. And so the massive institutions out there are probably going to stay in options land. And so the perp penetration in the onshore compliant world is probably just the retail audience. And it's probably why the Robinhood partnership is so important to that letter. Yeah, these are all kind of my thoughts. Granted, like letter will also be doing options. And it has some like novel technical infrastructure with the whole like zero knowledge circuits. It's probably going to be in terms of actual exchange execution, the number one most performant exchange of all time ever, like inclusive of all the other exchanges in the New York Stock Exchange and NASAC. And so it's nice to have an asset that is technically superior. I don't know how far that takes it. These are all kind of my thoughts.