Forward the Original Title: Airdrops & Insiders: Reflections on Hyperliquid

Multiple things can be true at the same time:

• The Hyperliquid airdrop represents a turning point, an utter rejection by the market of the dominant meta of insider-backed infra vaporware with tiny community allocations
• Raising ridiculous amounts of money at ridiculous valuations to then launch at a ridiculous FDV, inevitably generate a down-only chart, and dump on retail = bad
• It isn’t feasible for most projects to simply not raise and have “no insiders” besides the team unless the founders already previously made tens of millions of dollars

Some thoughts below on how to make sense of these statements with seemingly conflicting implications.

Some things Hyperliquid did very well

Hyperliquid’s airdrop was a canon event this cycle. There are four things in particular I like:

1. It reset expectations around how, when, and to what degree to distribute token ownership
2. It re-established DeFi and user-focused applications as first class citizens
3. It validated that sell pressure should be quick and dirty rather than a long slog
4. The aesthetics of community

The brilliance was in combining the timeline to token of VC-backed projects with the distribution mechanics of ICOs. Build a product, launch sans token, iterate with customers, multiple seasons of points, adapt iteratively to reinforce the behavior most value accretive to the protocol, token a year+ later (rather than pre-product to raise money). But distribute to users like a community-funded project would.

Ironically, in a space where many founders obsess over reducing sell pressure post-TGE by limiting distribution/liquidity at genesis, Hyperliquid managed to have both perhaps the most aggressive buying pressure post-launch and some of widest distribution in years from a major protocol.

On sell pressure: the more protocols try to artificially spread out the pain of mercenary holders selling, the more painful the selling, the more it makes it impossible for actual long-term believers in the protocol to hold the tokens (as complex supply dynamics will matter more to price over the mid-term than project strength).

The last thing I appreciate about Hyperliquid but haven’t heard anyone talk about is the aesthetics of community. The “community” is… people who use the product. Crypto’s love of community has morphed into an implicit requirement that every product have its own pseudo-religious cult, whether real or botted, replete with over-the-top visual insignia, catch phrases, and a Discord of maybe real, maybe botted profiles who message some version of the same few catch phrases every day. Centering the cult around a picture or catch phrase unrelated to the underlying product is a stand-in for what should be a cult around your product itself.

There is a HL cult, but it is—or certainly started as—a cult of users, rather than a cult of followers. As far as I’m aware, its most obsessed users don’t even have their own consensus self-referential name yet. I’m hearing rumors of “bozos” as the de-facto term but in general it is surprising how few crypto sigils HL features. I’m not sure I’ve seen any HL pepes; there’s the PURR cat and PIP but that’s mostly it. Aesthetically, it is clean branding that takes itself seriously, where posts aren’t peppered with cartoon characters.

Hyperliquid’s cult, however, is blowing up and its socials are in the process now of being thoroughly botted. Their following appears to have tripled in the last couple of weeks, but was only about ~30k when they began doing billions in volume daily. Compare this to other projects with hundreds of thousands or millions of followers on Twitter (and not one user you know!).

You can still learn something from Hyperliquid even if you can’t (or won’t) copy them

Ignoring product, most founders building a serious project cannot simply not raise money for the obvious reason that they don’t have 5-10 million dollars laying around to fund a team, even small, of developers for several years. Those who do have the privilege should consider putting skin in the game and reap what are likely to be outsized benefits if executed well. If you’re starting a company out of college or are in any way a normal person, though, this probably isn’t an option for you.

Even though Hyperliquid in some ways has set unreasonable expectations for those who aren’t in a place to not raise outside capital, I’d argue this reset is actually a good thing if you’ve raised anything but a mega-round.

Readers need look no further than to the type of announcement that bequeaths the greatest status boost and consistently triggers the most bot-driven growth in followership: fundraise announcements. Over the last several years, The Fundraise Announcement has become the definitive status marker in crypto; the bigger the better. This creates natural pressure for founders to raise larger and larger rounds, at higher and higher valuations, independent of how much capital they actually need to get to the next step. This isn’t unique to crypto, but certainly isn’t something that’s good for crypto, if you believe in any way in the underlying ethos.

Even if you can’t get away with raising no money, you can get away with raising a more reasonable amount of money, focus on product, and eschew competing in the game of Who Can Raise the Biggest Round. Compete instead on Who Can Build the Best Product—it’ll be more fun and hopefully better for crypto as a whole.

TL;DR:

• HL put DeFi in pole position + reset meta around token distribution
• Sell pressure should be quick and dirty
• Reject cults that aren’t focused on product
• You have permission from the market to focus more on product than on raising

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