It's striking how much the crypto world depends on trust in other parties. The whole point of crypto was supposed to be that it was "trustless". But it's not set up that way. All these crypto derivatives are not set up as contracts on a blockchain, with assets locked up until the derivatives settle. They're book entries with some weakly regulated exchange in Outer Nowhere.
The people who want trustless decentralization and the people who want leveraged gambling and the people who want KYC-free international money transfer may be different people. The only problem with Liberty Reserve was that it got shut down; if a "decentralied" fig leaf can allow it to operate... let there be "decentralization".
> HyperCore includes fully onchain perpetual futures and spot order books. Every order, cancel, trade, and liquidation happens transparently with one-block finality inherited from HyperBFT. HyperCore currently supports 200k orders / second, with throughput constantly improving as the node software is further optimized.
Key part:
> fully onchain perpetual futures and spot order books
By now crypto-in-practice has violated so many of its supposed founding principles that it's tired and cliche to point it out.
It was supposed to be limited in supply unlike fiat, and yet Tether underpins the whole thing and they print that out of thin air all the time. It was supposed to be decentralized, but in practice a few big exchanges control all the transactions and a few big mining pools control all the minting. It was supposed to be "code is law", and yet if you find a big exploit on smart contracts it'll be unwound later on and the cops will still show up for you. And as you say, it was supposed to be trustless, but counterparty risk is everywhere.
And it turns out nobody cares, because to a first approximation nobody is in crypto for the libertarian principles. It is all about number go up; always has been, always will be. It's not even worth pointing out anymore.
> And it turns out nobody cares, because to a first approximation nobody is in crypto for the libertarian principles. It is all about number go up; always has been, always will be. It's not even worth pointing out anymore.
I agree 100% - Meme stocks go brrrrrrrr
The idea that it's a currency that lives beyond the reach of governments is laughable (as soon as something goes bang a lot of the owners call for... regulators and government oversight)
>The basis trade, classically executed, is delta neutral: one isn’t exposed to the underlying itself. You don’t need any belief in Bitcoin’s future adoption story, fundamentals, market sentiment, halvings, none of that. You’re getting paid to provide the gambling environment, including a really important feature: the perp price needs to stay reasonably close to the spot price, close enough to continue attracting people who want to gamble. You are also renting access to your capital for leverage.
Patrick is largely correct on perp futures being mostly used as a leverage instrument to gamble on bitcoin or ether by retail. However I think he's missing one point which is that actually some institutional players also use CME futures to gain exposure to Bitcoin (e.g., BITO ETF or a pension fund that wants to gain exposure to crypto and have a fiduciary duty to hold assets with AAA custodians).
The thesis being that if you're an institution, you don't trust the relatively "fly-by" offshore crypto or even US-regulated custodians of crypto. When you trade CME bitcoin futures, your settlement is guaranteed by the clearing entities of Chicago Mercantile Exchange which are bulge bracket firms of TradFi. So why CME futures largely reflect a premium over the spot BTC price - and this premium is a function of the demand of bitcoin at anytime and the Fed fund rate. As the bitcoin futures market is highly efficient, the CME futures premium is arbitraged across the various DeFi and CeFi exchanges with basis points added relative to the default risk of each venue.
And the basis trade itself is not a "risk-free" arbitrage. The seller on the other side of gamblers are exposed to "right-tail" risk - your premium you get paid to "carry" the bitcoin is fixed while the collateral you must hold in theory to "hold" the coin on behalf of the buyer could be in theory infinite if bitcoin skyrockets to infinity. Sell too much and you might not have enough collateral before the futures settlement happens (for a fixed term futures, not perps) kind of like a reverse but still deadly scenario with Silicon Valley Bank (i.e., you incur "paper loss" that goes away if you can hold it to expiry; but you get force liquidated before then).
Crypto at this point is neither decentralized nor anonymous. It’s a Ponzi scheme wrapped in increasing level of complexity and involving an increasing number of banks, and controlled by a decreasing number of very large players. This crypto octopus is putting tentacles in Fidelity, and major US banks, and pension funds, and 401k accounts, and any other money holder. They are putting debt on banks at leverage levels beyond any reason. So when the music stops playing the octopus can slurp the real money liquidity out of as many US banks and savings institutions as possible, to eventually collapse the savings even of people who have nothing to do with Crypto.
It's striking how much the crypto world depends on trust in other parties. The whole point of crypto was supposed to be that it was "trustless". But it's not set up that way. All these crypto derivatives are not set up as contracts on a blockchain, with assets locked up until the derivatives settle. They're book entries with some weakly regulated exchange in Outer Nowhere.
The people who want trustless decentralization and the people who want leveraged gambling and the people who want KYC-free international money transfer may be different people. The only problem with Liberty Reserve was that it got shut down; if a "decentralied" fig leaf can allow it to operate... let there be "decentralization".
That's not true with decentralised exchanges like hyperliquid, no?
Hyperliquid and similar exchanges aren't decentralized. That is their long term goal but they are very far from achieving it.
The few actual decentralized exchanges are too slow and expensive.
> HyperCore includes fully onchain perpetual futures and spot order books. Every order, cancel, trade, and liquidation happens transparently with one-block finality inherited from HyperBFT. HyperCore currently supports 200k orders / second, with throughput constantly improving as the node software is further optimized.
Key part:
> fully onchain perpetual futures and spot order books
I mean, as soon as synchronisation is required in any system, block chain, distributed SAAS, even Peer to Peer sharing, decentralisation fails hard
That's one of the sticking points I have with the /idea/ of the technology
This comment makes sweeping generalizations.
By now crypto-in-practice has violated so many of its supposed founding principles that it's tired and cliche to point it out.
It was supposed to be limited in supply unlike fiat, and yet Tether underpins the whole thing and they print that out of thin air all the time. It was supposed to be decentralized, but in practice a few big exchanges control all the transactions and a few big mining pools control all the minting. It was supposed to be "code is law", and yet if you find a big exploit on smart contracts it'll be unwound later on and the cops will still show up for you. And as you say, it was supposed to be trustless, but counterparty risk is everywhere.
And it turns out nobody cares, because to a first approximation nobody is in crypto for the libertarian principles. It is all about number go up; always has been, always will be. It's not even worth pointing out anymore.
> And it turns out nobody cares, because to a first approximation nobody is in crypto for the libertarian principles. It is all about number go up; always has been, always will be. It's not even worth pointing out anymore.
I agree 100% - Meme stocks go brrrrrrrr
The idea that it's a currency that lives beyond the reach of governments is laughable (as soon as something goes bang a lot of the owners call for... regulators and government oversight)
>The basis trade, classically executed, is delta neutral: one isn’t exposed to the underlying itself. You don’t need any belief in Bitcoin’s future adoption story, fundamentals, market sentiment, halvings, none of that. You’re getting paid to provide the gambling environment, including a really important feature: the perp price needs to stay reasonably close to the spot price, close enough to continue attracting people who want to gamble. You are also renting access to your capital for leverage.
Patrick is largely correct on perp futures being mostly used as a leverage instrument to gamble on bitcoin or ether by retail. However I think he's missing one point which is that actually some institutional players also use CME futures to gain exposure to Bitcoin (e.g., BITO ETF or a pension fund that wants to gain exposure to crypto and have a fiduciary duty to hold assets with AAA custodians).
The thesis being that if you're an institution, you don't trust the relatively "fly-by" offshore crypto or even US-regulated custodians of crypto. When you trade CME bitcoin futures, your settlement is guaranteed by the clearing entities of Chicago Mercantile Exchange which are bulge bracket firms of TradFi. So why CME futures largely reflect a premium over the spot BTC price - and this premium is a function of the demand of bitcoin at anytime and the Fed fund rate. As the bitcoin futures market is highly efficient, the CME futures premium is arbitraged across the various DeFi and CeFi exchanges with basis points added relative to the default risk of each venue.
And the basis trade itself is not a "risk-free" arbitrage. The seller on the other side of gamblers are exposed to "right-tail" risk - your premium you get paid to "carry" the bitcoin is fixed while the collateral you must hold in theory to "hold" the coin on behalf of the buyer could be in theory infinite if bitcoin skyrockets to infinity. Sell too much and you might not have enough collateral before the futures settlement happens (for a fixed term futures, not perps) kind of like a reverse but still deadly scenario with Silicon Valley Bank (i.e., you incur "paper loss" that goes away if you can hold it to expiry; but you get force liquidated before then).
Crypto at this point is neither decentralized nor anonymous. It’s a Ponzi scheme wrapped in increasing level of complexity and involving an increasing number of banks, and controlled by a decreasing number of very large players. This crypto octopus is putting tentacles in Fidelity, and major US banks, and pension funds, and 401k accounts, and any other money holder. They are putting debt on banks at leverage levels beyond any reason. So when the music stops playing the octopus can slurp the real money liquidity out of as many US banks and savings institutions as possible, to eventually collapse the savings even of people who have nothing to do with Crypto.