Innovations
RWA Perps: The New Model That Can Overtake HyperLiquid
The next trillion in onchain trading volume isn't coming from crypto assets. It's coming from RWAs.
And everyone thinks HyperLiquid will win it. Data supports it as well. 42.5% of RWA Perps market share is with Trade.xyz (an HL HIP-3 exchange). Price-wise, $HYPE is up ~50% on the week.
But their model has a huge problem.
The bootstrapping problem
Every new market on Hyperliquid, Lighter, or any order-book DEX has to bootstrap its own crypto-native liquidity from scratch. Meanwhile, the TradFi dealers powering those underlyings already run multi-trillion-dollar books built over decades.
The Castle Labs research on Hyperliquid's HIP-3 oil market makes the gap concrete:
- CME's oil book is roughly 100x deeper than HIP-3's at ±2bp of mid.
- Slippage on a $1M trade: CME 0.79bp, Hyperliquid 15.4bp. A 20x difference.
- When geopolitical news moved oil 11% overnight while CME was closed, HIP-3's slippage blew out to 160bp on a $1M trade. 200x the CME baseline.
To be clear, Hyperliquid will keep winning crypto, and even the big RWA markets like oil. But the long tail of RWAs (thousands of equities, commodities, and FX pairs) isn't going to be solved by another order book.
The brokerage playbook
TradFi brokerages don't bootstrap liquidity per market. They aggregate from dealers who already make the underlying, internalize the offsetting flow when their own retail trades against them, route externally when it doesn't, and earn the spread instead of charging fees.
That's the model crypto needs for RWAs. The liquidity already exists. Stop rebuilding it ticker by ticker.
Almost no one in crypto is running this playbook. From dYdX to Lighter, everyone is trying to build their liquidity for assets that already have deep liquidity elsewhere.
There are two crypto protocols that are bringing the brokerage model onchain.
Ostium: the live broker model
Ostium pioneered this approach of bringing TradFi liquidity onchain.
On Ostium, Trades settle instantly against a Liquidity Buffer using oracle prices, with a Market Making Vault as backstop. Net directional risk gets routed to institutional hedging partners like Jump Trading, Wintermute, and prime brokers who neutralize the imbalance on real TradFi venues.
You can read about their mechanism in this X article or their documentation.
Variational: the upcoming RFQ model
It has the same approach as Ostium, but promises a different mechanism.
Instead of an order book or LP vault, it's RFQ-only: traders pull quotes from the Omni Liquidity Provider, which aggregates from CEXs, DEXs, and TradFi dealers in one shot.
They raised a $50M Series A led by Dragonfly this month, and it has given them a lot of attention on crypto Twitter.
How to play it?
Both protocols are running point programs. Standard caveat: teams can underallocate token supply, and make it worthless to farm them. Even so, if you're trading RWA perps anyway, these are the venues to do it on.
Want a more detailed points farming guide for Ostium and Variational? Reply to this email, and if there's enough interest, I'll work on it.
Sponsored by Stacks
First BTC L1 Staking With BTC Yield is (Almost) Here!
$1.3 trillion in BTC is doing exactly nothing. It just sits there appreciating, sometimes.
When every other crypto has yield, BTC holders are forced to pick between hodling cold or lending to Celsius, BlockFi, or Voyager. We all saw how that ended.
Stacks Bitcoin Staking is the first product that actually solves this. You stake BTC on Bitcoin L1, and you earn yield in BTC.
Your BTC stays under your own keys. No wrapping. No bridges. No custodian holding the bag.
And this isn't some new risky mechanism either. It's an upgrade to Stacks' Proof-of-Transfer consensus, which has been running since January 2021 and has already paid out over >4,200 BTC to stackers. The new BTC-denominated version targets ~3% APY, paid in BTC.
There are competitors with "BTC L1 staking". But they'll only pay you in their governance tokens. Stacks is the only one paying you in the asset you actually want: $BTC.
Opens to the general public in mid-2026.
Analysis
HyperLiquid Stablecoin is Dead. And it's Bullish $HYPE?
Native Markets just sold USDH to Coinbase.
The team that won Hyperliquid's stablecoin auction by pitching itself as "Hyperliquid-aligned" is out. USDC is back as the primary quote asset.
Looks like a massive failure. It isn't.
Quick 80/20: HL traded a sovereign-stablecoin moonshot for a recurring cash stream flowing straight into HYPE buybacks. The math is bullish $HYPE.
What happened? Back in September 2025, Hyperliquid ran an open auction for the USDH ticker. There were many great candidates. Paxos came in heavy with a PayPal/Venmo integration and $20M in ecosystem incentives. Ethena, Sky, Agora, and Frax all bid.
But Native Markets, a team formed nine days before the vote, won by claiming to be "Hyperliquid-aligned".
Then reality showed up.
Eight months in, USDH supply stalled at around $100M. USDC on Hyperliquid kept ripping. Latest read: $5.4B, with 97% of margin collateral in USDC.
Network effects don't care about your narrative. The flip wasn't happening.
So they cut a deal. Coinbase steps in as Hyperliquid's official USDC treasury deployer under a new framework called AQAv2.
Why this is bullish HYPE:
Here's the math that matters.
$5.4B of USDC float parked in T-bills at roughly 4% throws off about $200M a year in stablecoin issuer revenue. Under AQAv2, Coinbase shares the "vast majority" of that yield back to HL.
The exact split isn't public yet. Run the range:
- Aggressive (~90% capture): ~$180M a year flowing into the Assistance Fund.
- Conservative (~50% after Circle and Coinbase take their cut): ~$100M a year.
Frame it against what's already running. The Assistance Fund crossed $1B in cumulative HYPE buybacks in March. Current run rate sits around $1.7M weekly, or roughly $88M annualized.
Even the conservative case roughly doubles the buyback engine. The aggressive case almost triples it. At a ~$15B market cap, that's an extra 1-1.5% annualized buyback yield.
Free money. No infra to build. No multi-year liquidity migration to wait on.
There's a distribution win too. USDH was a Hyperliquid-only asset. People had to trust USDH and swap into it. USDC makes it easier for new capital to flow in, not harder.
Why this is bad:
Two real costs.
First, margin leakage. Some basis points flow to Circle and Coinbase instead of 100% to HL. The "aggressive vs. conservative" gap above is exactly this uncertainty.
Second, the USDC freeze risk. OFAC can technically freeze USDC. If Washington came after Hyperliquid, USDC could be weaponized against it.
Sounds scary. I think it's overrated.
Hyperliquid runs on 21 validators. Censorship resistance was never the pitch. If the US government really wanted to take down HL, a sovereign stablecoin wouldn't save it. Trading freezing risk for an extra $100-200M a year in buybacks seems like a fair deal.
The take: deal is bullish $HYPE.
Native Markets, in eight months, ran the experiment: can a new native stablecoin overcome USDC's network effects on a single venue? Answer: No. Not at $5.4B incumbent float, not at this speed.
Selling to Coinbase converts the unrealized moonshot into known, recurring cash. That money flows straight into HYPE buybacks. The flywheel gets faster.
The only real losers here are those HL DeFi projects that pivoted to USDH to become "HL-aligned".
🚀 DeFi Catalysts
Aave has re-enabled withdrawals for rsETH on Ethereum, Arbitrum, Base, Linea, and Mantle.
Morpho has been chosen by Wintermute for Armitage, its vault curator business. It starts with two USDC vaults targeting 4–5% & 5–8% APY.
Flex is a fixed-rate, isolated money market where borrowers choose their own fixed interest rate. They've launched a market for yvUSD/USDC.
CoW Swap has expanded to Solana. They're using NEAR Intents as backend infrastructure to power the intent-based DEX.
THORChain suffered an exploit that drained approximately $10 million. They stopped trading after the hack, questioning its decentralization claims.
Trade.xyz and Ventuals have both announced a Pre-IPO Perpetual (IPOP) Market for SpaceX, which has already filed for IPO.
Zama has acquired TokenOps to bring confidential vesting, distributions, and compliant token operations to public blockchains.
3F is a new app in private beta that enables efficient leveraged looping for RWAs. The first onboarded asset, Centrifuge JAAA, has grown to $7.6 million since launching in April.
Polymarket has partnered with Nasdaq Private Markets and will use them as the source of truth for resolving event contracts tied to privately held companies.
Drift Insurance Fund depositors will be able to withdraw their Insurance Fund stake when the protocol goes live.
HYPE crossed $50 for the first time since September. One catalyst was Bitwise CIO arguing in a memo that Hyperliquid is targeting the $600 trillion global asset market, not the $3 trillion crypto economy.
Hermes Agent, Nous Research’s open-source, self-improving agent, can now directly use your Grok account and subscription. Great for crypto research.
📰 Industry News
US Senate Banking Committee has approved the CLARITY Act in a 15–9 Vote, sending the Bill to the Full Senate.
Interactive Brokers, one of the largest brokers in the world, is integrating Kalshi directly within the trading environment that clients already use.
Japan officially recognizes foreign-issued crypto stablecoins as legal electronic payment methods starting June 1.
Ethereum Foundation is seeing a lot of people leaving the organization. This has made the community concerned.
LayerZero published its forensic post-mortem of the April KelpDAO exploit, attributing the $292M breach to DPRK group UNC4899 (TraderTraitor)
🐦⬛ X Hits
- Best $VVV analysis I've read.
- Macro thesis with concrete predictions.
- Tackling the Pre-IPO perps opportunity.
- A comprehensive prediction markets deep dive.
- Why is $ETH sentiment so low?
😂 Meme
Until next time,
Edgy
Today's email was written by Edgy and Yayya.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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