Ep 44 — How to Stake HYPE Permissionlessly with Omnia from Kinetiq...

Full Title

Ep 44 — How to Stake HYPE Permissionlessly with Omnia from Kinetiq

Summary

This episode features Omnia, co-founder of Kinetic, discussing their new native liquid staking protocol for HYPE on HyperLiquid, which aims to provide a fully on-chain and trustless solution. The conversation delves into HyperLiquid's unique technical architecture, its evolution as a decentralized exchange, and the implications of its various HyperLiquid Improvement Proposals (HIPs) and Builder Codes for ecosystem development and institutional adoption.

Key Points

• Kinetic aims to revolutionize HYPE staking by offering a fully on-chain, permissionless liquid staking token (LST), addressing the trust issues inherent in prior custodial solutions that relied on centralized addresses.
• HyperLiquid has evolved beyond being merely a perpdex, transforming into a comprehensive decentralized exchange by integrating native spot components and a smart contract platform (HyperEVM) alongside its perpetual futures trading.
• HyperLiquid's unique architecture includes HyperBFT for high transaction throughput and HyperUVM for EVM compatibility, facilitating complex DeFi operations on its network.
• The CoreWriter system contract is a crucial innovation, enabling seamless and permissionless composability between HyperLiquid's core exchange and its EVM smart contract environment, a feature considered a "Holy Grail" for decentralized exchanges.
• HyperLiquid Improvement Proposals (HIPs) define key functionalities: HIP1 allows for permissionless spot token listings via Dutch auctions, HIP2 provides guaranteed on-chain liquidity, and HIP3 enables the creation of entirely new, custom decentralized exchanges on HyperLiquid's underlying tech stack.
• The platform is actively decentralizing its validator set, moving from a small team-run operation to an increasing number of independent validators, countering common criticisms about its centralization.
• Institutional interest in HyperLiquid is growing, with Kinetic developing "iHype" as a compliant, whitelisted LST specifically for institutional participants to gain HYPE exposure and staking yield without direct interaction with the exchange's order book.
• HyperLiquid's "Builder Codes" offer a unique proposition by providing external developers and projects free, permissionless access to its substantial liquidity and trading infrastructure, fostering broad ecosystem growth.

Conclusion

Kinetic is poised to unlock the utility of staked HYPE by enabling its use in DeFi, with significant unstaking activity already observed in anticipation of its launch.

The HyperLiquid team's strategy of focusing on core architecture and allowing the community to build complementary infrastructure fosters rapid, decentralized ecosystem growth.

HyperLiquid's innovative approach to market infrastructure, exemplified by its HIPs and Builder Codes, is setting new standards for decentralized exchanges and asset tokenization.

Discussion Topics

• How might HyperLiquid's "Builder Codes" democratize access to high-liquidity trading, and what new types of applications could emerge from this?
• Considering the unique composability enabled by CoreWriter between HyperLiquid's exchange and EVM, what are the most exciting DeFi innovations or financial products you envision being built there?
• With institutions showing increased interest in HYPE staking via solutions like iHype, how might this impact the broader perception and adoption of decentralized finance by traditional financial players?

Key Terms

LSD protocol

Liquid Staking Derivative protocol; a decentralized finance (DeFi) protocol that allows users to stake their tokens while receiving a liquid token representing their staked assets.

Perpdex

A decentralized exchange (DEX) that allows users to trade perpetual futures contracts, which are derivative contracts without an expiry date.

HLP

HyperLiquid Perpetual, refers to the liquidity pool on HyperLiquid's perpetual exchange.

HyperBFT

A custom implementation of the HotStuff consensus mechanism used by HyperLiquid, designed for high transaction throughput.

HyperUVM

HyperLiquid's EVM (Ethereum Virtual Machine)-compatible smart contract platform, allowing for general-purpose decentralized application development.

HIP1

HyperLiquid Improvement Proposal 1, enabling native spot token listings via a Dutch auction mechanism.

HIP2

HyperLiquid Improvement Proposal 2 (also known as HyperLiquidity), providing a protocol-guaranteed spread for liquidity provision on spot markets.

HIP3

HyperLiquid Improvement Proposal 3, allowing users to deploy their own complete decentralized exchanges on HyperLiquid's tech stack.

CoreWriter

A system contract that enables permissionless read and write operations between HyperLiquid's core exchange (HyperCore) and its HyperUVM (EVM) component.

EOA LST

Externally Owned Account Liquid Staking Token, referring to LSTs where the underlying staked assets are controlled by a single address or multi-signature, rather than a smart contract.

LST

Liquid Staking Token; a token that represents staked cryptocurrency, allowing users to maintain liquidity while earning staking rewards.

AMM

Automated Market Maker; a decentralized exchange protocol that relies on mathematical formulas to price assets and provide liquidity, rather than traditional order books.

MEV

Maximal Extractable Value; the maximum value that can be extracted from block production in excess of the standard block reward and gas fees by including, excluding, or reordering transactions within a block.

0DTEs

Zero Days To Expiration options; derivative contracts that expire on the same day they are traded.

RWA

Real-World Asset; tangible or intangible assets from the traditional financial system that are tokenized and brought onto a blockchain.

Builder Codes

A feature of HyperLiquid that allows external developers to integrate with and leverage HyperLiquid's existing liquidity and order book infrastructure with minimal code and no fees.

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