Hyperliquid Airdrop Mode Analysis

Author: kaledora Compiler: TechFlow

Multiple viewpoints can be established at the same time:

• Hyperliquid's airdrop marks a turning point, reflecting the market's thorough rejection of the trend dominated by insider-backed infrastructure "air software", which usually only allocates a very small share to the community.

• Raising huge amounts of money at a ridiculous valuation, then launching at a ridiculous fully diluted valuation (FDV), ultimately leading to a continued decline in stock prices and selling off to retail investors, is a bad behavior.

• For most projects, it is difficult to do without raising funds and without "insiders", even team members, unless the founders have made tens of millions of dollars before.

Here are some thoughts on how to understand these seemingly contradictory views.

Why Hyperliquid succeeded

Hyperliquid's airdrop was an important event in this cycle. I particularly appreciate the following four points:

1. It reset expectations about how, when, and to what extent token ownership should be distributed.

2. It re-established the importance of DeFi and user-centric applications in the industry.

3. It proves that selling pressure should be resolved quickly, not dragged out.

4. Community’s Cultural Aesthetics

Hyperliquid’s cleverness is to combine the token timeline of venture-backed projects with the distribution mechanism of ICOs. Build the product first, launch without tokens, iterate multiple times with users, gradually adapt to enhance the behaviors most valuable to the protocol through multiple seasons of points, and then release tokens more than a year later (rather than raising funds before the product launch). But distribute tokens to users like community-funded projects.

Ironically, in a field where many founders are keen to reduce selling pressure by limiting distribution and liquidity at the time of the initial offering (TGE), Hyperliquid has managed to have perhaps the strongest buying pressure after launch and the widest distribution of any major protocol in years.

On sell-offs: The more protocols try to artificially distract from the selling pain of short-term speculators, the more sell-offs will intensify, making it nearly impossible for true long-term supporters to hold tokens (because the complex supply dynamics will affect price more than the strength of the project in the medium term).

My final point of appreciation for Hyperliquid, though rarely mentioned, is the cultural aesthetic of its community. “Community” means those who actually use the product. Crypto’s love of community has morphed into an implicit requirement that every product needs its own pseudo-religious cult, whether real or bot-generated, filled with exaggerated visual logos, slogans, and Discords of possibly real, possibly bot-generated profiles that convey some version of the same few slogans every day. Building a cult around an image or slogan that has nothing to do with the underlying product is a substitute for the cult that should be built around your product itself.

The cult of Hyperliquid exists, but it is — or at least began to be — a cult of users, not followers. As far as I can tell, its most obsessed users don’t even have their own consensus self-referential name. I’ve heard that “bozos” is the de facto term, but overall HL has very few crypto-flagship traits. I’m not sure I’ve seen any HL pepes; there’s PURR the cat and PIP, but that’s basically it. Aesthetically, it’s a clean brand that takes itself seriously, with posts not filled with cartoon characters.

Yet the cult of Hyperliquid is exploding, and its social media is being thoroughly botted. Its followers appear to have tripled in the last few weeks, but there were only about 30,000 when they started processing billions of dollars in daily volume. Compare that to other projects that have hundreds of thousands or even millions of followers on Twitter (and you don’t know a single user!).

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

Ignoring the product, most founders who are building serious projects can’t simply not raise money, for the obvious reason that they don’t have $5-10 million sitting around to fund a small development team for years. Those who have that privilege should consider investing the money and reaping the outsized returns that could come if executed well. If you’re starting out of college or a regular person in any way, this may not be an option for you.

Even if Hyperliquid in some ways sets unrealistic expectations for those who can’t afford not to raise outside capital, I think this reset is actually a good thing if you’re not raising a huge amount of money.

Readers only need to look at the type of announcement that confers the biggest status boost and consistently triggers the most bot-driven growth: the fundraising announcement. Over the past few years, the fundraising announcement has become the defining status marker in crypto; the bigger, the better. This creates a natural pressure on founders to raise more and more money at higher and higher valuations, regardless of how much capital they actually need to get to the next stage. This is not unique in crypto, but it is certainly not good for crypto if you believe in its underlying ethos in any way.

Even if you can't not raise money, you can raise more reasonable amounts, focus on product, and avoid playing the game of who can raise the biggest round. Instead, compete on who can build the best product - that will be more fun and hopefully better for crypto as a whole.

Summary:

• HL puts DeFi in the lead and redefines the model of token distribution

• Selling pressure should be resolved quickly

• Reject groups that are not focused on products

• The market already allows you to focus more on product development rather than financing