This episode reveals the powerful strategy behind Phantom's integration of Hyperliquid, showcasing how user-friendly wallets are becoming the ultimate distribution layer for sophisticated DeFi protocols.
Phantom's Mobile-First Perp Integration
- The discussion begins with Brandon, Phantom's CEO, and Femi, the Product Lead for Trading, detailing their new perpetuals (perps) product launch. The rollout has been deliberately gradual to ensure safety and gather user data, but has already generated nearly $70 million in volume, primarily in the last 24 hours.
- Femi explains the core design philosophy was to simplify a traditionally complex product. The team focused on stripping the interface down to its essentials—going long, short, and depositing funds—while abstracting away complexities like bridging.
- User-Centric Design: The team conducted extensive user research to build a clean, intuitive UX. Key decisions included simplifying risk management by allowing users to self-select risk profiles (low, medium, high), which then sets default leverage and stop-loss parameters.
- Mobile-First Strategy: The perp offering is intentionally mobile-only at launch. Femi notes this is to cater to users who value convenience and need to manage positions on the go, away from a desktop terminal.
- Education and Accessibility: A major focus was on education and simplifying jargon. For instance, they renamed "take profit/stop loss" to the more intuitive "auto-close" to make risk management more accessible to retail users.
Brandon highlights the market gap they identified: “In general, we basically recognized a pretty big hole in the market for a really simple, retail-friendly, mobile first perps experience.”
The Strategic Choice: Why Phantom Partnered with Hyperliquid
- The conversation explores Phantom's strategy of integrating best-in-class partners rather than building every feature from scratch. This pragmatic approach involves partnering with strong providers like Jupiter for swaps and, in this case, Hyperliquid for perps.
- Pragmatic Integration Model: Phantom's strategy is to first partner with a single strong provider to validate a new feature, gather data, and polish the user experience. Once the thesis is proven, they may expand to aggregate other sources to ensure the best execution for users, similar to how they added OKX and dFlow to their swapper.
- Why Hyperliquid? Brandon states that Hyperliquid's recent performance in the decentralized perps landscape made them the clear choice. He asserts, "There really is no second best in my mind compared to them, at least in the on-chain realm."
- Future Integrations: While the initial focus is on the perp product, the team is evaluating a deeper integration with the HyperVM (Hyperliquid's own Layer 1 blockchain). However, Brandon emphasizes that Phantom takes new chain integrations seriously, preferring to "go all in" on an ecosystem rather than offering superficial access, to maintain a high-quality user experience.
A Look Ahead: HIPP3, Permissionless Markets, and Phantom's Role
- YaKob from Blockworks Research provides a framework for understanding Hyperliquid's architecture, setting the stage for a discussion on its future. The focus shifts to HIPP3 (Hyperliquid Improvement Proposal 3), a system for permissionless perpetual market listings.
- Hyperliquid's Architecture: The protocol is built on three pillars:
- Hypercore L1: A highly performant, purpose-built order book chain.
- Coordination Layer (HIPP3): An auction-based system allowing anyone who stakes 1 million Hype (Hyperliquid's native token) to list a new, permissionless perp market.
- Consumer Layer (Builder Codes): A system that allows front-ends like Phantom to route trades and earn a fee (up to 10 basis points) on the volume they generate.
- Phantom's Stance on HIPP3: Brandon expresses enthusiasm for the open, permissionless nature of HIPP3, seeing it as a competitive advantage that centralized players like Coinbase cannot replicate. While Phantom will likely curate which HIPP3 markets are initially displayed, the ideal future is for Phantom to act as a full-featured browser for the entire Hyperliquid ecosystem.
- Strategic Implication: The 1 million Hype staking requirement for HIPP3 acts as a security measure and a rate-limiter. It creates an economic incentive for deployers to list high-quality, non-malicious markets, as the stake can be slashed. This built-in trust mechanism is critical for front-ends like Phantom to consider listing these community-created markets.
The Wallet of the Future: Embedded vs. Aggregator Models
- The discussion broadens to the evolving role of crypto wallets. Brandon contrasts the trend of embedded wallets (where the wallet is part of a single app) with Phantom's approach as a comprehensive "home base" for users.
- Embedded Wallet Limitations: While embedded wallets excel at initial onboarding for a specific app, they can hinder users as they become more advanced and wish to explore the broader crypto ecosystem. This model can break the core crypto value proposition of open composability.
- The Rise of Mobile: Brandon connects the rise of faster, cheaper blockchains like Solana to the surge in mobile crypto usage. This trend pushes experiences to become more native and integrated, which is the direction Phantom is taking with its direct integrations.
- Actionable Insight: The conversation suggests that wallets are moving beyond simple asset storage to become sophisticated aggregators of DeFi services. Investors should watch how wallets leverage their distribution power to become the primary user interface for crypto, effectively "king-making" the protocols they integrate.
Community Analysis: The Bull Case for the Phantom-Hyperliquid Integration
- After the Phantom team departs, the conversation continues with Hyperliquid community experts Max and Omnia. They frame the integration as the realization of the long-term bull case for Hyperliquid, validating its cross-ecosystem appeal.
- Unprecedented Scale: Max points out the massive difference in scale between Hyperliquid's current user base (est. 25-30k DAUs) and Phantom's millions of users. Even a slow rollout of the perp feature to Phantom's user base could exponentially grow Hyperliquid's metrics.
- Distribution as a Moat: The integration highlights that distribution is controlled by wallets. As Omnia notes, "As long as distribution is controlled by, you know, wallets, entities like Phantom, right? Like I think they will be able to king make protocols on the back end."
- Competitive Landscape: The panel concludes that this move puts significant pressure on Solana-native perp exchanges like Jupiter. With Phantom now offering a superior trading experience (more markets, better liquidity, lower fees via Hyperliquid) directly within the primary Solana wallet, competing protocols lose their native advantage.
Dissecting the Hyperliquid Flywheel: Builder Codes and Liquidity Moats
- The experts dive deep into the economic incentives that make Hyperliquid's model so powerful and attractive to integrators.
- Builder Codes as a Business Model: Builder Codes are a system allowing any front-end to integrate Hyperliquid and earn a portion of the trading fees. Omnia describes it as Hyperliquid handing the world a "$4 billion active platform" and allowing them to build a business on top of it for free. Platforms like Axiom have already earned nearly $1 million in fees in just a few months.
- The Liquidity Moat: The panel argues that Hyperliquid's true moat is not its front-end, but its deep, organic liquidity. Sophisticated market makers are drawn to the platform due to its high-quality order flow and are not paid with token incentives. This creates a self-reinforcing flywheel: more integrations bring more flow, which attracts more liquidity, leading to better execution and attracting even more integrations.
- Strategic Implication for DEXes: The panel suggests that other perpetual DEXes would likely be more profitable by simply integrating Hyperliquid via builder codes rather than spending capital to incentivize their own liquidity. This represents a major paradigm shift in how DeFi protocols can be built and monetized.
Market Focus: The Pump.fun Pre-Launch Market and Token Sale
- The episode concludes with a discussion on the highly anticipated Pump.fun (PUMP) token sale and its pre-launch market on Hyperliquid.
- Price Discovery on Hyperliquid: The PUMP pre-launch market is trading at a premium to its upcoming ICO valuation, reflecting both restricted access to the sale and strong market demand. This showcases Hyperliquid's emerging role as a primary venue for price discovery of pre-TGE (Token Generation Event) assets.
- The Bull Case for PUMP: Panelists are generally bullish, citing strong animal spirits in the market and a relatively reasonable valuation compared to past cycles. Max notes that even with concerns about declining revenue, a billion-dollar treasury gives the team ample resources to pivot and innovate.
- Competitive Threats: A key risk highlighted is the recent rise of competitors like Bonkfun, which has started to capture a significant share of launchpad activity on Solana. This is the first real challenge to Pump.fun's dominance.
This episode underscores a critical shift: user-facing applications like Phantom are becoming the dominant distribution channels in crypto. By integrating Hyperliquid's powerful and open infrastructure, Phantom is creating a superior user experience that could reshape the on-chain trading landscape, leaving siloed or less competitive protocols behind.
