This episode reveals how Volantis is pioneering asset-specific DeFi on Hyperliquid, moving beyond generic AMMs to build deeply integrated, modular liquidity solutions for liquid staking tokens like Stake Hype.
Introduction to Volantis
- Devon, a co-founder of Volantis, introduces the project's three-year focus on building modular DeFi, primarily spot exchanges for Liquid Staking Tokens (LSTs)—tokens representing staked assets that remain liquid for use in DeFi.
- He highlights their recent acquisition of Stake Hype, a major LST protocol on Hyperliquid, as a key step toward executing their vision for vertical integration.
- Ali, Head of Growth, explains his role in transitioning Volantis from a developer-focused platform to a user-facing brand, handling marketing, community, and business development.
The Pivot from Developer Platform to User-Facing Products
- Devon recounts Volantis's origin as a modular DeFi platform designed to let developers build any conceivable exchange design using single pieces of code called "modules."
- However, the team found that the market lacked the creative vision to utilize this platform, as the prevailing mindset was that concentrated liquidity was the final form of decentralized exchanges (DEXs).
- Devon notes, "We realized that like people don't really have that many ideas... there was kind of this mindset that concentrated liquidity was like the final form of exchanges."
- This realization prompted a pivot: instead of providing a platform for others, Volantis began building its own innovative products, with a sharp focus on the liquid staking market.
The Mechanics of Asset-Specific AMMs
- Devon explains the core inefficiency of traditional Automated Market Makers (AMMs), which are protocols that use liquidity pools to enable permissionless asset swaps. These AMMs rely on arbitrageurs to rebalance pools, leaking value when there is one-sided selling pressure on an LST.
- Volantis's architecture is fundamentally different. It directly uses the staking and unstaking queue of the underlying asset to rebalance its own positions, minimizing value leakage to arbitrageurs.
- The system enhances capital efficiency by lending out idle HYPE reserves to major money markets like Morpho and Aave forks on Hyperliquid, optimizing yields across them in real-time.
- This model functions less like a traditional AMM and more like a sophisticated DeFi strategy vault, actively managing inventory through market-making, lending, and direct arbitrage to maximize yield for liquidity providers.
Choosing Hyperliquid
- Devon explains that the team's conviction in Hyperliquid was driven by the unique nature of its native asset, HYPE. He views HYPE staking as a vast and underexplored design space, with LSTs tokenizing not just yield but also the "second-order effects of everything that you can do with staking HYPE."
- The team identified a strong demand from HYPE holders who wanted to earn yield without taking on price exposure to other assets (like USDC), making a pure HYPE-denominated LST pool a perfect product-market fit.
- Ali adds a qualitative perspective, describing the convergence of "degenerates, left-curve developers, and institutions" on Hyperliquid even before its token launch as a powerful signal. He notes that the entire "IQ curve" arrived at the same conclusion for different reasons, a phenomenon he hadn't seen in a long time.
The Stake Hype Acquisition: A Vision for Vertical Integration
- Devon outlines the strategic rationale behind acquiring Stake Hype, emphasizing that controlling both the DeFi protocol and the underlying asset protocol unlocks immense liquidity efficiency.
- He argues that Hyperliquid LSTs are inherently different from those on other chains due to the profitable businesses that can be built on top of HYPE staking. Owning the LST allows Volantis to flow this value back to token holders.
- A key motivation is the need for adaptability. Devon points to recent Ethereum upgrades (like the Pectra upgrade) that legacy LSTs like Lido struggle to adopt due to their rigid, ossified codebases. By rebuilding Stake Hype with a modular architecture, Volantis can adapt to future Hyperliquid features without compromising security.
Technical Vision for Stake Hype
- Devon clarifies that Volantis is rewriting the Stake Hype codebase to be more modular and compatible with Core Writer, a Hyperliquid feature enabling smart contracts to interact directly with the chain's staking logic.
- Instead of a single stake account, the new design will use a modular set of stake accounts. This allows for specialized logic to support new features like HIP-3 (a Hyperliquid Improvement Proposal for validator markets) and on-chain vaults that benefit from staking-based fee discounts.
- This modular approach future-proofs the protocol, ensuring it can easily integrate new staking features added to Hyperliquid without requiring a complete overhaul, a critical advantage in a rapidly evolving ecosystem.
Integrations and Business Development on Hyperliquid
- Ali discusses the strategy for deepening Stake Hype's integrations. A key focus is creating a two-way awareness between the LST protocol and the Volantis AMM.
- For example, if the AMM pool becomes saturated with Stake Hype, new staking deposits can be routed directly to the pool to rebalance it, rather than minting new Stake Hype. This increases the pool's volume capacity and provides more yield for LPs.
- Regarding business development, Ali observes that the Hyperliquid ecosystem has matured. In the early days, it was easier to collaborate as everyone focused on building foundational primitives. Now, teams are more "laser-focused" on their specific roadmaps.
- He notes the ecosystem's "figure it out yourself" ethos, driven by the core team's minimal communication, creates a level playing field where reputation matters less than execution.
Navigating Hyperliquid's Development Environment
- Devon expresses a strong desire for the Hyperliquid node to be open-sourced, calling it the "biggest torch on the fire that they could add." This would allow teams like Volantis to build more robust and reliable internal infrastructure, overcoming current challenges with indexing and RPC stability.
- He describes the difficulty of building on a platform with a "silent roadmap." The core team often provides cryptic answers about future features, forcing developers to take calculated bets on what will become possible.
- This creates a risk that a significant development effort could be rendered obsolete by a new native feature. However, Devon notes the team listens to builder needs, often silently shipping requested features weeks after they are discussed.
Conclusion
This conversation highlights a critical trend: the shift from generalized DeFi protocols to vertically integrated, asset-specific solutions. For investors and researchers, Volantis's acquisition of Stake Hype demonstrates a powerful model where controlling both the asset and its primary liquidity venue creates a defensible competitive advantage and superior capital efficiency.
