This episode reveals how Volantis is pioneering asset-specific DeFi, moving beyond generic AMMs to build modular, yield-generating strategies for liquid staking tokens on Hyperliquid.
Introduction to Volantis
- Deven, a co-founder, outlines their technical focus on creating asset-specific DeFi, particularly for LSTs on Hyperliquid. He highlights their recent acquisition of Stake Hype, a major LST protocol on the chain, as a key step toward vertical integration.
- Ali, Head of Growth, explains his role in transitioning Volantis from a developer-focused platform to a user-facing brand. He manages marketing, community, and business development, bridging the gap between the technical team and the end-users.
The Pivot from Developer Platform to User-Facing Products
- Volantis initially launched as a modular DeFi platform, allowing developers to build any conceivable exchange design using single pieces of code called "modules." However, the team found that the market wasn't ready for this level of customization, as the prevailing mindset viewed concentrated liquidity (like Uniswap V3) as the final form of DEXes.
- Deven explains that they expected a wave of creative ideas for custom exchange logic but found limited interest from other builders. This led to a strategic pivot.
- Instead of providing a platform for others, Volantis began building its own interesting products on top of its modular infrastructure.
- Their most successful products have been centered around liquid staking, a concept they were deeply familiar with from their time at Nethermind during the Ethereum Merge. Deven notes, “We went from marketing this as a platform that other DeFi builders can come build on to just building interesting products on top of it.”
The Mechanics of Asset-Specific DeFi
- Deven details the core innovation behind Volantis's AMMs, which are designed specifically for LSTs like Stake Hype (stHYPE). Unlike traditional AMMs that rely solely on arbitrageurs to maintain a peg, Volantis's architecture is far more capital-efficient.
- Traditional AMM Flaw: Standard AMMs determine price based on the ratio of reserves. When a pool accumulates too much of an LST, it sells it at a discount to arbitrageurs, leaking value.
- Volantis's Solution: Their system uses the native staking and unstaking queue to rebalance its own positions. Instead of selling an LST at a discount, the protocol can unstake it directly, capturing value that would otherwise go to arbitrageurs.
- Yield Optimization: The protocol enhances yield by lending out its idle Hype reserves in money markets like Morpho and Aave forks on Hyperliquid. Ali adds that they actively optimize lending rates across different markets in real-time to secure the best possible yield.
- Actionable Insight: This model demonstrates a significant shift from passive liquidity provision to active, strategy-driven DeFi. Investors should look for protocols that internalize functions like arbitrage and rebalancing, as they are designed to be more profitable and sustainable.
The Strategic Choice of Hyperliquid
- The decision to build on Hyperliquid was driven by a shared conviction across the Volantis team, though for different reasons.
- Deven's Technical Perspective: He was drawn to Hype as a uniquely compelling asset. He saw immense potential in Hype staking and the second-order effects of its LSTs. The strong Hype holder base, which seeks to earn yield without taking on price exposure to other assets, created a perfect market for their impermanent loss-free, Hype-denominated pools.
- Ali's Ecosystem Perspective: Ali observed a unique convergence of different market participants—from "degenerate" traders to institutional players—all showing interest in Hyperliquid even before its token launch. He states, “The entire IQ curve came to the same conclusion for their own reasons. And I was just like, I have not seen that happen in a really, really long time.” This organic, multi-faceted interest signaled that the ecosystem had reached "escape velocity."
The Stake Hype Acquisition: A Move Toward Vertical Integration
- Volantis recently acquired Stake Hype, a move Deven describes as a critical step toward fulfilling their vision of "asset-specific DeFi embedded liquidity."
- Strategic Rationale: Owning both the LST protocol and the primary DEX for it creates a powerful flywheel. The LST protocol can implement features that directly benefit its own liquidity pools, and the DEX can provide preferential treatment to the LST, enhancing stability and volume.
- The Problem with Inflexible LSTs: Deven critiques the rigid design of many existing LSTs, particularly on Ethereum. He points to the recent Pectra upgrade, which allows LST protocols to force withdrawals from validators—a crucial security feature that many established protocols like Lido cannot easily adopt due to their ossified codebases.
- Actionable Insight: The acquisition highlights a key trend: vertical integration. Protocols that control both the asset and its primary liquidity venue can create more efficient, secure, and profitable systems. This is a powerful competitive advantage for investors to identify.
The Future of Stake Hype: A Modular Approach
- Volantis is rewriting the Stake Hype codebase to be modular, flexible, and compatible with Hyperliquid's native features like Core Writer—a mechanism for trustless interaction with the chain's core logic.
- Modular Architecture: Instead of a single, monolithic stake account, the new Stake Hype will use a modular set of stake accounts. This allows for specialized logic for different use cases, such as allocating to HIP 3 (Hyperliquid Improvement Proposal) markets or running vaults that benefit from staking-based fee discounts.
- Future-Proofing: This modularity ensures the protocol can adapt to future Hyperliquid upgrades without requiring a complete rewrite, avoiding the rigidity issues seen on other chains. Deven emphasizes, “We could just take the same exact design philosophy that has enabled us to build anything as a DEX to build anything as an LST safely.”
Ecosystem Dynamics and Business Development on Hyperliquid
- Ali discusses the unique experience of building within the Hyperliquid ecosystem, which is known for its hands-off approach and lack of a traditional ecosystem fund or foundation.
- A Level Playing Field: While the minimal communication from the core team can be challenging, Ali views it as a positive. It creates a level playing field where protocols succeed based on merit rather than favorable deals with a foundation, preventing the formation of monopolies seen in other ecosystems.
- Deepening Integrations: For Stake Hype, the most important integrations are internal. Ali explains how the LST protocol can directly route new deposits to its AMM pool to rebalance it, increasing the pool's volume capacity and yield for LPs.
- Strategic Consideration: The Hyperliquid environment favors self-sufficient, technically proficient teams. The lack of hand-holding means builders must “figure it out yourself,” which fosters a resilient and meritocratic ecosystem.
Technical Challenges and Navigating a "Silent Roadmap"
- Deven shares his perspective on the technical challenges of building on Hyperliquid, particularly the difficulties arising from its closed-source node and cryptic roadmap.
- The Need for an Open-Source Node: He believes open-sourcing the node would be the single biggest accelerant for the ecosystem, allowing teams like Volantis to build more robust and reliable infrastructure.
- Navigating Uncertainty: The core team rarely announces its roadmap. Instead, they provide vague answers and then silently push updates. This requires builders to take calculated bets on what features will become available. Deven notes, “You could take a super deep bet on some specific part of infrastructure... and you could find out like a year down the line like, oh, it's just completely obsolete.”
- Example - HLP: He speculates that Hyperliquid's native HLP vaults may eventually be deprecated in favor of more flexible solutions built on Core Writer, illustrating the risk of building around current, non-core infrastructure.
Conclusion
This discussion underscores that the future of DeFi on specialized chains lies in vertically integrated, modular protocols tailored to core assets. For investors and researchers, the key is to identify teams building these powerful, self-reinforcing flywheels that capture value by combining asset issuance with bespoke liquidity solutions.
