Post #453

Two responses. Firstly, the benefits of aligned stablecoins are substantial but by no means a requirement for a successful stablecoin deployment. Furthermore, many stablecoins that may not qualify for alignment will naturally have their own incentivization opportunities coming out of a much higher top-line yield. The opportunity exists for many stable assets to thrive and synergize. Secondly, even if a project insists on "aligned or nothing" and deprioritizes deployment on Hyperliquid as a result, the tradeoff can still be worthwhile for the protocol. The sheer size of the stablecoin opportunity as part of housing all finance is worth more than any short term metric boosts such as trading volume or TVL incentivized by specific stablecoin deployers. As I once tweeted, “When you see a 100x, you drop everything to make that a reality.” I hope that as Hyperliquid grows, we continue to dream big and recognize that the largest growth opportunities involve taking bets on talented new teams building in uncharted territory. 3. Users will naturally choose the most aligned stablecoins, so the offchain conditions are not necessary. While this would be true in an ideal state of the world, it's important to be realistic about the probability of it playing out. Such an outcome depends on 1) competent deployers choosing to remain aligned with the protocol and 2) users doing research, correctly identifying the most protocol-aligned stablecoin, and actively choosing to use it. Neither of these conditions are guaranteed. The protocol unfortunately does not have the luxury of experimentation here, and given the size of the opportunity, it would be too risky to leave this level of uncertainty in the outcome. Any aligned stable that achieves massive success will owe its initial distribution to the protocol. It is only fair that deployers seeking this benefit should recognize and commit upfront to sharing back with the protocol and community. 4. The requirements kill the prospect of alternative stablecoins. This is not the intention and should have been clearer in the first draft of the proposal. The projected market for regulated stablecoins is orders of magnitude larger than that for alternative stablecoins. Of course, there is no guarantee on this outcome, but much of Hyperliquid's success has come from building infrastructure with real-world, practical context. Furthermore, alternative stablecoins usually have different yield characteristics that can offset the lack of trading benefits from alignment. Given this context, here are some point-by-point criticisms, responses, and revisions to the offchain conditions: 1. Fiat USD-backed stablecoin Several teams want to deploy delta-neutral strategies or other forms of higher yielding synthetic dollar assets. While Hyperliquid as a protocol does not have value judgment on various assets, regulatory conditions do. The payments, banking, and other regulated dollar opportunities at the moment are anchored by the GENIUS Act. Regulation is fluid, though, so the condition will be revised to account for this. Other teams suggested clarification that "fiat" may include US treasuries in addition to cash. Any revisions expanding the allowed yield-bearing backing assets would require an update to the protocol’s alignment rules to ensure that 50% of the deployer’s offchain reserve income continues to flow to the protocol. As noted above, higher yielding stable assets inherently have more incentives available to share for each unit of additional supply.