Author: DC Source: X, @DiogenesCasares Translation: Shan Ouba, Golden Finance

HyperLiquid is online Within weeks, it became one of the top 20 tokens by fully diluted valuation (FDV), an achievement achieved without being listed on a major centralized exchange. Supporters are mainly traders and users, and their enthusiasm for the product is more like a love for social platforms (such as BeReal or Instagram) than the "faith groups" of the traditional crypto community (such as Link Marines).

HyperLiquid's $HYPE airdrop does not have too many conditions attached, which not only makes many people rich, but also allows many people to choose to continue to hold it because they believe in HyperLiquid's vision and think you can profit from it. This "divine synergy" between vision and execution and fundamentals is the key to HyperLiquid's success. Similar success can also be found in another widely watched and one of the most profitable DeFi projects this year - Ethena.

This article will explore what Ethena and HyperLiquid have in common, such as building high-usage core products, as well as their differences to help readers understand what makes these systems successful. key factors.

Laying the foundation: product is king

Developing a good product is always challenging, and in encryption field, this challenge is further amplified. Some common misconceptions include: “Great products are simply not possible in the crypto space,” “There is insufficient market demand,” “Not innovative enough,” or “It’s been tried before.” These views are often wrong.

The biggest skepticism Ethena has encountered is that its product is considered similar to previous decentralized protocols (such as UXD). However, Ethena's innovation lies in accessing centralized liquidity through custodians, solving the liquidity problem while also expanding scale through the income from underlying assets (such as stETH). This relatively minor tweak makes Ethena’s product more scalable and stable. In addition, Ethena's USDe and sUSDe are similar to the relationship between ETH and stETH. This design makes its returns higher compared to individual operations.

Although HyperLiquid is not the first decentralized derivatives platform, its innovations focus on the following aspects:

• Speed: Deposits are processed very quickly.

•Liquidity: Launch of HLP (HyperLiquid Pool).

•Distribution mechanism: Create exclusive fund pools (Vaults).

HyperLiquid's platform is extremely reliable and has almost never experienced major failures, while competitors have repeatedly experienced problems, such as long outages and improper liquidation of user assets. , and even need to manually count user losses through Google Forms. HyperLiquid has won the trust and support of users with its technical stability and excellent user experience.

Opening up the market: distribution and execution

Having an excellent product is only the first step to success. How to get users to discover and use the product is a greater challenge.

The Ethena team makes full use of the "Other People’s Networks" (OPNs, Other People’s Networks). For example, they connected with @dcfgod, a well-known investor in the crypto space, attracting the attention of @templedao team, large traders and other key users through his social network. This strategy helped Ethena build a broad user base in its early days while attracting influential investors like @CryptoHayes.

The HyperLiquid team took a more direct approach, sending private messages to a broad user base in the crypto space, including well-known trader @HsakaTrades and RFV trader @burstingbagel. They listened to community needs and developed features that users really wanted (like Vaults and HLP), attracting deep liquidity to the project while avoiding the high costs of relying on market makers. This direct interaction with the community makes users feel like they are part of the project and not just an outside observer.

Whether it is Ethena or HyperLiquid, the key to success lies in establishing a strong moat and sustainable network effects.answer. They ensure the long-term competitiveness and user loyalty of the project through technological innovation, excellent execution, and deep community relationships.

Consolidating advantages: moats and network effects

Any excellent project will attract imitators and competitors. For example, Ondo has OpenEden, EigenLayer has Symbiotic, Morpho and Euler, Aptos and Sui, and so on. However, truly outstanding projects are able to build and solidify their moats, making their products more competitive.

Take stETH/Lido as an example. Although in theory, the basic products of stETH/Lido are easy to copy, its huge liquidity, lending agreement and The deep integration of DeFi forms a strong moat. Even though users may earn slightly higher yields through competitor products, many still choose to use stETH due to its greater availability in the DeFi ecosystem.

Ethena has adopted a similar strategy to consolidate its leading position in the field of funding interest rate arbitrage by integrating Ethereum DeFi and a growing number of centralized exchanges . Ethena’s liquidity, acceptance, composability, and higher returns at scale provide users with significant advantages to maintain user loyalty.

HyperLiquid's core moat lies in its name itself - liquidity.

•HLP (HyperLiquid Pool) is a powerful liquidity provider that ensures users can always find buyers or sellers and promotes the growth of new markets.

•As the number of users increases, price efficiency increases, thereby attracting more users, forming a positive feedback loop.

In addition, HyperLiquid enables projects to build on its spot and derivatives markets by launching an independent EVM-compatible chain. This innovation will provide traders with more efficient capital utilization solutions, such as market making and neutral strategies, while bringing more features to users and further solidifying its market position.

Although HyperLiquid's code may be open source and forked in the future, it is difficult for these forked versions to replicate HLP, user base and liquidity. length of projectEarly success depends on the depth of the moat, not just the product itself.

Differences in Financing Paths and Airdrop Strategies

This section begins to show the significant differences between Ethena and HyperLiquid approaches. These differences are not only stylistic, but also substantive. of. Ethena's products provide liquidity to achieve delta-neutral returns. HyperLiquid's product is a decentralized derivatives protocol. Ethena inherently needs to use existing platforms in order to scale due to its model, and a good way to ensure this is to get investment from exchanges to incentivize them. HyperLiquid, on the other hand, aims to replace these exchanges, it does not intend to buy them out and therefore does not need them.

The HyperLiquid team is also known for being excellent high-frequency traders who do not need to raise capital. The Ethena team, while successful in its own right, has not raised the tens of millions of dollars that might have been necessary to build Ethena and ensure its long-term viability and complete focus on product rather than profitability. In theory, Ethena could decide not to raise money, but by raising money, they could increase their likelihood of success. From a game theory perspective, and especially from a financial perspective, people have more confidence in teams that 1) have extensive experience in a specific field, such as HL, and 2) are strongly endorsed/backed by authority figures. The Ethena team, while excellent, cannot get the same accolades for delta-neutral trade management as the HyperLiquid team does for understanding exchange infrastructure, a core aspect of high-frequency trading. Ethena allows these major players to invest in gaining social support/enabling them to grow faster and ultimately achieve integration, which may be the best decision for their specific product.

HyperLiquid decided not to raise money but to take the risk of HyperLiquid fees in order to conduct larger airdrops and not own the system vendor (VC). Considering their product and the fact that they will actually be competing with most existing exchanges as they look to replace them, this is probably the best decision they could have made.

Ethena's $ENA airdrop performed well. Large holders were required to hold it longer than ordinary users, while subtly attracting the community's interest in Ethena through remilios. of attention. Despite this, it is not as popular as the $HYPE airdrop. In comparison, $HYPEThe airdrop has no strings attached and no unlocking terms for large players. Instead, it restricts those accounts that may abuse the airdrop and only allocates a small portion of the initial value while allowing these tokens to be fully unlocked after the airdrop.

Ethena's points program is very clear and aims to shape user behavior, while HyperLiquid's program seems arbitrary, but is significantly biased towards rewarding high-volume users and being liquidated users, but there is no fixed formula.

Conclusion: Path Dependence

My conclusion is that HyperLiquid has executed extremely well on its vision and product path. Ethena has performed equally impressively on its product vision, becoming the fastest-growing stablecoin protocol. The differences between the two in their token and financing strategies reflect their deep beliefs in their positioning and product endgame.

There is no fixed model for airdrop and token economics management, but needs to be dynamically adjusted according to product and user needs. If you can deeply understand your product and users and ensure that decisions are consistent with the ideal path of the product, you will be successful.