Menu #12: Policy, Probabilities, and Perps

Hyperliquid + Regulation
Hard Thing About Hard Things
Web3 Dinner Club: 25th June
Prediction Markets
Brand spice
Chef’s Note

This is The Menu: the UK Web3 operator’s weekly briefing.

What founders, investors, and builders are actually discussing behind closed doors.

Some weeks are driven by a single big narrative. This week, the industry is doing something more interesting; it's growing up.

The thread running through this issue is legitimacy.

What it looks like when the infrastructure, the regulation, and the money start moving in the same direction at the same time.

In this issue:

Signal, served weekly.

This month’s dinner is proudly sponsored by Novel Labs.

A multi-award-winning London storytelling studio building the brands of the future in AI, blockchain, and emerging technologies.

Best known for the $100m expansion to the Bored Ape Yacht Club, The Mutant Cartel World.

If you’re a startup or scale-up building a brand and looking for real go-to-market impact from those who have repeatedly built unicorns and category kings as VCs and founders... ask for an intro at the table.

Hyperliquid is a decentralised exchange built on its own purpose-built blockchain.
Designed from the ground up to trade perpetual futures and spot markets entirely on-chain. No custodians. No middlemen. No compromises.

Most DeFi trading platforms use automated market makers (AMMs): algorithms that set prices based on liquidity pools rather than real orders. It works, but it's never felt like proper trading.

Hyperliquid does something different. It runs a central limit order book, the same matching engine model used by Binance and Bybit.

Executes it fully on-chain. Every trade, every order, every liquidation is transparent and verifiable in real time.

Nothing is hidden behind a black box.

And crucially, it's actually fast.

Most blockchains can't support the throughput required for serious derivatives trading. Hyperliquid's L1 processes orders in milliseconds, giving you the execution speed of a centralised exchange without surrendering custody of your assets.

It's also quietly becoming more than a perps' exchange. Through its own token standards, HIP-1 and HIP-2, projects can launch and trade native spot assets directly on the platform. The infrastructure for a full on-chain trading ecosystem is already being built.

One-line summary: Hyperliquid = Binance UX, rebuilt fully on-chain.

Hyperliquid, the on-chain perpetuals exchange that has become the centre of DeFi derivatives, is now doing something most “decentralised” protocols avoid: it’s engaging directly with Washington.

Co-founder Jeff Yan has met US policymakers to argue that on-chain derivatives should be explicitly folded into America’s evolving crypto market structure rules, with conversations reportedly centred on the Senate Banking Committee’s CLARITY Act.

At the same time, two of the biggest incumbents in traditional derivatives, CME Group and Intercontinental Exchange (ICE), are reportedly lobbying the CFTC and lawmakers to scrutinise Hyperliquid, raising concerns about market manipulation, sanctions evasion and the integrity of commodity benchmarks, including oil.

So which is it: a protocol asking to be regulated or an exchange being forced into it?

Hyperliquid has been building a policy footprint for months. In February it launched the Hyperliquid Policy Center in Washington, led by crypto policy veteran Jake Chervinsky, backed with funding in HYPE tokens.

The stated objective is straightforward: educate lawmakers on how on-chain order books, liquidations, and settlement work, and influence how DeFi derivatives fit into the coming US framework.

The CLARITY Act matters here because it’s part of a broader push to define how digital assets and platforms are regulated, including provisions touching DeFi and when a system is “decentralised” enough to be treated differently.

The incumbents’ argument, as reported, isn’t “DeFi is bad". It’s that anonymous, offshore-style derivatives trading could influence price discovery in traditional markets and create vectors for manipulation and sanctions evasion, particularly if activity feeds into benchmarks used across the real economy.

In practical terms, the ask is familiar: register with the CFTC, adopt customer identification and surveillance controls, and operate like a regulated derivatives venue.

One under appreciated detail is collateral. Commentary around the lobbying effort highlights that platforms reliant on a US-regulated stablecoin can face an indirect chokepoint: if regulators lean on the issuer, liquidity can be constrained without touching the protocol. (This dynamic is often cited around USDC in particular.)

Good, if you believe the next phase of growth requires legitimacy: clearer rules, access to bigger counterparties, and a pathway to operate openly.

Bad, if compliance requirements collide with the current model: identity checks, surveillance expectations, and commodity derivatives rules could be structurally hard to reconcile with permissionless, pseudonymous markets.

But there’s a third possibility: coexistence. The likely near-term outcome isn’t “Hyperliquid becomes CME”; it’s that policymakers define rules for when on-chain venues can serve US users, what decentralisation actually means, and which controls are non-negotiable.

W3DC takeaway:
This isn’t just one protocol’s story. It’s a sign the US is nearing the point where on-chain derivatives are too large to ignore, and incumbents are moving to shape the rules before DeFi becomes a permanent part of global market structure.

The Hard Thing About Hard Things is Ben Horowitz’s blunt, practical guide to the parts of building a company that don’t show up in glossy startup stories: the messy, lonely, high-stakes decisions that land on the CEO’s desk.

Instead of “how to start", it focuses on how to survive: hiring and firing (including friends); handling crisis moments; building culture under pressure; making decisions with imperfect information; and staying mentally resilient when everything is going wrong.

Horowitz writes from lived experience (founder, CEO, investor) and keeps it real, often using hip-hop lyrics to drive the point home.

One-line takeaway: It's a handbook for leadership when there are no good options, only hard ones!

A curated, seated dinner for a small group of builders working in crypto, AI, and frontier tech.

One table. No pitches. No panels. No ego contests.

Just the kind of conversation that doesn't show up in your LinkedIn feed.

The relationships that move capital, talent, and ideas in Web3 don't start at conferences.

They start at a handful of dinners with the same people, repeated over time.

Seats are limited by design.

Proudly sponsored by Novel Labs.

Prediction markets used to sit at the edge of the internet: nerdy, niche, and mostly ignored.

Now they’re being embedded into the media layer.

In the past year, Kalshi has cut data deals with major broadcasters, including CNN (announced in late 2025) and Fox Corp in 2026, and Polymarket signed an “exclusive” partnership with Dow Jones, the publisher of The Wall Street Journal, to bring prediction market data into its properties.

The message is clear: odds aren’t just a curiosity anymore; they’re becoming a headline input.

That shift creates a genuinely new journalism question: when markets price the future in real time, do they become part of how the public understands reality?

Prediction markets can be a useful signal. They compress news, expert views, and crowd sentiment into a number, updated minute-by-minute. Used carefully, that can complement reporting the same way polling, markets, or economic indicators do.

The incentives are different.

Markets make money when people trade, and platforms have every reason to turn every developing story into a tradable contract. When “BREAKING” becomes “place your bet", news risks drifting from “what happened?” to “what will happen next?” in the most monetisable way.

And there’s an ethics collision coming:

The concern is no longer theoretical. ProPublica has updated its ethics guidance to explicitly address staff participation in prediction markets, and outlets like The Verge have raised alarms about blurring editorial independence with speculative products.

If prediction markets keep blending into media, three questions will decide whether this becomes a “useful signal” or a “toxic incentive”:

W3DC takeaway:
Prediction markets may not be “breaking the news", but they are changing it, by making the future tradable and by pulling journalism into the gravity field of money.

Table question:
Should newsrooms treat prediction odds like polls (useful but flawed)... or treat them like gambling (too conflicted to embed)?

This FCA policy statement isn’t a fun read, but it matters because it removes a few of the real blockers to tokenised authorised funds in the UK and clarifies what the FCA will accept right now.

1) The FCA is explicitly backing tokenised authorised funds (via the “Blueprint” model).
The FCA frames tokenisation as a productivity + competitiveness upgrade for the UK asset management sector and says regulation shouldn’t block change where there’s commercial demand.

2) “On-chain can be the record.”
A big practical change: the FCA confirms an on-chain record of transactions can be treated as the primary books and records for unit deals, and firms don’t need a full off-chain mirror if they have appropriate resiliency plans.

3) Public blockchains aren’t banned; controls are the issue.
The FCA reiterates that firms can use public DLT networks if they can meet regulatory outcomes (including privacy, resilience, and governance). It also adds guidance that token functionalities like freeze/unfreeze and forced transfer can be compatible, provided the manager retains authority to correct errors and comply with court decisions.

4) New “direct-to-fund” dealing model (D2F): less plumbing, more atomic settlement.
The FCA introduces an optional direct dealing model where the fund/depositary deals directly with investors in a single step. Industry feedback said this helps enable atomic settlement on-chain for newly issued units and simplifies reconciliation.

5) The real friction is legal: umbrella cash accounts + protected cell rules.
A major chunk of the paper is about how cash accounts work under the UK’s protected cell regime (ring-fencing sub-fund assets/liabilities). The FCA dropped its proposal to force standby client money accounts for unattributable payments and instead tightens reconciliation expectations, but it also flags continuing uncertainty over omnibus account mechanics and is working with HMT on clarification.

6) Stablecoin settlement is on the table, but via waivers/modifications for now.
The FCA says it’s open to firms applying to modify/waive rules to allow stablecoins to settle unit deals as an interim approach before final stablecoin standards land (expected in October 2027).

This is the UK’s “make it boring” strategy in action: tokenisation advances through fund operations, record-keeping, and settlement mechanics, not marketing. The firms that win won’t be the ones with the loudest “tokenised funds” headline; they’ll be the ones with the best governance, resilience, and compliance design.

Swatch’s Audemars Piguet “Royal Pop” launch played out like a rerun of the 2022 MoonSwatch chaos, queues, police, fights, stores shutting, and scalpers flipping stock within minutes.

The difference this time: nobody can claim it was unpredictable. Swatch had the blueprint for what happens when you combine ultra-limited inventory with global social frenzy and still repeated the playbook.

The uncomfortable lesson isn’t about watches. It’s about marketing mechanics:

Scarcity + social amplification + resale economics creates a powder keg. If you don’t build the operational infrastructure (ticketing, appointments, staged drops, transparent allocation), you don’t get “luxury theatre"; you get a public safety headache and angry customers.

W3DC takeaway:
Hype is powerful. But uncontrolled hype isn’t a growth hack; it’s a reputational tax.

The really crazy parts: you will be able to buy it at retail in a couple of weeks, and once out of warranty, if it breaks, it cannot be repaired.

Please tell us you haven't bought a possible $4,000 bag charm.

Until next time