The interesting thing about RWA perps is how they can become the reference price for an asset, rather than just another vehicle to take leverage on. How the Hyperliquid HIP3 silver perps managed 2% of CME volume during the Friday 30% drawdown was already pretty cool. But more interesting was that over the weekend the HIP3 silver markets traded $500m and ended Sunday 17:59 less than 1% from the reopen print. And If that can happen for silver on a weekend, it can happen wherever there's a gap in the pricing stack. There's a pretty big one in the market currently.

Korean megacaps SK Hynix and Samsung don’t have a real US-hours single-name market.

Hyperliquid’s HIP-3 perps for Samsung and SK Hynix have a path to become the missing layer: the US-hours reference price that the rest of the stack can anchor to. Who needs this reference price? ETF market makers and emerging markets macro funds, institutions and traders who had no reason to touch perps until now.

How Korea trades during US hours

People express trades on Korea via the iShares ETF, EWY. It trades billions of dollars per day. Interestingly, unlike other international index ETF, it is very top concentrated. 50% consists of SK Hynix and Samsung.

EWY has doubled in the past six months and has seen persistent inflows

Given that EWY trades billions per day and is such a massive component in emerging markets baskets (even if you discount the memory craze), you’d expect there to be some tradable part of SK Hynix and Samsung in the US markets.

Large stocks in most international ETFs have American Depository Receipts (ADRs) which in simple terms facilitate trading of those companies in US markets. Names like Alibaba, Baidu, JD, etc all have big presence as US ADRs.

But there are no liquid ADRs for SK Hynix and Samsung! There is no vehicle to trade them on in US markets.

  1. There are GDRs (Global Depository Receipts) that trade in Frankfurt and London, but they are obviously nowhere near as liquid as the ADR. The Samsung GDR trades only $60m per session and the SK Hynix GDR only trades $20m per session.
  2. They stop trading at 11:30 ET, 4.5 hours before the US markets.

So for the bulk of the US trading session there is no clean live price for ~50% of what EWY represents. That’s a missing market in one of the most reflexive corners of the AI trade.

The imperfect fair value for EWY

ETFs have a fair value that is the linear combination of all theoretical prices in the basket. ETFs trade in line with fair value due to create/redeem mechanisms, which allow exchanging the ETF share with the underlying basket. This facilitates the ETF arbitrage where an MM is

  1. short the ETF but long the underlying basket of stocks
  2. creates the ETF to cover those positions
  3. pockets the ETF premium to the basket

For international ETFs, the arb is more complex because the underlying market isn’t always open, making fair value estimation hard. When the international markets are closed, they need to rely on proxies to price the ETFs to fair, such as index futures or other correlated markets (i.e. emerging market proxies).

But these are downstream of simply finding the best live proxy prices they can get. When proxies are good, spreads stay tight, and ETF price tracks fair value cleanly.

When proxies are bad, market makers widen out and size their positions less. And in EWY, more extremes occur because of the reflexive pricing. It’s concentrated, and its biggest constituents have no real US-hours single-name price. So the market starts doing something backwards:

  1. EWY is supposed to track Samsung + SK Hynix.
  2. But during US hours, how Samsung + SK Hynix reopen in Korea get implicitly priced off EWY, since all the information is getting routed through EWY.

This uncertainty leads to convoluted pricing and lowered liquidity for these names.

How HIP-3 fits in here

Suppose SK Hynix and Samsung have a deep perp market that trades in US sessions, then it immediately connects all the legs together.

1) EWY pricing gets cleaner during the US session.

Market makers don’t need to guess fair value off stale closes and correlations with imperfect proxies. They can lean on a live signal for half of the ETF. They don’t need to make composite factors between emerging market indices and US indices to graft a continuous proxy for EWY. A SK Hynix and Samsung perp market pulls some of that adjustment forward, leading to much tighter quoting.

2) EWY traders have a much more powerful hedge.

Even if EWY creations/redemptions are cash-heavy in practice, the AP still has to warehouse risk across time zones. Perps enable direct hedges for half of the ETF which allows traders to express premium trades a lot more efficiently, without taking on specific SK and Samsung risk.

The SK Hynix and Samsung perps upgrade the reference price used by TradFi participants. They move the US hours price discovery from the ETF wrapper back into the single name.

3) The flow follows the reference price.

If SK Hynix and Samsung perps become what EWY desks look at during US hours, the institutions running those desks have to show up. They show up because they need the price and infrastructure and efficiency. That's a different onboarding path than retail wanting leverage on memory stocks.

Which means that building liquidity and onboarding traders, especially in the US afternoon session, is the next step to making this a reality. This in itself requires education on perp idiosyncratic dynamics on inventory management.

And given that the SK Hynix GDR trades only $20m a day, there is clear room for the perp to supplant the GDR as the de facto market for overnight SK Hynix. This is something TradeXYZ has in mind when they constructed the oracle. They could have enabled external pricing during European hours, but chose not to.

After all, why reference the GDR for your oracle when you could become bigger than it?