DeFi By Design EP#25: Building Your Investing Edge

Transcript

welcome to d5 by design where we talk all things blockchain and cryptocurrency while striving to educate empower and enrich what's going on guys real quick break for the d5 by design podcast sponsors and a defy slate sponsors who make this all possible first we have ave a money market protocol that allows you to borrow and lend and leverage your assets to earn interest uh right so if you want to deposit some stable coins in there currently you can get three four five six eight percent apys on stable coins which else any bank in the world uh as far as we're concerned you can deposit uh any uh ethereum based asset that is listed there borrow against it you can borrow stable coins you can borrow other assets like ether wi-fi link even the ave token itself ave is

the go-to protocol for any sort of borrowing lending check it out at app.com the next one we have is access auxis is a new crypto wallet auxis.com you can store all of your crypto there they have quite a few options uh they're integrating new dex features soon um and allow you to have a non-custodial way to store your crypto safely off of centralized exchanges and also just not in a meta mask or in your own ledger a bit of extra security there next we have mcdex mcdex is a decentralized perpetual swap protocol basically allowing you to trade on leverage uh on the ethereum chain right they're coming out with v3 very soon at that time you're listening this might already be out they are super solid team um and they're pumping updates and

allowing you to trade decentralized perpetual swaps on eth link and a few others all on ethereum all decentralized so that is mcdex next video ramify ramify is a decentralized stablecoin it's an algorithmic stablecoin that is pegged to the purchasing power of commodities and then basically it measures what value one dollar buys in terms of a commodity index each week and then it provides you with essentially a store value that allows you to continuously evade inflation while maintaining you know a stable aspect as if it was a dollar and that is the ramify protocol check them out on twitter finally we have diversify it is an l2 decentralized exchange they allow you to basically trade in a gasless and feedless manner

big volumes whatever quantities you need it's almost like a centralized exchange on ethereum but you are the custodian they do not hold your coins as a centralized exchange would you have full control full power so really it's almost like centralized exchange capabilities on a decentralized exchange and that is diversified all those sponsors make this possible i know it's a lot to take in but thank you very much for listening and let's get back to it welcome back to the d5 by design podcast we're here today on a beautiful bloody tuesday in the markets absolute beautiful day though finally out it's been raining a lot in north carolina but you know we're doing well we got dan the man from cms holdings

here today as well as co-host robbie um and yeah we're getting after we got a lot to discuss today there's so much going on in d5 and in the markets and it's it's really a whole lot to kind of keep up with so we're going to break down some institutional side some of the trading stuff and just kind of like a philosophy of the crypto markets what dan and cms looks at when they're trading and investing kind of what's been going on in the markets and the outlook uh looking forward to this one robbie how you doing today good afternoon good afternoon my brother yeah it's uh 75 and sunny here in florida wow the rest of the world is uh i guess freezing over which you know kind of sucks but um it's clear over here so uh yeah super stoked to have dan on i know

prices aren't looking too good honestly haven't checked out the markets too much today but i have to say dan has been one of my longer term followers on twitter always bringing valuable insights and yeah he he brings an institutional type of perspective that is hard to find i've really only seen it paralleled in three hours capital and some of the other bigger names so yeah super excited to have you on today dan and really hear it from the source so how you doing today man i'm doing good i'm i unfortunately have snow so i do not have the same beautiful weather that you guys are dealing with but i'm still a little bit nicer out um yes a little bit of background um so i'm one of the co-founders of cms so there's three of us uh a guy

named bobby cho who formerly ran cumberland which is drw the large trading shop in chicago's crypto arm and then a guy named julian sagan who has actually been doing crypto related things with me since 2013 um just really in the background so like not as many people know him but he really has cto so he builds all of our infrastructure stuff he's with me at circle through the real formative years um so i before this venture i traded bilaterally for an occ desk in boston called circle which you probably know from uscc now that's definitely what they've like stuck around for and i've sort of seen a lot of different market cycles traded a lot of different things like seeing the birth of different assets inside this um

sort of touched a lot of people in the industry via liquidity needs so definitely a pretty unique perspective on that side um i probably i guess like i have a little bit of institutional science but like i mean i haven't traded in a professional capacity anything outside of crypto and god almost a decade now so it's been a bit but i did get my start um trading equity derivatives at a hedge fund for about a year and a half and i was like my first real job out of school so really only ever done crypto but i sort of like have some insights into like how people think about risk at like sort of a different scale than sort of your traditional trader inside crypto that being said like deep fry and where the stuff's all going it's

like a whole new world like there's not necessarily a ton of like crossover but maybe there'll be more as it gets shaped um super unclear definitely definitely keeps me on my toes um yeah so let's move it back out we do a sort of a 70 30 split though that number keeps moving around like tremendously as these valuations of things change of liquid active trading a lot of that is basis related trading a lot of that is also like relative value between like different things and just like sort of taking shorter term directional risk and then the other chunk of the book is our sort of venture arm which is we do a little bit of equity is not a ton early stage like sort of venture type deals and then a lot of token related offerings so we've done a lot now i

think it's like probably approaching like 70 or something like that deals since we got started about 14 or 15 months ago so we keep a pretty active pace of like a new issue inside um and that's been very very heavy defy the last six months in particular um and it's getting very crowded in the next two months i would say i actually started proceeding two months um that's like very very interesting thing to sort of see like coming into the market um it gives you like a pretty good idea of like where dollars are flowing to net inside the system so that's sort of the quick and dirty on how i landed here yeah yeah that's sick my understanding of circle and usdc was that it was affiliated with goldman sachs and their uh trading desk did you have any

experience there or maybe you could tell that story a little bit um you know how it evolved from uh circle and then you know the outgrowth of that into cms yeah so there was actually very little involvement with goldman um so goldman had been not even a majority investor in circle they were primarily in our series b round of financing at the time like they were very hands-off they somewhat had to be hands off because of like their um regulatory situation like they weren't allowed to like sort of use us as like an agent to like like extract sort of things that they wanted to like build so i think that gets played up a lot and there wasn't really a lot of crossover like we we talked to them from time to time when they were looking to build that

like crypto related stuff but it never really went anywhere anyway so there wasn't a ton to sort of do there so they definitely didn't have a hand in uscc and there's like no relationship there currently between like those two products in any capacity but yeah so usb was something that jeremy o'leary the founder of circle was like it was somewhat his original thesis around like what bitcoin would be he's like thought it would be like a payment system and like the original circle products which was the ability to like buy and sell small amounts of bitcoin and move it around and then eventually like stable coins sort of like fulfilled that vision later in the stream but uscc was like one of probably four core offerings that we had at the time um i was primarily running the market operations so all the otc liquidity

providing and then all the stuff we like provided on the screens and then sort of any liquidity needs that fell into that bucket and then like subsequently a lot of those other pieces have been sold off since probably 2019. yeah that jeremy alaire uh the fella who uh started the whole usdc thing kind of brought it to fruition i was listening to him on a podcast and he made it clear that the term stable coin is is not the one that he likes uh if i'm not mistaken it's the crypto dollar um you know and and the eventual crypto yen and the crypto euro and whatnot um you know i'm curious to hear what your thesis is as far as the development of uh bringing fiat currencies you know into the crypto world you know we think about this idea of crypto dollars crypto euros crypto yen

and then do you see you know maybe a way in which we eventually start to have a unit of measure within d5 uh that isn't at all you know associated with any fiat currencies just sort of like rye if you will with reflexer but kind of uh our own unit of measure that is not related to a dollar but it's still kind of stable if you will so first how do you see the fiat currencies you know and their entrance with stable coins of dollars crypto euros and then do you see us making a transition away from you know keeping fiat currency coins if you will in the system and moving to a a separate unit of measure yeah so you got to remember we have euros heather now and there's almost no adoption of it um so

i think there's there's a world maybe where there's other fiat currencies bolted onto sort of public blockchains but like really this is still the primary purpose of most like tether and ufcc issuance is like people just like want dollars right like they want a stable unit of account people really don't want euros for that it's like what we found so i i'm actually i'm gonna take the other tax with it i think dollars will just like continue to gain more and more dominance as they become like in a more digitized format like i think at the end of the day people really just like don't want the other fiat currencies like it may be if you have a situation where there's like a ton of like actual like corporate to corporate action between

like geos that would make sense but the fiat banking system does a really good job of servicing those people right now so there's not like entirely a ton of clear use in the system yet that would justify any like there's there's no value added yet in anything of d5 that would like force those other currencies or like that commerce activity to be used inside it or even anything on like the borrowing lending site so like i think it's going to be a primarily a dollar thing for a fairly large amount of time going forward and like people really like dollars right like they and i think this gets back to your other question we were saying will there be like another unit inside the system that's stable and then you gotta get the question well like what's stable to what and like the answer to that is almost always dollars

so it's like well why don't you just have dollars because like at the end of the day that's what everyone's going to use as their like face unless like we get to some like crazy world where like bitcoin is at face where like everything is like benchmark too and like kept is like unit of account but i i don't see that happening for like a material amount of time and like the asset class would have to like balloon so much more to be able to like support that thesis doesn't mean we'll get there it's just not any pass forward that i see currently so um yeah bearish all the other fiat coins i'm sure they'll make them like that the people are gonna do it but like i just don't think they'll have a lot of adoption like like i don't want euros right like

i trade against dollars like and i think you see this even in countries that aren't domestic to the states right like they still want dollars like dollar bitcoin trading is massive like euro bitcoin trading is not and like you could easily just like trade that if you were someone else so that's that's definitely the way i see this sort of all going forward in that regard i just wanted to mention our friends over at ramify who are building um a stable coin pegged to a commodity index of the top 100 uh commodities traded by volume and you know the the uh value proposition there is similar to one of bitcoin where it's a inflation hedge um and it's supposed to provide a better accurate

um measure of consumer um value and buying power so it seems like yeah you know like you you're saying the the base peg is always going to come back to dollars and if there's a aggregate that can kind of provide uh for more accurate measure on top of that then we might see it used but it it won't be as widely used as uh the dollar yeah i i'm pretty skeptical of anybody trying to build a more stable like basket of goods that's like a transactable unit i don't know like dollars are really good the algo stable coins did not work at all those just i mean that's like that's like the idea right there

kind of behind what you were saying rob is like you know trying to figure out a way to algorithmically keep something of value without having it tied to a certain number yeah it's tough i mean this might be a bit of an alpha leak but dan what um what stable coin do you all like to use the most for any sort of borrowing or farming or is it a dependent on a scenario thing or you know what are you uh what are you most comfortable with uh like uscc and usdt like equally like we use them both um sometimes you have to use usct right like specifically if you're dealing with trading on a lot of like the asian venues like that's just the way you have to do it um really it's like a function of rape like we'll just like use whatever one

makes the most sense economically so never mind or no we don't really die for anything no like very very rarely you die just out of risk of loss of peg versus the the constant peg on the other ones or no not even it's really just more around utility it's just like not something that we like need to like it's not taken as collateral basically anywhere like specifically on the exchange side so like that really hampers it's like use and then even like inside defy like it's not always like economically better to like mint a bunch of dye or like buy die and like use it versus using the stable coins right so are you doing trading a lot or is it is it dependent on on what the market is probably but um using you know usdc usdt as collateral yeah a ton i mean that's

like kind of the primary way now that you're trading like is via the tether margin futures on the asian exchanges or like dollar margin futures on like ftx and then like dollars inside like cma or like like usbc is basically just like fluid right throughout the system on the dot like the on the dollar side like of that like like coinbase fpx like that's kind of it but like that's like gets you like pretty damn far um but then even like you can use it like sort of inside the d spy ecosystem as well um yeah so like we definitely we definitely are holding and using a lot of stable coins like on any given day um specifically because like it's like the vehicle that we're trading with and then

tether obviously if you're in asia yeah i just remember being on bitmex 2017 and using bitcoin as collateral to long bitcoin and you're just uberly screwed if if price goes against you if you're if your collateral is in crypto and your long crypto using that collateral yeah i mean that was like a pretty big pain point a lot of people figured out um unfortunately very quickly in march of last year right is that like if your compliance is in the asset that you're effectively like long um like you got a problem like you can't be posting your collateral like indefinitely and like also people like run into the issue of like these networks don't like really work as fast as you think they are like when they're stressed so then you got like additional problems like on the way down of like getting your collateral to it so

yeah no i um i would say that coin collateralized futures in general is like sort of on the way out specifically because of that like all most of those like large venues now are all cash or tether before we hop off of the stablecoin conversation it it seems like the uh the fed and just kind of the powers that be are starting to take notice of um just the capital on hand that is that is moving into crypto uh a buddy of mine just texted me in the last minute or two while we've been on this podcast that jerome powell says he's looking into whether the fed should issue a digital dollar and kind of the technical and policy questions around that it seems like we're going to get a digital dollar much sooner than any reserve currency in bitcoin you know maybe that digital dollar

can be used and maybe widely used as collateral and d5 dan what are your thoughts on you know a d5 dollar or excuse me a digital uh government uh issued dollar compared to some of the other stable coins that already exist yeah um i think there's always been like this thought that like the fed would just issue digital dollars and then that they would like sort of take over and that uscc and usdt would be like non-needed so there's been like some really good arguments from people inside the fed that like the fed should just not be in like sort of like retail banking right because if you're if you're offering that service to everybody you effectively like are in that business and like their arguments are

you don't do this now and you're probably not going to be like very good at it and do you want to do it so what i think you like end up with a model of potentially is like maybe like the fed is like the issuer and there's a bunch of like other stable coins that just like interface it and then it would be completely possible for like usdc to just like be one of those flavors of like a fed back stable coin that they like issue um i think that world makes a lot of sense and that would like give like a lot of like queens but like that's almost sort of what you have now anyway right because like ufcc just sits in bank accounts that are then like sitting at the fed anyway so this would just be like a more formal tying of like those relationships

together um what i don't think you're gonna have a situation though where like the fed is like dealing with like everybody's like issues of some like chain that they're trying to put out there um and it also depends if they put it on a public chain or like a private chain it's not a private change it's like you're really just talking about building a better settlement layer than ach or wire which i probably should do anyway because like those systems are not necessarily great but that's not really a competitor then to usbc and ufcc like i don't know if they're going to build a bearer instrument of dollars inside their system at any given point um that's sort of what i think about it i would bet that they just try to push private industry to like do more of it and they like support it yeah ultimately

it's gotta be about control in a sense um i mean that's at least what the privacy enthusiasts seem to push as as the narrative as far as anti-digital dollars go i mean we use everything to um you know we use our debit cards to purchase everything so really we're kind of you know already there um but it's a matter of kind of getting rid of that cash element of of privacy now is cash gonna be gone no but you know having a digital dollar really creates more of a yeah like a system of being able to you know overwatch in a sense and if we're really gonna go that team i mean i think stable coins that exist currently are all kind of an option to opt out um in a sense now um obviously not able to be used at your starbucks or

anything like such the fed digital dollar thing i mean i don't know i mean i feel like they've been talking about it for a while um you know i'm sure it's coming but that creates a whole other layer of macroeconomics when it comes to like the forex currency exchanges and and kind of how all of this is gonna work because there is going to be a just absolute i would say show of dealing with digital dollars based off other countries us dollar supply uh other countries cash kind of just like there's that's going to be quite the transition so i i don't necessarily think it's as easy as um you know just creating a digital dollar yeah well i mean like look at how much look how much time i took them to go from like

just ach to instant ach which is like still not even really instant like it's it's hard yeah and that's nothing against the fed or the government you know it's just it's a process man like this is a massive monetary system that you know is going to take some time to figure it out dan you mentioned most of the uh dollars already distributed you know in some sort of electronic way it's normally not the fed just shipping you know pallets of dollar bills out to banks so it in that sense it almost seems like it's still just a settlement layer and you know the the fed's gonna keep doing what they're doing it's not that they're going to get so involved in retail banking and uh supplying consumers with with the digital dollars directly yeah i i don't

know i'm skeptical that like anything i would like that this oil comes from private industry and they just try to support it yeah that's kind of how capitalism has been built through private corporations through incentives to kind of create the innovation layer that we have in in the world today um you know let's kind of switch gears here into uh into a bit of of talk of narrative so obviously bitcoin was written with the with the white paper to be peer-to-peer cash you know and now we've got this ethereum settlement layer narrative um dan i'm curious to kind of hear what your narrative for bitcoin is uh in 2021 and kind of your narrative for ethereum um you know have they changed how would you explain the narrative to somebody new or to any of your new clients or people that you speak to

um you know what are your narratives for bitcoin and ether nowadays yeah um i mean like bitcoin's like going to just be the base asset for the industry i think going forward i mean that's also like working on the most of like the dollar inflow is going to be around like i mean like that's where like the real sort of allocation is like occurring is like that to the asset class and then you have a lot of other stuff that's like growing and like being built around it but like that will like sort of maintain like where it's going and i would expect to like see continued like net order flow into the system higher sort of than issuance which like has resulted in like the price appreciation like i think that trend continues there's not like a lot of reason to believe that that's going to stop at any

given time um being said like the issuance every day is like it's real like it's a real amount of money sort of like like bitcoin does have inflation like just because it's defined inflation doesn't mean it like doesn't have them entirely so like that has to be reconciled in the system so i think that's a pretty easy one like i think that's like still like just like the way people will enter sort of crypto and like primarily say um ether is like an interesting one right so i i tend to be in the assumption that the base sort of core pieces of like d5 will like persist on ease but the sort of marginal more fringe use cases and like experimentation is like going to go off and like i think you're seeing a lot of that with like flights to other chains like avalanche is doing a bunch of stuff like

selana polkadot like like all the other l1's have traded really well and i think that is primarily because like the fuser just out of control on east and like the throughput is just like not where it needs to be for like how fast like d5 in particular is growing so that would just like push additional use cases outside so like that's not a bearish e stance but like it's definitely a a stance of this thing is going to grow horizontally more than it is like concentrated on each like in the future so i i'm still like bullish it as the like core backbone for like five but there's you're definitely gonna see like other stuff move to other chains like that's that's already happening i would argue yeah and it wouldn't be defy without other chains right i mean

defy on one chain is about as good as having i mean what's the analogy here like all your cows in one farm right rather than having a bunch of farms like you know it's just you know why why not be able to spread you know and and and cater to people because at the end of the day crypto is about options you know you're able to opt out of the the normal system if you will into into the crypto system now you can choose what chain where you keep your your coins what custody what wallets and all these things they give you options um and ultimately that's what it's about but the biggest chain is kind of the one with the most users and the one with the most money it's without a doubt that if the reason why the bitcoin narrative is as you said

is like the base money is like the order flows always coming into bitcoin is because it just got the richest people it's a battle between the l1 chains of you know who can make basically their early adopters the richest obviously has been winning um you know in a sense just based off price and time you know but i think that we'll see as these other chains grow and grow obviously the the money flow will go to them and the people will also who are using them get richer and basically i mean with money comes power i don't know am i going down the right track there guys like like is that kind of how you see why bitcoin is so dominant and then you know ethereum is right behind it just because basically the users of those chains are you know the richest people in crypto i think i think i think it's

more around utility right like like beyond bitcoin like for any asset beyond it it's really around like what has the like largest network effect and then like what has the most like incremental utility of which i mean like it each has the most right like everything's there everything's like stapled to it it's like very easy to move between like every asset is like on it effectively um but it's like trying to handicap itself in its own sort of like weight and success and there's a world that they just like get the scaling fixed quick and like it might matter but like there's just a lot of people knocking on the door to like sort of like edge use cases out and like to look a lot of stuff like this doing really well on ethereum and that's like kind of the problem right so like

those those projects aren't going to want to like slow themselves down i mean if any of this like d5 stuff were to grow an order of magnitude it would just like be consuming the entirety of like the gas space inside east like it's just not sustainable unless there's like changes and if it continues to grow at the rate it's growing now i just like see stuff spilling over into like other changes it's not necessarily about like what's gotten people like the the price appreciation will be like a following function well it'll be a forward-looking function of people that like think things are going that direction but then like ultimately a decision based on like where stuff like goes and value like a cruise i think yeah yeah that that sounds about right i mean dan you mentioned like the network effects that are contributing to

the amount of value in the system and i i think that's kind of where andy's hitting on is that perceived value of you know people getting rich this community is the worth the most across the entire industry um stani actually yesterday in our in our uh discussion around nfts you know we had a lengthy discussion around perceived value and i think that is really emphasized in uh in bitcoin and ethereum the these these blockchains that lock a lot of value um they they tend to be the most secure but that is going to take away from the scalability dilemma that comes about you know you can either choose between scalability security or um really community is the last one and you know if you are going to choose

to be secure or you know some of these other trade-offs you're going to sacrifice scalability i think that's what ethereum did is they didn't prioritize scalability so much whereas they wanted to build a lot of decentralization in their community they wanted to to get developers um you know as many as possible to contribute rather than focusing on how they can grow the existing projects that that have you know arisen in the early stages and that's given light to some of the other l1 that you know they they don't prioritize decentralization so much and because of that they're able to scale much more quickly right i think like you definitely see that most with finance smart chain right like people

just generally don't care a lot of times on some of this stuff um like i think you're definitely seeing that like liquidity in particular is very slightly amongst like not exactly amongst chains amongst like coins like amongst the trading community like it moves a lot quicker and it's probably less thoughtful on like the decentralization aspect of like people want it to be um that may not be like a long-term thing but like definitely the short-term flows like i say are consistent with that yeah there i mean it's a bunch of simps for yield if we're being real and there's a bunch of protocols who simp for liquidity it's the battle of the sims on on the change it's it's amazing actually it is kind of amazing um dan so

you you have an edge in the markets man like you've got you've got something i'm not going to ask you what's your edges but for a young investor like myself and robbie how how would you go about developing an edge in the markets and honestly man i guess just like in business and in life and for those who are listening like what are some of the ways that you've seen that you've been able to identify what your edges and and and use it in the markets whether it's with investing trading or business choices hiring um you know anything that you know that comes to the the investing and business side you know what what have you done to create yourself an edge that's made you profitable um with your investing and you know how can we how can we sort of uh

identify things like that that we are good at or things that we are aware of um you know to create our own edge yeah i think i mean look i think the biggest thing is time like i think it's just like the amount of sort of net time you put in to it and like sort of stick through it this is just like by far the biggest factor because like you'll find opportunity sets like it won't always be clear where it is and like things will change like rapidly like through your thesis and like your time like but like just making sure you're persistent in sort of being part of the ecosystem is gonna just be the biggest factor by far so like that that's definitely the biggest and like i think the second thing that goes into that is like you have to survive

and you have to put yourself in a position that you'll be able to survive so like you can't get in a situation where like a single move like wipes you out or like if some decision gets made in a way that like you're not gonna be able to like go forward or like that's like game over so like really having some because you're gonna be wrong a lot like that's just like the reality of it so like just being able to like weather those storms is like huge to sort of go forward so i did like those are the two biggest things and then like in the beginning part of your career when you're younger you definitely you have to take enough risk to make it matter which i think people don't necessarily do so i know that seems a little counterintuitive what i say that you

like have to survive but like you also have to not be so underinvested that it doesn't like matter if you are right so i think those are sort of the three biggest things um that being said like just also just not being too sure of anything like a lot of this stuff never works out the way people think it does yeah the risk one is is interesting i'm 21 rob i believe is 21 as well so we've about got all the all the balls in the world to pretty much throw ourselves out there you know but yeah the wiping yourself out is huge too and i think one of the biggest edges and the ways that that we found to identify an edge i mean through this whole project of defy slate it's been it's been an interesting way to get a bit of information information uh asymmetry

when it comes to defy and the markets and what's happening um you know and i think ultimately in in d5 you know it's it's just been about being early in crypto in general um you know and that in that info that is able to be gained through relationships and through connections and through you know just all sorts of of social media and such i mean ultimately one of the biggest edges uh out there is just information and yeah i think you hit it on the head um that was one of the most attractive things to crypto to me initially was you know i i was in high school at the time and uh it was a domain where there was hardly anyone with experience i mean i mean no one in crypto had five years of experience

at that point and right me coming in with one year experience i'm so much more ahead of the game relative to pretty much any other industry i could get into at that time so because of that i was able to learn with the industry and you know despite being young you're actually relatively ahead of the game compared to all these other financial institutions and uh you know supposedly more experienced players that have been around in similar industries but not with crypto specifically yeah i mean look it's a very flat like industry to like move into which is great for a younger person um because like look i mean nobody knows what's like nobody has that firm grasp of everything that's going on in like certain sectors of this thing right now it's just too much

it's like you you're just as well positioned information wise as anybody else and probably have more time and the ability to like dig into it so yeah i think that's a huge like it's a great industry to like come into as a young person for sure yeah dan are you doing much options trading on darebit these days with the fund quote unquote which is ultimately just you know your funds and whatever but are you guys doing options trading on derebit you know what's your take on that we do it we have a dedicated um guy who just traded ball um who primarily trades on dare a bit though like he does some stuff with like a couple of other like products but that's really primarily what he's doing so yeah like we're very active on that front um we like always have like a handful of

positions in the market at any given time um and then actually the guy who runs that down in your neck of the woods so i haven't even seen him in a bit but yeah we're very active sort of on that front solid yeah i mean i've seen a lot this year about uh gamma explorations and the gamma effect and how you know the options market is going to affect the prices of bitcoin i mean i guess the question here is you know are you are you more of on the line of you know perpetual trading with obviously perps or you know do you think new traders should be uh doing options or you know risk management wise what what do you see is the upsides and downsides of those both because obviously they're both forms of effectively leveraging your your money to make a bet you know so like what

would you say is a is your your more preferred one or or the better one for newer traders i i should say to get in i would say newer traders should not be starting out with options yeah um and they should probably not be using any leverage if they can't avoid it just yeah they're just like sticking to just spot trading is like a much better idea um but then if you're like if you had a ranking to be like all right spot trade and then like all right maybe trade perps and then like last like trade options like like i just don't think like many people have an understanding of like how like the greeks even like operate let alone like enough to be like putting positions on so um yeah i would say that would be like my

past for people one of the the funniest things i've seen is these tick tocks where it's like all you need to do to make this much money is make eight percent a day and then the last thing they tell you is just trade options and that's just it numbs my brain to see people suggesting to like on tick tock to absolute newbies that you should be starting with binary options like oh my god it's rough yeah i mean that is a weird trend yeah it's not going to work out for everybody most people and the defy options market right now is um honestly subpar i mean primitive just went down or something like that like they're they're gone hedging is expensive as hell um and premia just launched a newer one um

but i mean other than that i mean there isn't really much much available choice i mean unless i'm missing one or something i mean there's a bunch i mean like it's still so new though you really want to stick to like like if you're getting started like defy options is like so far down like the learning curve there's a lot of places you should like be testing incubating things before then are you doing a lot of direction neutral um i guess yield farming strategies like are you guys doing quite a bit of that um we do yeah i mean like when it gets really juicy um we will i mean that was like kind of the only thing we were even like doing over the summer because it had gotten like to be just like such mania but yeah i mean like in general like

wherever we see edge in the market like we're deploying capital to it like that's really like how we think about it so um it adds a close though right like things get hot and then they don't but like we're just like constantly moving capital and alexander accordingly but yeah we definitely do farm stuff like when it makes sense yeah yeah and i'm most interested in your adventure arm actually and how you weigh that balance with you know risk that um could be going into once one of these brand new plays with um some edge that you might find with some of these newer projects yeah um generally like we use the proceeds like a slug of like basically the p l we generate from the active trading side to then like do longer term like deals um like that's like the breakdown like one feeds the

other um yeah i mean like we try to make concentrated bets if we have like a really firm conviction in a deal i mean then otherwise like it's more we're going to try to do a bunch of things in a thesis and then like hope like one of them is the winner um i mean you never really know right you're taking a big risk on this stuff in the beginning um that being said you get liquidity on it fairly soon so it's not as risky as sort of doing like a basket of equity deals where you've got like real macro sort of risks on like longer time horizons yeah and what are some of the things that you look for when you're investigating into a project and you're you know embarking on that research um is there any similarities that you can draw between projects that you have

invested in uh or is it kind of a you know as one comes up you you proceed with analysis i would say it depends on a deal by deal like if there's like a clear like corollary that we like either in the market currently or one that we've like done a deal for before we're like obviously like benchmark them to each other but um otherwise you're really just like looking at the quality of like the people building it because these things like never like work out exactly as they're planned so you like really want to trust the people that you're working with and you want to like make sure that they have like the technical jobs and like the operational experience to sort of do it so like the quality of like the the team behind it is like really big just like making sure like they know what they're

doing um because that's like the quickest way like the whole thing will get kneecapped yeah that venture capital kind of idea is uh is really interesting there's been quite a few projects that have obviously done very very well off of pre-sales icos and i mean huge like ido's now is is kind of like the new thing have you all been messing around on pokestarter i've seen quite a bit there yeah it's super interesting man yeah it is i i actually personally haven't a ton but a guy on the desk um has done like a bunch of it yeah he's like very into it yeah it's cool because it's like it's like oh yeah this new uh ido is launching on polka dot but uh we're launching on pokestar and liquidity is going on uniswap so it's really an erc20 but it's on polka dot yeah i mean some of

these subjects get liquidity tremendously quick so exactly you know some of them are really interesting the polka dot that that kind of narrative is interesting um honestly i haven't really heard too much about polka dot as far as uh except i saw a tweet today from crypto dog and he was just he was like um polka dot doesn't even have a functioning wallet i mean i think i think it's further along than that um i mean like like there's like there's definitely real people raising and like real things being built on top of it um like i'd like to see the paritain start like launching i think that'll be like a big step for the ecosystem to like go forward but um yeah i mean like look there's a lot of speculative capital that's like convinced that's gonna be a a big player in the future so

you're obviously feeling a lot of deal flow grow around that yeah it's interesting to see like what gets instant liquidity on poke starter and and in these newer projects you mentioned you know right away you look at the team and if they have the uh the insta not the institutional but the just the you know wherewithal and uh the chops to to get the project done because they're gonna have to pivot you know multiple times um i it seems like that combined with um really a greater fool's theory that andy likes to point to um you know once you know that someone that either you trust or just you know has kind of way more money than you do because that that's another form of trust and you kind of just

follow their lead um it's going to kind of kick-start that value and then start generating more liquidity but you know for people that just ape-in and really don't do uh that substantial research it's interesting to see which of these projects generate liquidity and and continue to see that development yeah uh that whole community is very hard to understand what's going on sometimes like like i mean like you see this with stuff like i mean what was that one like emn that like andre didn't even like say he launched and like people bit it up immediately like it's like there's there's a little bit of like like that's not super predictable right like people just do what they do

and then like they are it's going up because it's going up and it just has momentum and it like just goes crazy like something i i think i found really weird is um like we we seeded a pool on uh i think it was uniswap for i forget it for the unity or sushi but it doesn't matter like for derivadex and like before like we had even like said anything or anybody even knew about it people were like pumping it up and like trying to like basically jack up the price and it was like you there's no information about this at all like you just like immediately see like a random erc20 and you just like go crazy into it on unit swap so like there's just a crazy i mean it's kind of gambling for the most part

like core like in a lot of these like super new issuances that just go mad um and like look you're always gonna have that behavior in the market somewhat um and then sometimes it just gets momentum on itself and like it just keeps like running um obviously like sometimes like the community as a whole like identifies like a real myth like pricing of something and like you see that playing on the market and it looks the same but like i think more often than not it's just like people who are just momentum chasing anything and everything that they can get their hands on without even like trying to understand it yeah there's got to be a sign of the times right now too i mean the market's in such a frenzy you know people are like piranhas in the water when they see blood yeah but also i think like the market is

more mature than it's ever been in a sense um like that sounds like absolutely like ridiculous with you i think we had like mia khalifa i like talking about dodge at eight cents and such but like i think i think we're starting to see where um the the quote-unquote good projects are starting to move kind of on their own like this like i think loomdart tweeted about like sam coins today and yesterday moving up while everything is down that's kind of an example of what i mean by like the market maturity is kind of almost here uh i mean i think over the past few years it's been a lot of crypto go up bitcoin goes up eth goes up everything goes up kind of and now it's almost like um i mean well obviously we

we've seen exponential gains in d5 tokens while a lot of the older tokens have kind of you know just moved a tad in comparison um you know i'd love to hear y'all thoughts kind of about the market maturity as it as it correlates to you know what our previous discussion was just about i mean you think there's a little bit in equities too right where there's like a lot of like money moving into like both systems in like a very short period of time and because of that you're gonna get like aberrations and like one of those aberrations is like just the most random ridiculous thing sometimes like flying out of control just because there's like a ton of hot money looking for like a home and the other side of that is that you also have like sort of institutional more like i think thoughtful money that's

also growing looking to like deploy so like you have it coming from like every direction which is like why you get like that sort of split on stuff um i mean like what's going on in the equity markets is like a really good like like people want to let go like oh like crypto's crazy it's like go look at like what's going on with like some of these like random stacks and stuff like it's just as much like mania and like a lot of this has to do with just the fact that there's a ton of mushy money pushing into the system like from every direction what is the root of that at a macro scale you know if this is happening across the uh the crypto equities border if you will kind of you know what what do we think is the source of all this uh

inflow the fact that they're like actually just like putting a ton of money into the system right like it's like it's all coming from the same spigot at the end of the day i think you see it in like real estate to a degree like you see it like that like obviously that's got like more of like a copic sort of like angle to it but like like just random like collectible cards are like going like crazy and like it's just there's a lot of people that got a lot of money and like it all trickles down into like assets at some point yeah nobody wants to hold dollars right now as a as a thesis i mean the nba top shots are going crazy yeah that's like yeah that's like a great example right it's just nuts i mean it's just in a way it's awesome though

you know like i mean i don't want all my friends to be a bunch of money hungry douche bags but at the same time like i want to see my friends and people around in the world you know trying to make things trying to make their money work trying to make a more efficient system if you will trying to make value create you know economic inflows outflows i mean that's that's going to help us in the long term um overall now obviously the money printing inspires the inflated prices but aside from the inflated prices yeah we definitely see more exchange of money um you know i would say since everyone's at home and everything's all digital now then we've you know ever seen it it's just been it's been amazing at its core you know kind of terrifying at the same time yeah it'll depend like how it like all

shakes out at the end like like you can't just like make everybody rich right like that doesn't like really work because then nobody sort of is and then like the prices of everything just like adjust accordingly um so like that that is somewhat the reality of like the system with constrained resources i i just i don't know i i don't plan to like be a macro like forecaster or like even like think in those terms i don't really have a ton of insight into like how this all plays out i mean like i think a lot of people's logical conclusion is like inflation but that's yet to like sort of be borne out um and anything besides like asset prices yeah i don't know it is going to be like really interesting i tell you what like it's it's a very interesting experiment to live through

um i'm sure we'll have a lot more to say in like five years when we like are looking at this like backwards yeah it's nuts it's nuts um cool we are uh running close to the clock here rob i mean what you got i i could probably think of one last uh topic you got anything over there on your mind yeah i mean uh we're just talking about this collective really rapid rise in asset prices it it makes me think if we're approaching bubble territory across different asset classes i i don't want to be you know screaming uh apocalypse or anything but like you know if we're seeing this rapid growth across different assets um damn like you said it it seems like just

kind of the perfect storm for uh inflation if not hyperinflation maybe that is what bitcoin needs to to fulfill the uh reserve currency narrative that'd be a crazy way but it's not impossible yeah i i also hate that boomer narrative though like oh the world economy collapses so all of our bags can pump yeah it's not it's not the way you want to make money um yeah i don't know i'm i'm worrying but like you know i'm trying to see other other perspectives around it on how these different narratives could merge together yeah yeah i mean like look it's possible everything just like slows down like at some point in the future like interest rates rise and like things like change like if like we're not like just because we're like

on a course here currently doesn't mean like that's gonna like persist indefinitely right like things will change along the way i don't know like i said like i i i don't have any you're not a weatherman man yeah and like i'm not even like talking to the people who like are close to people that make those decisions you know like i'm so far removed from that world yeah you're not enough of a big baller sorry buddy no i'm not it's not my world uh all right so a few rapid fire questions right here you know what do you which l2 in 2021 is going to have the most users by the end of the year oh with l2 yeah i give you some options xdi or matic um optimism arbitram um and then i want to know l1 as well

so the only l2 we use in size is x die so like that's gotta be my bad bet and then l one that you think is gonna have the most users obviously aside from ethereum i just solana just because like ftx is gonna like force that into life yeah it seems like the only one that i actually want to go and try to start to use i mean it's i mean maybe avalanche off of some of those stuff but i like avalanche too like we we own a position in that like i eat like em and a lot like we talk to that team like that's a very good contender i just like it's very hard to beat the like sort of nested advantage that solana has with ftx and serum like that's just like it's a big hurdle um at least for the short term

andy i got one uh if you were to bring one more investor into cms holdings uh institutional retailer celebrity who would it be um probably an institutional guy on the vc side to do more equity related deals i think that's probably like the one big thing we don't do a lot of that we usually do a lot more of do you think you have more of an edge in d5 than than in the equity markets yes absolutely sure not even a question no absolutely no doubt yeah i feel like somebody who's traded equities like i just like it's like not like the edge we would fight over was minuscule in comparison to this stuff um last one from me i told my i told somebody's that i was uh i was recording this today and

their question is um when are you gonna stop selling or no will you please stop selling oh i'm the one who's selling it i'm just messing around all right dan that was an absolute pleasure man you killed it thank you so much thanks for coming out man all right cool thanks for listening y'all peace thanks for listening to the d5 by design podcast until next time defy slate team