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Insilico Terminal Podcast Episode 24 - Ponzi Trader
104 Plays25 days ago
In this episode, PonziTrader shares his full journey - from buying Bitcoin to buy weed on the dark web to becoming a high-volume directional perp trader. He walks through spinning $2k into $50k in 2017, losing it all in 2018, printing during the COVID crash, and the brutal 2021 flash crash where he lost $800k in a single night. We dive deep into real vs fake moves, exchange flow dynamics, ETF-driven markets, perp DEX competition, Hyperliquid’s stickiness, and his advisory role with NADO. Beyond trading mechanics, the conversation explores risk-taking when young, rebuilding after wipeouts, the psychology of leverage, and why most people shouldn’t trade at all.
00:00 Intro, PonziTrader background, getting into crypto in 2016–17 and early BitMEX days
05:31 Trading style evolution, technical patterns to order flow, momentum and real vs fake moves
08:23 Market structure shift, ETFs, corporate leverage (DATs), institutional impact on crypto
13:38 Why he’s long-term bullish, stablecoins, perpetual adoption and retail leverage thesis
21:52 NADO DEX, advisory role, latency edge and unified margin advantages
28:21 Perp DEX competition, race to zero fees, security, liquidity and innovation cycles
40:45 CEX vs DEX future, Binance outflows, counterparty risk and decentralization narrative
44:11 2021 blow-up story, sushi wick liquidation, rebuilding from $12k and risk lessons
52:23 Trading philosophy today, belief in yourself, leverage dangers, investing vs trading and closing
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Transcript
Introduction of PonziTrader
00:00:03
Speaker
you
00:00:13
Speaker
Welcome to a new episode of the InSilico Terminal podcast. My guest today PonziTrader. And what I like to do at the beginning is ask people, how would you introduce yourself to someone that doesn't know you?
00:00:28
Speaker
Who are you? What do you do? What can you tell us? Cool. Perfect.
PonziTrader's Background and Evolution
00:00:33
Speaker
My name is PonziTrader. I am a directional degenerate speculator of all markets, um specialty being crypto for the last 10 years.
00:00:44
Speaker
I got into crypto in 2016, 2017, trying to find financial freedom and ultimately got hooked in. and have evolved since from just being a trader to an angel investor and advisor, founder, ah really taking a little bit of everything from the space to build, you know, what I do today. But the core principle is directional speculator, you know, with leverage, without, um and tokens and stocks and whatever really moves and can help expand and make my net worth a little larger every year. Mm-hmm.
Entry into Crypto and Early Trading Experiences
00:01:20
Speaker
So can you tell us a bit about how you first got into crypto? What was that like? Yeah. So obviously i was on the dark web um pretty early trying to buy weed and ended up like kind of a little bit of barrier of entry, bought some coins to try to buy some some weed and it just didn't work out. And then I trashed that computer. And then like four years later, my brother called me and he was like, dude, Bitcoin $800.
00:01:45
Speaker
at eight hundred dollars I was like, fuck So I like scrambled to find that computer. It was gone. Um, and then this was in January and then by June or June or July, i can't remember.
00:01:59
Speaker
He calls me again. i just totally forgot about it I was like, whatever, Bitcoin, $800, not a big deal. He calls me back. He's like, bro, it's at $1,200. was like, oh my God. That's when was like, all right, I got to get involved. And I made a Twitter because he was like kind of savvy on the internet.
00:02:14
Speaker
And I made a Coinbase account. And I have had like four personalities on Twitter, but I was like, oh, everybody's anonymous. So I should probably change my account name. And that's when I like started coming up with, you know, pseudonyms and shit.
00:02:28
Speaker
I'm just watching and I had like two random my name at the time and I went all in on Bittrex and started just buying shit coins. Mm hmm. And then in 2017, kind of spun that up to like 50 grand and I was like 19 at the time, almost 20 or something.
00:02:44
Speaker
And I called my dad and i'm like, I'm smart and rich. You're not. Haha. And would like sell. And I was like, no, it just started. And sure enough, lost it all in 2018.
00:02:56
Speaker
But I was hooked. And then I found perpetuals because of Arthur Hayes and BitMEX. Shout out Arthur. um And that's when things really like, you know, started
Turning Point and Trading Strategies
00:03:05
Speaker
spinning. I wasn't really profitable until about 2020.
00:03:08
Speaker
Covid crash. um That was when I first like made a significant amount of money to me, which was a grand and change. spun that up into, you know, where I'm at today and went through all the swings.
00:03:20
Speaker
um But it's been a fucking roller coaster. So was like the COVID crash your first like really profitable trade? Did you make a lot of money then or? No, I don't think it was my first profitable trade. Like, I think my scale of profitability is just a little skewed now. When I mean profitable, like I was making $2,000, $5,000, $10,000 trading like twenty nineteen which was a lot of money to me right um and I was paying bills and I had a job, but I was like trying to be profitable, make 50 to 100 grand a year trading. Right. That was like profitable, um which there's nothing wrong with that.
00:03:57
Speaker
You know, that's like a lot of money. I'm not going to try and downplay that. But what I mean by profitable is like I was able to I was like kind of down bad by COVID time because coins had come down so much and I was trading so shitty and I had like 15 grand left and I just jammed the COVID crash and I spun that into like 150 grand.
00:04:15
Speaker
And that was like, whoa, to me, you know, like first six figure trade really. Um, and then came DeFi summer, like right after that.
00:04:28
Speaker
And then that was when I really started to spin it up. um And then I blew up in 2021. i lost 800 grand in one trade and was down to like 70 grand or something. No, i was down to 12, spun it back up to 70 within like a month. And then that's when i was like, if I've done this once, I can do it again. And then, you know, played that game for a long time.
00:04:49
Speaker
How can I imagine your trading style? Like, what did you used to look for back then? On on which time frames did you trade? So back in the day, it was really like a um I was trying to rely on technical analysis a lot.
00:05:01
Speaker
So I was studying patterns like my favorite pattern was at Adam and Eve bottom signal where, you know, you get a quick V and then in a in terms of a bottom formation and then start a new trend and and double tops and Divergences.
00:05:16
Speaker
um And I was really trading technical patterns and it like wasn't working super well, but it was working, you know, like the hit rate wasn't high, but it was just it would when it worked, it worked really well. And then that's when I started to like.
00:05:28
Speaker
at at Over the last 10 years, I probably have tens of thousands of hours of screen time. So today my strategy is like, I've seen this before, you know, like watching the order book, watching absorption, watching perps leading spot selling, you know, it's kind of a culmination of so many things I've seen over so many years.
00:05:46
Speaker
I'm still a directional trader. I don't really do much arb trading. i have, I've done very well arb trading because I've done it so little that I'm like really selective with my ARB spots.
00:05:57
Speaker
I recently smoked Kraken for an ARB, which was hilarious, um like two months ago. Turned like 30K into 300K in like four minutes. It was sick. um That was probably my best ARB trade. But like I'm not, I don't really chase those inefficiencies. I'm really just like a directional speculator in the sense that I chase momentum. I fade stalls, right? Like I'm pretty good at,
00:06:21
Speaker
choosing moves that are real versus fake versus like a move or a spotlight move. And it's kind of like redefining my hedge as the market shifts. Like, for example, last year, the easiest edge to develop was like chasing Coinbase.
00:06:32
Speaker
and When Coinbase was like leading spot bid pretty aggressively and there was a premium, you could just be like max long and um get like really good scalps out of that. So my edge always defined is always like redefined as the landscape changes. um But really, like the core principle of my trading is just directional ah leverage speculation, like straight
Crypto Market Changes and Future Outlook
00:06:55
Speaker
directional. I really don't don't like try to capture basis or any of that stuff.
00:07:00
Speaker
How do differentiate between like a real and a fake move, as you just called it? It depends on the landscape. I mean, so last year, like what I would consider ah ah a real move was a spot led move by normally Coinbase. This year, a great example of that is Kraken and Bitminer. So like they have a partnership and you can see when Tom Lee executes on Kraken sometimes, right? And the same you could see when like Michael Saylor was executing on Coinbase and like that was happening, it was really easy to chase that kind of move. A fake move, what I would consider is like a a huge open interest increase with the perpetuals lead on like not sticky exchanges. So like I would consider my traders is not so sticky.
00:07:41
Speaker
They put on like $100 million dollars in open interest in a really short amount of time. I expect it to close out in the next four hours. Like no one's no one's swinging there. Right. Meanwhile, if I see $200 million dollars bid on Coinbase spot, I'm like, all right, well, this is probably they're probably not going to puke that in the next 10 minutes. So maybe I can chase it and maybe everybody else will chase it and there's a trade there.
00:08:01
Speaker
So it's really just defining like who's the buyer, like who really is bidding? Yeah. Are they using leverage or not? um That's what I define as real versus fake. How do you see the landscape changing over the years? um You just mentioned Coinbase and stuff like that before, but nowadays the market is also driven by ah ETF flows, I guess, through Coinbase and that sort of stuff. And back in the day, it used to be way more perp driven through all of the the exchanges that we had. How did that change? Also, did Hyperliquid maybe play into that nowadays a bit more like other DEXs? Yeah, it's really interesting.
00:08:37
Speaker
There's a few ways we can approach this conversation. I'll start by saying that
00:08:43
Speaker
The landscape has shifted immensely because there's a lot of leverage. Like there's always been a lot of leverage in the system. We saw that with FTX and Alameda. ah But now we have a different format of leverage, which is what we call these DATs.
00:08:56
Speaker
So a lot of the move last year was kind of driven from FOMO, froth and dat buying into like weird shit. Like we were seeing avalanche dats, like who the fuck is holding onto to AVAX coin, right? Yeah. Like copycat on copy. Like everybody wanted to recreate what Michael Saylor did. And that's why things got last year. And yet you're going to start to see an unwind of that. And we already saw it unwind over this last 60 days, really.
00:09:19
Speaker
A lot of Ethereum dats unwound and it's reflecting in the price, top down 10 billion. So it's it's it's not like the leverage disappeared, but it reformatted itself as to like an appropriate form of leverage, really using investor money in a sense and ah um offerings and such. But the main concern with the landscape at the moment for me is that DATs are still extremely exposed.
00:09:45
Speaker
Um, and in theory, they don't really have, I made a tweet about this like four months ago, five months ago when we were like maximum froth and everybody was like excited. And I was like, this is like actually really concerning because although they may not have mechanical liquidations, they still have a board of directors, right? They still have investors. They have, shares um, whether it's a mechanical liquidation or the board saying we have to fucking unwind these books, they have to sell.
00:10:12
Speaker
No one wants to incur 90% drawdown and 80% drawdown. And you get like a really and intense domino effect. And a lot of people are calling me crazy. They're like, oh, Michael Saylor. Michael Saylor is least in my concerns, but like all these other dots like, oh, they don't have liquidations. I'm like, well, they may not have a mechanical liquidation, but they sure as hell have a team who's going to say, maybe we have to unwind these books for the interest of our shareholders.
00:10:35
Speaker
um So that is still a risk in the books that isn't finished. And um if we're not trading much higher in the next 30, 60 days, then we'll probably see more refraction from that risk.
00:10:49
Speaker
um Although, i'm like landscape-wise, I'm extremely bullish. I don't think the space is going anywhere, but I think there's a lot of, a lot of extinction to be had before coins to trade hands, um, before we see some, you know, proper upside again.
00:11:06
Speaker
So it's gone from like really niche group of speculation to like institutional corporate format of and speculation. And they have caused more problems than benefit in my opinion. Yeah.
00:11:23
Speaker
I think it's quite interesting that even though we're kind of, ah we we are pretty much in a bear market right now, the Bitcoin dominance is still ah hasn't really increased again like it usually does. Or it pretty much did over like the whole bull market even apart from when that came into play and like started buying altcoins.
00:11:41
Speaker
Yeah, I mean, that was crazy. Like buying maximum tail risk asset Bitcoin. And froth is normally rewarding, but like not towards the end of it. Yeah.
00:11:52
Speaker
Human behavior. It's always the end when that kind of shit happens. It's nothing new. I've seen it, you know, with the dot com bubble all the way up to here. Every format is just a different form of speculation. It's just a different product for people to play with.
00:12:06
Speaker
um And I think a lot of shit goes to zero. Like we have like story protocols, a little multibillion dollar protocol and Why? You know, we have we have billions of dollars locked up that don't exist.
00:12:20
Speaker
Yeah. um but fully A lot of fully diluted values that will just wither away and with unlocks and no buyers. And this is going to happen everywhere. So it's no it's nothing new. We're like we saw this in 2018. We saw this in 2019. It goes to zero.
00:12:35
Speaker
And like, you know, the top ten may shift around. But like Hyperliquid, now that we, you know, since we brought it up, kind of created a whole new form of perpetual speculation.
00:12:47
Speaker
It's not that they created it, but they really helped the public adopt it because as you can see, OG whales are, you know, depositing billions and billions. And kind of telegraphing what they're doing.
00:12:58
Speaker
So it's changed the social aspect to like Garrett bullish getting liquidated for 700 million last week was fucking crazy. Um, and that would have never happened if it weren't for hyper liquid.
00:13:09
Speaker
Yeah. So there's a lot more transparency. Um, but it's It's interesting to see where it goes. I think Hyperliquid is going to be a top 10 token and top 10 platform for the next four years.
00:13:24
Speaker
Yeah. the charge and bringing perpetuals to traditional finance. And that's going to create a massive basis trade. So there's a lot of inefficiency with this new product that you know traditional finance gets to capture.
00:13:40
Speaker
Mm-hmm. There's going to be a nice bridge and gap crossing between what we call DeFi and TradFi right now. I think it's ultimately extremely bullish for this space. It's more bullish for stable coins. More stable coins are going to be printed.
00:13:55
Speaker
um But with stable coins comes you know more money into the landscape to then for people to speculate elsewhere. Can you maybe expand a bit on why you're so bullish on the space? Because right now many people are very bearish, obviously. And also it seems a bit underwhelming how Bitcoin performed versus everything else in the last couple of months.
00:14:18
Speaker
Well, it's concerning as well. so let me try my Let me change my my wording. I'm fairly bearish right now. um My macro outlook is ah it remains unchanged.
00:14:29
Speaker
We're seeing a lot of institutional adoption, but not in the ways people expected. um More with actual like ecosystem layers and stable coins. So the institutions are here and they're using using the networks and there will be network effects from it all.
00:14:47
Speaker
But like they're not buying dog with hat, right? Like no one's touching these shit, these shit coins. Yeah. So I'm extremely bullish on more money like crypto right now is like our Bitcoin's market cap is 1.4 trillion, 1.5 trillion, something along lines, I think.
00:15:04
Speaker
Yeah, I think so. Gold is like 15 trillion. Right. So there's a massive gap of closing. And I don't look at Bitcoin as really like a sovereign um store of value as much as I used to. But I look at it as the introduction to the entire space.
00:15:21
Speaker
So there's still a lot of gap to be closed. Mm hmm. And I think. With that comes many more products to be to be born or adapted or you know to evolve um to what users want. right And like perpetuals, I'm extremely bullish on perpetuals.
00:15:40
Speaker
yeah My genuine outlook is that, do you remember what happened with GameStop and Robinhood four years ago, five years ago? If perpetuals existed back then, they would have been maxed out by retail, right? And they existed, but not at like a TradFi level. yeah Options are such a complicated product, right? You're talking about five plus variables. Like you can have the right idea, be in the right direction and still not make money because you didn't weigh out all your variables. Yeah. toolss
00:16:11
Speaker
Absolutely simplifies being directionally speculative and winning or losing, right? Like as long as you don't get liquidated, you're winning. And that changes for that changes the the landscape for retail completely. Instead of trying to figure out an expiration with a strike, what's my gamma, you know, like really trying to understand options, they can just hit up or down and slide the large bar.
00:16:34
Speaker
And once we introduce that to retail in the US with regulation, which is inevitable, right? Like the US is gonna have to regulate perpetuals. It's inevitable. The next bull market's gonna be fucking insane.
00:16:45
Speaker
um I think every single person is going to adopt a perpetual on their phone and just say, hey, I want to buy Tesla. I want 5x leverage.
00:16:57
Speaker
All I need to worry about is my liquidation. That's going to bring so much volatility to the to the to the entire ecosystem, but it's also going to print a lot of generational wealth with people who hit it use it correctly.
00:17:07
Speaker
And it's going to be 10 times easier to use than options, right? Extremely easier. So with regulation in the U S we're going to see an insane uptick in speculation.
00:17:20
Speaker
And that's obviously going to inflate the market because leverage is whether it's in the form of perpetuals or something else adds fake value to markets.
00:17:31
Speaker
Yeah. And with all of retail having access to perpetuals, it's going to be insane. So. whatever Whether it's Hyperliquid, whether it's NATO, right? Whoever it is, there's going plenty of platforms, even if it's Robinhood, right? Let's say Robinhood introduced directional perpetuals. Mm-hmm.
00:17:50
Speaker
That is the next cycle for retail, in my opinion. And that came from us, right? That came from Arthur, which is the exciting part. um It's those types of events that make me extremely bullish on the space.
00:18:05
Speaker
And whether it generates revenue back to hyperliquid or to NATO, whatever it is, that money comes back into the ecosystem at some point. Why do you think the crypto ecosystem is better positioned than like TradFi players? I guess you can make an argument that we're further into the infrastructure and all of that, but why it won't Perpetuals, for example, just get eaten up by the the big institutional players rather than being brought on chain? Really good question. um I think there's going to be a split, right?
00:18:35
Speaker
And Perpetuals will come to like the to the Fidelity's, to the E-Trade's, right? But there's something novel about ah the decentralization of of like having the money in your wallet rather than like custodied by Fidelity. And that's why it all ties back into crypto and the narrative of what we've built over the last 10 years.
00:18:56
Speaker
It's as a user, I can literally have $100 million dollars sitting in my wallet and then I can withdraw it and no one's going to stop me. Right. I can I can cross border. can really it's just like my autonomy to make decisions with that finance. Like if I'm on Fidelity and I want to deposit 100 million dollars, we're going to get some calls. going to have to hit the bank up. That's not going change. There's still ah billions and trillions of dollars within traditional finance products that will stay there and they'll be able to capture it leverage.
00:19:27
Speaker
But like the guy who's just, you know, fucking sports betting and like ends up with an extra 50 grand, where is he going to go? He's not going to go to Fidelity. Right. He got paid in stable coins. He's going to keep it in the ecosystem.
00:19:40
Speaker
Yeah. So I think they'll both exist. And as more people realize that, or like as the younger generations start to make more money, like they're gonna keep their money here.
00:19:52
Speaker
Trad file will get paced out here. They'll grow together. But I think ultimately more end up coming to the decentralized side of the world. um And we're already seeing that.
00:20:03
Speaker
Like, we're we're already seeing a massive shift towards stablecoins. And TradFi is not harnessing stablecoins, like at least TradFi venues, right? Like the Fidelities, that the E-Trades, the JP. Like, JP's trying to, but you can't really... you can't seamlessly interact with other exchanges, foreign exchange currencies and...
00:20:27
Speaker
platforms with your SPACs core on fidelity, right? As you can't be able.
Advisory Role and NATO Exchange
00:20:33
Speaker
Um, so that's why I'm like ultimately bullish on, on and us not going anywhere as a space. It's really, comes back to that, like decentralization. i know a lot of it's centralized in theory, especially these perplexes, but like the, the narrative of like, this is my wallet, my money.
00:20:51
Speaker
I think HIP3 markets have been a really good example of that as well, yeah because ah even though people sometimes say, like, if you have a normal broker account, it's obviously a better, more liquid, less fee experience. But for me, like i I've tried to create an, what's it called?
00:21:08
Speaker
Interactive brokers account before. and um they just like demand so much paperwork that i kind of gave up and then i was like hey i'm already i already have money on hyperliquid and stable coins so it's like infinitely easier to just trade on hyperliquid or the dexes and there's a massive basis trade between the two right um there really is there's still price inefficiencies between venues that you can capture using both Right? Like if I have money on a traditional spot, so say I'm holding a bunch of Tesla and there's a massive negative funding on hyper liquid or vice versa. Right?
00:21:43
Speaker
Uh, you can just carry that trade through both them at some point. I was doing that for a little bit. It was like very little, just, just for fun. Um, and it worked.
00:21:55
Speaker
So that like with these new products comes many inefficiencies to be captured and the money's going to come and try to capture it.
00:22:06
Speaker
I think it's a good point to talk a bit more about NATO because um that's also part of the reason why you're here today. yeah And you are an advisor? um Yeah, both and really how it started was about three, four months ago.
00:22:19
Speaker
They reached out to me. um Vertex was the original product. It was acquired by Kraken Inc. and assets were merged over, engineers were merged over.
00:22:31
Speaker
And they wanted, you know, to be involved with having their own native Perfstex. So they reached out to me like at the end of this all, they built it, you know, months and months, years of work. And then at the end, before going live, they reached to me they're like, hey you're a massive perpetualist trader. Like, you want to give our product a try?
00:22:49
Speaker
I was like, yeah, for sure. Let's talk about it. So for like weeks, you know, I was just kind of tweaking the product, um UI changes, UX changes, liquidity de demands, just kind of guiding them with like what's competitive in the space. Right. Because there's really good competition. Hyper liquid are crushing it.
00:23:06
Speaker
So to catch up to that is it's very difficult, but it's possible with a lot of resource and time. And that was the goal was like, can we can we Close the gap because, you know, NATO was here and Hyperliquid was here.
00:23:17
Speaker
Mm hmm. And then like two months into the process, I was like, this is going to be fucking huge. And it was like really supposed to be just a short term, like, hey, test our product. We'll give you a little bit of money. Yeah.
00:23:29
Speaker
um You know, we'll give you margin. Fuck around on the product. Try to break shit. And then it's into like. I want to be here as a little bit of a longer to term oriented relationship.
00:23:40
Speaker
You know, I'll take on a strategic advisory role for the next few years. Let's let's make the best place. And there will like, so I had tried this with other exchanges in the past. And it was really a corporate ladder and like NATO's response time and willingness to listen to the user was extremely bullish.
00:23:58
Speaker
It was like I had something to be changed. It was changed overnight, you know, and like implementations like this. And it was back by, you know, ink and cracking. So to me, it was bug breaker to take on a strategic long-term relationship.
00:24:13
Speaker
So now it's been, don't know, four or five months and um the exchange grown a lot. love There's, there's. many complications and hiccups and road bumps along the way.
00:24:27
Speaker
um but it has absolutely come from a small venue into a much larger venue now. And, and I'm really bullish for what we're building moving forward.
00:24:38
Speaker
Um, you know, that's, it's been a ball. What in particular makes you bullish about it apart from like the fast, response time to issues and feedback and stuff like that, especially in comparison to something like Hyperliquid.
00:24:51
Speaker
Yeah. Number one is latency, right? It's strange to me. Hyperliquid latency, base latency is 300 milliseconds. We're operating at five to 15, which is obviously you can get better latency from Hyperliquid if you're direct and working with them, build their codes, whatever. But a base latency for us is five to 15 milliseconds, which is good. Even lighter, I think is 50 to 100 milliseconds.
00:25:15
Speaker
So latency is number one. That was there before I got there. That was like, here here's our advantage. Number two was unified asset margin. I know Hyperliquid is working on this and probably later is too, but we really had it first.
00:25:29
Speaker
um From the day I was there, it was like you could deposit into the and NLP and then get a token and that will be used as collateral for your perps trading. Yeah. Great for somebody who wants to farm an exchange um for what could be an airdrop or, you know,
00:25:43
Speaker
for another base of word of trade. So unified asset and latency were like number one. Number two was they were willing to give me the liquidity I needed. So like they came to me and they were like, Hey man, what kind of size you expect as a directional idiot? Because like I'll just market it large clips and hope I don't die. Like I'm a very like momentum chasing taker.
00:26:07
Speaker
Yeah. And I was like, dude, I need under five bips on a million dollar market clip and BTC or ETH. And we're like, okay, let's do it. So it was like, they they went above and beyond to try to make liquidity work.
00:26:19
Speaker
Obviously still working on it. Like, you know, it's been a few months, but the goal is to be able to scale to a point where I can fire $5 million dollar market clips and not lose more than five to 10 bips.
00:26:31
Speaker
um So. It's not that they are have closed the gap, it's that they are working so fast to close the gap much faster than exchanges and they will be adding, you know, real world asset perps, stock perps, commodities, foreign exchange, the whole nine.
00:26:52
Speaker
um their direction that they're going in is wonderful. And my goal as an advisor is to continue to use, like I'm a product user, right? Like yeah I want the best venue for myself.
00:27:04
Speaker
And if the venue works very well for me, there's a good chance. Like I represent a great cohort of the audience that's using the venue so I can help them grow. Um, but if, if it's working for me, then that's, that's a good sign that it's working for others.
00:27:19
Speaker
I don't know how much you can go into that, but do you know why they've managed to achieve such lower latency compared to the others? I don't know, honestly. So a little bit of context. I'm not on the web development side at all.
00:27:32
Speaker
yeah um And a lot of the what I will say right now is speculative. Like, why Hyperliquid so high? Like, surely they can bring it down, right? They're so far advanced. Same with Leiter.
00:27:44
Speaker
I'm not going to sit here and say they like sell order flow, right? Like lighter being no fees. Like I'm not going sit here and be like, oh, there's no fees because you are the fee being sold off in order to flow, whatever. Uh, I really don't know why these other, I think it's inevitable that they bring down the latency. They have to, to be competitive.
00:28:00
Speaker
Um, and I don't know how NATO has achieved it beyond, you know, hopping in on calls and hearing about it and not really retaining it, but it works. And that's kind of what's important to me. um If I had a little bit of a, you know, engineering background and break that down further, but I don't really, I'm a trader.
00:28:21
Speaker
see. you I guess at the end of the day, it doesn't really matter why or how, as long as it works properly. As long as it's real, right? Yeah. um What do you think is the differentiation or what will be the differentiation in the future? i guess latency is a huge point, as you said already, but I think a unified margin hyperliquid is going for that. I think Leiter just introduced it recently and then also extended, for example, is going for the vault tokenization thing and also unified margin and whatever. And every perp text is kind of like reaching a similar level, it feels like a bit. so
00:28:56
Speaker
This feels like a way of go ahead. Centralized exchanges did 2019 to 2022. So Arthur Hayes with Bitmax. to two thousand twenty two right so arthur haes with bitmax Every other exchange was just like a traditional margin exchange or spot exchange. And there wasn't much.
00:29:12
Speaker
When Perpetuals became popular, then all of sudden you had FTX. And all of these exchanges were pretty much the same exact thing. So it was really like, who has the deepest liquidity? Who's the quickest to innovate, right? Like who's going list the new shiny thing tomorrow morning when I need it, when I want exposure?
00:29:27
Speaker
Who's going to, you know, FTX introduces unified asset margin, but they did it horribly because obviously they were over leveraged. Um, they were allowing fucking clients LTV to be insane. You could take on insane risk with like fucking ah token that was worthless. Right? Like there was no reason for that to exist. So they, they showed us what not to do by bit introduces unified asset margin. But my point is all of these centralized exchanges essentially got to like the top of what they could be.
00:29:54
Speaker
There was like. Like if the top three were doing the same exact thing and it really became a preference thing. That's what I think is going to happen to Dex. It's the same thing, right? It's ultimately going to be race to zero on fees. So like, who's going to be the lowest, um, who's going be the fastest in execution.
00:30:11
Speaker
Who is going to have enough liquidity for, you know, institutions to take a chance directionally. um But there's going to be like a flat rate standard across the board and it's all within like 5% of each other in terms of like depth.
00:30:28
Speaker
fees and really UI UX is going to be pretty, I think, synonymous across the board. And then there's going to be little blips of like this exchange takes a little bit of market share because they introduced a new product, right? Something new that no other exchange has. And then all the other exchanges added and then everyone's again the same. And then this exchange introduces this, you know, so it's just going to be like a race to kind of outperforming until there's a completely new innovative product, um which there is going to be something like the the day perpetuals are born with BitMEX.
00:30:56
Speaker
was revolutionary, but and people didn't really realize that's going to happen again in the next two years. yeah There's going be some sort of new product or instrument that's born that revolutionizes how a perpetuals work, or maybe it's not even perpetuals anymore. And then that's when you start that race again. But ultimately, they're all going to be right here. And if you can't keep up to right here, then you disappear and move on. And they keep growing forward.
00:31:20
Speaker
So it it's probably going to be the like five Dex's. Mm-hmm and security, right? Like we saw what happened with lighter and hyper liquid in the past.
00:31:33
Speaker
Yeah. With how they were, you know, exploited for vulnerabilities and pools were drained or HLP was drained or whatever. And like, how do you address that? Right? Like you pay users back. It's all, it's all kind of a, a big circle of taking care of your client.
00:31:48
Speaker
And if whoever takes together client better is probably going to keep their client longer. Mm-hmm. I was just about to ask ah what's your opinion on why Hyperliquid has remained so sticky for people, even though they don't really have a at least explicit incentives anymore yeah ah versus all the other venues or all the other perp deckses. They do have explicit incentives or maybe Lighter doesn't anymore right now, but like they had for a long time. So why do people still prefer Hyperliquid mostly over other ones?
00:32:20
Speaker
Number one, in my opinion, is at this point, it's a ah layer of trust. Hyperliquid did a really cool thing with that airdrop. One, they created generational wealth and printed billions for people.
00:32:31
Speaker
Two, they proved themselves in times of darkness, you know, when maybe there were, the exchanges went down or h HLP was targeted.
00:32:42
Speaker
um They covered their tracks really well and and always, you know, supported the client first. And then three, um the domino effect of a virus in in the sense that like,
00:32:55
Speaker
OG whales, like the headline of an OG whale who's been dormant for 10 years, depositing Bitcoin to hyper liquid, says to the public where they're taking their money and it's no longer dance, right?
00:33:07
Speaker
um So it's been like create generational wealth, prove yourself as a product, right? The product works. You don't have to prove anything else. You've already won the whales. So like they don't have the best fee structure, like the the most expensive derivative exchange right now by far.
00:33:23
Speaker
Um, but they don't care, right? Because they're the leader and they like, there's a layer of trust. You pay a little bit of a premium for a layer of trust as the venue that the dormant whale deposits $3 billion. dollars Um, so they can charge a little more in my opinion, but if they don't adapt,
00:33:45
Speaker
And also they've been like the, probably the best venue for stock her so far. Yeah. i rio So they they're doing it right on that sense. Like if you want to get exposure to perpetuals for stocks, it's the best place to go. So many other changes that got it before them, right? Like I won't name them because I'm not trying to talk poorly of them, but a lot of perpstex is, perpstex has tried that and just.
00:34:12
Speaker
Piperly would have everything or else done already.
00:34:17
Speaker
I think that's ah part of the advantage though because I feel like other perpdexes could have a better experience experience for TreadFi assets because I think the other perpdexes mostly just use the same collateral or make it like easier to do that. And I guess Hyperlink will do the same now that they have Unified Margin and stuff. But I think the experience of having like different stablecoin pairs for the same asset kind of sucks.
00:34:42
Speaker
yeah I'm not really a fan of that. Yeah. Like why do we need a USTH and then USCC and UCT and whatever it's it's kind of, it just splits liquidity for no reason. Right. it's it It can just like lead people and who don't really know much into like weird directions, not understanding.
00:34:59
Speaker
Yeah. I think there's always going to be stablecoin competition um between the top dogs. And there's going to be many more stablecoins that come out soon, especially with governments getting involved.
00:35:12
Speaker
ah So that's not going to change, unfortunately. But there will be a leader between you know the top five. Yeah. she And you can see that with Circle, right? Circle just um created a partnership with Lighter on sharing because they want, you know, more marketing.
00:35:33
Speaker
So we'll see more of that. And actually, i don't i don't know if I should say that actually. Never mind. I just think it's nice that they have like, if the experience, I don't care which Davidcoin I use, obviously. don't think most people care. As long as it doesn't deep peg. Yeah, that's very important. But like, it's just nice if the experience is like smooth and you don't have to switch between them and whatever.
00:35:54
Speaker
While we talk a bit about incentives, um I don't know how much you can say about that, I guess, but I want to talk a bit about the points program. you And um also, I think NADL is not doing its own token, right? It's going to be an an ink airdrop.
00:36:09
Speaker
um I'll preface this by saying like, I'm in the dark for a lot, right? um I'm an advisor on product. I'm a user of products. And if they brought me into everything, then I wouldn't be a user of products and I would be blacklisted from being a trader. So I'm really the dark for a lot.
00:36:26
Speaker
I have no idea how the points program works. that's it It's a black box to me. I treat it as I do. a lot of people like they reach out to me, they're like, yo, how should I farm NATO? Mm-hmm.
00:36:37
Speaker
Like I'm not farming NATO. I'm trading. Right? Yeah. Like if you pull out my wallet address, I'm not doing anything weird. And I never did on Hyperliquid. I got a sick airdrop from Hyperliquid. I never did on Hyperliquid.
00:36:48
Speaker
I just always used it as a venue to trade because the expected value changes, right? Like if I know that I'm getting, in theory, a rebate from points, then my expected value is extremely higher than if I were to trade on Bybit.
00:37:02
Speaker
Yeah. Last year, like 10 billion on Bybit. which was retarded because if I did 10 billion on lighter, would have gotten an eight figure airdrop. And so towards the end of the year, as I was realizing this, like July, I'm like, oh my God, what was I doing? I could have, I could have been net negative the entire year on Bybit and still made eight figures.
00:37:21
Speaker
And so that's why I'm NATO, right? manylos case I'm not doing anything different. I'm trading, right? I'm trading curbs how trade and I'm being rewarded for it. hmm. How the points work, I'm assuming it's going to be whatever's best for the exchange. Right. hmm.
00:37:35
Speaker
So to me, like how I trade, I'm not scared of a smaller Token like say if I open Pepe on Edo and like the open interest is really low and the funding is skewed, like in my opinion, that's probably the best thing to trade because you're getting rewarded best for creating volume there.
00:37:53
Speaker
I could be totally wrong. It could be like all the volume or all the points are skewed for like Bitcoin trades. Right. But I just put myself in the perspective of like an exchange, like what would I want the user to do to me for me to reward them? And like, that's.
00:38:05
Speaker
Right. But I don't really have a strategy. i just trade. It works. Right. Like I'm doing great on points. um Obviously, I assume if I'm a fucking taker, then i get more points. Right. like So I really don't know how the points program works.
00:38:22
Speaker
um And for a good reason. you have any speculation or idea or whatever why there is no token? I guess that's kind of like one very differentiated feature from other practices. That is why I'm bullish.
00:38:38
Speaker
like the NATO experience. Yeah. Because most perpetual exchanges don't need a token, right? Like, why do you need a token? Like, there's fucking 30 perp decks competing for the spot and they all have tokens. And like, why do they all need tokens? They don't.
Challenges in Centralized Exchanges
00:38:54
Speaker
The difference for NATO is that NATO is rewarding users ink and ink is Kraken's layered too. So you're really betting on Kraken's, speaking of which Kraken,
00:39:08
Speaker
um You're really betting on Kraken's existence as a finance conglomerate, right? like are they going to be top dog with Coinbase?
00:39:19
Speaker
In my opinion, yes. I don't think, i think qua I think Kraken is going to, obviously I'm biased, but I think Kraken is horizontally expanding in a sense where they're going to be the number one Web3 and Web2 finance platform in the next two years.
00:39:35
Speaker
And so when I trade on NATO, I envision the fact that I'm capturing rewards, not for NATO, right? For Inc., which is,
00:39:47
Speaker
directly correlated with Kraken. hu That's why this this, to me, becomes a better long-term bet. Like, I won't name any of these other perpdexes by name, but like, why is that, why does this perpdex need a token, right? Like, is it a layer one?
00:40:03
Speaker
Is it really like an entire ecosystem or is it just a perpdex? hu So to me, that's what makes it a bit more bullish than some of these other venues.
00:40:16
Speaker
That makes a lot of sense actually. That that really is an insightful answer. I would just say no more no more questions like why perp decks need to points or like why why they need a token for the sake of all of our points. But yeah. And like I farmed almost every perp decks do.
00:40:33
Speaker
And me know what I do? I sell the token when I get it. I'm like, the difference is if I get my airdrop from Inc, I'm like, How did BNB do?
00:40:45
Speaker
BNB is a representation of of finance. yeah um That is kind of the approach I take as a thesis for this. It's like, well, this is a little bit different.
00:40:58
Speaker
Since we talk so much about the perp dexas in general, do you what what do you think about the future of centralized exchanges in the space? Why we already talking about? We just saw a really good example of that with Binance. They had $17 billion dollars in outflow in the last seven days, which is huge.
00:41:17
Speaker
Lots of rumors of insolvency probably generated that outflow. Um, it doesn't change the fact that it was outflow lack of transparency. And I mean, like they can publish, you know, proof of funds here and there, but like,
00:41:30
Speaker
I think there's been so many counterparty events like, for example, FTX that has created just left such distaste and distrust in centralized exchanges that it's hard to go back on that.
00:41:43
Speaker
And I don't think Binance is insolvent. I don't think Bybit is insolvent. I think they're very well capitalized and I think they're optimal exchanges. Like I love trading there. But I love being the holder of my tokens, right?
00:41:57
Speaker
Sure. They're deposited on Hyperlocut. Technically you don't own them, but like. the The facilitation streamline is just. Optimal for me. Yeah. um If I hit withdraw NATO, I know my tokens are, you know, contractually about to be withdrawn within queue.
00:42:17
Speaker
I've hit withdraw on Bybit or Binance and I've got hit with a face ID scan, facial recognition scan, tokens locked up in security, having to call my Bybit rep and do be like, dude, what's going on?
00:42:29
Speaker
Nothing. So um so
00:42:34
Speaker
It's really just like a no KYC, no overwhelming concerns of counterparty risk, you know, laws, code is law type of scenario.
00:42:47
Speaker
I don't think centralized exchanges are going to disappear by any means. I just think they're going to lose some of their market share, yeah which we're seeing.
00:42:57
Speaker
Which is kind of a good thing for the space as a whole, I guess. It's kind of popular to like hate hate on Binance right now, but it's also a bit understandable because they've ah not been doing too well. I think it's a bit stupid. Of course, we're like neutral and we we support every exchange, blah but it's a bit stupid how CZ always acts on Twitter. like he's yeah it doesn't even know how to use a wallet or something like that. And they now know that everyone is fighting them, then they're like blocking and then pushing back and saying it's both AI army or whatever. It kind of shows that they're a bit on the downswing, I guess, from from their previous position. Yeah, I mean, like they've definitely had market share.
00:43:34
Speaker
taken from them, you know, there's so much bullshit online. I don't know what to believe or what not to like. I really do think CZ has like the industry's best interest in mind. Um, but sure there's practices that have been committed by a lot of centralized exchange actors that can be considered malpractice pointing my fingers at him or, know, anybody from any centralized exchange. But in general, I speak on the fact that a lot of shady shit has been done.
00:44:01
Speaker
Yeah. I mean, as SBF, we can point fingers at SBF because he's been convicted and so far still in prison, thankfully.
Major Trading Loss and Recovery Lessons
00:44:10
Speaker
yeah yeah um i want to talk a bit more uh i want to swing back to a bit to to your trading because uh i want to go back to when you said that you blew up in 2021 and can tell the the story of what happened there and yeah that was a that was a very silly mistake i'm sure everybody can relate to um anyone who was a trader or is a trader or has any sort of
00:44:36
Speaker
you know, experience being on the side of a losing streak can can attest to this, but it was May of May of 2021. And I had, you know, was trading since 20, 2016, 2017. So I finally like started to build a real portfolio. It was like $800,000.
00:44:57
Speaker
And I was so strategic with it. Like I would never leave more than one hundred K in my trading account and I would take profits and withdraw them to Coinbase and to, you know, to spots where I would consider trading spots where I was just like storing coins and Bitcoin was at like.
00:45:15
Speaker
52,000 or something along the lines. And I was hosting spaces. And this is when like my Twitter was starting to blow up. I had like 700 followers and overnight I got like 10,000. And I hosted a space with like cred and think Kobe hopped in or whatever. A bunch of people hopped in at like 3am to talk about what was happening.
00:45:35
Speaker
Like 3, 4am I end the space and I'm like... I think there's about to be a massive crash in the next two days. So I'm going to take all of the money I've made over the last few years, with withdraw it from this, from Coinbase, from my ledger.
00:45:51
Speaker
And I'm going to, going to be smart. I'm going to put it on four different exchanges, four accounts, FTX, Binance, Bybit. know, I was like spreading it. And I was like, no, I'm only going to use 3X leverage on each. There's no way the market crashes more than 40%. And yeah,
00:46:04
Speaker
and The one that really got me was sushi was at like $20, $22 on Binance. And I deposited a lot of money on Binance. I think it was like half a million.
00:46:19
Speaker
And I did, layered bids on sushi from like 11 to 14. So was like, if it crashes 30, 40%, I'm going to get filled and I'm going to be stoked.
00:46:32
Speaker
Like I've seen this before. It's going to do one of the, right. And I wake up like four hours later. i was living with my mom at the time. We were renting a house together and she knocks at the door. She's your brother's calling you.
00:46:46
Speaker
And I'm like, I like roll over all fucking exhausted. I look at my phone and my phone is blowing up. Calls from everybody. Gainsey, fucking keyboard monkey, my brother. Sushi went from $22 $2.
00:47:00
Speaker
to two tallers and was back at 17 by the time I woke up. So I got fully filled on that wick liquidated in the second and I would have been in profit.
00:47:13
Speaker
And I like saw that and I was like, wow. And I looked at Bitcoin at XRP. I had like 70 grand left on my tx account out of all the accounts out of the 800. And was like, wow, I got fucking smoked.
00:47:29
Speaker
Right. Like full flash crash. Um, And I just like spiraled. I was like, holy fuck, everything I worked for for like, yeah, all these years is gone because I decided to take a chance. But I was young enough to where like i I could take a chance. I think I was 23 and like not, you know, it wasn't over for me. Like it felt like it was over, obviously. Yeah.
00:47:52
Speaker
um But yeah, I mean, fucking Binance was sued for that. There was a class action lawsuit specifically because really once was the only venue where some of these tokens like wicked 99% and then recovery.
00:48:05
Speaker
and the recover Um, so that's how I learned the hard way that flash crashes are possible. And, it took me a while to build back from there, but did did you receive money from that lawsuit?
00:48:21
Speaker
I didn't join it because i wasn't KYC'd on the account. I was scared and young. I didn't really know what to like, what to do. i don't know how it ever ended. i don't know if they paid out or not.
00:48:34
Speaker
How did you like mentally recover from that? It was rough, dude, but thankfully I had like a really, so ah really supportive like friend group, right? Like I was starting to make friends in the space because I was building like followers.
00:48:49
Speaker
Mm hmm. so I, uh, I had guys who were just like, Hey man, like, like for example, Loma crypto, i never really talked to him. He'd get me. He's like, dude, send me an address. I'll help you. i was like, no, was like, I don't want the handout. Like I just want support, you know, like tell me your story. Have you been here before? i was young.
00:49:09
Speaker
So like, and I had a really supportive girlfriend who I'm still with today. was like, don't worry. I'll pay the bills. You know, like, Everybody was kind of had my back. And i was just like so young that I was like, I'm fine.
00:49:25
Speaker
Like, sure, it sucks, but I'm fine. Mm hmm. And then once I built it back, you know, I've been in similar spots where I got really low. in my net worth again, not like it's that low, um but like relative drawdowns.
00:49:39
Speaker
So my obviously my like belief in myself was number one. Like I've never doubted my ability and anything I've ever done anything I've ever done. I've just always believed that I can do it.
00:49:51
Speaker
um So that was like part of it. But it was fucking horrible for sure. You know, you go from like being 23 with $800,000 to zero I just bought a house, dude. I bought a house.
00:50:04
Speaker
I had a loan out on the house on the plane. I bought a plane a 50 loan on it. And I have like, I don't know, maybe my expenses at this time were like 4K, 5K a month.
00:50:17
Speaker
I'd like 12K left. and I'm like, holy fuck, I have three months to figure my shit out. like I really, I really got to figure it out. So but like that summer that was in May. By September, like, spun that 12K into 70 on FTX.
00:50:31
Speaker
was like, all right, I'm back. Like, this is... I have more than five months now, you know, I can calm down. And then just started playing the game again. So you just went right back into trading? Mm-hmm.
00:50:45
Speaker
Which I shouldn't have. I think I should have taken a break. Yeah. But normally when you have, like... Extinction events like that is when there's a lot of opportunity. So like if you have, if you have margin or collateral and like an extinction event, like we saw recently, you can really bid, you know, dislocations and a lot of money. And I knew that. And that's like the most frustrating part is like, yeah, kind of a real dislocation. If you have capital, you can print, like for example, in 2020, when BitMEX, when Bitcoin crashed, COVID crashed, like the There was an insane dislocation on on BitMEX where you could long 100x BTC and not get it. Yeah.
00:51:23
Speaker
and Like if you had money, you could infinite print. So it's like hard to be like super jaded and all fucked up, but know that there's something that you can do in that moment to try to fight back. Mm hmm.
00:51:35
Speaker
And that's just kind of like what I did. Have you learned your your risk management lessons since? Dude, you'd be surprised like I'll say yes. Like I'll never be in a position where I go to zero, but like I still will take insane losses, like 40% portfolio losses trying to like double up in weird spots.
00:51:58
Speaker
So like nobody would say that taking a 40% drawdown is risk or proper risk management, but I'm also like trying to win, you know, and sometimes it takes a big risk to to get to that next spot.
00:52:11
Speaker
So yes, my risk management has shifted a lot. Like I always have runway now, like I have years money in the bank so that I can survive if shit hits the fan. I've bought assets that I can liquidate if shit hits the fan.
00:52:21
Speaker
ah But in terms of like my trading portfolio, it's still pretty risk aggressive.
00:52:28
Speaker
What are some of the lessons that you learned over the years for ah through blowing up and then everything that you've been through that you can give to people? Yeah. Number one is always believe in yourself.
00:52:39
Speaker
Like that was like, if you have any self doubt or fear, then you're probably not going to succeed. Whatever it is, right? Whether it's trading or business, whatever. You cannot have any fear because fear is immediately a blocker for like getting to
Advice and Podcast Conclusion
00:52:52
Speaker
the next point. Mm-hmm.
00:52:54
Speaker
Uh, taking a chance when you're young, like really take a risk when you're young, like even under 40 still young and dear to take a risk. Like, If you have a chance, but you're scared, take the chance.
00:53:08
Speaker
Risking is better than regretting. Regret is like probably the worst thing ever. Like if you look back, you're like, fuck, i was 20, 27. I should know, I should have quit my job and tried that thing I wanted to try. Yeah.
00:53:20
Speaker
Those types of things. Trading advice. I actually tell everybody that they shouldn't trade and they shouldn't learn to trade. Investing is 10 times more efficient, right? Like 99% of traders lose. Like you're not gonna beat the market. I don't think I'll beat the market on a 30 year basis.
00:53:36
Speaker
Over the last 10 years, fuck yeah, I had two grand in my name and I've turned into several millions. Kind of hard to do that by just investing, but like, I don't think I can replicate that forever. And I think 99% of people can't replicate that at all.
00:53:48
Speaker
hu So I tell people not to trade and just invest, just be be a passive investor. Just like dollar cost average on a 10 year basis, earn you know earn income and dollar cost average and you'll win always.
00:54:00
Speaker
Assets like these are programmed to go up forever. Because the debasement, the denominator is worthless. So like, don't trade, don't try and be trader. Like it's not a glamorous lifestyle. It's really difficult.
00:54:11
Speaker
It's really taxing mentally, physically. Um, it's not for and everyone. It's really not for anyone. There's like a select number of people in the world who, who know, like have proper strategies on trading.
00:54:23
Speaker
Um, so stay away from. you know, that type of lifestyle and two stay away from leverage. Leverage is like the downfall as, as Buffett said, ladies leverage leverage and liquor.
00:54:37
Speaker
Leverage can be extremely tormenting and dangerous. Easiest to lose all is with leverage.
00:54:45
Speaker
If you decide to trade though, of course do it through Insilico tournament. I was, I think I was like one of Insilico's biggest traders last year in volume. I'm not gonna lie.
00:54:56
Speaker
Shout out Flood. you we We appreciate that. So yeah. would Would you ever stop trading then? If you say you're you're probably not gonna beat the market forever? question. I think the definition of trading changes, right? Like I've always trained and look for that sort of arbitrage and value and like inefficiency in market.
00:55:17
Speaker
But like, I think the next step for me is like private equity, um real estate, right? It's not like, or like, it's not really like perpetuals. um Maybe it is, but really it's gonna be more mature products.
00:55:33
Speaker
Things that I'm still trading, right? Like I'm going to buy a property but for a million to try to sell it for two in the future. Like, you know, buy a handful of companies and then, you know, restructure them and shave off expenses and sell them for more. Right. So like, it's always a form of trading, ah but it's not going to be the trading that I do right now.
00:55:54
Speaker
I see. Mature, mature evolution. Yeah. yet You know?
00:56:00
Speaker
I think that's a good point to to wrap it up. We've covered a lot of different interesting topics. I think ah you you already dropped your wisdom. I usually like ask a bit if if people want to to drop any final words or whatever, but I think you already it did did quite well. trade Trade on native. Yeah, trade on native. trade chain is ah Yeah.
00:56:20
Speaker
Thank you very much for coming on. This has been fun. And the goodbye, everyone. Thanks for having me.