Flippening - For Crypto Investors

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The Fascinating History of Crypto Exchanges w/ Nathaniel Whittemore - Part 1 (Ep. 0057) Oct 21, 2019

Show notes

This episode is the first installment of our two-part series on the history of crypto exchanges. I’m joined by Nathaniel Whittemore, freelance crypto communications strategist and curator of Long-Reads Sundays on Twitter.

This conversation is part of a larger series we’re doing on crypto exchanges. As part of this series, we’ve already interviewed Binance CEO Changpeng Zhao (CZ), Ivan Poon from Switcheo, & John Jansen from Deribit, among others.

Nathaniel and I are teaming up to write an article about the history of cryptocurrency exchanges.

In this two-part series, we explore the main ideas from that article and share our understanding of how cryptocurrency exchanges and the crypto exchange ecosystem have evolved over time.

This conversation is broken up into 5 chapters:

- Chapter 1: The pre-history of Bitcoin and how regulation from that era still affects us today
- Chapter 2: An exploration of the first crypto exchange that launched only a year after Bitcoin went live
- Chapter 3: The Mt. Gox story and the fallout caused by that hack
- Chapter 4: The rise of ICOs and how that led to the ascendancy of Binance
- Chapter 5: Current trends in the crypto exchange ecosystem

In this episode, we cover chapters 1 through 3. In the next episode, we cover chapters 4 through 5.

In this episode we discuss:

How Binance has continued to innovate even at the risk of self-disruption
Patterns in the history of exchanges
How decentralization will change regulation
What Mt. Gox was and how it got hacked

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How Deribit Does $500 Million in Real Volume Per Day w/ John Jansen (Ep. 0056) Oct 02, 2019

Show notes

Welcome to this conversation with John Jansen, CEO of Deribit.

Deribit launched in 2016 and is one of the first futures and options crypto exchanges. At the time of this recording, Deribit does half a billion dollars of (real) volume per day.

I should also note that Deribit has completed a “deep data integration” with Nomics.com. With this integration, Deribit receives an A+ crypto exchange rating.

This interview is part of a series of interviews I’m doing with exchange operators. As part of this series, we’ve already interviewed Binance CEO Changpeng Zhao (CZ), Binance CFO Wei Zhou, as well as Ivan Poon from Switcheo, Alex Wearn from IDEX, and Sam Bankman-Fried from FTX.

If you run a top 50 crypto exchange by volume, I want to speak with you as part of this series. Please reach out to set that up.
My conversation with John Jansen is broken up into 5 chapters:
- Chapter 1: What derivatives options and futures are
- Chapter 2: The current state of crypto derivatives exchanges
- Chapter 3: The current state of Deribit
- Chapter 4: Brand differentiation and growth hacking for crypto exchanges
- Chapter 5: An exploration of the future
In this episode we discuss:

Deribit’s origin story
How Deribit is funded
Why most exchange operators don't really use social media
How leverage changes as your position increases
How crypto derivatives exchanges differ from derivatives exchanges in traditional finance
Why more people have started spot exchanges versus derivatives exchanges
How Deribit differentiates itself from the rest of the market
How the crypto derivatives space has evolved over time
Derivatives contracts volume versus spot exchange volume
Why Deribit attracts institutional investors
The number of Deribit users
Deribit’s revenue figures
Why Deribit uses geofencing
Deribit’s future developments
What Mass Quote Protections (MQP) are

Sponsor

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The Nomics API offers squeaky clean and normalized primary source trade data offered through fast and modern endpoints. Instead of having to integrate with several crypto exchanges, you can get everything through one screaming fast fire hose. If you found that you or your developer have to spend too much time cleaning up and maintaining datasets & ingesting market cap data, instead of identifying opportunities or if you’re tired of interpolated data and want raw primary source trades delivered simply and consistently with top-notch support in SLAs, then check us out here. Or if you’d like to order historical cryptocurrency market data as CSV exports from top exchanges, email us at sales@nomics.com.

Part 2: Insane Growth of Derivatives Exchange FTX w/ CEO Sam Bankman-Fried (Ep. 0055) Sep 21, 2019

Show notes

Welcome to part two of this series on crypto derivatives trading. Once again, I'm joined by Sam Bankman-Fried, CEO of FTX, one of the fastest-growing crypto derivatives exchanges in the space. FTX launched in April of 2019, and at the time of this recording, does around $100 million dollars in daily volume.

Sam is also CEO of Alameda Research, a quantitative trading firm that provides liquidity to crypto markets worldwide. Alameda manages over $100 million in digital assets and trades $600 million to $1.5 billion dollars per day across thousands of products. They are responsible for approximately 5% of all (legitimate) crypto exchange volume.

This deep-dive is broken up into 7 chapters:
- Chapter 1: Quantitative trading
- Chapter 2: The relationship between Alameda Research and FTX
- Chapter 3: The current state of crypto derivatives trading
- Chapter 4: The similarities and differences between leveraged volume and spot market volume
- Chapter 5: The current state of FTX
- Chapter 6: Growth hacking and brand differentiation in the crypto derivatives exchange space
- Chapter 7: An exploration of what the future might look like

Chapters 1 through 3 were covered in episode 54. In today’s episode, we focus on chapters 4 through 7.

In this episode we discuss:

Why leveraged volume and spot market volume are essentially the same
Why the FTX and Alameda Research teams are distributed throughout the world (Antigua, Tokyo, Hong Kong, etc.)
How US regulators approach the crypto space differently from other countries
Why emerging markets with less developed financial ecosystems are quickly adopting crypto
What FTX is doing to differentiate their platform in the crypto derivatives exchange space
How much revenue FTX is currently generating
The importance of WeChat for building crypto communities in China
Why co-location is not a big deal yet but will eventually be in the future

Sponsor

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The Insane Growth of a Crypto Derivatives Exchange That Just Launched 4 Months Ago w/ Sam Bankman-Fried from FTX - Part 1 (Ep. 0054) Sep 14, 2019

Show notes

Welcome to part 1 of this series on crypto derivatives trading. I’m joined by Sam Bankman-Fried, the CEO of FTX, one of the fastest-growing crypto derivatives exchanges. FTX launched in April of 2019, and at the time of this recording, does around $100 million dollars in daily volume.

This conversation is broken up into 7 chapters:

- Chapter 1: Quantitative trading
- Chapter 2: The relationship between Alameda Research and FTX
- Chapter 3: The current state of crypto derivatives trading
- Chapter 4: The similarities and differences between leveraged volume and spot market volume
- Chapter 5: The current state of FTX
- Chapter 6: Growth hacking and brand differentiation in the crypto derivatives exchange space
- Chapter 7: The future

In this episode, we cover chapters 1 through 3. Next week, we'll close the conversation by covering chapters 4 through 7.
In this episode we discuss:

How FTX got started
The opportunities in cryptoland versus traditional finance
How quantitative trading works
How the infrastructure for crypto investing has evolved over the past few years
Blind spots to avoid when creating trading bots
Why there are so few players in the derivatives and options platform space
Rules, regulations, and norms for liquidity providers
Why FTX wants more liquidity providers on their platform
The 4 components (which Wall Street has) that are missing from crypto derivatives trading
The difference between a future and an ETF
How FTX handles outlier detection

Sponsor

Nomics’s Cryptocurrency Market Data API

Binance's Fiat Businesses (e.g. Binance US) w/ CFO Wei Zhou - (Ep. 0053) Aug 22, 2019

Show notes

Welcome to part 2 of our series on Binance, the world’s biggest crypto exchange based on real trading volume. Nomics has given Binance an A exchange transparency rating, which means that Binance provides highly audible and granular data about trading activities with complete history. On most days, they are the #1 ranked exchange on Nomics.com.
In the previous episode, I had the honor of interviewing CZ, CEO and founder of Binance. In that episode, CZ gives us a "behind the scenes" look at how Binance grew to become the #1 crypto exchange only a few months after launching.

In this episode, we continue our exploration of Binance by talking with Wei Zhou, CFO of Binance. Before joining Binance in 2018, Wei was CFO of several startups, including two companies that IPOed in the US. Wei was also instrumental in the 2018 Grindr acquisition.
This conversation is broken up into 8 chapters:
- Chapter 1: How Binance accounts for its revenue
- Chapter 2: Binance’s fiat businesses (like Binance US, Binance Jersey, etc.)
- Chapter 3: IEOs and the disruption of investment banking
- Chapter 4: How Binance generates revenue (other than collecting trading fees)
- Chapter 5: The burning schedule for Binance Coin / $BNB
- Chapter 6: Stablecoins and pegged tokens
- Chapter 7: Binance’s general operations
- Chapter 8: The future

In this episode we discuss:

How Wei became the 1st CFO of Binance
How Binance uses equity to recruit talent
The relationship between Binance and its fiat businesses
What Binance looks for in a partner
What the IEO process looks like with Binance
Why stablecoins and pegged tokens are crucial for traders
How living in a country with a stable banking system can be a disadvantage
What Wei would do if he could make anything happen in the crypto space

Sponsors

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This episode is brought to you by Nexo, the only lender offering INSTANT crypto credit lines, which let you use digital assets as collateral to get cash in 45 fiat currencies and stablecoins.
As of recently, the company has integrated the Binance Chain so you can instantly access cash without selling your BNB. Nexo is also a strategic partner of exchanges, OTC desks, and crypto funds through its portfolio of structured financial products. Institutional counterparties can earn up to 8% annually on their idle stablecoins, enter into asset swap agreements, or directly borrow crypto.

So if you are looking to borrow, lend, or swap digital assets, Nexo is your GO-TO PARTNER. Definitely explore nexo.io or reach them on institutions@nexo.io.

Nomics’s Cryptocurrency Market Data API

If you found that you or your developer have to spend too much time cleaning up and maintaining datasets & ingesting market cap data, instead of identifying opportunities and if you want raw primary source trades delivered simply and consistently with top-notch support in SLAs, then check us out.

Binance's CEO (CZ) on The *Real* Story Behind Their Rapid Growth w/ Changpeng Zhao - (Ep. 0052) Aug 08, 2019

Show notes

This conversation is with Binance CEO and founder, Changpeng Zhao (CZ). Binance is the world’s biggest crypto exchange based on (real) trading volume. On most days they're #1 ranked exchange on Nomics.com; they're also our highest rated exchange.

Binance is one of the two most important crypto companies. I believe they'll become one of the most important in all of finance.

This episode is in 5 chapters:
- Chapter 1: The state of Binance when it launched, and the pre-conditions that led to its rapid rise
- Chapter 2: The current state of Binance and Binance Coin / $BNB
- Chapter 3: What CZ would do if he were to start a company from scratch
- Chapter 4: Binance’s growth hacking strategies
- Chapter 5: An exploration of value-added custody
In this episode we discuss:

The lawsuit Sequoia Capital lodged against Binance over a "no-shop clause" in a term sheet
Why Binance transitioned from “employees” to "team members"
The relationship between Binance Uganda, Binance Jersey, Binance Singapore, and Binance US with Binance.com
How centralized Binance is bootstrapping Binance DEX
The biggest opportunities in crypto right now (according to CZ)
CZ’s thoughts on the role of equity over time
Growth hacking strategies that helped Binance grow so quickly
Why crypto exchanges will overtake custodial and staking businesses

P.S. This is part of a series on exchange operations. As part of this series, we’ve already interviewed Alex Wearn from IDEX the largest decentralized exchange & Ivan Poon from Switcheo, the first multi-chain decentralized exchange.

Sponsors

Crypto Loans By Nexo

Nexo is the only lender offering instant crypto credit lines, which let you use digital assets as collateral to get cash in 45+ fiat currencies and stablecoins. As of this week, the company has integrated the Binance Chain so you can instantly access cash without selling your BNB.

Nexo is also a strategic partner of exchanges, OTC desks, and crypto funds through its portfolio of structured financial products. Institutional counterparties can earn up to 8% annually on their idle stablecoins, enter into asset swap agreements, or directly borrow crypto. If you are looking to borrow, lend, or swap digital assets, Nexo is your go-to partner. Explore nexo.io or reach them on institutions@nexo.io.

Nomics’s Cryptocurrency Market Data API

If you found that you or your developer have to spend too much time cleaning up and maintaining datasets & ingesting market cap data, then check us out.

The World’s 1st Multi-Chain Decentralized Exchange w/ Ivan Poon from Switcheo - (Ep. 0051) Jul 27, 2019

Show notes

In this episode, I’m joined by Ivan Poon, co-founder and CEO of the Switcheo Crypto Exchange. Switcheo is the world’s first consumer-grade & multi-chain decentralized cryptocurrency exchange allowing users to trade across different blockchains.

We discuss Switcheo’s origin story, how to market a crypto exchange, and the future of decentralized exchanges.

This conversation is broken up into 7 chapters:
- Chapter 1: What Switcheo is and how it’s positioned in the market
- Chapter 2: Which parts of the Switcheo exchange are on-chain versus off-chain
- Chapter 3: Switcheo’s core user demographics
- Chapter 4: What it actually takes to grow an exchange
- Chapter 5: The regulatory environment for exchanges
- Chapter 6: Switcheo’s business operations
- Chapter 7: The future of decentralized exchanges
In this episode we discuss:

How Switcheo facilitates on-chain, Atomic swaps
Hash time-locked contracts (HTLCs)
Proxy tokens
The pros and cons of the EOS, NEO, and Ethereum blockchains
The blockchains that Switcheo plans on adding
Which components (custody, order books, matching engines, etc.) are on-chain vs. off-chain
The two parts of trade execution
How OTC Desks can use Switcheo
What types of users are attracted to the Switcheo platform
How many Switcheo users come from institutional backgrounds
What Ivan has learned about exchange growth
The strategy around the SWTH (i.e. the Switcheo Token)
How to incentivize market makers
Switcheo’s affiliate program
Why Switcheo is looking at supporting BTC
Switcheo’s position on regulation
How Switcheo’s corporate entity is set up
The future of decentralized exchanges

Sponsor

Nomics’s Cryptocurrency Market Data API

The Nomics API offers squeaky clean and normalized primary source trade data offered through fast and modern endpoints. Instead of having to integrate with several crypto exchanges, you can get everything through one screaming fast fire hose. If you found that you or your developer have to spend too much time cleaning up and maintaining datasets & ingesting market cap data, instead of identifying opportunities. Or if you’re tired of interpolated data and want raw primary source trades delivered simply and consistently with top-notch support in SLAs, then check us out here. Or if you’d like to order historical cryptocurrency market data as CSV exports from top exchanges, email us at sales@nomics.com.

Part 2: He's Responsible For 0.5% of All Crypto Exchange Volume ($1 Billion Per Month) w/ Ed Tolson from kbit (Ep. 0050) Jul 15, 2019

Show notes

Welcome to the second and final installment of our deep dive on high-frequency cryptoasset trading. Once again, I'm joined by Ed Tolson, founder of kbit. Kbit is a high-frequency trading firm that's responsible for about 0.5% of daily total crypto exchange volume. For example, in May of 2019, kbit did just shy of $1 billion of total volume.
This two-part deep dive is broken up into five chapters:
- Chapter One: What high-frequency trading is
- Chapter Two: What high-frequency traders actually do as well as the categories of high-frequency trading that exist in cryptoland
- Chapter Three: Data, fake volume, and toxic activity on exchanges
- Chapter Four: How kbit operates
- Chapter Five: What the future of high-frequency trading might look like

In the previous episode (#0049), we explored chapters one and two. In this episode, we conclude the conversation by covering chapters three through five.
We discuss:

How exchanges outsource wash trading
What "classic crypto wash trading" looks like
Types of data that are most useful to high-frequency traders
When it’s necessary to manually execute a trade
What business development looks like between market makers and exchanges
The two biggest pain points that market makers have with exchanges
Maker-taker fee schedules
How latency impacts high-frequency cryptoasset traders
How kbit plans to enter the OTC space
Where Ed goes for industry information

Sponsor

Nomics’s Cryptocurrency Market Data API

The Nomics API offers squeaky clean and normalized primary source trade data offered through fast and modern endpoints. Instead of having to integrate with several crypto exchanges, you can get everything through one screaming fast fire hose. If you found that you or your developer have to spend too much time cleaning up and maintaining datasets & ingesting market cap data, instead of identifying opportunities. Or if you’re tired of interpolated data and want raw primary source trades delivered simply and consistently with top-notch support in SLAs, then check us out here. Or if you’d like to order historical cryptocurrency market data as CSV exports from top exchanges, email us at sales@nomics.com.

He's Responsible For 0.5% of All Crypto Exchange Volume ($1 Billion Per Month) w/ Ed Tolson from kbit - Part 1 (Ep. 0049) Jul 08, 2019

Show notes

Welcome to this two-part deep dive on high-frequency cryptoasset trading. Our guest is Ed Tolson, founder of kbit. Kbit is a high-frequency trading firm that's responsible for about 0.5% of daily total crypto exchange volume. For example, in May of 2019, kbit did just shy of $1 billion of total volume.
This two-part deep dive is broken up into five chapters:
- Chapter One: What high-frequency trading is
- Chapter Two: What high-frequency traders actually do as well as the categories of high-frequency trading that exist in cryptoland
- Chapter Three: Data, fake volume, and toxic activity on exchanges
- Chapter Four: How kbit operates
- Chapter Five: What the future of high-frequency trading might look like
In this episode, we cover chapters one and two.
We discuss:

Ed’s background in crypto and finance
The role that artificial intelligence plays in high-frequency trading
What Ed was doing before founding kbit
The definition of high-frequency trading
Who kbit is competing against
Whether front running is possible in crypto
Why traditional high-frequency traders have not moved to crypto
Categories of high-frequency trading in crypto
What a high-frequency trader does
The concepts and mechanics involved in a trade that all beginners need to know
Where changes in the market show up first
What Ed sees happening in the crypto space that others might not be aware of

Sponsors

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Nexo is also a strategic partner of exchanges, OTC desks, traditional & crypto funds helping them earn interest on idle stablecoins & fiat. The company's growing portfolio of structured institutional products includes fully collateralized continuously rebalanced swap agreements allowing counterparties to effectively manage their balance sheets. To learn more, check out Nexo.io.

Nomics’s Cryptocurrency Market Data API

The Nomics API offers squeaky clean and normalized primary source trade data offered through fast and modern endpoints. Instead of having to integrate with several crypto exchanges, you can get everything through one screaming fast fire hose. If you found that you or your developer have to spend too much time cleaning up and maintaining datasets & ingesting market cap data, instead of identifying opportunities. Or if you’re tired of interpolated data and want raw primary source trades delivered simply and consistently with top-notch support in SLAs, then check us out here. Or if you’d like to order historical cryptocurrency market data as CSV exports from top exchanges, email us at sales@nomics.com.

Ins & Outs of Crypto Trading Bots (And Real-Time Trading) w/ Daniel Anderson (Ep. 0048) Jun 22, 2019

Show notes

Today's episode is an exploration of crypto trading bots and algorithmic trading with Daniel Anderson. Daniel is a software engineer and a freelancer who builds tools for cryptocurrency traders. Before he got into the crypto space, Daniel was a software developer for IBM.
This conversation is broken up into 4 chapters:
- Chapter 1: What trading bots are, how they work, and why they’re useful
- Chapter 2: Approaches for setting up, testing, and executing algo trading strategies
- Chapter 3: Popular algo trading strategies
- Chapter 4: The future of algorithmic trading
In this episode we discuss:

How John Mcafee inspired Daniel to start building crypto trading bots
What trading bots are and what they do
How algorithmic trading works
Factors that new algo traders must take into consideration when backtesting
How to account for slippage
Portfolio allocation strategies
How trading bot platforms allocate funds
How fees are accounted for in algo trading
Why you won't find trading bots on decentralized exchanges (yet)
Popular algo trading strategies
Why doing arbitrage with crypto is harder than it looks
Algo trading strategies for accumulating BTC versus USD
What the future of trading bots looks like

Sponsors

Crypto Loans By Nexo

Nomics’s Cryptocurrency Market Data API

The Nomics API offers squeaky clean and normalized primary source trade data offered through fast and modern endpoints. Instead of having to integrate with several crypto exchanges, you can get everything through one screaming fast fire hose. If you found that you or your developer have to spend too much time cleaning up and maintaining datasets & ingesting market cap data, instead of identifying opportunities. Or if you’re tired of interpolated data and want raw primary source trades delivered simply and consistently with top-notch support in SLAs, then check us out here. Or if you’d like to order historical cryptocurrency market data as CSV exports from top exchanges, email us at sales@nomics.com.

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