ETH Rio 24 - Trading: Tigrinho vs B3 | Renan Barros, Guruprasad Venkatesha, Oren Varkony

Transcript

we want to discuss now the what's the future of trading right because we've seen many times many and many times that other products other applications have more volume have has more um users has more activity than what we see in our traditional market and I'm not defending the traditional Market but I'm rather questioning uh what is allowed what is not and we want to discuss that we saw recently the chigu does everybody know the chigo the casino so uh we just saw something on

that and we want to talk a bit about it with you guys so I welcome back Guru to the stage please Guru thank you feel free beach and I'd like to invite Orin from frost and other places thank you sir you have hello cool so so um I will start with you with you guys um introducing yourselves but um I want

to take your take on the state of the market as you guys see it um uh renan comes from dered they do options derivatives um big Cub is regulated in Italy and two other countries and Oren is us it uh with the US market while B cube is in in Europe mostly so I would like to well let you guys introduce yourselves and um after the introduction we get on to the um to your views on that hey everyone I'm Orin uh from the US I spent five years working in traditional Finance in the US as a derivatives Trader I started off by

trading ETFs and I moved into options soon after I've traded options on uh commodi ities uh on Equity index on equities as well uh after that experience I moved over to the crypto world where I was the head options Trader for a large crypto native hedge fund called Pythagoras where um I got to trade uh volatility on BTC eth and also altcoins along with doing some uh some Luna yeah Luna as well Luna as well um and also doing some some Market neutral trades as well putting on some some spreads and whatnot so um yeah I'll hand

it over to Guru thank you uh so my name is Guru just now you have seen my big introduction so if I have to make it again for a few people who have just entered here I'm the co-founder and C of bcbe where we provide trading AI driven trading agents um fully regulated Company from Italy we do have company in France and Hungary too and I'm coming from Hungary nice yeah my name is renan I'm the head of Latin America for derit derit is the largest Exchange in terms of uh well derivatives especially uh the largest one especially in terms of options um and yeah I'm glad to to be here cool so

what you guys are seeing in the market right now in terms of trading and I'm I mean not just Trading like what's going on and so on we just had CPI this morning um but rather um how you guys are seeing the trading Market because it's quite sensitive to the to the stage of the cycle that we are right in crypto so what are you guys are seeing like in each one of your areas as like the main Trend or the main observation that you guys um are having sure I can speak a little bit about uh crypto volatility so we've all seen the Bitcoin chart you know price has been mooning since the start of the Year

especially into February after the ETF came out um middle of March we kind of ran into a rough patch because we had the third warm CPI print in a row which you know coming into the coming into the end of the first quarter the market was pricing in something like six rate cuts out to the end of the year that completely shifted the pricing down to like one rate cut um and the the Bitcoin rally kind of lost some steam in the middle of March um the the yield on the 10year treasury has gone up quite a bit as well it's anti-correlated to the price of Bitcoin Bitcoin despite feeling like it should be digital gold it trades like a risk

asset for now for better for worse um I like to look at the Bitcoin options market for a sense of how the market perceives future expected volatility so backend volatility uh like December or March of next year hit a high of roughly 80 80% annualized volatility in BTC uh today it's something like 65 yeah what does that mean so everyone gets it uh without uh without digressing into a a lecture on options pricing basically the higher the number the more the market the more the options Market expects the price of Bitcoin to move okay between now and December or now and

next march um so the level the the price of options has gotten cheaper over the past six or eight weeks for Bitcoin and ethereum because the market is kind of calming down you know it sort of like a a mini rally and it lost Steam and everyone is kind of holding off on allocating more money um although in my experience the this is this is not a perfect prediction this options Market can obviously be wrong so um but I'm quite optimistic out to the rest of the year and I I I'm not a fed Whisperer I'm not a Jerome Powell expert but uh the the bias to cut is clearly present

cool um I'm I'm super bullish with PC and how you're seeing the activity overall as well like the the trading activity how you're seeing the that going on right now I'm I'm super bullish on BTC I know um quite recently we had some troubles with SEC and everything that's going on I think markets are also watching the US elections very closely maybe if Donald Trump just made a statement that he's positive about crypto so maybe if he comes back to the power and if he fires Gary Gensler and brings a very crypto-friendly SEC rest in then things can be something different so I think with there is a bit of Hope on that way because crypto is

based on Hope and narratives right so there is a bit of Hope on that side um because we were seeing the same kind of patterns when uh the ETF talks started and after it was actually happening we again saw the new High um and then we saw the dump um Everybody are saying like it's pretty common after the Hing so it will dump and it will go back maybe the historical events are repeating or maybe it's not repeating um but if we see the overall Global scenario um especially in Hong Kong the ETF trading started quite recently I think even Germany is discussing the same thing some of my German friends were discussing with me that U yeah even the regulator is thinking about that

buffin so I I think it's getting a kind of trend now for all the countries to have an ETF so that's kind of like an indirect entry they want to get into crypto on a very high level so this trend and these kind of narratives will keep it very hot um and also I mean if if SEC chairman is the real issue here he shoots down everything uh he behaves like S400 if you know the anti- missile defense system or Patriot uh like in United States he shoots down everything so I think someone have to shoot him down for the industry to prosper and I'm expecting that to happen if there is a

change in the government yeah I see that something like that happening um because they haven't been so Aon actually spoke about this in the state of the Market opening that um there's not a politization of the pricing and so on but there's a potify political Finance going on around all this um and how you're seeing the the activity on on their bed and all that is going on yeah from from The Exchange point of view I believe that for now we are seeing a lot more institutional coming in um that's a movement that we haven't seen before uh we have seen a few institutional players

but not with uh the appetite they are at the moment especially here in Brazil we see traditional Banks coming in um you know institutional houses coming in and well it's it's extremely bullish for us in terms of of the pricing I saw I heard uh Orin telling us a little bit about uh how bullish he is um but I do see also I mean we talk a lot about um especially with miners um and miners are usually selling calls so they and that's something that holds off the sort of a eventual Spike so um we do see a lot of

miners trying to uh make more money in some other way because well the revenue have been cut in half so that's something to to keep in mind obviously we're all bullish but um one of the most trated um contracts in our platform is the sell call people are selling call like never before so that's something to to keep in mind as well yeah and so everyone knows when you're selling uh an option you are making money on the spot and there is a risk to the other side um and you were buying it you were just um taking a position either to the upside or downside with other less than other

exposures um now okay so all guys gave us the your views on pricing where you you seeing the market going I think everyone here kind of agrees on that um on the regulation part we seen as you said Guru many participants looking into it we have seen the US Brazil is way ahead on a bunch of things but specifically regarding to trading uh we see some of of these Regulators um trying to protect the investor right and uh but at the end of the day that's not always the case um well it's not the same type of products not the same um industry or or Market in itself but it

it considers the same audience um and we well what what I'm talking about is the iGo right it's a it's a batting it's a casino thing everyone has access to it and they're always losing to the house that's the the definition of it so at the end of the day people are going to those venues because they want to well have some chance and then try um a 50 a 100 a like over a couple weeks you know um but when we talk about crypto we see um that there is a bit of that degeneracy that gambling feeling to

to some of what happens in crypto so when we what I want to talk with you guys about is what are the tools like what can we do to make these guys feel safer not only the these guys I mean the user The Regulators because we as industry we move faster than than the regulator it will always be like that but we need to work close to them to educate and show like hey that that type of products like not the best and people are having access to it this other one is way more interesting but we have other stuff related to that but what are

the tools like where are the the good practices that indust the industry is applying be in your companies be either you how you see um from the trading perspective running a desk and so on so what can I can start on that one we were actually talking about this right before we we came in I was talking to Orin about this uh obviously there is the aspect that the regulator will protect the market but it's not always how it happens as we already know uh FDX happen and they were the ones who were who were closer to Toler and you know the the

regulator so um we have to we have to know who is actually trying to help and who is not or who isn't so uh for for the specific gambling part obviously there are products um that and mean coins and there are you know a lot of things that you can actually gamble on so uh uh daily options for instance it's it's it's a lottery ticket so if you buy extremely outof the- money option call it's a gamble it's you're gambling but it's it's fine it's I mean you know what you're doing at least um it's not a scam uh it's just like a lottery ticket on the other hand on a a casino it's completely different

especially if it's a you know crypto Casino exactly GRE or stuff like that um but from from the regulation standpoint Point obviously we have to do a lot of things especially after what happened with that with FTX uh the the entire Market has changed and grew a lot in regardless if uh the regulator is playing a role or not we were going to do it anyways because that's what the industry the industry asked for so now we have you know Marco tree proof of reg proof of Reserve proof of liability a lot of those that sometimes we don't even have on a

traditional Market um we have Auto Liquidation that's something that we don't have in a traditional Market we have Market 24/7 also something that we don't have in a traditional Market I mean uh there are so many things we're winning by far but still uh apart from that I think that there are many things that we're doing to to get the the the environment more mature um like for instance we are partnering with with uh with Fidelity for for custody which is something that we have never thought about a few years ago so the the institutional players are actually coming in and it's it's it's really good I think it's inevitable um if you think about it it's a journey right it's a

progress oh so uh as he said like I totally agree with him um buying main tokens it's buying a lottery ticket yeah if you win it yes you win 1,000x or 500x or whatever it is if you lose you lose completely at least in this way you can have a pride of being a crypto investor because if you buy a lottery ticket I don't know what they call them as gamblers right it's much worse so let them be in the crypto trading space and they can buy M tokens um how how we see uh our products for these kind of people is that we introduced quite recently the futur trading but actually it was not possible

for us to launch this product in France so we had to migrate to Italy for that for for regulations thing uh when we moved in Italy like we launched the first product and that's performing very good uh if someone is a gambler then they can have like 20x 30X on the same strategy and if one strategy average returns is like 1.5 2% per trade so if they're having in 2x they're making 40% per trade so this product can fit into the Gambler categories what we are seeing and I also like I I know these type of people exist and and I saw what happened with meme tokens and everything that's why like in my upcoming next project of Perpetual trading decks we will be having 1,000x leverage so so any

move is yeah any move is like literally liquidated or literally need to be right yeah so I think like this kind of innovative products can bring people who are gamblers into something else and maybe when they come here if not everybody at least few people will understand the importance of uh Investments importance of trading and they can come to mainstream crypto in this way that's what I believe cool well I think I'd like to see The Regulators pursue more of the path of going after people who outright scam other people so I'm sure everyone here's been rugged one time on a coin it's like a right of passage in crypto um you know that that's it's essentially legal but it's

not very well prosecuted in the United States but those are the kinds of scenarios I like to see Regulators really apply a lot of manpower to um when I think about protecting retail you know if people want to gamble in the traditional markets if they want to trade S&P 500 futures they pay less than one basis point of spread to get into that position and that's probably one of the most efficient markets in the world so um you know they're taking on quite a bit of variant but they have next to zero expected value over the next I don't know few hours or few days um you know ironically if someone wants to gamble that's the place to do it because you get the tightest Market in the world if you look at something like a sports book you know you start to see

a vig or like a a house cut of like two three% or more depending on what it is I haven't uh played chinu not yet um but I'll I'll probably check it out later and lose all my money and send some bigs there yeah I I have Peaks now so I I'll makes it easier I don't know what kinds of spreads they charge but the the other thing I would say is you know it might make sense for Regulators to also kind of limit leverage because really what what blows up people when they do this is poor bankroll management so um you know you can if you put on a,x levered position and it moves against you by 11 basis points you're liquidated right or

over 10 BBS um but that can be ordinary variance in in something like Bitcoin so I think that I'd like to see less regulation on some of the retail facing stuff more pursuit of illegal activity like outright scams and then finally maybe offer I saw evany who's the CEO of wintermute post this on Twitter the other day maybe let people opt out of regulations you know have some more stringent regulations give them some like basic statistics PDF for them to read and acknowledge and then sign something that says okay like I I agree to lose all my money really difficult to happen really unlikely yeah yeah but uh just to complete um on the strategy obviously

there's the the speculation the the gamble sort of sort of the side but also there is the investment side so uh for instance a covered call it's a it's a when so if you want to sell the Bitcoin at 100K you you can simply you know do a cover call to sell Bitcoin at 100K and if it doesn't happen you'll make money anyways yeah so yeah it's like betting on Vasco to lose it's it's a win for sure no but yeah like the at the end of the day I guess that that people kind of look for that type of sophistication but they don't have access to it right I structure products and all of that that

stuff um but I was curious about one thing that Guru said so I direct this question to you and if you guys have anything to add please you um you if I understood correctly you guys are regulated to offer derivatives in Italy that's crypto derivatives as well how does that work like what are the maybe the the main lessons that we could take from it um that we could maybe apply in in a in a place like Brazil yeah actually in Europe there is a blanket ban on all the derivatives fre like uh any exchange which is providing the services within the borders of European Union all the 27 countries it's prohibited they can't do that and that's

the reason like no exchange provides any derivative services but uh we are finding a loophole there um the loophole is that there are some exchanges which is not present in Europe so they don't fall under the jurisdiction of European Union so they are somewhere in China they are somewhere there for example htx hobi they don't have it uh but they did this smart thing quite recently they they came to also Italy and they got registered there and they still providing derivatives from their parent company which is in China so we are providing derivatives through them and if regulator is asking us then we will tell them like you are the one who have licensed this in the same country where we are present so we are using another

licensed company just like us so um we we can play this type of things but uh if you're asking a straight question whether derivatives is legal or not in Europe it's completely illegal okay it's not possible it's not possible right now no it's not possible got it yeah so yeah that kind of happens in Brazil as well but yeah yeah um yeah the well derivatives um on that we have just acquired a um a license derivatives license in Dubai which is something that the plan is to replicate that to other jurisdictions and Europe is one of those um but the way we're going to do it is we're going to either Buy or set up a

broker so the broker would route the the orders to our Exchange in Dubai and that's the the regulated way of uh of doing it and the plan is to do this here in Brazil as well um and we're studying paths to have this you know regulated derivatives product uh crypto here uh we do have it with B3 now uh but the settlement is in in real and it's you have to to go through B3 to do it so we're trying to do something more crypto native and also regulated which we can kind of we can't run away from nowadays yeah exactly and I think that's the main

message here at the end of the day we want to advance the industry we want to educate the Traders and people that are curious about that um so I would say that maybe even the case of the batting houses are against the interest of the crypto people like when we want to advance this there are just the the house just always wins and you like you rarely make out with some money so I think that the main message is that um what we are trying to do is to advance the industry we want to talk to to advance alongside with The Regulators um and bring this in a in a safe fashion so people can have access to it because

what we have seen so far is that people will always find a a way to to get access to what they want to so um it's is I wouldn't say it's smarter but it's more beneficial to be proactive towards that and allow people to to have access to it so with that I would like to open for a couple questions from you guys so we can move on to to our launch thank you uh regarding options trading when it comes to fungible crypto assets such as nfts how do you guys see the

evolution of the options markets regarding those uh assets uh options on nfts that's your question yeah just make sure I heard you right well I think it's it's it's interesting um I think it's a a difficult thing um if if you look at current options markets the underlier is always on a fungible token whether it be BTC eth traditional market futures whatever it may be stocks um you know it's thinking from the perspective of the market maker it's kind of tricky uh to hedge those options that they're quoting if if the underlier is not

fungible um I get yeah do you do you have a followup on that do you want um um sure so I think there was a thank you is just that like uh when it comes to those Futures and derivatives that we are seeing nowadays now we have derivative derivatives for points and derivatives for tokens that haven't been launched yet so I've been thinking that maybe uh as this Market evolves there's probably going to be more you know sophisticated uh instruments to H positions and such no yes for sure like on in terms of haging and all like there is a few Solutions but when we talk

about the nfts and like creating liquidity for it be either through the fractionalization of it or like a full nft we have seen examples like of nft perss where people set up pools and and set up like the floor priz and a few rules to make sure that that goes through and like the model that I see on for example um how is it called again um the trading points exchange I believe whales Market is the name right a whales Market yeah so the way I see well from what I could learn from them is that they you basically need to put up some collateral to take to to sell your

tokens or something like that so it's actually just an exchange of um of Capal flow so you're advancing uh money that you would get on that on that airdrop and in the meantime you you just sell it uh on the spot I mean on the spot price that it's that on the price that is at that moment that's more correct um and then you escape let's say the um the volatility of that token after its launch or something like that so I think that to come to tr fight will take a while um but we are seeing more and more advancements on on these models on how

they do it but well for sure liquidity fragmentation is a problem uh it's would it will need to be solved at some point through some type of protocol ler or something like that but we are seeing these advancements in crypto but I I would say that they could take like five to 10 years to get into into the traditional economy just want to add one thing I think one interesting thing could be something like options on the floor price of an nft collection because then it's easier for a market maker to hedge those options they can trade any one of the nfts in the basket against it um so maybe that could be kind of a more liquid more exactly especially since now

there are ways to you know negotiate nfts without having to purchase the nft because there are you know per contracts on the floor price yeah yeah I think that one of the issues for the I it could definitely be 10 five to 10 years from now and perhaps it's really difficult one of the reason is the retail client of the op the options retail client is a different kind of retail it's a more sophisticated client so he is looking for other things and the market maker in order for for them to make they have to have somebody else on the other uh on the other side taking it and and if there's no volume there no

liquidity uh it's just not interesting for the market maker either so um I just see it's difficult to to take place just for now for instance in our platform our two main coins are Bitcoin and E because we have institutional appetite we trade over a billion dollars a day on each on each one and the other ones even Solana which is quite quite large in terms of market cap it doesn't trade as much Solon Matic and you know xrp those that are you know common known to the to the main public uh it's not really traded because it's simply not there the appetite is not there so uh to to have

nft options I think we're we're a long way from it but it can definitely happen so you would say that fungibility is one of the main issues I say the um not not the fungibility the appetite is the main the main issue oh I see thank you hi guys thank you for the speech I think this discussion is really important for all the people to know and understand how is the market now but you guys pied a lot of about trading Guru about sentimental trading and I want to know how do you look to the fundamentals you know you think that these really

perform because we see projects like Solana and Avalanche that has really good fundamentals performing really well but to see another projects that are big good fundamentals and they just don't perform because of the narrative I see more projects performing about the narrative than the fundamentals how do you see that it's a it's a hard question I would say I would say price is the king of all fun uh the king of all narratives okay so um I don't have a great answer for you um I think you know the market likes to there's a certain attention economy in

crypto right there's you know rwa is a hot narrative uh dein's a hot narrative um you know there's certain projects Within These sectors that are very hot like Ando Ando has something like a 10 billion dollar FTV which is uh quite quite interesting um but you know I ultimately what the term is prices are supply and demand and I think a lot of what moves the demand for these tokens is attention in the crypto Universe yeah look uh to be very honest I don't think crypto Market is what fundamentals nobody cares about it there are more number of layer ones and layer twos than actual number of users right

every week there is a new layer layer one or Layer Two which is coming in people get excited they buy it they dump it they make money and they just move on to the next one it's like uh you know like a teenager moving from one relationship to another one exactly this is what happens so uh we should not look for fundamentals there is no such thing as fundamentals here brutally honest we can say like okay certain things will have a use case it has a revenue share it has this it has that blah blah blah blah blah blah okay it's a good sory but honestly um I don't know just by looking at it on the face value like why M token should even have any value if you're speaking with the fundamental side

because I come from trade fire and we used to do fundamental analysis based on earnings forward earnings EPS um dividend yield we used to take several things into consideration to price a stock like why this should appreciate so much but um you you can't make that kind of analysis of course like now crypto people are also trying to make about uh the token unlocks the burn and how do you reduce the supply and everything which is crypto equivalent of uh uh trade F analysis but still uh for me like most of the tokens they they don't have any intrinsic value because uh there are some nice tools for example you have to try this uh what is that Lama it's it's a very good tool to see how much revenue a a def or someone is

making and if you see that nearly 80 to 90% of the companies they're bleeding they're not making any money uh Solana also they're not making money they're losing a lot how how are they surviving they they are surviving because they have huge market cap they dump the tokens they make the money and this is how all these you know projects are surviving to be honest so searching for fundamentals in crypto in an absolute sense like in equities or something else it's like searching for the black cat in the room which doesn't exist so um I don't think it's about fundamentals really but it's about the trend it's about the narrative it's a trend is your

friend if if there is a trend of deepin just go for it if there is a trend of AI just go for it if there is a trend of something else which is coming tomorrow rwa or something like just go for it um that's it you will make money in that yeah perfect answer and I think that that happens now I agree totally now the crypto Market is all about narrative but I think there is a path when gets more mature and turns really a third asset class like the stock market that we're going to see really more fundamentals and we're going to invest in tech companies behind between crypto so by crypto we're going to invest in these

companies but really nice thank you so in the same sense talking about narratives and fundamentals I do believe in that because today we see like a big project with big founding and big rewards and they are like being beat by a meme because it is a dog with a hat it's not fundamental doesn't have recipe and like it's crazy but right now the markets uh I see I just keep thinking about the future what do you think about the future will be like the mark the market

will be will value the fundamental the fundamentals on on the future or you believe that will be like forever this uh narrative stuff uh and dog with hats and dog with different dogs and cats and that stuffs uh in the the first the top lead valorization if if I can just make a quick comment I think that we overall we have the fundamentals in crypto are completely different from the equity markets it doesn't exist the same sense you don't have cash flow like it's very hard like some some projects just don't do that um I think we live in a moment of

pumos like what is pumping the the token right um in terms of fundamentals in the future um it's a different thing that needs to be set up right some people are talk like some VCS are talking talking about fundamentals in memes right so we are we're right now in a in a meta on the meme super psycho or or whatever but I think that's just a function or a reflection of what people are seeing in the economy and they're just well all of this I'm going to put my money there because I maybe will get rich because a friend of mine bought $15 and made like a million you know so it's the

same thing with the it's like people trying to to find a way to to make money fast because as we talked here uh yesterday like the USD is not well seen you know like people are moving away from it so they get into crypto just the narrative just to uh through the pum mentals and then they move on to the other thing I think in the future yes we will see some stuff but I think they will be very segmented by industry by applications and so on I agree with the same what Antonio said but just to add a little bit more I

think crypto markets are very new it's very in it's in a very nent phase so I think like as we move forward uh things can get more matured and things can change a little bit but uh if any project has to be very successful on the long run they should be solving a very huge problem a real problem uh but often we see like problem being created by the same people and then trying to solve it uh but that's not how it should work there there is a huge problem that needs to be solved um for example if you're speaking of decentralized Finance the ux is uh it's not so friendly uh the UI looks like very difficult to access it's not easy for everybody to have uh wallets to connect their wallets and to

make the transactions and if you see sui uh sui uh blockchain um they provide all the web3 with web 2 interface you can log in through your Gmail account or something but still it's happening on the web 3 uh so these kind of uh blockchains and these kind of solutions will have value because they are minimizing the friction for masses to come to blockchain um otherwise like just having metamask or trust wallet or something it's not for everybody it's for geeks uh even some very smart people sometimes try to send the money to their friends but they will they don't know which chain it is they sent to the wrong chain and they lose money and it often happens so I think uxui is something

like which needs to improve a lot in crypto field for it to go mainstream um secondly like um you're speaking about mes and everything mes like there is another type of discussion because memes are a kind of culture for many people uh they it's it's like all the M people they believe that like they belong to one Community I was was listening to very big Angel Investors in Dubai in token 2049 even Santiago believes in M tokens and he invest in M tokens like such a big angel investor like there there was even ran the YouTuber so all all these people really believe in it because they

believe it's a kind of like a revolution it's a kind of like movement it's a kind of identity everybody has which was a similar narrative what we saw in nfts also like they were thinking like B Club it's for Elite Class people so they were all the one they were all one community and everything and now we know what happened um um you know like I yes even if you see the company uh what was that one Yuga Labs $400 million was invested in the company in the seed stage at a $4 billion valuation who led the round a16 Z so a16 Z was bullish on nfts if there was a Perpetual trading deck at that point in time for nfts I

would have shot it with 1,000x because I was knowing like the these monkey pictures have no value but nft is a very great technology by the way I'm not saying anything about the nft Technologies but I'm just saying about a dog with a hat uh frog with a I don't know something else so whatever it is so that's my take cool okay guys thank you everyone um thank you all for the the the talk we went a bit over but I I think that trading is a it's a subject that everyone loves um for reason or the other so um well thank you everyone thank you thank Youk