The Perpification of Everything

Transcript

[applause] >> Hello. Um All right. Uh I'm going to talk a little bit about post-modern investing and the rise of uh what I'm terming perpification, which is the transformation of assets into perps uh and the proliferation thereof. Um and I'm going to start with a couple examples of some interesting traders uh that have been very active on Twitter that you maybe perhaps have seen if you've been active on CT the last few months. I want to give a little context on why we started the company uh and maybe the core big picture macro thesis uh driving Austerity before I talk about product at all.

Um and I would characterize it as the following. Uh macro news is macro is the new reality TV. Um so when we started the company a few years ago, this was a very contrarian thesis. Um but the high-level uh view that we sort of developed was that we had entered into what we call the new macro paradigm. So the first generation of consumer trading applications, and I'm going to focus very much on the world outside of crypto, um in the sort of interim period between the great financial crisis in 2008 and COVID in 2020 was characterized by a very uh unique set of circumstances that in retrospect was a historical anomaly. So uh and I'm going to highlight three core

things. So one, extremely low interest rates, zero interest rate world, extremely low inflation, um and then very little geopolitical uncertainty, at least certainly retrospect. And our conviction when we started Austerity was that we had new we had entered into this new paradigm with COVID. It sort of broken the mold and thrust us into this new brave new world in the markets. Um and that that would be characterized by the opposite of those three things. So persistently higher and more unpredictable rate policy. You can see that with what's just the last few months. We went from, you know, anticipated three rate cuts to a couple rate hikes in one of the fastest changes or, you know, changes in expectation around um rates.

Inflation was transitory, then it wasn't, now it's back. Um and then obviously geopolitical uncertainty, I think uh goes without saying for any of you following the news. Um so, what does all of this mean? Um well, our conviction was that this would basically usher in a new generation of traders and a new way of trading. And to illustrate my point, I'm going to point to two particular individuals who you may have seen on Twitter. Um one of them is an account called PP Poopoo, um who very loudly made over $4 million trading oil uh during the Strait of Hormuz closure uh or perhaps continued closure, unclear if it's open.

Um and then another one is a guy Say Pump on Twitter. Uh single-shotted massive positions on gold and oil, uh made, you know, over half million dollar P&L in less than a day. Um this is pretty crazy trading behavior and uh in order to dig into what's motivating these people and sort of what all of their trading strategy is really all about, um I'm going to break it down into what I think are two unique and probably contrarian views on what they're really good at.

Um and I'm I'm calling this Revenge of the Hyper Online, uh maybe just to go back to the other slide, uh as sort of a nod to what I think is the driving uh maybe like psychological trend underpinning this change in trading behavior. And I would analogize this a little bit to I think a lot of tech cultures like Revenge of the Nerds. Um I think a lot of what's going on right now is like Revenge of the Hyper Online. Uh unsurpri- or surprisingly perhaps like spending a lot of time online and in in chat, in various chats and in trading groups from a very young age um on various subreddits is actually very value-creative in a way that I think no one could have anticipated a few years ago. Okay, so two skills. I think one is identifying these reflexive viral loops.

So in this, you know, reality TV world, macro news is the new reality TV. Being able to get a set or having a good sense for what's going to take off and what people are going to find interesting and sort of sort of the herd is going to focus in on is a unique skill that again in a very less online world probably would not have been that useful, but now is actually very useful if you're trading the markets. So identifying reflexive viral loops, having a this intuitive sense for when you see something knowing what's going to take off and I think some of this also is like honed a little bit in the meme coin trenches, but is now trickling out into the broader economy.

The second one and and this is maybe an even weirder thesis, but I will share it nevertheless is a theory of mind for unpredictable characters. I think that a lot of what's driving the markets right now is these kinds of headlines in one direction the other direction driven by very unpredictable sort of geopolitical activity and I think having this theory of mind for what an unpredictable character might do again analogizing those maybe to the meme coin trenches um having a sense for maybe what a meme coin dev might do is somewhat analogous to uh having an intuition for what's going on more broadly in macro and and sort of this headlining and and news-driven news cycle. Um and this is a funny meme that

well at least I think is funny, but this is I think pretty much encapsulates anybody who's been talking about the markets ad nauseam to their family and then has to go home for Thanksgiving. Um okay, so what does this mean more broadly? So one is as a class specific trading is collapsing, you see this all over the news and you see it in the trading behavior on the next generation of trading platforms. The first generation of these consumer trading applications that I alluded to before in this very unique interim period between the great financial crisis and COVID um was characterized by the sort of mobile-first world and then uh very asset class specific applications. So, apps catered to or trading platforms

that were catered to either equities or to crypto or something else. Um and you had this very siloed uh world of traders. So, people would characterize themselves as an FX trader or a stock trader or a crypto trader and that whole separation between categories is collapsing. Um the trader of tomorrow, I suppose trader of today now, is someone who is moving seamlessly between asset classes, might be trading gold one day, Bitcoin the next, oil the following, Nvidia, the new SpaceX IPO the day after. Um and they're very agnostic to the asset class. They really just want to be moving. They want to be trading what's moving and they're momentum chasing.

Um and the second big piece beyond cross asset is ultimately the rise of a single instrument and single platform goes without saying. So, in contrast to the prior generation of sort of predominant trading applications which were very much asset class specific and sort of catered to um you know, there would be an a core, let's say, leverage trading or more risk on instrument that would serve the needs of that asset class. Um you now have this migration to one platform across multiple asset classes and importantly a single instrument to allow people to trade that. Um and I'm now going to sort of bring it back home to perps themselves. Um this is where we believe in the rise of perpification and

you see this now really being validated across the market. Um rather than people trading perhaps options for, you know, if they're trading equities and they want to take on some more risk or dated futures on a different platform in a different asset class. People want to move between all these different assets in one platform and they might want to do that in the same day and they probably want to do it in the same way and really all they care about is being able to long or short, take on more or less risk, sort of modulate the you know, their margin based on how much risk they want to take on and then move seamlessly between assets. And so this broader trend is encapsulated by what I'm calling perpification.

So perpetual allows you to easily turn any instrument into something that doesn't expire or any asset into an instrument that doesn't expire is cash settled and is, you know, can can be modulated from a risk standpoint, doesn't expire and this is the perfect native instrument this for this style of trading. That's what we're building at Auctane and that has been sort of validated by the market. We have grown tremendously over the last year and many of the others in the market that I'm sure many of you are aware of have also grown tremendously and really what I think has catapulted this category from more of a niche crypto instrument into a instrument that is now taken seriously by the broader finance world is I think the rise of this new class of trader and the

validation of this instrument as one that actually serves a real need not just for what remains sort of a more niche asset class but ultimately for the the broader range of assets that people want to trade. Um So that's it actually. That's that's all I have to say. Um that's that's what we're building at Auctane and that is sort of the the rise of this new archetype of trader. Um perpification and uh the rise of the cross asset trader, cross asset macro trader is uh driving markets today. That's it.

>> [applause]