Lianwen × Crypto Tonight # 1 | Eastern and Western institutions recap “Black Swan Day”

Su Zhu, the founder of BlockFi, HashKey Deng Chao, and other 6 top experts in the field of digital asset management and investment in the East and West discuss the cryptocurrency black swan event.

At 8 pm on April 3, the first show of the cryptocurrency online talk show “Crypto Tonight” jointly launched by Winkrypto, Lianwen and Yama was successfully launched. Yama invited 6 top experts in the field of digital asset management and investment Discussing the “Black Swan Day” of the cryptocurrency market plunge on March 12, the core highlights of this episode are:

  • Curv launches API Key secure multiparty computing (MPC) solution and Blackbox wallet solution
  • BlockFi CEO: Market volatility on March 12 stems from a shortage of dollars on loan platforms, forcing miners and other institutions to sell bitcoin
  • Su Zhu: The market price on March 12 was driven by the waterfall clearing house of BitMEX and other perpetual contract exchanges
  • Su Zhu: It is recommended that investors should adhere to and implement the trading strategy planned in advance, not to be affected by the sentiment of market volatility
  • Co-founder of Paradigm: Market structure problems need to be solved, but it is difficult to have an exchange fuse mechanism
  • Curv CEO: March 12 suffered the largest transaction volume since its inception, but it never went down

If you want to know more about the full point of view, you can click here to view it. If you want to see the full program video, click here to look back. The following is a text record of the entire program of this issue, with some edits.

Good evening, everyone. Of course, many people have to say good morning. Welcome to “Crypto Tonight”.

I ’m Yama and I ’m very honored to be the host tonight. At present, I wish you all stay away from the virus. Today we are a family. Thanks to Lianwen ’s bilingual reporter, our dialogue tonight will have a real-time translation of Chinese.

“Crypto Tonight” is a place to share and a bridge between East and West. I hope to hear everyone’s real experience and sincere views here to enhance understanding. Of course, you can also explore strategic cooperation opportunities, and maybe also for the existing problems in our industry Find a more advanced solution.

Come, please join me in welcoming six guests today: Zac Prince, founder and CEO of BlockFi, a cryptocurrency lending platform, Su Zhu, CEO and chief investment officer of Three Arrows Capital, a cryptocurrency hedge fund, and an institutional trading and communications platform Paradigm co-founder Anand Gomes, cryptocurrency institution-level wallet developer Curv co-founder and CEO Itay Malinger, these four are today’s panelists; of course, we also have heavyweight observation guests: chief of cryptocurrency investment agency Hashkey Capital Executive Officer Deng Chao, and Michael Wu, founder and CEO of cryptocurrency agency service provider Amber Group. This is a top-notch combination of Chinese and Western, digital asset management and investment.

First of all, let me invite guests to make a brief personal introduction: who are you, what exactly do you do, what does your company do? Start with Zac.

Zac Prince: No problem! My name is Zac Prince and I am the founder and CEO of BlockFi. My personal background is mainly in technology companies, and some of my recent experiences are mainly in the online lending field. BlockFi’s original intention is to build a credit market in the field of cryptocurrency, and the company’s vision has many expansions on this basis! At present, we provide users with deposit accounts, users deposit BTC, ETH and USD / stable currency, they can get good interest, we also provide loans to individuals and institutions using collateral as collateral, and also provide no transaction fees. Spot trading services. We also have a team of service agencies that provide customized lending services to institutional clients. The BlockFi team is mainly based in New York, with branches in Argentina and Poland, and will soon open offices in London and Asia Pacific.

Yama: Thank you Zac, Su Zhu next.

Su Zhu: I am the CEO and Chief Investment Officer of Singapore Arrow Fund Three Arrows Capital. Three Arrows Capital, a hedge fund established in 2012, focuses on foreign exchange and cryptocurrency trading. Before creating Three Arrows, I worked as a proprietary trader at Credit Suisse, Flow Traders, and Deutsche Bank, and worked in Tokyo, Singapore, and Hong Kong. I graduated from the Department of Mathematics at Columbia University. Let me briefly introduce Three Arrows Capital: We are a trading institution mainly engaged in crypto derivatives and spot trading. Recently, we also made a strategic investment in the derivatives exchange Deribit. Everyone should know that Deribit is a leading Bitcoin and ETH futures and options trading platform.

Anand Gomes: I am the co-founder and CEO of Paradigm, an information platform that provides quotation and transaction services for institutional cryptocurrency traders. Paradigm is an institutional communication platform with embedded RFQ trading system for crypto derivatives traders. I previously had more than six years of OTC sales and trading experience at Keybank, helping Keybank create transactions that span multiple interest rates, multiple commodities, and multiple credit markets.

Itay Malinger: Hello everyone, my name is Itay Malinger and I am the co-founder and CEO of Curv. Curv is a digital asset security platform. We are creating an institution-level standard for digital asset security by eliminating outdated single-point failures such as “private keys” and delivering digital asset security solutions that have been secure, comprehensive, and scalable. Curv’s Secure Multi-Party Computing (MPC) key management protocol allows institutional users to enjoy bulletproof protection, instant availability and complete anonymity for digital asset holders. We are the only crypto asset wallet service provider for institutions, based on the cloud, and using a secure multi-party computing protocol. We are also the first such enterprise to obtain EY2 audit certification. Our services are favored by the world’s leading exchanges, custodian service providers, OTC trading institutions and brokerage institutions, traditional financial institutions and digital asset management institutions.

Deng Chao: This is Deng Chao from HashKey Capital. I started my career in the traditional financial industry very early in Bosh Fund. In 2011, I joined Wanxiang Financial Holdings and worked in many departments of Wanxiang Financial before joining the HashKey Group in 2018. I started to intervene in the field of cryptocurrency and digital assets in early 2015. At that time, Wanxiang established the first blockchain venture capital fund-distributed capital, and the first investment was Ethereum. Now I am in charge of HashKey Capital. We have been actively investing in the blockchain field. So far, we have made more than 200 investments worldwide, with a total investment of more than 200 million US dollars. Our recent investment projects include BlockFi, ZenGo and Blockstack.

Michael Wu: Hello everyone, this is Michael Wu, the founder and CEO of Amber Group. Amber Group is an integrated encrypted financial platform where users can trade and invest in cryptocurrencies, as well as earn interest and make loans. We have accumulated in this field for several years, witnessed the rapid growth of the encryption industry, and also understand the pain points of the encryption industry. The pain point of this industry is that liquidity, deposits and withdrawals are too fragmented. Our goal is to provide an intelligent solution to help customers access the entire market with only one account and enjoy enterprise-level encrypted financial services. We hope to use our own products to help alleviate this fragmentation and enable people around the world to adopt cryptocurrencies.

Quick questions and quick answers

Yama: Thank you for introducing yourself. Let’s move on to three quick questions and quick answers tonight. Let ’s start with Zac. I have three questions, I hope to get your quick answer:

1. What has excited you the most in the past six months?

Zac Prince: There are several things that are quite exciting. We completed the B round of financing in January and received 30 million US dollars; we also tried to launch the US dollar fiat currency service; in addition, we began cooperation with institutional client customers in China! This is very exciting.

2. Please name three of your favorite customers or counterparties.

Zac Prince: Then I would say they are market makers, cryptocurrency exchanges, and bitcoin miners.

3. In fact, China has more than 70% of the world’s miners. Welcome to China. Here’s an advertising slot for you: Please tell us, what is the biggest benefit of doing business with BlockFi?

Zac Prince: Of course, interacting with our world-class professional team and enjoying great customer service.

Yama: Thank you Zac. Next is Suzhu.

1. For the first question, please state your three favorite cryptocurrencies.

Su Zhu: I only said two, BTC and ETH. The reason is simple: Bitcoin is a value storage tool, a ledger with digital native scarcity, and the most powerful network effect. Ethereum is a global decentralized solution layer and smart contract platform.

2. What is your favorite trading strategy?

Su Zhu: Basic transactions, that is, futures to spot transactions. Observing the trading trends of spot and derivatives, you can either carry out arbitrage trading on these two, or gain an in-depth understanding of the market’s future trends.

3. Wise! The next question is, what advice do you have for our audience and listeners when it comes to trading?

Su Zhu: Please write down your trading strategy and goals in advance, and make sure to stick to it, which is the same as sticking to fitness strategies and other self-improvement methods. Otherwise, it is easy to fall into emotion when the market fluctuates rapidly. Many hypothetical situations that seem impossible are not impossible, so survival and risk management are very important.

Yama: Indeed, risk management is too important. Next are three questions for Anand. We asked Deng Chao of HashHey Capital to ask questions.

1. How many hours do you sleep a day?

Anand Gomes: Haha I don’t get enough sleep. The crypto world is a 24x7x365 year-round field, and our team has seven and a half members. Counting this question, my beauty is not satisfied.

2. In the process of building Paradigm, what excites you most?

Anand Gomes: We built the work of “Finance 2.0” Finance 2.0 or “Transaction 2.0” Trading 2.0. Paradigm’s vision is simple: a single point of access, you can trade everything with anyone, you can settle / clear anytime, anywhere. We provide users with various options and customizations at the asset / tool level, dealer / counterparty level, and clearing / settlement level … all this is done through automated price discovery and settlement, providing a seamless execution experience. At the level of large-scale transactions, I can say that this is unprecedented, even in the capital market. When I think about how we are building for the future, how can we not be excited?

3. What are the next major actions of Paradigm?

Anand Gomes: We hope to enter more derivatives markets, such as OKEX, Binance, FTX; hope to be more automated, through graphical user interface GUI and API; hope to access more assets, spot and loans.

Yama: Thank you Deng Chao and Anand. Next are three questions for Itay, please ask Michael of Amber Group.

1. Can you name the three companies currently using Curv?

Itay Malinger: Then I will list Franklin Templeton Fund, cryptocurrency lending platform Genesis and multi-asset trading platform eToro. I must add that Franklin Templeton Fund is one of the largest listed fund management companies in the world.

2. Curv announced last year that it will cooperate with Munich Re, which provides insurance for Curv wallet users. Can you explain to us what this means?

Itay Malinger: This is a hot wallet, that is, a wallet connected to the Internet, and the only institution-level insurance you can enjoy, so far it is the only one. It is also the policy with the largest underwriting amount. For Curv, we believe that this is a major certification of our wallet service and an endorsement of our security agreement.

3. What major plans does Curv have in 2020?

Itay Malinger: Several great projects have started this year. Recently we launched API Key’s Secure Multiparty Computing (MPC) solution to protect the transfer of encrypted assets across wallets. This solution uses the same security and policy enforcement functions as Curv’s institutional wallets, but it mainly focuses on helping customers smoothly transfer encrypted assets between various non-Curv wallets. We have also launched a new Blackbox wallet solution. Customers can use Curv’s distributed signature mechanism to ensure the security of all their encrypted asset transactions, regardless of whether these transactions are conducted on the Curv platform. We have also introduced native support for multiple tokens, and more tokens will be supported in the future. Recently we announced native support for Stellar, and all Stellar-based tokens and BSV, and HBAR was added this week (no official announcement yet). More outstanding projects will be announced soon, all of which hope to bring innovative digital asset security solutions to the market to meet customer needs.

The resumption of the March 12th cryptocurrency market black swan event

Yama: Thank you very much. After quick questions and quick answers, let ’s move on to our core question tonight: Please review the black swan event in the cryptocurrency market on March 12. Zac, what happened to you and BlockFi that day?

Zac Prince: At any price in Bitcoin, as long as it does not return to zero, BlockFi can succeed. Of course, if the price of Bitcoin is higher, we will be more successful. Although we are a company registered in the United States, we have invested a lot of work with Chinese customers. From our point of view, the market volatility on March 12 was mainly due to the interruption of the cash flow of USD stable currency loans to Matrixport, PayPal Finance and Renrenbit, and to Chinese miners and exchanges. This interruption has lasted for several weeks before it was finally exposed in the panic of global financial markets.

Since 2019, hundreds of millions of U.S. dollar stable currency loans have steadily flowed into China, especially when platforms such as PayPal Financial and Matrixport realize that they can use their customers ’Bitcoin collateral to lend from the United States like BlockFi and Genesis The platform borrowed the US dollar stable currency.

About a month before March 12, market makers and hedge funds pay 20% higher interest rates than Chinese loan platforms to carry out arbitrage transactions on futures products in the futures market. We believe that the shortage of US dollar stablecoins on China’s loan platform has forced many companies, including miners, to sell bitcoin earlier than the originally desired time. In particular, do n’t forget that the halving of bitcoin will happen in May, and you do n’t want to sell bitcoin now. Eventually, such selling continued to intensify, and some lending platforms and exchanges entered the liquidation mode, causing damage to some borrowers. BlockFi has maintained our borrowing relationship with our customers, and co-operated with customers in difficult times when prices fell and triggered liquidation. Not only that, BlockFi maintains sufficient liquidity, and can use the 50% LTV ratio to immediately loan more USD stable currency loans to trusted customers, even when the bitcoin price drops to 3800 USD.

Yama: Thank you for the first-hand information. Indeed, we were all worried that the price of Bitcoin would continue to fall to $ 2,000, or even zero. But quite surprisingly, BlockFi was able to issue loans even when Bitcoin fell by 3800 USD. How to say that sentence: organic in danger.

Ok, let ’s talk about Su Zhu. In the trading area, Three Arrows is a crypto hedge fund that should not be underestimated, Su Zhu, can you please talk about your observations and your views on that day?

Su Zhu: I think the price changes in the market on March 12 were mainly driven by waterfall clearing of exchanges like Perm swaps. Bitcoin first fell from $ 7,900 to $ 6,000. Although it is large in scale and still going down, it can still be considered normal. The second wave of falling from US $ 5800 to US $ 3800 came too fast, and happened to catch up with so many exchanges that there was a chaos, and some market makers could not liquidate. The price difference between perpetual swap contracts and spot Bitcoin exceeded US $ 400 at one time, and more than 80% of open positions in most perpetual swap transactions were liquidated.

Before March 12, the market bulls had been over-leveraged. Therefore, the first wave of decline is a natural deleveraging, futures tend to spot, and the second wave of decline is full surrender. The fall from $ 8,000 to $ 3,800 is something most market makers did not expect.

Most importantly, there are many short sellers, such as Derbit and OTC. As the market went further lower, these short sellers scrambled for a delta hedge. In addition, some miners have borrowed USDT using BTC as collateral, and these loans must also be repaid. All in all, March 12 is a good reminder to the market, to avoid excessive leverage, to be cautious rather than greedy.

Yama: Indeed, you need to be cautious and not greedy. Now that OTC is mentioned, Paradigm must be heard in the transaction of derivatives OTC. Anand, how were you affected that day, and what do you think of the market that day?

Anand Gomes: I can only say that the market has collapsed. I can’t think of a better way to describe it. I was terrified at that time. I had not slept for almost two consecutive days. I dared not move away from the market for a moment or went to sleep. I was afraid to wake up and see that the price had returned to zero.

Obviously there is a market structure problem that needs to be solved-some people have called for trading all the fuse mechanisms, which is a prudent approach, but considering the fierce competition between exchanges, it is difficult to reach a certain consensus, because fuse means that the transaction volume is reduced And similar to OPEC, no exchange will automatically trigger a fuse because it means that the trading volume will only be transferred to another competitor’s exchange.

How are we affected? A few days after the market crash, Deribit’s trading volume fell by about 30%, but we saw the newly increased CME trading volume increase. I think the transaction volume will remain stable in the coming months until the macro environment of Bitcoin and the traditional financial market recover. Global financial market dynamics have a significant impact, because cryptocurrency transactions are largely retail transactions. With the advent of the economic downturn, retail transactions will be adversely affected.

Who should be responsible for this? It’s hard to tell, if I knew and could foresee, I wouldn’t build the market infrastructure.

Yama: Itay, wallets are a very important infrastructure in the crypto world. We know that one of your biggest customers is the leading loan platform Genesis Capital. From an institutional wallet perspective, can you tell us about the market on March 12 The idea of ​​a crash?

Itay Malinger: During periods of intense market turbulence, especially as experienced on Black Swan Day on March 12, customers need excellent system resilience. Fortunately, Curv’s platform is built for this kind of moment. We have encountered the largest transaction volume since its establishment, but it has never been down. Our customers always need to optimize transactions based on security, liquidity and controllability. The extreme environment like Black Swan Day shows the need for market participants to quickly transfer funds to the market or counterparties. Thank you to our customers. As they do every day (including Black Swan Day), our Multi-Party Secure Computing (MPC) wallet service achieves optimized transactions without sacrificing security, ensuring that our operational capabilities are not affected.

Yama: Thank you for sharing. Very rewarding. The following is to our observation guest, DC, now you can ask a question to a panelist.

Deng Chao: The 312 incident was a stress test for many players in the market. I observed that BlockFi performed well, so my question is what risk management tools or mechanisms does BlockFi provide to help users resist the impact of this Black Swan incident? ?

Zac Prince: Risk management is critical. Rene van Kesteren, the chief risk officer of BlockFi, once served as the general manager of structured equity finance business at Bank of America Merrill Lynch for 15 years, so he has rich experience in loan security and structure, even During the financial crisis of 2008 and 2009, there was no loss of a penny, and BlockFi was also lucky to spend 2018.

Our current risk control system has the most basic loan amount monitoring system, which adjusts the guarantee ratio according to the activities of institutions and individual borrowers, followed by the market health monitoring system, including feed price, exchanges and users, market depth monitoring Tools, the final monitoring system is for BlockFi to adjust the funds and hedging positions of the US dollar and cryptocurrency according to changes in market conditions.

Yama: Michael, I know you will also have a lot to share, but we will keep it until the next issue. Could you please summarize it in one sentence and draw a full stop for the discussion tonight?

Michael Wu: It’s great to hear these industry leaders share their insights today. In general, I agree with your analysis and conclusions on the market dive on March 12. As the CEO of Amber, in such a market, I think market risk management is the top priority. The crash that day put stress tests on the capabilities of market participants and the infrastructure for managing risks. Obviously, many people failed the test, and some people survived the storm in thrills. But those who can perform well at such moments, including our Amber and some of the guests present today, have shown a truly outstanding temperament, which is the backbone that truly leads the young crypto industry to the future.

Yama: Once again, thank you very much for your presence, thank you Lianwen and Winkrypto, without you there will be no Crypto Tonight. Looking forward to seeing you again. I say good night to everyone in Beijing.

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