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Anthony Scaramucci & The Wizard of Soho: Inside the New Age of Onchain Leverage | Markets Outlook
00:09:28
Anthony Scaramucci and Joy Pathak discuss how decentralized exchanges and 24/7 liquidity are revolutionizing market transparency and risk management, positioning crypto as a more resilient alternative to traditional finance.
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- [00:00]
Anthony
Foreign.
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Host 1
Is a man of many mysteries and even more alpha. On paper, he's a former quant analyst at RBS and rates trader at TD securities and the man who once managed a 40 billion dollar portfolio as head of global rates at Calpers. We are now joined by Joy Patak, the wizard of soho. Hello.
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Joy Patak
Hi. How's it going? Thanks for having me, guys.
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Host 1
Yeah, of course. Thanks for being here. How's your consensus been going?
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Joy Patak
It's been great weather today. I'm happy to be here. A lot of great information, learning a lot and happy to be chatting with you. Great guys.
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Host 1
You're going to be on stage talking leverage never died, perps, basis trades and the return of the degens. Talk to us about what you're gonna, what you're gonna talk about. What are some insights that you tell
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Joy Patak
our audience about exactly? I think we're in this new age of leverage, more so than we have ever seen in history, especially in crypto with all the new Dexes that are out. I think there's a lot of knowledge out there that people still need to learn. Everything from risk management to being able to use leverage to advantage. I feel like a lot of times people kind of don't understand that you can use it in a good way rather than just gambling. And I just want to kind of give that information out, help people become better traders and be able to utilize things more than just being a degenerate in crypto.
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Host 1
Anthony, you were at the institutional summit yesterday, right? When you think about your institutional partners and you hear the wizard talking about leverage and degens, how do institutions hear this message and take it in? Does he sound like a madman?
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Anthony
Well, he's. Well, first of all, he's very accomplished guy, he's very successful. So he's definitely not a madman. But I think what you're saying though, do we have a lot of fuddy duddies and old fashioned people in the institutional community? And the short answer to that is yes. So you know, listen, if you read the, it was about two weeks ago. If you read the article and the tension between Jamie Dimon and Brian Armstrong, okay, about where the world is going and how there's a group of people wanting to hold the world back, of course they're not going to like the wizard of Soho or me for that matter, or Brian. But the truth of the matter is he's going to win because he sees the future and he sees the efficacy of the technology. And this happens. Guys, you know, listen, do you think that the horse and carriage owners were in love with the horseless carriage and they were like, yeah, let's bring on the horseless carriage. They had no bid, had no interest in it. Okay, so he's going to be right and they're going to be pissed off about it.
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Host 2
Tell us about leverage in the ecosystem. So we have the trad 5 world where things are a little bit more opaque and then we have the on chain world where we can see what's happening aave. We can see when people are looping collateral, we can see when things start to fall apart. Over the last few weeks, as we've seen bitcoin price and a lot of these other assets collapse. Where have we seen in the tradfi world some of that leverage be exposed or have we not? And where on chain have we seen it being exposed?
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Joy Patak
No, for sure. That's a, that's a great point. You know, me personally, you know, I came from tradfi background and being able to see that difference, especially like if you, if you go in crypto, like you know, maybe a couple of months back, leverage was not the way it's now and it wasn't on chain the way it's now. The onset of dexs like, you know, guys like hyperliquid aster that have completely changed the game. You've gotten institutional type of leverage and exposure to the regular Tom, Dick and Harry, right? Something that they didn't have. And you can see all of that. Everybody can see it. For example, if I was, when I was on my, you know, at RBS or TD or at CalPERS, whatever positions I took on, what leverage took on, nobody knew. Now I can go put a position, you know, you see multi billion dollar leverage positions out. The entire world sees it. And that's part of decentralization, right? You want to be able to see everything. You want to be able to have everything disseminated, clearly have the, you know, even playing field. And that's where, you know, as Anthony was saying, I feel like if you're not part of that new world and you don't accept it and you don't utilize it, I think that's the most important part. There's so much information out there, so much on chain analytics out there. If you're not taking that in and if you're just in that mindset that no, I'm going to stick to my old ways, I think you're going to get left behind by a lot of people out there.
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Host 2
Just follow up on that. So I think the uninformed mind or the naive mind Might think that on chain analytics gives us the ability to see leverage. So shouldn't there be more tempid risk taking out there where people aren't going to go leverage long and explode versus TradFi where you can't see everything. You can't see where all the sharks are. So why are we still hitting these spots where like 10, 10 we had so much leverage and then explosion. And then this last week we had so much leverage and explosion. If we have on chain markets, shouldn't we be able to.
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Joy Patak
So I think, I think I get what you're saying. So I think there's a couple parts of that, right? So I think one is you're giving. There's all in trading world you have people, you're coming in. You know, there's a, there's a path to becoming a trader, for example, right? You have to go through a whole program. You have to understand risk management. Here you just kind of, you could say in a way you're giving like a young kid a loaded gun, right? You can go and put 100x with all your network with no risk management, no guardrails. But there's a, there's a learning process in that. There's a process where there's a lot of efficiency that will build up. Right now we're in a world which is great. Like if you're a trader, investor, you want markets that are not as efficient. You want people to be able to take this because you can take the other side and have, you know, you can make money. Remember zero sum game, right? End of the day. So yes, it's good and bad. You have situation like 10:10 because of it. But also you learn from it. The market grows, the market gets more efficient, less opportunities. But at the same time you, you know, it's all part of different building blocks of how leverage is going to, you know, turn more and more efficient. But part of that there'll be hiccups and I think that's part of growth. You saw that in trad fire world. There was, you know, there's the Black Fridays, the Black Mondays, the Black Thursdays. You've seen that historically. You're just seeing that in a much more expedited way in crypto. And that's just the world we live in now.
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Host 2
Anthony, if I can follow up with you there. So from your time on Wall street, how did you see that replicated? Is it similar, like, similar process over the last 30 or some years of seeing Wall street change and add new innovations in that make it more Clear or less clear where leverage is.
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Anthony
Remember Wall Street's inclination during crashes is to slow things down. Crypto's inclination is to accelerate things. And so don't underestimate that. And remember Wall street, we're going to open the market at 930, we're going to close the market at 4 o'. Clock. Crypto, we're running things 24 7. So to me, it's weird to say this as a former trade fight person, but this is a safer market. Why is it a safer market? Because if you're a trader and you know, at 9pm on a Sunday you're out, 9pm on a Saturday, you're out, then you can adjust your brain to that situation. But on Wall street, it's 4pm, the market's closed and now something bad happens somewhere in the world. You know, you know, you're in a tougher position. You can get out, you find somebody to sell it to, but you don't have a fully liquid market. And remember, when bad things are happening on Wall street, you've seen pockets of bitcoin and other big liquid tokens get hit because they don't have any liquidity anywhere else. I'll just make one last point in. In 2023, when we had the banking crisis with Silicon Valley bank, we saw the rise in bitcoin and it was really happening over the weekend. So to me, it's a better market, it's a safer market long term, despite the fact that it looks so volatile today.
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Joy Patak
That is a great point. Like especially you couldn't hedge yourself, you know, in tradfi, like, you know, I was a bond trader, he's called the wizard.
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Anthony
So he said it was a great wizard. There you go. Keep it up. Keep. What else? Are you saying I keep going?
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Joy Patak
No, no, that's great. I'm just saying, like it's great that you can hedge yourself in this market. You couldn't do that. Like if I was on a bond desk and I had a position that I put on Friday, there's no way I can get out of it. You know, the world could be ending.
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Anthony
So you won't put the position on. Yeah, see what he just said? So he's not going to put that position on because he can't get out.
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Host 2
Yeah.
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Anthony
If there's an exogenous risk, that happens and we're in a world right now where there's a lot of anticipation of exogenous risk.
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Host 2
On the flip side though, it's a less liquid market and we have over the weekends, historically more ups and downs in bitcoin on those Fridays, right?
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Anthony
For now.
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Host 2
So where do you see that sort of part of the industry growing? Does this require more participants?
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Anthony
Does it require more infrastructure, more liquidity, more participants? Clarity. That's why they call it the Clarity Act. You have more regulatory clarity. There'll be better guidelines and there'll be banks will be entered a space. You know, you know, we will be winning, to use a Charlie Sheen word on this program, we will be winning when you can custody your bitcoin at a money center bank and even possibly get yield from that bank off of your bitcoin.
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Host 1
All right. We're going to leave it there. Maybe winning will be trending on the wizard of winning. There we go. We got the wizard of winning at the desk. Thank you both for joining us. We hope you enjoy the rest of your time at Consensus.