B (4:08)

And one question that comes up a lot that I'd like to just kind of ask right away. How do you sort of segment the prop trading, the trading you do on your own book versus the market making? Just, just ensure there's no conflicts of interest or no shadiness going on.

A (4:25)

I think it's, I think it's less about like separating market making from other strategies. But honestly in the modern world, even if you look at TradFi, basically nobody does pure market making anymore. In order to run successful market making strategies, you need to run a bunch of strategies all inside it. You need to run a bunch of signals that basically enhance those market making strategies. So basically let you be out of the market when it's too volatile, for example, or jump right back in if like, if you are more sure about the prices, that happens. So it's less about segregating different strategies but more about like having a. Yeah, more comprehensive black box if you make.

B (5:09)

Okay, gotcha. And I want to get into some of these, I guess some of these functions in more detail, but I think we'll be able to do that through our discussion Taking questions. So I guess first I want to discuss some of the key findings from your recent 2025 OTC report where you sort of kind of give a layout of everything that happened last year in crypto. And in particular one key focus or one key point was the fact that alts did not have a good year and most trading activity, most liquidity concentrated in the Mega Cap tokens, primarily Bitcoin and eth. Could you please expand on that?

A (5:52)

Yeah, I think a big challenge currently is. Well basically last year and year before that there was a pretty big surge in basically beam coin trading, especially on Solana but also beyond that and there were basically a bunch of factors that led to that. First and foremost I think there was a growing dissatisfaction on retail side of things that they are getting into tokens at a much later stage. So basically venture capital firms get into those tokens with like early and when tokens are released for trading it's basically too late for retail to make money. And that basically kind of proliferated platforms like Pump Fun where people had at least maybe potential, well most of the time really illusion of getting into things early and basically being able to make this 10x100x. I'm basically trading something very early before anyone else. But in reality what happened is instead of focusing on a bunch of venture backed tokens, people started trying to guess which of those millions of meme coins will work out on any given day. And it just became very much unsustainable. The capital became very diluted because it's just, well it's the same amount of retail money competing for millions and millions of those meme coins and it basically inevitably resulted in basically market crash of 1010 and beyond where basically both retail and bunch of liquid funds as well just lost a lot of money because the system was too leveraged but the liquidity was too seen and the system just couldn't handle it. And post 1010 basically people just like yes, there was was a very clear flight to quality at least on crypto side of things where people just decided to park their money either in Stablecoin or Bitcoin or Ethereum, maybe Solana.

B (7:53)

Okay, yeah, that is. I want to get into the retail psychology a little bit more because that is particularly interesting. But let's first focus just on the mega caps again because again there was the fight to quality but then there was also a big surge in DATs and ETFs especially in the beginning part of the year had some additional inflows. Can you maybe explain a little more what you saw there and in particular what you saw through the end of the year in particular, sort of, I guess how sustainable or what you expect to happen price wise as we move into this year given the fact that I would say after a liberation day or so, Crypto. But Bitcoin, every asset, including the big ones, struggled.

A (8:41)

Yeah, I think digital asset treasuries definitely also contributed to this. I don't know, the whole space being too diluted. Just again there are too many things to basically invest into. So you have a bunch of ETFs, you have a bunch of dots, you have a bunch of tokens and perpetuals and everything else listed. So those dots, I think people didn't expect them to basically fail and crash and burn so quickly. But like again post 10 10, that's basically what inevitably happened. And a lot of them are trading basically way below net asset value, which is only natural. And I think it will take quite some time for the market to get back to. Well, people being like excited about those dots especially for that are like focused on. Yeah, not, not the, like, not, not Bitcoin, not Ethereum, but like in some like very, very long tail, part of, part of the curve.

B (9:41)

Okay, so I'm gonna. How does that change your business then? I'm, I'm curious. Like when, when investor interest spins out, it gets concentrated in these large tokens that are already pretty liquid. How does that change what you guys do?

A (9:59)

Honestly, not much. Like our obviously operating principle, we are trading but like they're busy trading where volume is. So if volume is primarily concentrate on Bitcoin, we'll trade bitcoin more. But there has been other developments in the crypto as well. Like there had been search and basically tokenized gold, gold perpetuals as well on a bunch of platforms as well. So they actually shift in focus towards trading commodities. They're shifting focused towards for example equity perpetuals as well. That looks quite promising. So basically our operating model is just focus where the market interest is at current moment. So we're not struggling in that regard.

B (10:47)

I'm going to talk about all of that or ask you about all of that a little bit later. But okay, so we kind of handled spot, but we also saw a big explosion in derivatives in particular options. And it's a good thing in many ways because it creates more mature markets, it makes things safer for institutions to come in because they could hedge, but it also dampens volatility and that works.

A (11:09)

Way beyond Bitcoin as well. So we've seen a lot of this covered Call yield strategies across the whole curve all the way to long tail assets, even on the interest side. So I think we will most likely see the continuation of this this year. So I think we will see a lot more interest and people continuing expressing interest in trading options and enhancing the basically yield parameters or what's not by using those more complex instruments. But I think when it comes to retail, retail will probably still stick to users perpetuals, unlike in traditional finance where people are quite frequently using options to get leveraged. Like I think it's still perpetual so it'll be the product of choice for retail and crypto.

B (12:00)

Okay, and you operate worldwide including in the U.S. correct?

A (12:04)

Yeah, basically we have three core offices. London, Singapore and New York.

B (12:10)

I'm curious how you see engagement in derivatives and options in particular, how that differs geographically like in Asia versus perhaps the US levels of maturity and in particular how those instruments are used.

A (12:28)

I think in Asia it's primarily focused on basically your generation, while in the west it's a lot more complex basically. So I think it's basically like yeah, the sophistication is a lot more on the, the investor side of things.

B (12:46)

All right, so and I'm curious, how do you decide which tokens to, to participate in? I mean, I mean I assume you sometimes you work with the exchanges, sometimes you work with token issuers themselves. Like what is your thought process when you're evaluating a potential client?

A (13:04)

It's primarily volume. Like I mean there are, there are like a bunch of, there is quite some due diligence process going through this. We are like really trying hard not to work with somebody scamming, like to put it very, very directly. But ultimately it's all about. Yeah, I mean I wish like everyone in crypto would pursue like the same principle. But like that's definitely what how we operate. But generally it's all about volume. Like we, we do try to work with tokens that we expect to well have significant interest. Just basically like either on DeFi, on CEFI, OTC, if a token is not expected to trade much, we probably are not going to engage.

B (13:48)

And where do you think retail attention is going to go next? If alts, traditional alts are struggling, Meme coins have flamed out, NFTs are, they're struggling as well. For lack of a better term. Where do you think this altcoin attention is going to go? Is it AI, is it like exotic derivatives based on tech stocks that are tokenized? Like what, what do you think?

A (14:16)

I think what we already see in, well first of all, commodities well, gold and silver and specifically equity pers basically like Nvidia Tesla of this world. Yeah, I'm pretty sure there is. Well, there's going to be a lot more interest on those primarily because it can just get leveraged that way and prediction markets. So that's going to be even bigger theme for this year because we see, well, basically caution poly market competition will just continue. I do think we'll see a lot of other sort of smaller competitors popping up more and more. So yeah, I do expect a lot of interesting things happening in prediction markets as well.

B (14:54)

Do you work with prediction markets?

A (14:58)

We're better looking at it. It's not necessarily like it's like on the, how do you call it on the volume side. It's not necessarily like the most interesting market, but we do see certain events. Obviously sports betting is like very interesting from that perspective. But yeah, we are looking to insert ourselves just like in the crypto. Yeah. Rare volume.

B (15:22)

Yeah. I'm curious your sense of like how honest production markets are because I'm sure you've, I mean you've studied this extensively. It sounds like. And I'm sure you've wrote stories about and you've seen it. I mean concerns about insider information and in the US like sometimes trading on that on polymarker Kelshi is not even insider trading because of basically how certain laws are defined or the fact that markets that are somewhat thin, they can be moved by, by big traders that are not trading on their honest expectation of events but because they feel that there's a way to manipulate the outcome in a way that won't be materially beneficial to them. I'm interested in your thoughts on what are some of the red flags that you see or what are the safest ways to engage with prediction markets. For people watching and listening who I'm sure already are.

A (16:16)

I think it's a, it's a major problem for market makers primarily because, okay, as a retail participant, okay, like if there is inside trading or any kind of like manipulation in certain market, okay, it's more or less 50, 50 for you. Like you can be like, it can go either way. You might actually be on the same side as inside and then you're lucky. But as a market maker, it's, it's Beijing very challenging because if you want to actually provide liquidity like in a big size, it obviously works really well for the insider because then suddenly he can trade even more and make even more money because he has access to information that we are not that we don't and so it's definitely consideration. So we are. Yeah, we definitely would be a lot more careful providing liquidity on markets where we do things. That is like high chance to. Yeah. To have inside information surface in one way or another. And I think it's also a difference between culture and polar market to a degree because. Well, because culture is KY seed and poly market is not like. Yeah, there is definitely. Yeah. More challenge. It's definitely more challenging to provide liquidity on poly market because of that. Because it's even harder to basically catch somebody if somebody has inside information.

B (17:29)

That's really interesting. I didn't think of it that way. That essentially you could be the sucker at the table in a way if you're providing deep liquid markets that are, that, that, that are fundamentally unfair. Whereas the someone like, like me, you could actually down and be on the right side of the person manipulating it would, would benefit. That's, that's pretty interesting.

A (17:50)

And in the way we also sort of incentivize, like Vincent, like if we provide a lot of liquidity, we even incentivize even more for people to actually use incentive information. Because if it's really like same book and you cannot really make a lot of money by using insider information, you're probably not going to do it. But if there is a lot of liquidity, actually. Okay, I can make like 10x more, 100x more compared to what I could have made before. And just. Yeah, it's crazy. It's like really weird incentive loop.

B (18:17)

Yeah, it is.

A (18:17)

Yes.

B (18:18)

You have to be very careful. So I guess just to be clear, have you engaged in prediction markets yet or you're still trying to find the right strategy?

A (18:26)

I would say safe to say the experiment. Yeah, I think that's, that's, that's the best I can indicate at this moment.

B (18:32)

Okay. And I want to talk a little bit also maybe go a little more detail into tokenized equities, like curbs related to traditional securities. We'll get to commodities a little bit too. But how are you thinking about that from Yerk, from your business? Like, how is that similar to the business lines you already operate? How are there any important differences? And in particular too, I know there's been some controversy I don't have. Controversy is the right word. But it's difficult to stand up liquid markets for even ostensibly liquid assets if they're new. On Robinhood's Arbitrum offering, for instance. How do you help bootstrap that so that when people trade these new versions of assets, they're making sure that they're getting the best possible price. They're not enduring too much slippage.

A (19:28)

Yeah, I think the biggest challenge was. Well basically with anything equity related on chain or with equity perhaps is basically training when the key market is not open. So basically train during the weekends for example. And that's ultimately the biggest challenge from last. Well basically last year a lot of news typically now happening over the weekend like Trump loves announcing stuff on Saturday and those things tend to move the markets and you could sort of build a model which will make things move in a fairly correlated way. That's not necessarily the biggest challenge, but a really big challenge. If he does something that changes a specific sector or one company, he announces something like, I don't know, Ben's chips export to China or something like. Basically something that can affect Nvidia only then it becomes really challenging to make markets in Nvidia on Saturday for a market maker. Like if it's because everybody rushes in.

B (20:32)

Because traditional markets are closed so it puts a lot of strain on you or I guess.

A (20:38)

Well, it's basically you can get arped by people who are basically doing homework better than you. So like if you are just quoting Nvidia where it traded on Friday evening and you just like ignore all the news and somebody is actually watching the news really carefully or even like automates their like I don't know, arbitrage or scratch just based on Twitter news or something like this. Yeah, you basically. Yeah, you, you again like you have asymmetry of information. You can get exploited. So it's. Yeah, like I wouldn't expect there to be a lot of liquidity during the weekend in those tickers for quite some time.

B (21:15)

And so what's the disclaimer that nothing on this show is financial advice. What is your sense? Do you have any tips for people listening, watching here that are perhaps trying to be opportunistic during times like that when there is news to make sure that they're doing it safely or that they're not getting too far ahead of their skis.

A (21:39)

Good question. Yeah, I would be very careful positioning myself over the weekend. Not basically ultimately not to be too leveraged. And also be really careful with equity per platforms because like those tokens or those like equity perpetuals, like it's relatively easy to manipulate them during the weekends. And so you basically can get liquidated if somebody like pushes the price too much down or too much up. So that's I guess like the main. Yeah. Thing you need to be careful if you, especially if you deal with equity Perks, because yeah, liquidation risk is like very real and very not theoretical.

B (22:22)

Okay. All right, so let's switch gears for a minute. One of the reasons I like bringing on people like you is that you really kind of sit at the, the nexus or intersection of what all the smart money is doing in the space. So it's a really great opportunity for me to ask you what is happening and, and perhaps get some, get some inside information in a, I guess between us and just a few thousand friends. But it's hard to have any conversation about crypto and not discuss gold, silver, even now copper. I mean, you read the broadsheets and it seems like some of these assets are completely detached from reality. And because this is a crypto show, it's deflating for people watching and listening to not see bitcoin joining in the fund. So what are you seeing? And in particular, I know you mentioned how you're getting involved in tokenized gold and that's a real growth area in crypto. So maybe you could talk about both sides of the trade.

A (23:23)

No, I mean it's really challenging to be like in crypto and see this massive equity rally, massive gold rally. Like, I don't know, like we do have an adventure arm and like, I don't know, three, four years ago, like every venture deck would be like, I don't know. This is a market cap of cryptos, this is the market cap of gold, this is the market cap of equity. And I was like, this is market cap of crypto, this is market cap of gold, this is market cap of equity. So it's like crypto didn't change at all. And like percent is going up and yeah, it's kind of sad, but it's also, I guess like in hindsight it's like, it's, it's more clear like why this is the case. Like crypto, like first reason. Yeah, crypto has been very range bound. Well, not popular crypto, but like bitcoin specifically, like has been very range bound like last month or so. So it just doesn't look like a volatile asset anymore, which is very bizarre. But it is basically the perception that a lot of people have gold. On the other hand, it just keeps going up. So it's basically somehow has a lot more crypto like characteristics, if you may. And yeah, that's being driven by strong demand from retail. It's being driven by strong demand from sovereign governments as well that are basically selling treasuries and buying gold. So it's. And yeah, you want to as a market participant. You want to participate in a fun asset, not in something that is being range bound. So it's kind of sad, but I also kind of understand why it's happening.

B (24:58)

I have a few more questions about gold, but before we do, we have to take a very quick break so we can hear from some of the sponsors who make the show possible.

A (25:07)

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B (25:30)

So we're back. We're talking about gold and I do have one question that we're seeing a big surge in tokenized gold. But one of the oldest investing adages is that people should be fearless when others are fearful and vice versa. What do you make of, I'm just curious market timing. So many people rushing into gold now and I know it's not enough to size have a meaningful impact on the size of the gold market cap. But everyone rushing into gold now to get exposure, do you think that they're going to end up being the suckers? Is this now still a good time to buy or are you seeing any traders in particular on your platform doing anything unconventional that perhaps is sort of like counter to the prevailing narrative? That's worth pointing out.

A (26:21)

Yeah, I don't necessarily feel like I'm equipped to give advice on that particular thing because yeah, it's a pretty, it's a pretty weird move. Like we haven't seen move like this in gold like well, ever pretty much. And I would typically say like okay, you can.

B (26:37)

Yeah, I was just gonna say maybe I can then because I can participate in wildly and with little fear of consequence. I'm just kidding. But it is interesting. I mean you see gold going up 5,400, $5,600 an ounce and that just seems to be completely detached from any sort of fundamentals. And I understand the whole all the narratives out there, the base control, lack of confidence in the U.S. the fact that interest rates are still, interest rates are still somewhat elevated. So bonds aren't necessarily going to rally point yet. It's a perfect storm of things to really help gold soar at this point. Even when central banks actually pulled back on their buying a little bit last year because they only get too overweight. So it's one of those I do Wonder what's going through the mind of people buying tokenized gold at this point. Because you're buying in at the very, very, very top of the market. And there's plenty of people that have said that months ago and it's still going up. So maybe it's not the top of the market, but it seems very toppy. But at the end of the day, maybe that's necessary to kind of get tokenized gold into the marketplace now so that the next time this happens. There's already this existing supply. It's just something that I've been sort of thinking about. So I didn't want to put you on the spot again. So this was sort of my thoughts. I'm curious if you had any reaction to that or if not, again, I'd love to know kind of what you're seeing on your platform. Like how some of the pro traders. Do you see people buying tokenized vault or are they rolling back into Bitcoin or other assets? Or maybe we're going to get tokenized silver one day, I don't know.

A (28:23)

No, like, we do see activity both sides. Very interestingly, we are seeing a lot more activity on the option side with people basically looking, for example, to sell covered calls on gold. So, yeah, basically looking to get some extra yield, which is a pretty decent strategy if you have a target in mind. If you think, okay, like, if gold goes up another, I don't know, $500, I will definitely sell. So why not just sell some out calls there anyway? So, like, worst case scenario, I'll just get some yield on top. Yeah, it kind of depends. Like back to your original question. It also kind of depends, like, where you are. Like if you have a portfolio in mind and you're just saying, okay, gold should be, I don't know, 1% of this portfolio, 2% of this portfolio, you can just keep it and see what happens. If you're like me and like, I don't know, for me, gold, like I became sort of like reluctant holder of gold like a couple of years ago because I thought, okay, like, I just need to diversify. Now. I'm like quite happy with it, obviously. But yeah, I did start selling today, for example, because it does feel like a bit overheated. But yeah, I'll see. I'm definitely not selling everything because I do think it's a pretty important part of one's portfolio. Basically, it's a pretty good, like on the diversification engine.

B (29:41)

Yeah. Lock in some of those profits. Now, what did you buy with the gold or did you just sell it for dollars, I may ask?

A (29:49)

I bought some defense stocks.

B (29:50)

Okay, fair enough. Okay.

A (29:55)

Which are also going up.

B (29:57)

Yeah, well, it's earning season. So what's your reaction to what happened in the Fed? With the Fed yesterday holding rates steady for the first time since last summer, it seems from I guess Chairman Powell's press conference after the announcement that they're very much a wait and see mode because they get the sense that the current rates are not sort of propelling the economy forward, that they're not too restrictive. Inflation is somewhat steady, even if it is elevated. And the job market, notwithstanding recent announcements from the likes of. I think it was Amazon this morning, seems to be healthier as well. Like, like what, what is your sense? And, and, and do you do anything or are you seeing any interesting ways that clients or, or traders that you participate in marketplaces, that you participate in, how they're sort of aligning around the Fed?

A (30:51)

Yeah, I mean, first of all, like now we have a lot more instruments on prediction markets to basically, well, either bet on those outcomes or like hedge those outcomes. That's pretty interesting development. Now, like obviously in tradfi, like more sophisticated traders always had this possibility, but now pretty much everyone on the street has access to this, which is. Which I think it's a pretty positive development in terms of like why Fed does what it does. Like the explanation makes sense. Look, I mean, all the assets, like still going up. It doesn't sound like it's a. Yeah, doesn't sound like there is a massive urgency to cut the rate at the moment. So if anything is. Yeah, feels a bit overheated, if anything. Yeah. Okay.

B (31:40)

All right, well, we're getting close to the end. I have a few more questions and then we'll wrap up. Do you do anything in tokenized credit or is that a marketplace that you're looking at?

A (31:51)

Not, not really. Basically what we are looking at, basically into RWA space as a whole into basically more like on tokenized money markets. That part is quite interesting for us to apply ourselves both as a liquidity provider during normal times, but also the liquidity provider fast resort during the weekends when the liquidity is pretty thin in those tokenized credit is something that we have sort of like indirect exposure towards, like some DEFI protocols. For example, like we incubated one of them called Wildcat, so they, they actually do tokenized credit for market makers, including ourselves. But generally I haven't seen that much experimentation from sort of like Web2 space trickling down into crypto yet on that Side. But yeah, it's definitely. Yeah, I think I wouldn't be surprised if you see more, more of that.

B (32:48)

All right, so what are some of your big expectations for this year? Like what are a couple of the core themes? I know we've already touched on a few, but what are you expecting this year and in particular do you have any sort of counterfactual or contradictory thoughts that are sort of against the prevailing narratives that you'd like to share?

A (33:09)

Well, I guess like the. One of the key things that people are looking at is obviously the market structure bill. Whether it will pass. It doesn't look very promising unfortunately. So our expectation is it's actually more likely it won't pass, unfortunately this year. And if it doesn't pass this year, it's quite unlikely it will actually pass until the end of this administration in particular because of midterms. And yeah, midterms is something that everyone is basically sort of looking forward to in terms of basically getting volatility back and basically seeing how they can participate in the outcome of that, whether it's prediction markets or crypto prices. I think my less conventional opinion would be I don't think that the crypto bear market will last too long. Actually like fairly optim. Relatively cautiously optimistic like despite the market structure bill not passing. Like I'm still cautiously optimistic that it will start recapturing the mind share closer to the mid year. But yeah, honestly we'll see. Like there are just so many components in play like from AI to geopolitics to fat to pretty much everything else.

B (34:30)

A couple of follow ups. What do you think would be the main catalyst for sort of ending the bear market? I think it's all about structure.

A (34:39)

It's honestly all about mindshare. So basically once mindshare is going from commodities and AI for whatever reason, people basically always want something new in shiny that might potentially go up. And crypto is traditionally, it cannot be not interesting for too long. At some point people will switch back and saying okay, like this thing, I don't know if bitcoin is range bound for another six months. At some point people will be like, okay, that's actually enough and enough is enough. And yeah, at some point it should go up, I might as well buy now.

B (35:14)

And I'm curious, what do you think would be the impact on crypto and your business if market structure doesn't pass?

A (35:24)

I would say for the next like two, three years. Not necessarily a lot because generally like one positive thing with this administration is where we have very, yeah, like Very. I would say friendly regulators in largely on the SEC and CFTC side. So from that perspective it's. Yeah, it's not like scary to be encrypted at the moment. It's more like if this admin changes, like if Democrats are in power like after the next presidential elections, not having this framework to back you up can be potentially devastating because yeah, new SEC and new S EFTC can just do whatever they want because they won't even be constrained by any legislation. If you can get this legislation done, it can actually be a pretty big constraining factor for unfriendly regulators. And if you don't have it then non friendly regulators can be potentially. Yeah, pretty bad.

B (36:23)

I wanted to ask, I think one more quick one. I'm curious if you give any thought to x402 that the new protocol developed by Coinbase to sort of help agents talk to each other and engage in commerce and how that may impact your business moving forward.

A (36:39)

I don't think there's going to be like a massive impact on our business necessarily. So I think it's more of. Yeah, like on the stablecoin side is definitely a pretty interesting development because it just further propagates importance of stablecoins in the digital economy. Yeah, it's interesting. I think it's like. I do think we'll see a lot more experimentation on the agentic side and I think it's one of the more interesting sort of like AI crypto interactions in general.

B (37:07)

Great. Anything else you'd like to share before we wrap up?

A (37:13)

Yeah, no, not really. Just I guess looking forward to how the. Yeah. Develops because yeah, like it's last year was yeah. Quite fun in terms of all kinds of events that we've seen, especially outside of crypto. And so yeah, it's. Yeah. I do expect to see similarly fun years this year, which is great for market makers and it's great for traders who are not afraid to take positions. But it might be quite stressful for people who just like. Like to buy and hold.

B (37:42)

Yeah, absolutely. Volatility is your bread and butter, I guess. Right?

A (37:47)

Yep.

B (37:48)

Okay.

A (37:48)

All right.

B (37:49)

Well, Evgeny, thanks for. For joining. We'll have to have you back on. Thank you to everybody for. For watching and listening and tune back in next week for another episode of Bits and the interview.