trad.var retweeted
Insanely bullish on a team who knows that dealing right away with critical questions from smart people on CT is extremely good marketing
Variational
trad.var retweeted
Just out of fun/curiosity:
Variational is becoming more RWA-focused & institutional, while most coins outside the majors add risk, not quality
Would it be better off trimming its 430 crypto markets?
11%Yes, keep only the top 50
11%Cut the illiquid ones
22%Later, as swaps scale
56%No, keep all 430
9 votes • Final results
Half the timeline is the Battle of OMNIFUD
Half is bros finally realising republics are fake & ghey & the Galactic Empire was strong, disciplined & purposeful
trad.var retweeted
Thanks to @koolkrypto223 for his comments, I do not see his post as FUD at all but rather constructive discourse.
On single dealer
I think we've been quite transparent about being a broker-like model rather than an exchange. This actually necessitates the use of a single dealer: unlike spot assets, derivatives in crypto cannot be transferred between different exchanges. If we were to route your order split across 5 exchanges, you would not want to see 5 different positions displayed in your account. You want a sophisticated counterparty to do the liquidity aggregation. We've achieved the benefits you describe:
✅ more listings than any other DEX
✅ best in class liquidity on any asset class even as a new entrant
✅ liquidity aggregation of the best primary venues; no need to open 20 different exchange accounts and keep switching between them
On the moat
Bringing all of TradFi onchain will take years, if not decades. Swaps, for example, are a fundamentally bilateral contract that cannot be replicated by DEXes, and I don't even think any are trying. This is the first time we've seen direct TradFi liquidity ported onchain with stable funding rates (the routing actually doesn't touch a single crypto venue). Getting the partnerships in place for this was not easy; I think we'll see the same type of consolidation into a few winners as we see with CEXes, DEXes, and TradFi brokerages.
On price discovery
Our opinionated take:
a) You do not give a flying fuck as a user where price discovery is happening
b) In fact most users should not touch exchanges directly at all
Currently, no price discovery happens on any DEX, except in very niche scenarios. To say otherwise is massive cope. To build a venue for price discovery means catering to the very fastest HFTs: wake me up when DEXes have matching engine latency on the order of nanoseconds. Do a lead-lag analysis on prices between DEXes and CEXes, or DEXes vs CME, and it's obvious where price discovery originates. The only question is do you want a shallow clone of TradFi liquidity or direct access?
As a user, you primarily care about best execution, and that's what we optimize for. Additionally, the reason why brokerages exist in TradFi is to add another layer of protection between the user and the exchange.
▶️ When 10/10 occurred and billions of dollars of ADL were forced upon users at other venues, Variational came out squeaky clean.
▶️ When Binance was hacked for billions, we immediately put out a statement that said that user funds are safe in self-custodied smart contracts and not moved to offchain hedging venues. OLP puts up its own capital for that.
Variational Pro
Variational Pro will be multi-dealer: you will be able to request a quote and dealers will bid for your flow. This increases the complexity of the product but will have massive unlocks for institutions, including allowing for subnetworks of markets where OLP is not involved.
If two parties want to trade swaps or other derivatives peer-to-peer at infinite size we will facilitate the infrastructure for order matching, clearing, and margining for that.
Reminder that the tech for this has already been built; it's the same underlying protocol that clears billions every day for Omni! I hope you will see our vision to bring TradFi onchain is a multi-year one and cannot be cleanly segmented into "oh it's just a DEX" or "oh it's just a CFD broker". It's so much more than that and we encourage everyone to follow our roadmap which we publicize on our docs page.
The discourse over @variational_io is...bizzare.
Everyone knows it's a single dealer RFQ platform (or at least I'd hope by now).
This is neither inherently good nor bad, but it should shape your expectations.
Similar to a CFD broker, I'd expect Variational to trade at lower multiples than actual exchanges. IG Group trades at ~half the multiple of CME for example.
There's nothing terribly new or interesting about "RFQ", I'm not sure why people think it's a big value proposition or moat.
The real value prop of Variational is that in crypto, UI for DEXs is largely solved, and UX all comes down to liquidity. Variational can potentially list assets faster, get better liquidity on long tails, and generally abstract away a lot of the awkwardness of bootstrapping a brand new marker that a CLOB has. This has been and will likely continue to be enormously successful with their RWA swaps.
That's a very real value prop, for now. The problem is that they have much less moat than actual exchanges; they are not the venue where actual price discovery is happening. It's significantly harder for TradFi entrants to replicate what @HyperliquidX has built than it'll be for them to do what Variational does, but better. B-booking retail crypto traders and points farmers in OLP is enormously lucrative now, but how durable will those margins be over time?
Depending on the exact flavour of regulatory clarity we get, the value prop they offer for TradFi liquidity can pretty easily shrink as more TradFi market makers are willing/able to quote directly on permissionless CLOBs. I don't know where regulators will land here though; there's worlds that it's very good for Variational and very bad.
I see Variational as more of a bandaid fix/reg arb, but a lot of crypto falls into that category. It's attempting to solve a very real issue, but will that issue be as prevalent in 6 months? 1 year? 2 years? Hard to say.
Personally, I see $LIT and hyperliquid:native as more pure expressions of longing the proliferation of perps as an instrument and DeFi as a sector, where as I see $VAR as more of a business with more operator risk, but it could easily print money for months-years. $GMX might be a good example in that it printed fees for a long time and then eventually became more obsolete.
I actually don't think any of this impacts point price much at TGE, and that's what everyone seems to care about. Market conditions at the time of TGE probably dictate $VAR performance way more than any of this.
Just out of fun/curiosity:
Variational is becoming more RWA-focused & institutional, while most coins outside the majors add risk, not quality
Would it be better off trimming its 430 crypto markets?
11%Yes, keep only the top 50
11%Cut the illiquid ones
22%Later, as swaps scale
56%No, keep all 430
9 votes • Final resultsGood dive
I will say, JellyJelly isn't the best example, you are incorrect when it comes to OLP potentially blowing up. Skew and total oi are capped as a percentage of FDV, and OLP will reject large one-sided positions on shitters like JellyJelly.
Limits tighten further with lower liquidity (less hedging venues). There are also per-user limits (acc level gross/net notional caps), individual mkt position size limits and individual order size limits.
Their risk parameters wouldn't even have let it happen in the first place, and any absolute losses would have been significantly smaller.
GME is different as the underlying FDV was way bigger, meaning oi caps/risk limits would be a lot higher. However, extreme one-sided flow would still hit the skew or aggregate limits and be rejected, so there is that to consider when it comes to risk on short term one-sided volatility. There are also significantly more external hedging venues in this scenario, and with OLP not always hedging 1:1, they have more depth and access to liq.
There is an argument to make in favor of OLP in this scenario, given they can hedge properly throughout an event like this, they would make even more money and spread revenue would increase with volume and volatility. Regardless, I think the possibility that OLP loses money here is more likely than other scenarios involving lowcaps. I lack the technical understanding to go deeper here but would like to learn more if any quant can tell me.
I do understand what you are saying though, it is true, Variational is allowing residual positions on riskier assets to exist, regardless of what they are, and has to hedge against them. It is definitely a different risk profile, but whether that risk is actually higher purely depends on the team's execution, and this is a bet I am willing to take (all this info is in the docs and their exact risk parameters are very complicated. surely someone out their can do a full deep dive and maybe simulate various scenarios).
Bottom 100 cryptos in terms of OI are a combined <0.3% of total OI
A lot of these are dead coins & never coming back. The spreads aren't great (nor is it for these markets anywhere) and they served their purpose showcasing the broker-like model before the RWA boom
trad.var retweeted
$3.96M clip on @variational_io , all-in cost $487. rfq swaps beat orderbooks for size on tradfi markets
no token yet. no api. already top 3 perp dex by OI
INFINIVAR
teapawt.net/variational_io/status/…
Expect general reassurance but nothing specific (security through obscurity)
so gud tek
hope team will be able to provide clarification since everyone is very concerned about security rn after poly & banana incident.
@variational_lvs @JustinCBram @0xMGB @cas3333333 @edward_yu_var
Or will we fall flat on our face at the first hurdle, 80k?
Omni will look very different in 1 yr
Tradfi perps/swaps will completely take over with hundreds more listings & sig. higher caps
Most crypto markets will be delisted which’ll free up liquidity & improve platform optics for institutions
Perhaps we’ll even have API 😏
