The Pomp Podcast - #1574 Evgeny Gaevoy | Who’s Really Buying Bitcoin Right Now

Starting point is 00:00:00 This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales. Using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. hear that it's your money calling it wants a promotion elevate your savings with the scotia high interest savings account always earn high regular interest rates that grow the more you

Starting point is 00:00:44 save and invest conditions apply visit scotiabank.com hisa to learn more scotia bank you're richer than you think. What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to The Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn.

Starting point is 00:01:11 So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments.

Starting point is 00:01:35 You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. What's going on, guys? Today's episode is with Yevgeny Gaevoi. In this conversation, he's the founder and CEO of Wintermute. They're massive. Most of you probably never heard of them before, but they dominate crypto markets. And he's on a quest to become the richest man in the world. I'm serious. When you hear exactly what goes on in this conversation,

Starting point is 00:02:06 you're going to better understand Wintermute, but also all of the things that feed into why Bitcoin, Ethereum, and all these other coins, they go up and they go down. This is who you are competing against in terms of exchanges, OTC desks, and building companies in this industry. And maybe my favorite part of the conversation is we talk about how crypto companies like Wintermute are turning their attention and potentially going after traditional market players as well. This is the future of finance and Wintermute is sitting at the tip of innovation and trying to push forward for the entire industry. Here is my conversation. I hope you guys enjoy it. All right. I thought a great place to start this conversation is Bitcoin

Starting point is 00:02:38 obviously just hit a brand new all-time high. Everyone knows that there's more buyers than sellers. That's why the price is going up. But Wintermute has this new report that just came out that says that actually a lot of the Bitcoin movement is being driven by traditional firms, not crypto firms and not retail. Can you unpack a little bit as like what you guys are seeing? Give us like the, what is like the data that you guys have access to that maybe the market doesn't really understand who's buying Bitcoin here? Right. So pretty, pretty, pretty big change for the last six months has been basically what we see is two main drivers are basically So think of it like big banks, BlackRock, Fidelity of the world on one hand, and basically

Starting point is 00:03:17 pretty big retail aggregators, basically Robinhood on the other side. And those two big groups are basically driving a bunch of Bitcoin, but also Ethereum trading in general. It's a lot more than it used to be. And like all other types of OTC counterparts we see, they're actually reducing their Bitcoin and Ethereum exposure and well, interest in general. Okay, so put aside kind of everything else. Let's just focus on the Bitcoin thing. So you're saying the BlackRock's, the Fidelity's, like the really big financial institutions. And then also Robinhood, in terms of a counterparty for you guys or others, is really aggregating a bunch of retail flow together. But that's where you're seeing most of the buys come from is these really, really big buyers, not the thousands of individual kind of retail buyers that maybe people might talk about online. But that's not really who's driving this huge move in Bitcoin. Exactly. But also if you unpack it more, like who is basically behind, well, BlackRock especially, like it's still, well, it is still like high net worth individuals who buy into ETFs, but it's also retail who is buying into those ETFs on traditional exchanges like NASDAQ, for example.

Starting point is 00:04:24 Yeah, it's not principal capital, basically. It's either asset management or like a platform, like a fintech type thing. Okay. Now, one of the things that's interesting in the report is that Bitcoin interest is exploding with the traditional firms. Crypto-related firms, kind of crypto-native firms, is down 5%, I think. So what do you kind of attribute that to? That's fascinating, right? Bitcoin's going to all-time highs, but the people in the industry, they actually don't have their eyes on Bitcoin. Maybe they have their eyes on something else. I think it's typical, kind of typical for our industry is people are always looking for Bitcoin beta, effectively,

Starting point is 00:04:55 like trying to get a better exposure to bitcoin by i don't know going to like solana or like something else try to outperform yeah trying to perform out from bitcoin so it's it's kind of typical so in a weird way maybe the traditional firms are trying to outperform their benchmarks by using bitcoin bitcoin outperforms so like that they're good enough they don't have to push further on the risk curve but if you want to outperform bitcoin and bitcoin's the hurdle rate then you got to kind of push further out in these people's eyes they're going to go try to find something that can perform bitcoin okay um what are people coming to you guys for spots derivative like what are the the things that you guys actually see the capital flowing to in terms

Starting point is 00:05:28 of the like way people are expression expressing their uh view and uh something like bitcoin yeah pretty big change this year options is yeah there's really a lot of interest in that and part of it is just inherent leverage and also instruments compared to spot and part of it is these options for example you can get a lot more creative with what kind of ps setups you can do on the trading side and do you think that's because you have more sophisticated kind of larger traditional players coming into the market now and so they're used to these types of tools or is this like if you give leverage to retail they're gonna you know just go full degenerate and uh try to use as much leverage as possible i think it's kind of both like on threat five

Starting point is 00:06:08 sides they're both they're definitely much more accustomed to more complex strategies but also there is a lot of education going on with crypto native uh counterparties basically to teach them okay you can actually use more complex tools to achieve what you want yeah and then what how does like robin hood or public.com or you know the e-tours of the world like these fintech platforms that have retail on them but they're really aggregating flows how has that changed the market or do you see anything different there i think what we'll see well i mean e-tour has been offering cfds for ages but that's their secret right people don't know you see if these are illegal in the u.s but in europe you can use them right but if you look at robin hoods they

Starting point is 00:06:44 just announced that they're going to do perpetuals for example for european clients and beyond like I'm pretty sure they're really working with CFTC to get them approved in the US as well. But yeah, things that leverage, basically offering the customer's leverage is going to be a pretty big thing for them. And that's because you think that the retail investor, they're just max bullish. And so the more leverage you give them, the more they'll use kind of, you know, give a man a money printer, he'll print money, give a retail investor leverage, he'll use the leverage?

Starting point is 00:07:12 Pretty much. If you have $100, you'd rather use, yeah, put them to work on leverage like 3x. 4x, 100x, just like on some platforms instead of just doing spot. And do you guys have data in terms of like win-loss ratios there? Or like, I'm assuming that the traditional firms are like much more skilled at using these tools than retail, but is that actually true? Like, you know, there's stories all over the place of people on BitMEX or Binance or, you know, nickname a Deribit or whatever, where they've used these tools and done pretty well

Starting point is 00:07:44 for themselves. How do you see those tools in terms of being used successfully versus just being used? Yeah, I think it's a lot of it. For example, if you look at options, a lot of it is basically around extra yield generation. For example, selling covered call strategies, which win-loss ratio might not be the right way to look at it because people are ultimately looking, okay, I would sell my Bitcoin at whatever 150k or whatever so i can just sell this car would call it 150k strike and if it goes there sell it if it doesn't go there at least i get yield so win-loss ratio would not necessarily be

Starting point is 00:08:23 like a good measure of success for this particular strategy it's just it's just a better tool for them to use because they're basically taking the yield and then they're just reinvesting in more bitcoin or more options until they figure out what happens okay um let's talk about the otc desks. I think there's another component to the market that the average kind of analyst doesn't really pay attention to. They're looking, you know, beauty of Bitcoin or crypto is that you can look on chain. So they see, you know, how much Bitcoin is sitting at the exchanges. They can see how much Bitcoin is moving on chain. You can start to see like how much Bitcoin is sitting at the OTC desks on chain to a degree. But it does feel like OTC desks are becoming much, you know,

Starting point is 00:08:59 more important part of the market than say, you know, definitely 10 years ago, maybe even five years ago so why would somebody be using the otc desk versus some of these more sophisticated kind of low-cost exchanges yeah i think part of it is yeah bitcoin ethereum like not so much but especially if you look at alts it's yeah it is very visible what you do like if you sit in a big i don't know solana position or hyper liquid position yeah the whole market will see once you start moving your tokens to a centralized exchange so it's somewhat better to just deal with a single otc desk and effectively trade with them because they can also delay the market knowing that you actually sold or bought for example so it's you basically get a better execution this way

Starting point is 00:09:42 so i think that that's a primary but so people if you went ahead and still transacted with the otc desk they would know but the otc desk has the ability to kind of have time variance involved and once you introduce the time variance now it's harder for people to kind of understand what's happening ultimately it's just much harder for people to for lack of better word to front run the transaction yeah got it and then when you think about uh the most popular assets bitcoin ethereum i'm assuming two largest they've got to be up there uh what are some of the other assets that people have been interested in you know let's say in the last six months or so yeah it really varies like it's it's very semantic like beginning of the years with a lot of uh crypto ai stuff uh

Starting point is 00:10:22 meme coins always interesting and then it really depends i mean last few months hyperliquid has There has been a lot of interest in hyperliquids. I'm pretty sure, well, recently Ethereum has been very interesting on OTC side. Ethereum has? Yeah. Why do you think so many people are interested in Ethereum all of a sudden? I think a big part of it is just it underperformed Bitcoin for so long. And people are just looking, okay, what is going to be the next big thing?

Starting point is 00:10:53 And over the last week, for example, you definitely see this reversing quite significantly. Yeah. Yeah, but see, I always go back to, yeah, you can look at it from a reversal story, or you can look at it as things in motion stay in motion, right? I think that ETH, it never reclaimed its all-time high from November of 21, right? I think it's still down like 40%. People see it as, okay, this is my potential upside, right? Like it has to-

Starting point is 00:11:17 They feel like they missed Bitcoin, so then they go to the next one. Exactly, yeah. Yeah. And then what about in terms of all of the derivatives and those types of products? Should we assume that everything that's available for Bitcoin is also available for Ether and maybe the top 10 coins, the top three coins? How far does some of this derivative products really go in terms of what people can use? With LTC desk, I would say it would be, yeah, you would get pretty much the same instruments

Starting point is 00:11:43 definitely for top 25. Further down the line, it gets a bit harder to price really complex option strategies, but covered calls, for example, should not be an issue for like top 200. Yeah. So that was gonna be one of my questions is like, you guys are ultimately in the risk game, right? And in a weird way, I think people look at you as kind of a liquidity solution. And they can use it in different ways, long, short, you know, derivatives, etc. But you are underwriting risk. And so most people who I think look at this from kind of that elementary view would say, wait a minute, you have like 80 to 150 vol assets, you know, there's not a lot of

Starting point is 00:12:20 information sometimes, especially as you push further and further, you know, in the coin list. How do you start thinking about underwriting the risk and the principal risk that you guys are taking or balance sheet risk that you may take versus, you know, kind of riskless type trades where you're more so just acting as an intermediary that, you know, you're not really kind of injecting yourself into the trade itself? Well, ultimately, Bitcoin, Ethereum, it's all very vanilla. There are markets on Deribit, there are markets on CME. It's very simple to price them everyone can do it. We have been active in alts since forever, since pretty much when we started, and we always kind of specialized in them to a big degree. We're still very good in Bitcoin and

Starting point is 00:12:57 Ethereum, like all the majors, but alts is... That's really where, when I first started hearing about you guys, that's really where I think you guys saw a wedge into the market was, we're going to go and we're going to serve a bunch of assets that maybe these other desks aren't going to do. Was that the strategy? Pretty much, yeah. And we understand it it really well and it also comes from us basically serving different parts of the market so it's on one hand yeah we're very very big on otc side of things we're very big on centralized exchanges but we're also very big on d5 and that's where a big chunk of liquidity is for a lot of those d5 tokens for example and we are pretty uniquely positioned on one hand to get access to this

Starting point is 00:13:36 liquidity which not all of our competitors can do and on the other hand also understanding it really well because we are like our research team is very advanced in understanding like how a lot of those protocols work like how to price them how to understand the risks like what happens if they upgrade their protocols like all those kind of things yeah well what's your story like you got like the kind of cool smart like russian programmer vibe going on and you build this big business like what what's like your uh your background or like how did you end up actually want to start the business yeah where do i start i guess i mean on the russian side like i was actually never well i was a programmer like for a very brief time but my business my education is

Starting point is 00:14:14 economics so basically i started in moscow at the high school of economics which was basically like the most libertarian university back in russia and possibly like in almost in the world i would say back then in 19th because it's like it was yeah like a temple of libertarianism i guess hardcore libertarianism hardcore like so i got like properly how does that work in a place like russia though in 90s it was perfect because yeah it was i keep i keep telling people this it's like russia in 90s was very similar to crypto in a way okay because it was very like it was very hardcore capitalism hardcore like a lot of opportunities a lot of different things available but also a lot of risks as well so you had to navigate yourself really properly and some people

Starting point is 00:15:03 were successful and some people were very not successful. I read a lot of books about the 90s and even the late 90s, early 2000s. There's people, Americans, who went over and did all kinds of things to figure out where there was value or how to invest. Some of them have amazing

Starting point is 00:15:19 stories and some ended up not so good. My father was an entrepreneur back then. He was very successful in the first part of the 90s. In the second part of the 90s, he just couldn't adjust to market maturity like yep things becoming like more proper what type of business he did like expert import initially

Starting point is 00:15:39 and then he transitioned into company valuation very random yeah but it's kind of like what you have to do and then basically he sort of like finished his career by trying trading funny but he was doing very different kind of train because i'm doing yeah market making so it's very yeah yeah like it's basically like very i would not say like not risky but it's like very scientific and very like yeah but you also understand the risk better than maybe if you're just directly against he basically did technical analysis so he was like he was basically he would have been my counterpart effectively in the market yeah he transferring money from his wallet to your wallet right and then basically when this uh 2007 crisis hit here well 2008 crisis hit he basically

Starting point is 00:16:22 just lost it all because he he was just like alone the market and he like he stopped losses for somewhere, but market crashed way more than his models told could crash, and so it just wiped out. Okay. And then, so how do you get the idea for Wintermute? So basically I was... So after Russia, I basically went to study in the Netherlands, and then I got into Waterland. So you're a libertarian Russian who goes to the Netherlands.

Starting point is 00:16:47 Yeah. I mean... Yeah, it makes sense. Honestly, I went there because it was the easiest, well, not the easiest, but it was the shortest masters program i could find in europe it was just one year and i just wanted to get get it get it always with masters um and it was in maastricht so it was pretty nice city and then afterwards i basically found a job at one of the really top hft firms back then but still now called october in threatfi and uh there basically for 10 years i was building the atf market making

Starting point is 00:17:17 desk and i left into basically i left in what 2017 uh because opto was yeah doing all the stratify stuff but it was not really interested in like any of the more funny fun things and barely grew from this like late stage startup wipes to proper corporate wipes and i just felt my felt myself very constrained but also i wasn't even sure like do i want to do this trading thing not and i basically left amsterdam for london started looking around and basically that's when i was i stumbled up upon bitcoin and i basically i remember i bought it on coinbase app paying just like ridiculous two percent credit card fees uh like literally just writing in the tube and doubled in price like in a week and i was like yeah you definitely got my attention this is

Starting point is 00:18:05 interesting because like it's you look at stratify markets back then like you can have maybe 10 exciting days a year and otherwise volatility is like pretty boring in crypto you have like maybe 10 not busy days a year so it's like very very different very refreshing so and which meets the first idea you have in crypto or you did pretty much yeah because i knew how to do market making and i knew how to like basically run algos and one thing i enjoyed the most was actually building desks building your desks managing people and basically competing as well not necessarily just, I mean, making a lot of money is also nice, but I just really enjoyed this building aspect of it. So building my own business, yeah, it did sound really interesting and exciting. And so

Starting point is 00:18:49 I basically teamed up with two other ex-October people and, yeah, we built an interview. And how do you get the first customer? You just call up a friend that you know is in crypto? Or how do you start getting some flows? Well, basically, our initial idea was back in 2018 uh we basically started serving uh really we went to market making for projects for protocols yeah and so the projects that hey I'll market make for you exactly and our initial idea was okay there was 2017 ICO booms there's a lot of protocols all these protocols need market makers and a lot of market makers back then and actually still now uh not like of a good variety like they basically promote like pumping and dumping this the token is uh doing it's crazy like voice trading

Starting point is 00:19:31 crazy stuff that still for some reason happens. And we wanted to position ourselves as a market maker who doesn't do this stuff. So we went there, but 2018 was pretty much the worst time to start it because all those ICOs were pretty much dying. And so we had to quickly pivot into more traditional prop trading, basically market making majors, but also alts. And so OTC business didn't really start for us back then. Our first OTC business, i think it was somewhere in 2020 when we basically started market making for market making for protocols again because it was starting to revive again i think pretty sure our first otc counterparty was filecoin uh not falcon foundation but actually filecoin

Starting point is 00:20:15 employees because we're perfectly market making for falcon token yep and we onboarded quite a few employees back then to help them to sell their falcon tokens yeah that's kind of how how we kickstarted our OTC business and we started developing. Now, where did Wintermute, the name, come from? I'm always fascinated by how people come up with the name. Yeah. So basically, yeah, it's a funny story. So yeah, back in 2017, when I started, I kind of knew crypto ethos a bit. I was not very cypherpunk-y back then. I just knew what the vibes are. And the vibes were like, okay, it's a lot of geeky people. So I basically Googled top 10 science fiction novels of all time.

Starting point is 00:20:51 No way. I wrote a list of characters from all the snowballs and one of them is basically called new romance it's basically origins of cyberpunk uh it's basically like one of the first cyberpunk books ever written it's actually really good but i haven't read it back then and basically winter mute was one of the characters it was actually like sort of like evil ei character in the book okay i didn't know that so i just really like how winter mute sounded so okay i'll just pick that that's incredible yeah all right and so you go to your partners you're like hey here's what i think the name is what do they think they're like, yeah, it sounds good. Let's go. Yeah. Yeah. Like, cause it was very easy. Yeah. They didn't

Starting point is 00:21:27 care as much. Okay. All right. Um, now talk about, uh, you built pretty much all the business outside of the United States for a long time, right? And a lot of that was like regulation or what? Well, I mean, I wouldn't say it was outside of, yes, we barely haven't operated. Today's episode is sponsored by figure the largest non-bank home equity lender in the United States with over $15 billion unlocked on their lending platform. They are now in the crypto-backed loan space and they offer industry low interest rates when you use your Bitcoin as collateral to get cash. You can access interest rates starting at 9.9%, the lowest fixed rate in the industry at 50% LTVs. Whether you're funding a major purchase like a down payment on a home,

Starting point is 00:22:08 investing in new opportunities, or even buying more Bitcoin, Figure makes it straightforward and transparent. You can go to figure.com slash pomp or click on my link below to take a Bitcoin back loan with figure today i'm an investor in the company and i have spent a lot of time trying to understand this product and so go visit figure.com slash pomp to better understand exactly what they're doing and how these rates work you can go to figure.com slash pomp today it's no secret that bitcoin etfs have taken wall street by storm with over 35 billion dollars in assets in just one year it's become the most successful etf launch in history my partner bitwise is the first and only Bitcoin ETF provider to openly publish its Bitcoin wallet addresses, allowing

Starting point is 00:22:50 anyone to verify the fund's holdings. I believe this level of transparency is exactly the kind of innovation that only crypto makes possible. Bitwise is also the only ETF issuer that is a crypto specialist asset manager, meaning their team solely focuses on Bitcoin and they have the research, education and support to help investors navigate the space with confidence. All of that is great. But what I love most about Bitwise is probably their commitment to developers. Bitwise donates 10% of their ETFs profits to Bitcoin open source developers. Bitcoin developers are the unsung heroes working tirelessly to maintain, improve and innovate the blockchain. Their efforts ensure that Bitcoin remains true to its promise as a

Starting point is 00:23:29 decentralized system that is built to last. Go to bitwisepomp.com to learn more about their ETF and other services. Once again, that's bitwisepomp.com, bitwisepomp.com. As always, remember investing is risky and carefully consider the extreme risks associated with crypto before you invest. Today's episode is brought to you by Zappo Bank. This is where eligible members can unlock the power of Bitcoin without selling it. Do you need cash fast? With Zappo Bank's Bitcoin-backed loans, you can borrow up to 20% of your Bitcoin's value in just a few minutes, and you can do so with low interest rates and zero fees. Here's the best part.

Starting point is 00:24:08 You keep your Bitcoin, meaning you get to watch your holdings grow as the price of Bitcoin increases. Whether you're looking to buy a house, fund your child's education, or seize an exciting investment opportunity, these loans give you the flexibility to access cash without selling your Bitcoin. Unlike traditional loans, Zappo banks, Bitcoin-backed loans, they have no minimum repayments, no early repayment penalties, and the flexibility to settle your loan in USD or Bitcoin whenever it suits you.

Starting point is 00:24:32 It's liquidity entirely on your terms. Zappo understands the unique needs of Bitcoin holders. That's why they developed a product design specifically for you. With over a decade of experience in the Bitcoin space, Zappo Bank has been a trusted partner for those looking to make the most of their Bitcoin while keeping it safe. Your Bitcoin stays safe in your vault, untouched, never lent out, and secured a global network of military-grade bunkers with cutting-edge security technology. Head to Zappobank.com forward slash POM to learn more.

Starting point is 00:25:02 That's X-A-P-O-B-A-N-K.com forward slash POMP. Go check out Zappobank today at Zappobank.com slash POMP. I wouldn't say it was outside of US. We basically haven't operated in US for our, like very actively. But at the same time, I know we had one of the largest market shares on Coinbase and Kraken. We are very big on Robinhood crypto, for example. So we have been trading in the U.S., but we haven't set foot in the U.S. on the office side of things, simply because we saw it as a pretty dangerous thing.

Starting point is 00:25:40 That's crazy. Yeah, previous admin, SEC specifically, it just was very scary. Well, you're here now, you're live here in the flesh. So what's the plan now? No, the plan now is to expand pretty massively in the U.S. We do see it as pretty much the main market for us to grow over the next years. How many total employees do you have? Total is about 140, and we have currently around five or six in the U.S.

Starting point is 00:26:07 Okay. And then what do you think, let's say, five years from now, you think the majority of your employees will be in the U.S. or split? It's a very good question. It really depends where the business develops. And one interesting development is generally, basically, will crypto stay on the fringes of finance or will it just completely merge? Yeah, I think it's going to merge.

Starting point is 00:26:24 What do you think? I also think it's going to merge. So US can be a big part then? On one, well, that as well, but also it means that as a pro-crime firm, we cannot stay focused on crypto forever. So we actually have to expand the trade fire. We have to expand the pretty much all asset classes.

Starting point is 00:26:39 And if we do that, it makes perfect sense to have our main base of operations for trade fire assets in US. So in a weird way, like forget Republican, Democrat, all this nonsense, right? But just like having a government that now says like thumbs up on an industry you guys are like a perfect example where like you literally are going to come on shore now you're going to build out the company you're going to

Starting point is 00:26:57 hire people like all the things that like the academics talk about you guys are a perfect example pretty much and also invest and yeah hire people invest support local ecosystems yeah okay um what are you most interested in the traditional financial system well yeah it's i guess it's basically how crypto will change it is a pretty interesting thing so tokenized uh securities security is probably like the most obvious one because yeah how we transition from current uh like legacy system which operates on fiat currencies which operates basically five days a week doesn't that doesn't operate on the weekends it's crazy it's closed on like however holidays for example like how do we transition from that from a pure 24 7 with

Starting point is 00:27:46 And solving for all the challenges with how do you handle corporate actions, how do you handle dividends, how do you handle basically this 24-7 aspect, which crypto is super comfortable with. Of course. That's very interesting. Also, how do we move it from fiat rails to stablecoin rails, which is a massive fun lock, I think, for legacy exchanges, but also for crypto exchanges. Do you guys make money on stablecoins? Yeah. What do you guys do? I mean, it's a bunch of things.

Starting point is 00:28:11 So on one hand, it's settlements for our derivative business. So it's very convenient to effectively margin counterparties and stablecoins. On the other hand, just basically being there for them for fiat to stablecoin transactions. You just take a percentage or whatever. Well, it's more like bips, but yeah. Yeah, whatever. Okay. And then how much money do you guys make?

Starting point is 00:28:34 You guys got to be printing cash, right? I mean, it depends. Yeah. But how should people think about it, right? So when you got a business, you got 140 people. I always think about it in terms of the best businesses in crypto, I think, historically have been the exchanges. But now I think that there's a bunch of, if you look at traditional finance, Citadel is doing pretty good. A bunch of these different firms that are either in the market-making business or they're doing some sort of OTC component.

Starting point is 00:28:58 All the things that you guys do, but just for the traditional world. Those businesses are incredible in the traditional world. So it seems like there's been a corner of the crypto world that most people, they've just been unaware of, right? in terms of how successful you can be doing this stuff without having to go run an exchange or some sort of consumer-facing fintech-type product, right? Yeah, I mean, basically market makers, pro-train firms that have been successful for decades.

Starting point is 00:29:24 Like I was with Optiva before, like Optiva has been and still is. Like how big are they, you think? Are the numbers public or no? No, no. No, okay. Past majority of market makers are private. Like you have-

Starting point is 00:29:35 It's so good, they don't want anyone to know. Well, basically, the only exceptions I know are virtual and flow traders that are public. But most market makers, they don't want their numbers to be known.

Starting point is 00:29:46 Well, for example, look at Jane Street, for example. Jane Street numbers were public like last year and the year before. Do you remember what they were? I think they definitely contributed. I think they made like,

Starting point is 00:29:56 well, tens of billions, basically. Tens of billions? Yeah. They've been super successful. But ultimately, and still are, but ultimately, that's also like

Starting point is 00:30:05 nobody wants to draw attention to that. Because on one hand, you basically will have all your competitors looking at you and saying, how can we invade? Like, I remember when Flow Traders went public, because it's also a Dutch firm. And I was at Optiva back then, and Flow Traders went public. And basically, they don't say where they make the money, but we knew that their main business was actually an OTC business.

Starting point is 00:30:27 While for Optiva on the ETF side, it was mostly on screen, basically on centralized exchanges. and basically Optiver was making I don't know one basis point on volume like on total volume trade it was trading

Starting point is 00:30:38 and Flowtrace I think it was making something like five basis points on this OTC business and Optiver and like other competitors were like okay yeah

Starting point is 00:30:45 that sounds really interesting let us actually start OTC business as well and so it's it's basically like you even buy like even by showing aggregate numbers

Starting point is 00:30:54 you just disclose so much that it's really it's not hard people are smart they figure it out well especially market makers yeah okay So it just doesn't make sense to broadcast.

Starting point is 00:31:02 What numbers can you share with us about Winter Mute that wouldn't give away things? Like, are there things that help people understand just like how big of a business it is? You said 140 employees, right? You guys are growing really fast. Yeah, basically, yeah, how much we trade. So it's anywhere between like 5 to 10 billion a day in volumes.

Starting point is 00:31:17 That's a ton, right? Yeah. Yeah, are you guys the biggest, you think? Depends. I think it's like, it's one of the questions I get a lot is like basically who are our competitors? And it's very different because I think we are still very unique in crypto

Starting point is 00:31:30 because we do everything. So we trade on centralized exchanges like Coinbase or Binance. We trade on DeFi. We do a bunch of OTC things. We trade with Robinhood. And we have very different sets of competitors in all those different niches.

Starting point is 00:31:45 Like we have a very different set of competitors in DeFi, very different set of competitors on Binance, very different set of competitors on Coinbase. And again, like different set of competitors on Robinhood. But on OTC business as well, it depends whether it's spot or derivatives. It's also a different set of competitors. And most of them are focused on their specific niche,

Starting point is 00:32:05 but we are the only ones that are actually doing it all. And that basically allows us to be a lot more efficient across the whole space. Got it. Okay. Well, you didn't say that Citadel Securities or anybody is your competitor. I would have thought you would pick the big guys. Citadel, I think they will come,

Starting point is 00:32:19 but I don't think they are there yet. No, not them come to crypto. I'm saying you go to the traditional world, go compete on their turf. oh yeah no you're coming right i'm coming it will take some time it will take some time like it's i was like big child big big big reason i actually moved to crypto was i was a bit sick and tired of uh stratify because it's it's basically a massive rat race when it comes to latency people are building this like microwave towers and like there are like radio waves bouncing off atmosphere like

Starting point is 00:32:49 it's it's crazy like what what you for like a millisecond it is like nanoseconds in certain cases like it's it's basically like it's it's very competitive it's not is it that competitive in crypto it's not but it's primarily a function of crypto exchanges just not allowing this kind of throughput this kind of latency like because most of the crypto exchanges are still basically based on aws uh yeah in fry and it just doesn't allow for this like optimizations nanoseconds even microsecond optimization yeah it's just like the traditional exchanges they just open up for businesses that whatever however fast you guys can be yeah yeah interesting why doesn't a crypto exchange do that uh i think part of it is it would like they would need to be do pretty big

Starting point is 00:33:30 investments uh into this but another thing is like it's pretty interesting basically like a lot of times i go to this like those script exchanges do events for traders that operate there and traders keep like asking those exchanges please increase throughput please like let us allow to send more than more orders per second blah blah but the ironic saying is like if basically let's say binance improves their latency to see me level vast majority of those market makers will be computed away by basically like lots of jumps so city yeah so in a way it protects the quicksand and also makes markets more liquid on those exchanges as well because it basically levels the playing field quite a bit so from that perspective it's actually for those crypto

Starting point is 00:34:12 exchanges it makes sense to keep the status quo because they can keep like a pretty a much bigger mix of market makers around who given how successful you guys are who do you think is the best in crypto right like who do you respect the most in terms of other people who have built businesses uh like on a competitor side or it could be competitor or could just be a different type of business yeah like i i still i really like jump trading for example like it's before they sort of like exit like they exited a lot of a lot of parts of crypto like they're coming back now but they basically were doing pretty much what we do on like in terms of building diversified business because they were like doing ventures they were on defy and like they were trained on

Starting point is 00:34:57 robin hood they were pretty big and still are on centralized exchanges so it's like diversified business is what we i wouldn't say copied because opto was like this as well but definitely was a big inspiration for us and yeah i really respect them as competitors like from the other chunks of it yeah I think like what Hyperliquid built is very impressive I would say because they have built a really impressive business which is decentralized

Starting point is 00:35:25 and which is basically like ultimately set up to compete with all the big exchanges yeah obviously Binance is just amazing how they continue to be big and relevant and not being outcompeted by everyone else If we talk in 10 years, you think that you can be one of the great traditional financial firms? Like you think you can compete against them? Yeah.

Starting point is 00:35:48 That's basically, that's kind of the question I- That's the next mountain to go climb. It's kind of like a question I asked myself, well, asked myself like last year, for example. Like I'm not a very like needy person. And so in terms of like needing a lot of money, like I don't need like yachts and cars and everything. Like I definitely have like enough money to last me until I die. You're rich, you're good. Yeah.

Starting point is 00:36:09 Like I'm like, I'm fine. so kind of like why i'm doing like fine or like fine fine like is your bloodline like everyone in your family forever is rich or like just like rich yeah i mean like it's they have enough and like i think i think we created this culture inside the family as well they didn't like my children my kids are also not gonna go for like yachts and supercars and yeah but maybe their kids will like third generation maybe like hey we don't know who grandpa was but like look at my 400-foot yacht i kind of hope that it will continue this like internal family culture forever but ultimately yeah like in terms of like we are not we don't need that much money uh

Starting point is 00:36:46 so i definitely like multiples of what i actually need uh so why i'm doing this is i guess like the best way i describe it to myself is it's kind of like i see this like leaderboard so i see my competitors i see like i know other rich people on the planet and i kind of just want to keep competing and keep climbing up not for the money itself but just uh yeah kind of like meaning of life kind of thing do you have like a um you won't be satisfied till number one you gotta be top 100 top thousand like the idea you ever thought about like how high on the ladder would be the point where you're like all right like that's a a milestone yeah i guess like number one is probably number one sounds sounds crazy but like that's when i really like okay what should i do

Starting point is 00:37:30 do next yeah but until that it's like but if you're number three you wouldn't be satisfied because you're not number one yeah but that's the best thing about it just like keep competing keep growing it's that that's this like number one is yeah it's pretty hard yeah well of course there's only one person who does it in the world yeah but it's it makes the whole journey like much more fun and yeah it is a grind but it's kind of i just enjoy it like i'm quite competitive i like i really like competitive games i well i like games in general i think i see it as a prism of game yeah you know i say investing is like the professional sport for people who like to think yeah right like to me that that's a huge piece of it is uh i don't know about you i'm pretty

Starting point is 00:38:09 athletic but not athletic enough to play a professional sport so this is the only thing we got left right is uh just use our brains yeah no exactly all right i got one uh two last questions for you uh when you interview people at winter mood i've been to some of these firms and uh i walk in and where they interview people they got the big white boards and ask them all kinds of crazy questions is that what you guys do to hire people not not crazy questions no like it's like what's what's the craziest question that you think that you guys ask people yeah like how many golf balls go in an airplane or something like that yeah like we would ask some bullshit like this sometimes yeah like you think it's bullshit too right yeah i mean it's it's basically it's it's a

Starting point is 00:38:46 good uh it's a good way to like judge how people think yeah like it works it does work yeah it like it's it works like i got the same questions when i was applying for optima for example like it's it works yeah yeah yeah okay it's a good proxy all right and then uh when you die what you want your tombstone to say i honestly don't care like that might be the best answer because you're not gonna read it yeah exactly like it's i honestly don't care like it's i think it's i don't think about like i'm not that afraid of dying like i just want to yeah keep it are you excited about it excited about dying no no okay why are you not afraid of me you know no it's just like i think you like i would want to like when i would have a line in my dad and on my bed and

Starting point is 00:39:38 like yeah i know i'm gonna die like soon i just want to make sure make sure that i look behind it saying okay it was actually like cool life yeah that's basically it yeah but i feel like that's winning right yeah it's part part of the whole thing is let me make sure your kids don't get yachts that's why i also don't quit because like i think like if i quit now and then like whatever 50 whatever maybe 100 years from now like i die and then i think like yeah why did i quit like i could have like kept it going and maybe go to number one right so yeah that's what we should make the title of this is the quest to be the richest man in the world yeah all right well thank you so much for taking the time to do this i'm super excited for you guys coming to the u.s

Starting point is 00:40:13 and we'll do it again in the future We'll be right back.

The Pomp Podcast - #1574 Evgeny Gaevoy | Who’s Really Buying Bitcoin Right Now

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.