The Pomp Podcast - Clay Collins, Co-Founder and CEO of Nomics: Identifying Fake Volume & Exchange Data Transparency

Episode Date: June 6, 2019

Clay Collins is the Co-Founder and CEO of Nomics, a company focused on crypto market data. In this conversation, Clay and Anthony Pompliano discuss how crypto market data works, what the biggest challenges are, why exchange data transparency, and identification of fake volume is so important, and how the price you see on most crypto websites gets there. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Clay Collins is the co-founder and CEO of Nomix, a company focused on crypto market data. In this conversation, we discuss how crypto market data works, what the biggest challenges are, why exchange data transparency and identification of fake volume is so important, and how the price you see on most crypto websites gets there. I really enjoyed this conversation, and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions

and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. can uh get into uh you know what you're doing with nomix what's your background for yeah so yeah can talk about nomix in a second uh but uh started out my my very first company was in the marketing tech space it it is called lead pages uh it's still around and and doing quite well so i'm really really proud of that i started that in january of 2013 and found myself in a place a

few years later where that had grown to over 150 employees. We had raised 38 million in venture capital from folks like the Foundry Group, et cetera. And at some point, I think around 120 people, I realized that I really had no business with my very first startup running a company of that size. So I went to the board. I encouraged them to hire our COO to be our CEO. And I promptly stepped out of the way three to four years after starting that, but learned a ton during that process. Acquired a company, which is looking like it's going to actually be bigger than the original company that we started and both are growing well. But entrepreneurship is in my bones. I was one of the kids that had the lemonade stand and was always hawking things and interested

in the grind. Absolutely. And were you always interested in building businesses or was it more of just building or what got you, do you think, interested in being a repeat offender of starting a company? Yeah. So I wouldn't say I'm a serial entrepreneur. I really like staying with things as long as I possibly can. And I prefer to go deep rather than to just do thing after thing after thing. But yeah, that's always been something I'm interested in or I've done. So I'm kind of a weirdo. I was homeschooled. And my parents really didn't care what I did other than I needed to know math. So I did my math work. And then the rest of the day, I was free to do whatever I wanted to. And I think I had a lot of intrinsic curiosity. I

got a chemistry set, but where I found myself going most frequently was business. So I was essentially doing my math work and then running businesses on the side and learning about what worked. And I think that's where kind of down the road as I became interested in marketing and split tests and conversion rate optimization, I noticed when I ran the, it was actually a orange juice stand by the side of the road. You know, if I place signs here versus here, more people tend to look at them. I'd watch cars drive by and see where they were looking. I'd split test different copy. And it seemed like there was just so much depth. There were so many things to learn about in that space. Everything from, you know, from accounting to copywriting to psychology and

product. What products are people interested in? How do you frame them? Things like that. So I'm really grateful. A lot of people kind of hate on homeschooling. I don't think it works for everyone. I think it's really, you know, depends on the child and the individual. But for me, it was a really fantastic thing. I think I probably have an undiagnosed learning disability called dysgraphia. I remember I was in school and I was getting a lot of grief from teachers because I was winning the school spelling bees but failing the spelling test. So there's something about actually writing it down. That was hard for me. And, uh, I just, when I see what that path would have turned into, it just would have been a lot of grief and having to conform to a system

that I didn't want to be part of. So, um, so, so I think kind of having like not having this artificial boundary between what you do for fun and what you do during the nine to five period, like that's, that's something that's always been with me. Got it. And as you were doing that, I think this has become a much more popular belief is that you can kind of, I call it lifestyle design. So things that you enjoy, you end up figuring out a way to make a living on it and spend the majority of your time doing it. Did you feel like there was a point where you kind of unlocked this or really understood it and said, hey, I'm going to go do lifestyle design? or was it more of a transition over time and then eventually you look back and in hindsight said, oh, wow, I've really figured out how to build a life where I get to do what I enjoy.

Was it a one-time moment or a transition? Yeah. Great question. I think I just had that for free when I was growing up. I didn't really have to think about lifestyle design. The default was that I had a whole lot of discretion and uh and my my mother just trusted me um so i think later in life though it was just this process of trying to get back to what i had when i was was younger so i did eventually decide that i wanted to go to high school and have that experience i wanted to go to prom and you know have some of those social things although i think i had a really social life as someone who was homeschooled i did boy scouts and played like four hours of tennis a day and all kinds of stuff

but uh you know so i i did eventually end up dropping out of uh high school at the age of 15 to start a software company um so i guess that was technically my first software company but post then it was i really just hated um cubicle work i i hated uh college and then um and then also hated graduate graduate school the first and the second time uh i i started a phd program in developmental neuropsychology and like that lasted one year so i think i was trying to get back to the state that I had growing up. And I did find that I returned to that at, you know, when I was in graduate school, I found myself in this place where I had outsourced the job that was paying 100% of my tuition plus some money. I had found a way to outsource that. So I didn't have

to do any of it. And then I had another job doing marketing consulting and I charged, you know, a few hundred dollars an hour and so I was in this place where my expenses were low and I was working around seven hours a week and could really do whatever I want and and I think that's where you know my adult entrepreneurial life began but I do remember reading Tim Ferriss's four-hour work week and being excited about that and a lot of a lot of the stuff people were doing around lifestyle design a lot of it wasn't for me I think there were a lot of what I call like the the lost boys of lifestyle design whose goal is they want to run a business from a laptop on a beach. And I never found that that definition of lifestyle design really suited me. I think

my idea of lifestyle design is having the resources to hire the best people I know to work 16 hours a day on a problem that I'm really, really passionate about. So, you know, I think lifestyle design for me is a lot more about going really deep and really hard with a huge group of talented people and something that I am, you know, where I think there's an opportunity to really make a difference. Got it. And so how do you go from that to Nomix? Yeah. So the transition is kind of interesting. I was in the marketing tech space with my startup lead pages. And I started seeing a really interesting trend happen from around like 2013, between 2013 and around 2012 to 2013 to around 2016, 2017. we saw like this doubling in the number of vertical marketing tech sas apps so like roughly every single year the number of of entrance like software as a service entrance in that category was doubling and it was creating a really significant problem around distributed data sets

so let's say you run a business or an e-commerce business you know you might have a situation where you have information about what emails were clicked on or opened in MailChimp. And you've got information about what webinars people attended, maybe in Zoom. And you've got information about payments and stuff in Stripe. And you've got a different kind of data, maybe an anonymous page view data in Google Analytics. And the data is just, it's all over the place. And so this creates an integration problem. So all these things need to talk to each other. But it also makes it really difficult to get a 360 view of the customer. So before my last company acquired a company that solves this problem, we were working on solving it internally. And around the

same time that we were thinking about this problem, I started looking at what was happening in the cryptocurrency space. And we saw something really similar. So a couple years ago, if you were ingesting data from about five to eight exchanges, you could on any given day capture 50% of the trading volume in the cryptocurrency space. And roughly a year later, you needed to be ingesting data from around 35 exchanges to get 50% of the trading volume in the space. And since then, the number of exchanges has gone through the roof. But not only has the number of exchanges gone through the roof, but the volume has become more and more distributed along the long tail. So I saw a very similar kind of issue that existed in the

MarTech space around distributed data sets and having to do just a whole bunch of integrations to get a 360 view of what was happening. I saw very similar problems around normalization of data and distribution of data in the crypto space. And so I started thinking about what would a data platform in this space look like? And to me, the answer is really that it all comes down to integration. And that coverage is king. So there's lots of fancy metrics you can do. There's a lot of stuff people can do once they have all the data. The problem is that it's very, very difficult to get all the data. And you might think, okay, there's just a handful of important exchanges that are regulated. And there's just a handful of markets on those. But then once you start

taking into consideration options, different contract types, order book data, the normalization of that stuff, and then you start looking at security token exchanges, exchanges for non fungibles, and the tokenization of everything. This becomes, I believe, a really significant and important problem. So we started thinking about, you know, what would it look like to create a platform whose sole purpose was to make integration as easy as possible. And so that's what Nomics is. People see the website. Yeah, we price things. We have a really cool, I think, way of rating transparency for exchanges and a whole lot of other things. But at the end of the day, I come from this product and this data platform, and that's what we're

attempting to do. Got it. So let's really dig into this data world in crypto, right? Because I think a lot of people know that it might not be as, I don't want to say legitimate, but just kind of as a high confidence level as data they may see in public markets or other assets. Describe how, whether it's Nomics or CoinMarketCap or some of these other products that provide pricing data, for example, or market cap data, how is that data actually derived? What is the mechanism um or the process to get that information onto those products yeah that so that's that's a really fantastic question and an astute one um you know in in i think most people in this space i think there's far more people who understand how blockchain data works than market data i i really

do um just because so many people in the space are crypto native so yes you see these prices on websites and um and then you start thinking about like well how are they uh how how are they deriving them and the answer is it's it's kind of complicated so you know like nomics could market cap others um post methodologies and um i think we have the most extensive description of our methodology for pricing a crypto asset of of anyone out there a lot of folks just have like one or two sentences and it's hard to know what's really going into that but yeah i i and it's kind of interesting because we get a lot of people who write in and say, hey, I think we found a bug on your website. You're showing a different price for Tether than CoinMarketCap is. And I try to

explain to them that it's a feature, not a bug, and that there is no one correct way to price a crypto asset. We think we're doing it the correct way, but there's a lot that goes into that. So, you know, maybe a good way to dig into this would be to kind of explore how one might price a crypto asset. Like, you know, what does that journey look like? So it's not as straightforward as most people would think. Let's say we want to price a crypto asset like ZRX. So zero X. So in order to do that, you should probably gather all the trading pairs on all the exchanges that have zero X. So an example of that might be you've got the zero X to Ethereum markets on Binance, for example.

All right. So you get a bunch of those markets where zero X is on either side. although I think it's always the base currency, not the quote currency. I've never seen 0x as the quote currency. But okay, so you've got 0x to Ethereum. And you're like, okay, well, we're going to price 0x with Ethereum now that we have this trading pair. Well, then the question emerges, how do you price Ethereum, right? So if you're going to use Ethereum to price 0x, now you have to price Ethereum. So do you include all the Ethereum markets like Ethereum to Tether? um you might i i would rather not use tether to price ethereum in many instances um but so if you're using pairs like ethereum to tether to price xerox then then that begs the question

well how do you price tether you can't just say it's worth a dollar um so so then the question emerges well how do you how do you quote the price of tether do you use do you use markets like Qtum to tether some of these really crappy shit coin markets. And a lot of these pricing websites and aggregators do. They'll use Qtum to USDT on some crappy exchange and that ends up influencing the price of Ethereum and Xerox. And it can become really circular. You can be using ethereum markets to price bitcoin and then you can be using you know bitcoin to price ethereum markets and it really gets complicated after a while so i can't speak to how others are doing this but i can speak to how we're doing it so how we do this is we have a couple rounds where

we're pricing things so the the first round of pricing is we use um ethereum to fiat and btc to to fiat pairs to price uh ethereum and bitcoin so we use all the trading pairs that involve ethereum and bitcoin that are traded against fiat to to price those two crypto assets ethereum and bitcoin and the reason why we do this is because we think it it anchors us to the real world right If you're using Qtum to tether to price Ethereum, pretty soon you're off in la-la land and there isn't great price discovery and these inputs to pricing are very off-base of how rational people think about value. So we'll use these fiat markets to price Ethereum and Bitcoin, and then we'll use all the trading pairs that include Ethereum and Bitcoin as the quote currency to price those secondary altcoins. and that that was working for a while until we started to see the emergence and this is still basically what we do but then we started to see the emergence of stable coins as quote currencies

and also exchange tokens as quote currencies so you know you might see a bitcoin to usdc or a market or a you know ethereum to to tether market and and those at some point if you start looking at the dominance of quote currencies in the space you had you had times where um actually most of the time many of these stable coins in terms of like quote currency volume are far out ranking um fiat like fiat as a percentage of volume as a trading pair in the crypto space is very very small so if if we have bitcoin or ethereum against um a stable coin where bitcoin or Ethereum is the base currency in the trading pairs, that first currency, then we will allow for bidirectional pricing. Anyway, I'm getting off in the weeds here, but the essence of it is

we use fiat to price Ethereum and Bitcoin, and we use those prices to price everything else. And it works pretty well. Another component of this, which a lot of people don't talk about or think about, is what you do with outlier detection. So if you want to include all exchanges, which actually we don't encourage people to do. But if you want to use all exchanges for the purposes of pricing these assets, you have to think about what to do with crazy outliers. So sometimes we'll see, it's really bizarre and it's probably fraud in most cases, but we'll see this bid leap across the ask, like Michael Jordan going to do a slam dunk. And we'll see this bid leap across the ask and purchase some crappy, crappy coin way out of the money and way off

market. And it'll be a huge price, but a small amount of volume. And if you're doing volume weighted pricing, that still moves the price. So another thing that goes into this is outlier detection. And the way we do outlier detection is on a per trade basis. Most of our competitors are doing outlier detection on a trading pair basis, on an exchange trading pair basis. So instead of just taking out the few trades that seem to be fraudulent, they'll take out the entire trading pair on that exchange for the purpose of pricing that crypto asset. And there's a million debates to be had about how to do that. But that also factors into it as well. And then you get a price on, on a website like ours or, you know, others.

Got it. And so, you know, look, there's a lot of components here. Um, and you described not only how the price gets to the website of the product, but also, uh, some of the, what I'll call like high risk areas are right in that process. What would you say are, um, the most common, right? So when I think of like crypto exchange data, um, there's a lot of, as, uh, Travis Cling from uh ike guy says there's a lot of fuckery going on right shenanigans yeah shenanigans whatever you want to call it right and what's going what's what's happening is uh there's the wash trading there's all kind of spoofing right there's all these different things what do you see as the number one most common thing that affects price uh that maybe listeners

aren't aware of right so like is it is it the spoofing uh spoofing is it the washing like what Yeah. So there's a couple of things. One, I think it's just volumes are off. So there's a type of exchange spamming that I call ticker stuffing, where exchanges that only report data in tickers, which we can talk about what a ticker is in a second, just inflate a ton of volume. They just change a number on their data set and they send it over to CoinMarketCap or others. And now the volume is really inflated. So let's say you have like Bitcoin to tether on one of those exchanges. And it's like NegosiCoins, which is this Brazilian exchange that no one's ever heard of. Even people in Brazil are like, this isn't even the biggest exchange. And that was at the top of CoinMarketCap's exchange rankings for a while, posting like double Binance's volume or something.

it was like 1.6 billion, you know, on, on a few markets. And so if, if they're using some wacky pricing, if, if someone's using a wacky pricing methodology to price Tether and the volume on that is 1.6 billion, um, you're going to get a, you're just going to get a really, really crazy price, um, price for Bitcoin. So I'd say for Bitcoin, you know, for the most part, it's, it's pretty stable. You're not going to see something that's like several hundred dollars off the mark. But a lot of this, a lot of the shenanigans are, in my opinion, and what we see in our data are really tied to stable coin pricing. So we think a lot about how stable coins are priced. So let's say, for example, you've got the price of Tether. There's only a

handful. There's really only a handful of fiat to Tether markets. So Bitfinex has one. And where you can take USD. I don't know why anyone would do this. Uh, you, you take USD and you could buy tether and the price there is usually lower than the price of, of tether and other places. So we heavily, we heavily weight our tether price to the, the Fiat price of tether. I mean, that's, you know, so, um, we, that, that affects how, you know, how we price tether. And then that flows through the entire market right like if if if tether is the most popular uh quote currency and the price of tether changes whoa like the ramifications of that are are huge you're talking about billions upon billions of dollars in volume i'd say the the the second you know most common

or i'd say the most common egregious uh shenanigan is is you know when when people when when i don't know so if you're a centralized exchange and this happens then your matching engine just sucks but where you'll see the bid hop across the ask and pick off some you know sometimes it's even bitcoin though someone will buy like a top like the ball buy a small amount of bitcoin out at some outrageous price and and and that will that will move the market as well we see that mostly on decentralized exchanges where um you know because of the way you know Because sometimes these matching engines are on-chain, their APIs do allow you to snipe off a particular order on the order book that might be at some outrageous price. So that'll move the market as well.

Another thing that people do, which is just ignorance, and they don't know to not do this, but they'll use derivatives and options contracts that might be insanely leveraged to price these assets as well. So they might be using BitMEX data and those contracts to price Bitcoin, which should not be done. And that's just, again, not knowing how to do this correctly. Absolutely. And what do you think is the impact of just bad pricing data? Is it something where investors just make bad decisions or they're much more negative impact to having not necessarily false data as much as it is just inaccurate? Yeah. So I think there's a few problems for the end user that arise out of this. The first problem is that someone might go to some of these exchange rankings and these exchange ranking websites and if you go to current market cap today, you'll see exchanges you've never heard of and that you could call everyone you know and they could call everyone they know. You're like, I've never heard of this exchange. And it's in the top five. So people who are newer to the space might go to those kinds of rankings and see exchanges and assume that because they have a lot of markets and because someone like CoinMarketCap, oh, yeah, here it is.

Nego C Coins, literally right now, is posting $2.7 billion in 24-hour volume. And that's with their adjusted metric. That's like they're supposed to be their good one, where they adjust for shenanigans. So someone might go to this website and see an exchange. They're new to the space and they're like, I want an exchange with DeepMarkets. And so I'm going to go here. And they end up going to one of these exchanges. They place an order and they just blow through the order book and they end up paying a lot more for a crypto asset than they should because the liquidity isn't there.

So I think the number one problem is that it's hard for people who don't know what they're doing to get good information about liquidity. And then when you're on an exchange that has bad liquidity and you put in even small orders, that's going to move the market a lot and you're going to end up paying more. So I think that's the biggest problem. I think all the other problems, you know, other than that, or many of them, relate to real-time trading environments and people who are, you know, just making knee-jerk decisions. um so for example you know what what we think happened we can't say for sure but uh if you recall uh back in the day on coin market cap the they they um excluded korean exchanges from their calculations and uh overnight the price of a lot of things dropped and there were a lot of fund managers and fund administrators that were using coin market cap data to provide like nav statements

to investors and it looked like people lost a lot of money. You know, what we believe happened there was that the Korean markets were just algorithmically excluded using their outlier detection model. So there's things like that. There's things like, you know, just collisions of symbols. So there's a lot of weirdness around symbols. You might think you've spotted an arbitrage opportunity there's a bat token and then there's bats basic attention token and one of one of the customers that we had come to us like spotted some arbitrage opportunity in a real-time trading environment executed on that they're like what the hell this isn't even the same this isn't even the same token so if you're if you have machines trading for you it makes all

the difference in the world um but uh in general i think it has to do with with liquidity on these exchanges. And also, you know, if you're backtesting and you want to do some strategy backtesting, it can be really hard to get accurate order book data. You might say, hey, you know, I have this amazing model. And according to this model, I'm going to be just fine because, you know, if I execute against the trades that my model says I should execute against, you know, there's going to be a lot enough liquidity for me to make money here even with with low low margins or you know small spreads because the order book data is here but the order you know the orders on these exchanges are all spoofed and uh it turns out that that you know it's just not a viable

trading strategy at all for you because at no point would you have been able to trade any near anything near what what what you thought you would um you know without without moving the market a lot so i think it has a lot to do with with with moving the market with deciding which exchange to use. Um, the prices themselves, um, you know, tend to work themselves out over time, but they're definitely huge blips in periods here, there, where what you're seeing just simply, um, uh, simply is not true. Got it. And so as, as you've been building this, um, how do you think when this gets solved, what are we going to see? Do, do we actually see kind of a, um, conversion where, Binomics or another kind of data aggregator slash provider kind of getting it right,

does that force the rest of the market to follow suit? Or can there actually be some pretty big disintermediation between what we'll consider kind of accurate data versus non-accurate data? Yeah. Yeah, that's a really good question. So I think that the best analogy to use here is really is really spam so i've been talking about data quality and all this nerdy stuff and i i think i'm probably the least interesting person at the crypto party and people's eyes start to you know roll or glaze over um but uh i think people really started getting it when we when we started talking about volume spam uh ticker stuffing in in exchange spamming because that's really the best analogy i think about this like like google so you know

at the end of the day uh who owns the top of the funnel in the space uh probably coin market cap right now like they they have more traffic than anyone else and um so there's a lot of interest there's a lot of benefits to being there so it's probably analogous to maybe having google um, for the worldwide web. And Google has an algorithm for trying to figure out if all these SEO professionals, search engine optimization professionals are, you know, manipulating the quality score of these pages or, or trying to, um, you know, sort of, I guess, pull shenanigans and, and, and get to the top. And it's just an arms race. It's, it's, um, it's never, I don't think anyone's ever going to get it right permanently. I think it's the kind of thing

where like we came out with our exchange um our exchange index um before anyone else that i know of and then um coin gecko did and it looks like coin market cap is going to be doing some things but it's one of those things where everyone's going to do it and as soon as we um as soon as we sort of um plug one hole another one's going to emerge and it's it's it's it's like email you know like people start off just you know you could put uh you know pills and viagra in an email and it would get through just fine. And then maybe you'd replace an O with a zero or you'd replace an L with a one and it could get through. And then people would take pictures of the images and put those in the email. And then Gmail would catch up to that. And then it would just get more

and more sophisticated. They'd be swapping out IP addresses. And I think that's what it's going to be like. And I think it's never going to end because this space with permissionless innovation, I think there's going to be more exchanges over time, not less. I think there will be a few periods of consolidation. But essentially, I think, you know, anyone can start, you know, a cryptocurrency exchange overnight with something like 0x. And I think there's just going to be an explosion of venues where you can get, you know, maybe even just like local security tokens for projects you're interested in. I really do see that happening. And then there's so many tokenized projects. So I see this trend continuing and I think it's an arms race that never ends. And I think it's one of those things where as a product company, you just need to have a dedicated team of people thinking about this and exposing, you know, whatever you want, you know, exposing sort of correct ways of thinking about this. Right now, it's still fairly easy. Like on our exchanges page, we show the Alexa rank. And so one of the things that I've been looking at is the ratio of like volume to Alexa rank. And you can still find people with those types of things. For those of you who don't know what Alexa rank is, it's a ranking of top websites. So if you're 979, that means you're the 979th most popular website on the internet, which is what Binance was a couple of days ago.

So if you see a website that has an Alexa rank that's in the hundreds of thousands or millions, and they claim to be doing more volume than Binance, and that's probably off. So there's still a lot of like really like simple, easy stuff that we're doing right now to find people. And that seems to work. Another thing that works for us is just transparency. So when we looked at Bitwise's report to the SEC, where they claimed that there were only 10 exchanges with actual Bitcoin volume, we started looking at the kind of data that those exchanges were providing. And we found that of the 10 exchanges that Bitwise said were good actors, eight of those provide full historic trade level data. So it means you don't have to trust their candles. You can build the candles yourself with individual trades. It's super tedious and a pain.

But you can do it. You can audit their candles and you can audit a lot of stuff that they're saying. and so so eight out of ten provided full history on all the trading pairs you know going back to to inception uh and of the it's like around 20 exchanges 25 that they explicitly called out as doing things that were questionable um it was it was around 30 exchanges only two provided uh full historic trade level data so and that makes sense right because if if if you get enough history with enough granularity on someone, sooner or later, you're going to find the shenanigans. It's almost like an IRS audit. If you get audited by the IRS, maybe you can hide what you're doing if you

provide six months of data and it's really high-level statements. But once they start seeing the receipts for every single transaction, they go back five years. If there's something to find, even if you didn't mean to do it, they're probably going to find it. So we've just found a willingness from top exchanges to provide really high level or really granular data with a lot of history. And so that's really important to us when we look at exchanges in combination with things like AlexaRank. For sure. And I guess as you're thinking through data, exchanges, quality, how does all of this fit into this narrative of the institutionalization of Bitcoin in crypto, right? This idea that whether it is large financial service companies or people like

pensions, endowments, foundations coming in, how does that impact or influence the quality of the data? Yeah. So that's a really great question. So I think the old model of doing this is very much like the New York Stock Exchange and NASDAQ model where almost all trading happens through those two exchanges in the United States. So they have a monopoly on the data and then they can seek rent on that data because they're really the only ones that have it and then they can charge like a billion dollars to co-locate your server somewhere for high frequency traders um uh well you know what what we're finding in this space is that in a lot of instances market data is a distribution channel for exchanges so if you're a new exchange what's

your what's your product well your product really are these trading pairs and when every time people trade across them you make a cut so you really want to programmatically um expose you know when you've listed new coins, when you have new trading pairs, you really want to share as much of it as possible. We don't think the response is going to be like, oh, there's huge consolidation and there's only a couple of exchanges. Precisely because we found that even among our largest institutional customers, they're interested in exchanges with the most liquidity. They're interested in BitMEX data. They're interested in Binance data. They're interested in all the places that everyone else is. And we'll go to them, and I won't name names here, but we'll say,

hey, how about this super reputable exchange that you've all heard of that's regulated? And they'll be like, eh, can we get the Binance and BitMEX data? So I think liquidity is going to be king in terms of where the institutions go. What I do think they want is some kind of assurance that's auditable, that what you're saying is true and what the exchange is saying is true, is actually true. So I think this is going to come through market forces. I think the market is, and it's already happening in a big way, especially in the aftermath of the Bitwise report. Institutions are demanding more transparency, more history, more granularity. And it's not this thing where exchanges are charging a million dollars. It's the kind of

thing where like, that's just the price of entry. Like you just have to give up that stuff in order to gain trust in an environment that, you know, where, where there isn't a lot of trust. So I think that is going to be, you know, more open and, uh, more granular and, and more history over time is among the, among the good actors and the ones that want to gain trust among institutions. Got it. What, uh, what's next for, uh, Nomics? Where, where do you kind of take it from here? And then what, what's kind of on the plate? Yeah. So there's really, there's really two things. One is, you know, we're an integration machine. We were built around integrations from day one. So I think people can expect, you know, 400 plus more exchanges here in the near future.

But the goal is not to treat them all the same. It's to rank them algorithmically. So that's sort of the second component of this is providing more quality indicators, more proprietary quality indicators so we have one already there's there's more on the way but really at the end of the day you know we've seen companies get really ambitious in this space and they'll have on-chain data they'll have exchange data they'll have momentum indicators and all kinds of crazy signals and who's posting what on reddit and telegram groups and github and um and all kinds of you know 20 million third-party scores and stuff like that and and i think that's fine if you're like an aggregator of aggregators um but we think there's so much to be done here still around uh around the

boring basics around things like um you know normalization of data and tokens changing their symbols and so how do we follow that history over time we think there's more to be done around uh algorithmically you know detecting wash trading and you know open sourcing those methodologies so we're we're going we're going very very deep as opposed to wide um except when it comes to exchange coverage we're going very very wide but uh it's it's the the hard problems are still there and there's still a lot of work to do the space still doesn't know how to think or talk about exchange data or market data in this space like we still have um analysts coming to us from really places that you think would understand this

and they don't even know how to ask for what they want. The language isn't there. The practices aren't well established or developed. So there's just a lot more boring basics. And we think of ourselves like a utility company. We're like the power company or something like that where it's just about doing boring things really well and improving infrastructure over time.

Got it. Before I wrap up, I always go through some rapid fire questions. Let's do it. what do you think is the most important company in crypto uh i think right now it's probably binance why um i think they are doing some really interesting things with binance change i i think it's binance chain um they've taken basically the core value prop of ethereum or at least what people are using it for and they've isolated it there i think it's really

interesting as a business practice and i really like this to create your like you know your your evil twin. So they've got the centralized exchange and now they've got a decentralized exchange. It's almost like, you know, on one hand, you're going to create Nordstrom's and you're going to create Walmart and you're going to see who wins or hopefully they'll both win. So they're willing to cannibalize existing businesses with new incumbents that come from them. I think that, you know, what they're doing with fiat and arbitrage across jurisdictions is really really interesting and i also think that they can out execute just about anyone in the space um so uh that in and of itself is really impressive absolutely what uh what's the one

regulation that you would change or improve if you could um i mean i i'm like everyone i just wish there was more regulatory clarity um and also as a holder of cryptocurrencies um i think maybe the one thing I'd like to change is I would not like to see at least Bitcoin be a commodity. I think every time you make a purchase on your Bitcoin credit card, that shouldn't be a taxable event. I think it'd be really fantastic if a lot of this stuff were simplified. That's fair. What is the one thing you believe in crypto that everyone else would disagree with you on? Like your most controversial thought. I think Dharma and projects like Dharma, which are built around on-chain lending, are the second most important thing in the space

behind Bitcoin. Why? Because lending markets are much larger than almost any other market out there. I think we're looking for the killer use case and most people don't have a ton of money to buy this stuff, but they will adopt it if they can get a loan. And I think that it's incredibly hard to earn interest and to take out loans in the space. And if that could be opened up, every small business owner here in the world, I think, would potentially get involved and much faster than anyone thinks. Got it. So I don't know if I necessarily agree it's the second most important thing but i will agree that it is probably undervalued right or underappreciated kind of um what's going on there and what it can become um you know relative to

kind of how people are thinking about it today so that's fair yeah yeah i don't know that i've had you know i might i might have said something different if i had more time to think like what do you think is the second most important thing in this space for me yeah um honestly i think bitcoin is the first and i think bitcoin infrastructure is the second right yeah okay fair fair enough yeah the way i think about it is just uh the you know you if you think of bitcoin as like kind of the inner circle like on a target right like it's the bullseye and then like that first ring around the bullseye is like bitcoin infrastructure then if you look at um you know the second ring maybe it's like institutional adoption of bitcoin right like you kind of have

like this whole target of just bitcoin and then there's a second target of like everything else right i think that that yeah else has a lot of value if you ask me what's the bullseye in everything else uh i'm not sure right like i actually don't know if i could put something there and so that's you know both um not a good answer but also i think that's part of the opportunity right it's eventually there will be something there that i think we all look at and say of course that's the bullseye of like the second target um and the people who were there early and understood that and foresaw it we'll uh we'll be pretty pleased i think yeah so i agree with that i think i was lumping bitcoin and bitcoin infrastructure together but you can't

take the infrastructure for granted it's there's so much to do i was reading this this uh tweet where someone was talking about exchanges instead of listing a million coins should just go incredibly deep and just provide a whole bunch of you know infrastructure stuff around bitcoin but um that's that's easier said than done for sure what uh what's the most important book you've ever read oh that's a really good question um so i i think i'm just gonna go uh so so this is like super weird but there's there's a book by a guy named wim hof who has this thing called the wim hof method and he encourages people to take you know to hold their breath and take cold showers and he's a crazy but he holds the world record for like

swimming the longest under ice or something, all kinds of crazy stuff like that. And, um, you know, it, it, at first I, I got in involved with that because I thought maybe I'll lose a lot of weight because I, you know, I had some weight loss goals and some health goals at the time. But, um, you know, yesterday I held my breath for four minutes and it's been the craziest meditation experience of my life. I've, I've probably grown more in the last maybe six months of, of doing the Wim Hof method and particularly the, the, the breathing exercises than I have, like maybe in the last six years. So I feel like I've gotten six years of therapy in six months. Um, and, and he, and he has a book called like the way of the ice man or something like that, which is a good explanation

of his values, but it's really the, the, the method. So I don't know if that's the most important. It's been probably personally, it's been the most important book to me. Um, I'm trying to think, I'm trying to think more broadly and, uh, I'm coming up, I'm coming up short i'm just i although i just say a bunch of obvious stuff so i won't uh it's stuff like sapiens and whatnot but um personally the wim hof method has been fantastic for me awesome no i love it i love it um what uh what do you think about aliens real not real complete parse oh yeah i mean i think they i think they i think that the universe is infinite which means there's an infinite number of you know ways that life can emerge so i think there probably is life out

there somewhere i don't know if they're visiting and flying saucers or look like any of those other things but i think there is there is life on other planets and that life is likely evolving and uh given a long enough time horizon you know provided that we don't go extinct as a species we'll we'll probably meet up with them at some point and see what happens i love it there's not a there's not a lot of people who would uh who would think it that way but it's uh it's definitely possible i'll end up i let you ask me one question what uh what you got for me yeah okay okay so i was thinking about this um okay so you're like i think you're incredible on twitter it's been fun watching you you know grow your personal brand and i think

i think i'd love to hear a little bit from you about how you think about personal brand the opportunity around personal brand in the crypto space and you know given the opportunity cost of doing anything compared to doing something else that might generate a higher return um why have you decided to place so much emphasis there and how does that fit into your kind of long-term plan? So that's a huge question. I got a really simple answer. I actually think of it completely opposite. So I've never once thought about personal brand. I literally think about doing what makes me happy and doing whatever the fuck I want. And the reason why I do that is because I think people are attracted to the tweets and everything that I do because I don't try to build

my brand. Actually, if I was being intentional about building a brand, I wouldn't say probably half of the things that I say. I wouldn't fly to the Bahamas and go interview John McAfee on his boat. That's actually not a good thing for brand building. But guess what? I wanted to go do that. and i didn't think that there was anything wrong with doing it and i thought it'd be a cool life experience and the day i'm laying on my deathbed but i'm glad i did that and so yeah i think that that's really how i look at it it's just like i don't care about brand right but in a weird way like that almost becomes a brand right and and so it's almost this aspect of like if i'm excited you know i'm excited on the internet like you can just tell right and the way i tweet and do all

this stuff. If I'm not feeling something, like I'm not afraid to say that, right? I'm not scared of topics. I'll talk about anything. I'll go anywhere, right? I'll kind of do the things that I find interesting. Now, there's a lot of people who I think wish they did that stuff or took a position that way, but they don't. And so they end up usually being, you know, kind of watching, or being really positive towards me because it's almost like, oh, well, if I can't do that because I have a job or a reputation or my family's not going to like it or whatever, then they're almost kind of like living vicariously through me. And then the other aspect is I would be horrible at building a brand. I literally would. I joke all the time and think about with my friends,

i'm like imagine if i was responsible for like helping somebody like at a corporation build like the company brand i'd be fired immediately they're like oh look at this cool we're excited about bitcoin like just literally tweet all caps like buy bitcoin you can't do that right it was very um i think authentic like this is who i am in the sense of what I tweet, what I say, how I act, I'm not 100% turned on all the time, which is another kind of weird thing. So if you think of most people who build a brand, they actually put themselves through an aspect of suffering in order to keep that brand. So if you're always the intellectual, sometimes they want to say a joke, but they don't say the joke because they

don't want to be perceived as not serious and an intellectual right and vice versa people who are funny sometimes they don't say that intelligent thing that they have because they don't want to be perceived as like the nerd right they're the cool thing and so like for me like that's just a life that like i'd hate right having to like think before i do things that i want to do right and so it doesn't mean i'm gonna be perfect every time but i also own my mistakes so if i say something and i'm wrong i'm like oh shit i'm an idiot like i you know i i was wrong and just the ability to like transparently own when i'm right or wrong or or if i say something somebody's offended like i think that people are really just drawn to the authenticity and then like look it's selfish

right on the on the flip side i get to do the things that i want to do every day like i'm the fucking luckiest dude in the world right because i get to do that and so it's just more of um I think like really getting comfortable with, uh, I could be wrong, um, in public. I could be embarrassed in public, right? I could fail in public, but all of that is an okay trade off. And I'm comfortable with that as the downside for the upside of being able to do the things that I want to do and really just kind of enjoying life while I'm here. Okay. Can I ask a follow-up question can i go ahead okay okay so so i hear you uh and that seems like i don't think anyone could be as successful kind of doing what you're doing if they didn't authentically enjoy it so i

believe that it's just like that's just who you are um but there there there also does seem to be and this is not a bad word coming from an entrepreneur there doesn't seem to be like some like ambition behind it like i'm pretty sure some bot who was you followed me and then unfollowed like you have goals there and i'm sure it gets you access to stuff and like you're doing some growth hacky things like what i mean is there is there some element of like it's not just for pure expression like there does seem to be a reward that enforces you that reinforces it and is there like a level of ambition beyond just like this is just fun or is that just it oh i i've listened i've never uh been shy about saying and i've tweeted you know literally i think for like two

or three years now like audience is the new currency right and yeah aspect of um again not everyone's gonna agree with me i bet you half the people who follow me literally follow me because they think I'm an idiot, right? It's this weird thing. But look, I ran a growth team at Facebook. I understand how a lot of this works. I've been able to be very fortunate to see the benefits of having a large audience, both from what I consider like creators and entertainers to literally Mark and Cheryl at Facebook to even the things that I've done, right? And so I've never been shy about uh, I want to put my ideas out in the world and get them in front of as many people as possible. Right. And, uh, and I don't, I come from a world, uh, and maybe it's just like the growth

mindset of like all of these quote unquote growth hacks. I have no problem with anyone doing them. Right. And I actually think that it is, uh, social media, Twitter is a great example, right? Like Twitter provides you tools. If you do not want to follow somebody, you can unfollow them. If you do not want to hear from them anymore, you can block them or mute them. Right. People don't do that. What they'd rather do is they'd rather complain about the fact that somebody is always in their feed, blah, blah, whatever. And so I think that we really do kind of get into this spiral. But, but again, I really look at it as, you know, look at like what I do for a professional real job during the day, right. Which is my job is to take

institutional investors' capital, invest it into companies that are being built by world-class entrepreneurs, and grow that money at 20%, 30%, 40% compounded annually. And if I can do that, I will continue to be able to do that. I'll get rewarded by being given the opportunity to continue doing my job. If we're not good at it, eventually people stop giving us money. Right? And so one of the things that we think about a lot and I talk about all the time is uh having that audience is a really defendable thing there is not another investor in crypto that can walk into a room and tell an entrepreneur when you go to launch your product i can put enough traffic to your website to crash your website it's not gonna happen right and super

defendable um and so i think that part of that is uh that audience is powerful but also that audience is an echo chamber. I'm not confused or not self-aware enough to realize that this is only possible in crypto. If you're telling me right now, hey, go and talk about pretty much anything else in the world other than Bitcoin and cryptocurrency, I'd have zero influence, zero power. It's a very kind of niche thing. And then also, if I tweet something positive it goes crazy if i were to start to question like bitcoin and crypto it'd probably get like no one right it's very much an echo chamber i'm just i'd like to think at least i'm self-aware enough to know that and it's i'm not using twitter to educate myself right i'm

using it more as a broadcast uh mechanism than anything and then i go and i consume content elsewhere that I think is kind of more balanced in terms of people looking at a topic, you know, pros and cons or believers and detractors, etc. Yeah, that's awesome. You know, so I heard your, you know, kind of the way you described why you do this. And it reminded me of this Howard Thurman quote, who said, it said, don't ask what the world needs, ask what makes you come alive and go do it, because what the world needs is more people who have come alive. So I think that example of just going to talk to John McAfee, like the payoff there is probably very little in the scheme of things. But that made you come alive. You're on a boat somewhere talking to one of the

most interesting people in the world right now. So I can I can completely identify. Thanks for sharing that. I appreciate you letting me get a question here. Yeah, look, it's a it's a thing where I just, you know, I really, really wish more people kind of live their life. Right. It's uh, it's probably beat dead at this point, but I really do think a lot of people end up, uh, kind of end of their life having regrets and because they were worried about everyone else thought. Right. And so I don't think there's anyone in the world who, who can say, honestly, I don't care what anybody thinks, right. Because it could be your family. It could be your loved one. It, you know, it could just be a friend, right. But you care what somebody in the world

things it's just can you decipher the difference between uh those that actually matter in your life and what they think versus the people who actually don't matter at all right and not really worrying what they think yeah yeah it's it's it's really cool it's really cool when the when the market values that too like you know you you probably enjoy just talking to crypto to people about crypto any you know anyway and asking questions about what's happening and uh and then now you can do this professionally so it's it's it's really awesome to to observe you know absolutely look man i uh i appreciate you uh um you coming on i think that uh people will really enjoy i learned a lot um about kind of how this data is created and what some of the issues are and stuff

and then hopefully we will over time um you'll be able to bring you back and you can say hey it's gotten better but uh but but i really uh appreciate taking time to do this and i hope everyone else enjoys it as well hey everyone pop here if you like this episode of off the chain and want to help us take crypto to the top of the apple spotify and other podcast charts please do us a favor and rate review and subscribe to review simply go to the off the chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts i appreciate you listening and see you next time on off the chain

Thank you.