Top market makers Wintermute founder Evgeny Gaevoy and DeFi Head of business Yuriy Myronovych On the market making strategy of cryptocurrency market and DeFi The future of market making .

Arrangement :dYdX

5 month 4 Japan , We (dYdX) And from Wintermute Founder and CEO Evgeny Gaevoy and DeFi person in charge Yuriy Myronovych Together, I presided over AMA Spotlight Live broadcast of .

dYdX dialogue Wintermute: stay DeFi Market making in the deal , What kind of strategy is needed ?

Evgeny and Yuriy Various topics were discussed , Include :

  • Their background and Wintermute The story behind it
  • Deep market making business and different strategy deployment
  • DEXs and CEXs The difference in market making
  • Wintermute Manage inventory 、 risk 、 Collateral and Credit Strategies
  • DeFi The future of market making

Here are the edited interview records :

David (dYdX): Hello everyone , I am a David Gogel. I am a dYdX A member of the growth team . I'm glad to be with you today Wintermute Founder and CEO of Evgeny Gaevoy、Wintermute DeFi Responsible person Yuriy Myronovych, as well as dYdX Director of business development of Vijay Go to a meeting together . For the next hour , We are going to talk about Wintermute and dYdX On the topic of market making . Thank you very much for coming here today . As opening , Can you introduce yourself and tell us Wintermute The story behind it ?

Evgeny (Wintermute): I have a traditional financial background . In establishment Wintermute Before , I am here Optiver Work , It's one of the biggest market makers in traditional finance . stay Optiver, I built it from scratch ETF department .2017 Beginning of the year , Cryptocurrency fever is rising , Bitcoin in particular , I join the blockchain industry at this time .
therefore , I work with another software engineer , We set up Wintermute. Interestingly , The first business case we see is a market making project . But when we're in 2018 At the beginning of the year , It's already a bear market for the industry . So we have to move quickly to a more traditional market making business . Fortunately, , We made it . We became one of the key market makers in the cryptoecosystem last year . So this year , Our growth is also amazing . In the process , Especially since 2019 Since then , We've been supporting dYdX The liquidity of . We are very happy to see the common development of both sides . Now it's... Turn Yuriy 了 .

Yuriy (Wintermute): Hello everyone , I am a Yuriy, I am here Wintermute Leader DeFi The job of . And Evgeny Different , My background is software engineering and blockchain . The most famous project I've ever worked on is probably Argent Wallet, A lot of people are using it right now . But to some extent , I found that for me personally , Trading is more interesting , And I'm usually more involved in DeFi In the ecological . That's when I joined Wintermute. That was two years ago . From then on ,Wintermute Has grown into DeFi, It may be specialized in DeFi One of the biggest market makers in the industry , I'm very excited to be able to join the work . When I join Wintermute when ,dYdX It's my first integration project . From then on , I started an interesting journey .

David (dYdX): Thank you for sharing. . First ,Evgeny, Can you describe what market making is , as well as Wintermute The market making strategy used ?

Evgeny (Wintermute): In short , Market making is to offer bilateral quotations to any given market . That's providing liquidity . Any time you want to trade , For example, when you are dYdX Open perpetual contract , You can see the buying price and the selling price , Yes 95% The possibilities are offered by market makers . Market makers have advanced trading systems , These systems are connected to a variety of other liquidity platforms or pools , So as to get the pricing source , These platforms provide a lot of signals , Let's be efficient and flexible . But in short , It basically provides liquidity .

What we offer is the most basic market making strategy . The trading you see on any centralized exchange , Or if you look at it AMM, It can be AMM Pools provide liquidity . We are also a fairly large OTC market , The counterparties can ask us the price , This is basically market making . If you look at something like 1inch or Paraswap Such a platform , It works the same way , Because they're not just directing money to different pools , And also ask some private market makers to quote , We are one of them . So market makers can also provide liquidity in different ways .

David (dYdX): There are many different types of market making strategies . Can you talk about Wintermute What's your market making strategy ? Are you always neutral to the market ? If not , What will change that ?

Evgeny (Wintermute): Generally speaking , The core of the business is to be market neutral at all times . We can really learn from OTC Get some position in the trade , So it can run longer , For example, hours or even a day . however , Our core business is always market neutral . Occasionally in some other activity , These are not necessarily market making , If you are in the farming ( Liquidity mining ), It's quite difficult to keep the market neutral with some tokens , Because it's actually impossible to hedge risk . We have also made great attempts in venture capital . It's obviously good for us to buy any token long . But it's basically beyond our market making responsibilities .

David (dYdX): You mentioned Wintermute In many different DeFi It's all active in the agreement . Can you tell us the difference or focus of different types of products ? for example , What's the difference between spot and derivatives ?

Evgeny (Wintermute): For us , Whether it's cash or derivatives , All are 「 Big machines 」 Part of . Almost the whole team is focusing on all the product combinations . Whether it's trading failure or frequent trading , So there are potential problems with its effectiveness . therefore , We're not going to make a big distinction between spot products and other products .

David (dYdX): Can you describe what is market depth , And why it's good for order book It's very important for us to develop healthily ?

Evgeny (Wintermute): It comes down to liquidity, establishing the concept of liquidity . therefore , If you have good market depth , It can effectively help you develop many different marketing strategies , From active market participants , They also take short-term or long-term positions , Or technical analysis , Charts and so on . When they start trading , This effectively allows more liquidity to enter . Basically , Market makers are starting to see more volume , And then it's natural to go into the order book , It's going to be more liquid .

It's a self reinforcing mechanism . But it needs to be started by market makers from the beginning , otherwise , If there is no market maker , Nothing happens , Because there will be a lot of long orders in the order book , But not many deals . therefore , You just need to activate liquidity , That's what we're very happy to do with a lot of platforms .

David (dYdX): You mentioned that market makers play a crucial role in helping to improve the liquidity of the market . Can you describe how market makers play a role in the long-term and efficient operation of the encryption market ?

Evgeny (Wintermute): What I'm describing is a great way to show . For example, when there is a huge fluctuation in the market , Or a flash crash , Or when something unusual happens , Market makers can provide liquidity when they need it most . As for perpetual contracts , Another important component is the financing rate . There are a lot of traders who like different perpetual contracts , Just because you can arbitrage . This is where market makers really work , Because they help different exchanges , The consistency of interest rates between different agreements does affect long-term price stability and the user's trust in any given exchange .

David (dYdX): got it . therefore ,Wintermute It is often quoted as DeFi One of the main market makers of . I'm curious , Define the success indicators of top market makers ? Wintermute How to score on these indicators ?

Evgeny (Wintermute): What we prefer to believe is , Technology comes first , Especially in DeFi, It's very important , On top of everything . More and more Defi The agreement launched , There are many factors that need to be taken into account , Market makers need to make decisions , Whether to invest time and effort to support a given protocol , Advanced technology can be a must , Once there is a program error, the loss it causes is devastating .

besides , It also needs to be able to integrate with as many mainstream exchanges as possible , To provide the best and fast price . For us , This has always been a top priority . So this is one of the foundations for the team to build the best technology from the beginning , Especially in DeFi, That's what we've been focusing on since day one . The second is corporate culture , It's basically about making sure you hire all the right people for all kinds of roles , Whether it's junior traders , Senior traders , Senior Developer , Make sure the right people are our 「 property 」. Culture is something we are proud of , Because we really put a lot of effort into making sure it's really well established . Even though people have to work 24 hours a day , But they also need to know , They dedicated their best years to a company that appreciated them , That's what we do .

Last , For market makers , The way to deal with risk is also important , Especially for perpetual contracts . Market makers can also be liquidated like users . If any , They are much more at risk in this respect , Because we may hold a large position due to arbitrage of different financing interest rates . Then manage the level of collateral between exchanges , At the same time, manage risk exposure to ensure neutrality to the whole market . This is very critical , Because you need to hold on to the end , Not just making a lot of money . So for market makers , It's a much more accurate trade than a normal trade . For example, in the case of wrong quotation , Just make sure these deals don't lead to bankruptcy .

David (dYdX): crypto The market is open all year round , Some big price swings happen in the early hours of the morning when people sleep . Can you describe a day's life of a market maker ?

Evgeny (Wintermute): Yes , The most annoying thing in the early morning is , It takes the night shift on that day to deal with this mess , Colleagues need to call other colleagues , Wake up enough people to deal with . But I think it's a typical day for a junior trader , You wake up , The mess left you by the night shift man , Do something , Make sure all positions run smoothly .

And in the daytime , It's mainly about responding to what's going on in the market . See where the opportunity is , What trades are the most , Make sure we take the opportunity we see . because Wintermute There is no pure trading role , All of our traders are also doing support work . therefore , When the market is quiet , Most traders will have one or two projects to improve the existing system , Integration with the new exchange . So basically they're either monitoring whether the market is busy or not , Or busy writing code .

Vijay (dYdX): It's great to know that . Change the subject , I'd like to talk about how you see the decentralized exchange and the mechanism behind the trading of the centralized exchange . First ,Yuriy, At the highest level , What is the difference between a centralized exchange and a decentralized exchange , How about the trading volume of these two exchanges ?

Yuriy (Wintermute): This is an interesting question . On the whole , There is no significant difference in the way the two trade . Because our job is always to provide them with the liquidity to trade . However , The difference is at the technical level 、 Integration level and asset management level play a bigger role , Because being closer to blockchain has its own disadvantages . You need to think about Gas, What happened on the blockchain , How the assets on the blockchain are transferred . You need to think about a lot of complicated situations .

However , You also have a lot of benefits . for example , You don't have to worry about being able to withdraw assets from the exchange , Because you know that all the money is guaranteed by the underlying blockchain . therefore , You can rest assured that , Even now, technically , The asset always belongs to you . therefore , On a centralized trading platform , It's perfectly normal for independent traders and market makers to wait for hours to withdraw money . stay DeFi in , If you want to 15 Finish the deal in seconds , You just type in a very high gas fee, It's done . It's good . It's easy to predict , It's also easy to use .

Vijay (dYdX): Do you think this has effectively helped improve the overall mortgage efficiency of the trading system and operation ?

Yuriy (Wintermute): Of course , Because in terms of market makers , We have to put all the risks in the price , If there's any problem with the flow of money , This directly affects the price users pay for liquidity at the end of the day . If it can be in DeFi Ready to use , So it's easier for users and for us .

Vijay (dYdX): From a technical point of view , That's right API or DeFi In terms of coding the smart contract in , And connecting to a centralized exchange API What's the difference ?

Yuriy (Wintermute): From a development point of view , It's definitely more interesting . You will be more creative , You have to adapt to a lot of agreements and their work . especially DeFi It's kind of like the wilderness , Different protocols can work in completely different ways . It's like having AMM equally , You can make order based transactions , You can also confuse the two with some other categories . You have to adapt all of this to your internal trading system . And centralized exchanges are basically the same , It's just api There are some subtle differences . So in this sense ,DeFi It must be more interesting , I can say that our development team definitely prefers to work for DeFi code .

Vijay (dYdX): Great . So I want to talk about market neutrality and how you see the role of perpetual contracts and the role of maintaining them . Do you think perpetual contracts are an effective tool to maintain market neutrality ? Or what role these play in your strategy ? What kinds of cross product arbitrage and cross trade arbitrage do you see and pay attention to ?

Yuriy (Wintermute): In terms of market neutrality , Generally speaking , As a market maker , We always try to keep the market neutral , But once something happens , We can't match buyers and sellers effectively . It's always been a problem for us , Because it's not our business , It's not what we want to do . We never want to be on the opposite side of the deal executors . So we always try to be market neutral , We always try to match buyers and sellers perfectly . It's not always possible , But from our internal data , As long as you can reduce the holding time to less than a few seconds , Then it's enough .

Evgeny (Wintermute): When it comes to the importance of perpetual contracts to market makers , There is an important aspect that we often use , This is also dYdX It's a great place . It does allow us to be market neutral when trading certain products . What you can do is , Spot long , Contract short , So you have stock to trade, but it also ensures that you are market neutral , There's plenty of money , Especially in the central exchange is very positive . It also means that you get paid , It's a great way to .

Vijay (dYdX): That makes sense , In terms of the arbitrage opportunities you focus on , Is there a specific framework that is particularly attractive to you ? For financing interest rate arbitrage or cross exchange rate arbitrage or cash arbitrage transactions of the same product , Or do you focus on a particular type of arbitrage ? Or you might say you're looking for a very broad approach ?

Yuriy (Wintermute): We didn't look at the market from that perspective , Because we don't really focus on arbitrage , We don't have a specific strategy to use arbitrage . But as a market maker , It's natural to provide liquidity in multiple places , Then that liquidity will balance supply and demand . From our point of view , We don't do arbitrage , We're more focused on providing liquidity .

Vijay (dYdX): got it . How do you view the risks behind the management and trading of stock funds and the role of credit in it ?

Yuriy (Wintermute): Stock capital and risk , I think it's the most annoying part of our trading system . Risk management is always the hardest , Because there are always needs that can't be met under certain circumstances . Maybe it's because the market is more unstable than you think , Maybe you already have your own position , under these circumstances , You always go back to market neutrality , And make sure your risk parameters are useful to you , Bring you back to the neutral position you want to enter . So risk is a tool for us , To make sure we're market neutral .

Vijay (dYdX): got it . So what's the role of credit in your balance of assets ? Do you prefer to use it ?

Evgeny (Wintermute): I can answer that question . It's not easy to borrow capital in cryptocurrency . You can see from the financing rate , Because you can see in traditional finance , Interest rates are zero or negative , And in cryptocurrencies , Sometimes I borrow dollars , or DAI Or any legal equivalent , The interest rate is 20,30,40,50,100%. All this will also affect the investment of market makers on the platform , Because no one can have unlimited funds . therefore , You just need to allocate the money appropriately to each appropriate exchange .

therefore , It is a great challenge for market makers to have enough stock capital and even easily control the capital . Even the biggest market makers don't have enough capital to serve the whole market , This leaves a lot of opportunities for smaller market makers .

Vijay (dYdX): Now let's talk about the lightning crash and how you deal with it . So obviously , Rapid price rises and falls are common in cryptocurrencies , in fact , In the past few weeks , We've been through it several times . Of course , In the past few days , There was a strong rebound . So how do you ensure that you are able to provide liquidity under market conditions , More specifically , What's your strategy when the market collapses ? Tell us about your operation sequence or how to operate when there is a major change in the market .

Yuriy (Wintermute): For market makers , Monitor market conditions , Adapting to the market is very important . When the market collapses or soars , It's rarely pleasant for us . We prefer a stable and predictable market , But whenever there is an extreme situation , We have to adapt to . We have to adjust our trading system . We have to expand the order book to make sure we don't encounter 「 Fender Bender 」. For individual traders or any algorithmic trader , It's usually a stressful experience , The same is true for market makers . That's why we see the highest load in terms of risk , Whether it's a manual risk component or an automatic risk component, this is when it starts to work .

Evgeny (Wintermute): This is a key priority , When it comes to big market volatility like a flash crash , We're really conservative , Many of our systems will shut down , And restart by the appropriate trader or developer , We prefer to do this , Because it's really hard to make the system perform well in this situation , Extreme market will not only lead to abnormal price fluctuations , It could also cause all pricing to be out of date , It also means that a lot of collateral may have to be exchanged for the transaction . Centralized exchanges are more terrible . You can't create a 7×24 A 24-hour trouble free system . therefore , We are basically very conservative , We're going to pull out in the extreme , And get in as soon as we think it's safe .

Vijay (dYdX): To sum up , What's the biggest risk for a market maker or what's the risk of keeping you up at night ? Obviously , We've talked about some , But is there one that you have been thinking about, or some kind of technical risk, or more operational risk ?

Yuriy (Wintermute): I might say two , One is the security of funds on the chain , But it's a bit like a centralized exchange , You have to give your money to the central exchange, which will have full custody of your money . This is probably the worst . Secondly, the encryption market is very unstable .

Evgeny (Wintermute): In this regard ,DeFi It's much better , Because it's easier to control . We set up security mechanisms , It's very well controlled DeFi The risks you see on the Internet . by comparison , We can't control anything in a centralized exchange . If someone hacked them or an exchange was investigated and closed , It is finished . There's nothing we can do about it .

Vijay (dYdX): So I'd like to take a few minutes to talk specifically about what you're doing dYdX My experience in business and the market environment . Can you describe your Integration dYdX Layer2 Perpetual contract API The experience of ? How does it compare with other centralized exchanges ?

Yuriy (Wintermute): about Layer2, In my submission API More like a centralized exchange API, More similar to Coinbase、Binance Wait for the primary exchange . From my point of view , I can say it's a good change , No longer represented by blockchain API Things in , for example , We don't have to deal with WEI Or convert different currencies into the original value of the blockchain . Whole API leaner , Easier to use . On our side , Integration becomes very easy . I don't think we see any problems . obviously , Having a knowledge base built by your team for different languages will certainly help .

Vijay (dYdX): From the perspective of capital efficiency , How much cross margin helps you ? From the perspective of market structure , How much cross margin helps you ?

Yuriy (Wintermute): Cross margin is great , We like it very much , Because we have to trade in multiple markets . If there is no cross margin , The value of the collateral we need to keep may be five times that of the cross margin .

Vijay (dYdX): How do you deal with your technology stack , You usually build everything inside , Or in some cases , You may depend on API Aggregators or institutions that provide capital functions ?

Yuriy (Wintermute): We almost never rely on any third party as aggregator or api. There are two reasons for this . First , It's an additional risk , Because if something happens , We are responsible for this . We have an obligation to enter the market and provide services , And third parties don't necessarily have these obligations . therefore , If something goes wrong , It's going to be our problem , But it's not necessarily a third party problem . The second thing , All of the technology stacks or technology solutions we're currently using , It has to be real-time , Very fast response . Our job is at the millisecond level , So it's hard to find any existing solution , We can use it on the market . I don't think we've seen anything better than what we've done . So we're more or less forced to develop everything ourselves .

Evgeny (Wintermute): It's kind of like a shortcut you can take when you start . At the beginning , We call it CCXT Of python Libraries to connect many centralized exchanges that we don't have the ability to connect to , But as it develops , Market makers develop everything themselves .

Vijay (dYdX): What do you think DeFi and dYdX The depth of the market 、 Spread and pricing ? How do you think these indicators compare with the current centralized exchange ? What do you think of its future development ?

Yuriy (Wintermute): Interestingly , Compared with centralized exchanges , stay DeFi It's more liquid to execute real-time transactions on the Internet . If you look at the centralized trading Directory , Even if you combine the other books , You won't always find millions of dollars in liquidity , But in DeFi, Really? 、 It's really easy . Usually , When a market trader cooperates with an exchange , It's always up to agreements and exchanges to motivate market makers to contribute a certain amount to the order book . It depends on the relationship with the market maker, its definition and structure , To a certain extent, this determines the existence of market makers in the order book . So from our point of view , If I will dYdX Compare with a centralized exchange , We are dYdX The liquidity offered on the market may be three to four times that of the first tier exchanges we usually offer .

David (dYdX): It's super helpful . obviously , With amm The rise of , Traditional market makers are being replaced by liquidity pools . stay AMM There's a lot of innovation , lately Uniswap V3 Back to the order book rule in some ways , I hope the new products will be used more widely , That is, the working capital pool . What do you think of these ? What do you think of market makers in DeFi The change of role in ?

Evgeny (Wintermute): I personally think the so-called disintermediation is ironic .Uniswap To realize , It's not a simple thing to just open up liquidity to people and to people .Uniswap There's a lot of liquidity right now , but Uniswap V3 Almost back to this order model , This can improve our current functions in centralized exchanges and centralized order books . But it proves that you can't disintegrate like that , At least not market makers like that . Our business is complex , Need management technology 、 Risk and capital , It's going to take us a long time to DeFi See enough building blocks in , To really replace us . So I don't think it will come soon . I'm curious V3 How the experiment will work , We're actually looking forward to working for Uniswap Provide liquidity , Because it will be more effectively capitalized .

David (dYdX):Wintermute Obviously there are many DeFi One of the main market makers of the deal . With these DeFi The evolution of the nature of the agreement , In addition to providing liquidity ,Wintermute Are you involved in governance ? If there is , In what capacity are you involved in these DeFi The development and future development of the agreement ?

Evgeny (Wintermute): First , We really like governance as a feature . I think the agreement will allow more voices to be heard and token holders to participate actively , It's really great . We do plan to be more active in this area , for example , A few months ago , We signed 3 An agreed market making contract , Just by dealing with the relevant communities .

I found the whole process really cool , I think we will continue to do that , Because the agreement is interesting , I think it's really transparent and progressive . We will certainly continue to participate in any business-related governance vote , Whether it's like a trading platform , Or a hosting platform , Or something like that .

David (dYdX): Great .DeFi There's a lot of innovation , Sometimes it feels like the pace of innovation is accelerating .Evgeny and Yuriy, I'm curious , You are right. DeFi What do you think of the future of ? What's next ? Do you think DeFi What opportunities are there in the broader market ?

Yuriy (Wintermute): Glad to see DeFi It's developing very fast . so to speak , Compared with traditional finance ,DeFi One year can cover 10 year . You can even put DeFi And CeFi Compare the evolution of the transaction , in the past 10 Mid year CeFi No real change , stay DeFi On , We actually have as many as 50 Different projects are trying different rules to do AMM transaction , Order book based exchanges , futures , option , Or more complex trading derivatives . It's very exciting to see it develop . We believe that we just touch the surface of what we can do and what we can achieve . In traditional finance , The cost of the experiment is very high , And it takes years to try new products , But in DeFi in , You can put everything together, maybe just a week with a few partners , It can be built literally . I think this is DeFi Biggest advantage .

Evgeny (Wintermute): My view is based on these . Especially when we're looking at DeFi All kinds of derivatives on the Internet , It's very cool . We've seen a lot of different agreements this year , And has been properly developed . But there's one thing that hasn't been talked about so much , But I'm actually very optimistic about index products . We see in traditional finance , The most traded product is S & P futures , Not the underlying stock , So seeing this kind of product , Like perpetual contracts and DeFi The index is dYdX On the market , It's going to be cool . I think if that happens ,DeFi You can beat the central exchange by entering the market .

David (dYdX): fantastic .Yuriy, One question is related to your previous comments on financial security . You can share more about Wintermute How to ensure the safety of funds ? stay DeFi and CeFi Is there any difference in ?

Yuriy (Wintermute): stay CeFi On , You have little choice , Your money is owned by the central exchange . Although in DeFi There may not be so many existing solutions on the Internet , You have to come up with your own solutions . however , You have the ability to . For any enterprise , More contracts and multiple contracts can help , This may answer or solve many security problems . Because of the flexibility of smart contracts , You can achieve your own multiple contracts , Customize your personal needs , This is probably the most powerful feature .

Vijay (dYdX): Another question we get from the audience is : One by CeFi Or how people with traditional experience begin to DeFi Market making ? What do you think is the biggest difference between the two ?

Yuriy (Wintermute): Fortunately, ,DeFi Very scattered , For many new agreements , They may not be big enough , Or not having enough mobility or attention , Let the bigger market makers get involved . This provides a lot of opportunities for small market makers who want to try this business to work with small projects and agreements , Help them grow together .

As for how to start , There is no simple answer . You just need to stop sleeping , Read all you can find about how smart contracts work 、DeFi How the world works 、 And how the protocol works .

Evgeny (Wintermute): Well, I mean , When it comes to Ethereum , The best option is to use dYdX. You can also be in Solana Found on the Serum, This is also a central price limit order book . These are your first two choices , Because they're probably the closest . secondly , It should be trying to integrate RFQ platform , such as Paraswap This aggregation platform , Because it's basically a way to make the market , You can respond to a request for quotation and become a market maker . obviously , All the competition is fierce , But it doesn't hurt to try .

David (dYdX): We have another question , It's about being AMM Market making , You are right about LP What's arbitrage's view on how to use the free loss in the liquidity pool ?

Yuriy (Wintermute): It's a rather complicated problem . The problem is ,AMM You can't control the price, you can't control the pricing function , You have to rely on AMM To provide you with these . If you're not satisfied with the price , You can't do anything because it's very expensive to recover liquidity . So in the current generation AMM in , You have to come up with some creative solutions , How to hedge this risk , How to solve the problem of gratuitous loss , Because in fact, unpaid loss means that you can't control the price . Unfortunately , There is no simple answer . We've seen people trying to do it in different ways . You can use options to hedge your unpaid losses , Or you can use neutral hedging (delta hedging) Methods . There are quite a few solutions for media coverage , But none of them is ideal , That's why we're looking forward to AMM New inventions in the field , See how to solve this problem .

David (dYdX): Another problem is related to Wintermute The history of fundraising .Wintermute How to raise money for the company ? Would you suggest a similar approach for smaller market makers ? The broader problem is , How market makers invest in themselves , And how to scale up over time ?

Evgeny (Wintermute): That's a good question . There are two options for market makers , image Optiver Such a company , They are all companies that trade with their own funds , They don't have any external capital , They just trade with their own money , And it's done very well . Or you can create a hedge fund , Basically, it uses 80/20, or 50/50 To pay for , Or some other way .

Our approach is , In the early , We decided to take our own capital trading route , So our first round of financing is equity financing . In the world of encryption , The main challenge is not to be constrained by any platform , Any exchange , It's hard to get leverage . And this leverage is not limited to any given platform , Any given exchange . Of course , The capital of the central exchange can be obtained from the central exchange . In short , It's very difficult to get capital , You can go to the exchange or DeFi Free transfer of capital between , And you need to have the right track record to achieve this goal .

We start with equity investment , We actually take part of our capital as profits, and the way we share profits is between hedge funds and private capital transactions , But once we do POC, Once we start making money , And then we give all the money back to the dividend investors , Turn to non mortgage . Because the non mortgage institutions agree that we are accepting more and more loans . This is our path , It's rough , But we are now in a very good position , Because self owned capital trading can let you have more long-term thinking and construction . and , If investors invest , They can afford to lose money , Because investors withdraw easily . If you're a hedge fund or something like that , You can get more capital from the beginning , And it can expand faster , But obviously you need to give up a lot of uplink space .

Vijay (dYdX): This is our last question . If you don't have the data on hand , You can tell me what you're doing DeFi The volume of trading on the exchange is compared with that on the traditional exchange , Or the ratio between the two ?

Yuriy (Wintermute): This is an interesting question . I think there are... In our current trading volume 20% To 30% come from DeFi. At first glance , It could be a small number , But you have to take into account that most of the trading takes place in Layer1, So users have to pay for every transaction they make . If you compare 20% The volume of transactions we have to pay for , And the other 80% The volume of trading is the free volume from the centralized exchange , You trade back and forth almost for 0 cost . From this point of view , It suddenly makes DeFi It looks more competitive , Because in this sense , It's actually more impressive , You can have 20% The high cost of that comes from DeFi.

We are very much looking forward to any kind of Layer2 All systems can work , It's like dYdX Switch to Layer2 A perpetual contract for . This is really the only solution for the first layer of blockchain to move forward , Because we think the first tier is no longer scalable .「 It has to be in Layer2 function 」, The first project to realize this will become a leader in the industry .

David (dYdX): fantastic .Evgeny、Yuriy、Vijay, Thank you. . The above is the current issue AMA The whole story of the show . You can Twitter Focus on dYdX and Wintermute @dYdXprotocol or @Wintermute_T, And must be in dYdX.exchange Check out our latest version of the perpetual contract on .. You can dYdX Go long or short on , Leverage as high as 25 times . Thank you for watching and asking . The above is the current issue AMA The whole story of the show .