Markets, Math, and Mayhem with Galois Capital

Interview of Galois Capital done by Thiccy

I first became acquainted with Galois on twitter in late 2021 where he frequently posted his views on markets. I met him in person for the first time in early 2023 and was pleasantly surprised by his jovial and cheerful demeanor. He clearly had a love of the game and was eager to discuss markets, trade ideas, and his Bitcoin thesis.

Galois has grown his personal account at a compounded rate of ~100% a year since 2011 when he first got into crypto. He managed 250mm under his hedge fund Galois Capital running market neutral strategies and grew at a compounded rate of 35% over five years with only four down months and no month having a drawdown of over -1% (excluding the FTX bankruptcy).

Trade crypto on major exchanges like Hyperliquid, Bybit, and MEXC

What were the early signs as a kid you'd be so involved in crypto?

When I was growing up, my family was really poor because we were immigrants. I was born in China, in Shanghai. My parents came over first, and then I came over when I was three, raised by my grandparents for the first three years. My dad was doing his PhD at University of Hawaii in mathematics, and my mom was getting her master's in electrical engineering. We were just completely broke, and didn't have two pennies to rub together. From a very young age, it was instilled in me to value the dollar and not wasting money. I was like a latchkey kid, just home alone by myself cooking the rice and stuff like that. I was left to my own devices.

Given that my dad was studying math and eventually became a math professor, he gave me a tutelage in math. I got pretty far in that just as a young kid. I was eleven during the summer between fifth and sixth grade when he took me to the community college where he was teaching precalculus where I sat in with a bunch of kids that were much older than me. Not a lot of people know this about me, but I was actually a bit of a math prodigy as a kid. I eventually ended up taking this John Hopkins like talent search test and got first in the state of Hawaii. I think I was top one hundred twenty in the U.S. That was like the peak of my math ability because then I just started becoming more degenerate with video games.

I wasn't the best student in middle school and high school. I did all right but I never really pursued that much academically. I was a bit of a rebellious kid, always you know, hustling Pokemon cards and Magic the Gathering cards on the playground which was probably an early sign I was going to be a trader. And I remember when Diablo II came out and I just loved trading like runes in the in-game markets. I always found the economy part of the game to be even more interesting than just grinding out levels or trying to climb the ladder and that sort of thing. I've always loved video games. I've played so many, probably more than almost anybody in crypto. Everything from Starcraft, Warcraft III, DOTA on the strategy side and Melee and Street Fighter IV on the fighting side. Just basically everything. I have card games, board games, everything. It was always something that I really enjoyed.

What did you study in college?

I went to school for college in math and economics and graduated in 2009. The economy just crashed and I wanted to put off being an adult and just procrastinate on the responsibilities. So I went to grad school and got a master's degree in Economics. Afterwards I went to Wall Street and got started as a back office quant working for a rating agency like S&P. It was not very glorious. They used two languages on the team that I was on, MATLAB and C++. One of the folks on the team would write some model in one language and it was my job to replicate that same model from spec using the other language as a way to just validate the model for quality insurance and validate it was correct down to two decimal places. None of my code ever went to production or anything.

So you were basically like that asian math quant guy in The Big Short that is Ryan Gosling's assistant?

I would say I'm probably weaker than the guy in the movie haha but something like that.

Did you know you wanted to go into trading in college?

No, when I was in college, I was smoking way too much weed, honestly.

Me too, man.

I can say that now that I'm out of the game. I feel like I can say that shit now, right? But during undergrad and during my first master's, I was smoking weed every day, basically. For two and a half years there's a chunk of my memory that's just missing. I just remember it was a good time. I was smoking way too much weed. Even though I wasn't going to class too much, I was a good educational point in my life because I was eating Japanese food every day and playing a lot of time, here I was playing video games, reading Wikipedia and going to the library and borrowing a whole bunch of philosophy books that had nothing to do with my fields that I just found interesting. I didn't know what I was going to do. At some point after my master's, my dad went from doing math at a n academic setting to working in industry. I realized that there's just way more money in industry. So why couldn't I just skip academia and go straight into industry like my Dad?

When I chose grad school, back then, I didn't really have a choice. I knew I wasn't going to be spending time in video games. I had to have money. That's why I was an economist going into the industry, because it's one of the only fields where it's okay to say that you want to make a lot of money. But I think when it comes down to the pure game playing aspect of it, I just enjoy games. And I think just growing up poor, I resented just being poor because life is just a lot harder when you're broke.

While you were working this back office job, I always had in the back of your mind that you wanted to be more of like a risk taker. It slowly dawned on me as I was doing that job and losing my soul as a cog. I realized that I should focus on the things that I enjoy.

When did you start acting on that realization?

After my two-year stint in Wall Street, I went back to school for my second master's in financial engineering. I got an internship at an equity options prop shop and was completely mind blown because the people that were working there were really good poker players. One guy was really high up the ladder in Warcraft III. I thought I'd really found a place where I could use my inclinations and my skill set. I saw that there was this whole other world outside of banking and quant that I knew I wanted to be involved in.

How did you get into crypto?

I had already gotten into crypto in 2011. I was a lurker on the forums. In 2013 when I returned from my internship in trading, I knew that my heart was always in crypto so why not just go into the industry on the trading side? I actually took a huge pay cut to join this exchange Buttercoin. It was a YC startup company at the time. The people were quite good and I have a lot of respect for the people that I worked with, all very smart guys. But it ended up failing because of the bear market of 2013.

I didn't even know there was a bear market in 2013. You got into crypto very early.

Yeah honestly, I have to say that probably this is one thing where smoking a lot of weed probably helped. During those formative years I was introspecting and reflecting on things. I had a lot of time to read and think about the world. I came into contact with a lot of libertarian writings like Hayek and A Road to Serfdom. I was always a libertarian but then it really crystallized in my mind as I read more. I think that together with some understanding of math and statistics I read the Bitcoin paper and thought it was great and worth a shot.

Did you put all of your money into Bitcoin?

Yes. The earliest I bought it was like eleven bucks. I didn't have that much money at the time from the internships but I put everything I had remaining that I wasn't spending frivolously as a young 20 something year old in the big city.

And you just held it through this entire time?

Yeah, I'm a true believer in this stuff, man.

Tell me more about Buttercoin?

Buttercoin was a crypto exchange before Coinbase had an exchange and was just operating as a brokerage. It was a YC company. Back in the day everybody was market making on their own exchange. So that's basically what we were doing.

Why, why was everyone marketing their own exchange back then?

It was just hard to source liquidity. I joined around the time that the OTC desk got set up. This is like all pre-Cumberland. Even at the time there was still demand for OTC. People had Bitcoin they wanted to offload it and didn't want to do it themselves. Back then people didn't really even know how to use an exchange or limit order book. So you could clip your fifty bps like on a trade. And I remember just being so happy to even make like a hundred bucks or two hundred bucks on the trade. Back in the day, the sizes were pretty small and the spreads were really wide. Everyone was super unsophisticated.

Why didn't Buttercoin make enough just from market making? Why did it fail?

Well, the margins were good, but the sizes are very small, man. An OTC block at the time was like a hundred grand. These are like small blocks. The whole market cap was small. The price of Bitcoin in 2013 peaked at a thousand bucks. The whole industry was minuscule back then.

What did you think of the talent in the industry at the time?

It was a wide mix of seedy characters.

Seedy characters.

Seedier than today. Things have actually cleaned up over the years even though it might not seem like it. Things were even more wild back then. A lot of seedy characters. Tech guys were starting to come in. There were like some cypherpunks that cypherpunk ethos back then. I think over time as things got more mainstream a lot of that ideology went away or at least got diluted.

So what did you do after Buttercoin?

I ended up going to Kraken and worked there for two years and then set up the OTC desk over there.

Was Kraken big at the time?

I think Kraken's perpetually been like rank five to rank seven throughout all this time. They were dominating the Euro market, but business was tough. Within a month or two of me joining, they laid off more than half of the staff. I was thinking oh no this is another Buttercoin that's going to fail again so it wasn't looking good. This was a bear market and there was a lot of consolidation. I think Kraken ended up taking a pretty full page spread in the Wall Street Journal to help revive. Eventually Kraken started turning a profit in the spring of 2016. We just had the market with the Poloniex and Gateio. There were just three players there for Ethereum and it was enough to keep the company afloat in decent standing. The bull market started hitting in maybe early 2017.

What were some of the most memorable experiences you had while running the OTC desk at Kraken?

Well sometimes other people wouldn't settle. You'd have to do some trades. Almost always it was against you. Sometimes people just run you over. One time the market was moving really quickly, like at the peak of a bunch of risks that I was holding overnight. I didn't think it was that bad, but it was starting to get pretty ugly so then I remember I packed it to Bobby (the Cumberland desk) and paid him for massively on the spread on that one. I remember just waking up and over since then I was like I have a rule of just not trading immediately after waking up. My mind was not clear. It cost me a couple tens of grand. I think I could have gotten a better price if I was more aware.

I remember the Ethereum Classic fork. When that happened, that was a fucking shit show, right? Because basically, Ethereum forked and all of its holders got Ethereum classic. It wasn't until Poloniex listed it in the dead of night a couple of days later that all of a sudden the price started shooting up. But I remember before all that happened, I remember talking with Bobby. He's like, hey, how about we go buy out all of your ETC because it's worthless, right? We'll just want to play around with it. How about we buy it out from you for one penny, right? And then I thought about it. I talked it over with Jesse (Kraken founder). I was like, yeah, this just doesn't seem prudent. What if there is some value there? And I was 100% going to do it. A couple of days later, Jesse said he's going to list it on the discovery. I was like, I'm talking to the guy on the dollar or whatever. So did not end up selling all of the Kraken's ETC because that would have been a fucking disaster if we had to buy back later with money that we were already high on, right?

You owed it to Kraken customers?

Yeah, exactly. They had a right to it.

What did you do after Kraken?

I left Kraken in 2017 to start my own hedge fund. The raising actually wasn't too hard only because of the timing. Given I'd never done it before, I didn't really know what I was doing. I set up a hedge fund. You could do it in like a month or two if you really know what you're doing. But at the time, I still needed to raise the money and to build out some systems. I ended up raising about 5.5 million. I ended up turning away capital near the end of it because I didn't even know if we could even use use two million. These numbers are small compared to the numbers today. But back in the day I didn't even know if we had enough opportunities to deploy it on. We did almost all market neutral type stuff.

What prompted you to leave Kraken?

I think for me it was that I'd always really liked the idea of doing a startup. And I remember as a young guy reading Paul Graham's essays and Ben Horowitz, and Peter Thiel. I always wanted to be an entrepreneur. So I thought, I'm young and I have one more time - better do it now than never, right? By the time I left Kraken, the balance sheet was pretty healthy and the company was in a good spot. Things were growing. Cash flow was positive. I felt my equity was in good hands.

How did you pick the name Galois?

So yeah, both me and my co-founder are math guys. I actually wanted to name it something different. I wanted to name it Julia Capital. Gaston Julia is kind of a math fractal. But my co-founder thought it sounded too feminine. So we ended up going with Galois, which is actually a huge mistake because Galois is such a French word or French name that nobody knows how to pronounce it. Maybe we should have gone with Mandelbrot, but that's like too much of a mouthful.

Where did you meet your partner?

I went to school with them for financial engineering.

How did you guys divide the roles?

It was mostly that he would handle all of the tech, and I would just try to handle all the business and operations, investor relations, accounting, all that stuff.

What were your strategies starting out?

They changed a lot over the years. So we started off only doing OTC, because it's what we knew. And when I left Kraken, I made a deal with Jesse about on how to split the book of business. So like any very well known or prominent crypto company would be off limits for the game. Anybody that I'd known from before Kraken would be fair game. I had a good enough relation with Jesse, enough respect. I would never leave the with his book of business with him. Jesse was very gracious. He actually backed not just on the LP side, but also on the operator side. It was always something that I appreciated that he backed me on that endeavor.

What were some of the things you were doing to make money when you first started?

So we started off doing a bunch of OTC. And then afterwards there was a bunch of basis trading (harvesting yield between futures and spot) that we did. And then afterwards it was DeFi summer and we were doing a whole bunch of yield farming. We were actually the biggest farmer for Yearn Finance which was a DeFi yield aggregator. We were under the pseudonym "yl_whale". I want to say we farmed a little bit less than like a quarter of the entire supply of the YFI token.

I'll tell you a funny story about that is the reason that we even found YFI to begin with. Everybody was farming Compound at the time right and doing all this protocol stable lending and doing stable swaps. It was a little bit like Compound, a little bit like Uniswap. But in it, there were these tokens "yTokens". And I'm like, what the hell are these "yTokens"? So one of my guys, YL who was one of our portfolio managers, started looking into it. The pools kept growing basically. They kept getting more auto-rebalances between Compound and Aave or whoever else how yields. It wasn't a bad idea, at least at the time. So by the time that they started their farming program, we were just ready from the get-go just because we were extra familiar with it just from the previous research. A lot of times in trading it just comes down to all the work that you do when nothing happens. It helps you recognize an opportunity when it comes. It's all this idle work and all this study and homework that happens ahead of time and then getting lucky.

Anyways we built our systems in Python to start, but eventually it was just too slow to do any market making. So we did a huge migration to C++, which was a huge headache and took a lot of time. Then we started doing some market making. We had a bunch of other strategies too. We did a little bit of discretionary long short too, but it was never more than like 10 percent of the book. So we were really trying to be market neutral. Over the five years that we had been operating we had four down months not including the FTX bankruptcy. We had four down months and the biggest drawdown was like minus one percent so it was a very steady stream of PnL.

The amount of opportunity on the delta neutral side really picked up from 2017 to 2020?

I wouldn't even say picked up because there were actually a lot of times throughout the five years we went through three or four droughts, whereas like a period of like three or four months where the returns completely flattened. So we constantly had to be trying things to trade. Alpha would just always decay or whatever new event being a squeeze would happen, then OTC compensates and OKex with inside information just squeezes everybody's spreads and then Alameda came in and squeezes everyone's spreads even tighter. They just squeezed everybody out. Then on the basis stuff it was like in like 2018 and 2020 but then everybody's just rotating that trade and then that thing gets squeezed out. For yield farming everybody starts farming and then that gets squeezed out. And on the point, I think either you just have to get really good at something and then become the monopoly player in it, or you have to go further out into the frontier, into more inefficient markets. And either one I think would work, but I think we were better at being nimble than being smarter.

I like that framing. What was your process of being able to trade through the droughts and capitalize on the booms? How would you decide where to focus your efforts?

I think it was an organic process. Everybody would have their own ideas. We would just study and do research. Some of it just never bears fruit. There are still some ideas we had that we've never even tried. Wherever you can find alpha, you just try and take it. And then once that runs dry then you start looking for the next thing, that sort of thing. It's a little bit of a free for all scouting out the market and just like spending a lot of time thinking.

We spent a lot of time both modeling, doing back tests, and thinking. But I think honestly, the thinking paid off more than the modeling. I think there was one common thread in the things that played out very well for us, which is to be very contrarian about things. What I found is that when you're right and everybody else is on the same side, your margins are slim to none. You don't make a lot of money when the right and for everybody else is wrong. But if you're wrong, when you're right, and for everybody else is wrong, maybe the market will eventually be convinced onto your side. You know, that's often the biggest return maker, I think. So that's like most of the returns on.

I'll give you a really interesting example where we made a decent amount. It wasn't even one of our top performers, but it's my personal favorite one, which was when Tribe and FEI merged. So FEI is like the stable coin and Tribe is the governance token. But FEI for some reason kept depegging. And in April 2021, this protocol had a very heavy penalty for redemptions once it depegged. So once it depegged, you have to pay progressively more of a penalty as it's further and further away from peg. So eventually this thing got about like 85 cents on the dollar. We realized we could just buy up this thing at eighty five cents on the dollar and then basically buy the ETH, which is the underlying that's backing it. If the underlying value is above the stable coin value the market doesn't get any of the excess value. But if it's below, the protocol makes sure that the underlying value is similar to or above the stable coin. So why don't we just buy the stable coin at the dollar? And we don't even care if it goes to zero because we can just redeem at around eighty five cents on the dollar. We were one of the only buyers at 85 cents on the dollar. I'm particularly proud of that trade, even though it wasn't the most lucrative. It was one of the more contrarian and clever plays that we did.

I wanted to talk about two of your iconic public battles, the Ethereum Merge and Luna.

You know, I'm still getting hate for this, right? People are still saying that I've been shilling ETH POW, but that was never the case. I tweet very carefully.

Can you explain the whole thing?

Yeah, so it's been a while, so I'll just go off of my memory here. But basically, Ethereum was about to go live from proof-of-work to proof-of-stake. And there was some thought that there might be a residual chain, which was the original proof-of-work chain. And at some point, they were calling it ETH 1 versus ETH 2. So I've tweeted, my first ETH POW, so my first dumb. So when beginning to think about how to trade it, and one way to trade it is basically to buy the token at current point will split into two tokens, but the peps will probably just track the more dominant chain, which is most likely 99 percent chance is going to be the ETH POS. So what I was saying in my post was that the futures basis should diverge because people hadn't priced that in. After I made that tweet and after we put on that position, I did in fact leverage a few percentage points. I also said that the Long Tail position should increase, which it did do. And then I said all party, the sell ratio on longs should go one direction. I forget which way I said it was going to go. But anyway, it didn't matter that much. We didn't make a play on that angle. But some of it I think in retrospect, I think that one wasn't as important. We didn't really end up trading it that way. But some of it, a lot of people just still saying that I was still shilling maybe two weeks out at about two percent of the network value ETH POS and it ended up being something like half a percent I think two weeks out so maybe I overestimated it a little bit. But overall I was right on most of my predictions.

I remember thinking at the time that your expression of the bets were very clean ways to play it. I remember you made some hilarious comments about offering to consult to Three Arrows (the founder) in exchange for five million dollars. And you also offered it for Vitalik, too, which I think a lot of people got riled up on.

Yeah looking back I was being a bit of a troll. I mean, look, if they were serious about it, then I'm serious about it. But I think really I was poking a bit of fun. It is happening of those. What's a lot of huge budgets are spent on things that actually don't move the needle. But actually, even though it sounds outlandish to pay somebody like five million for monetizing consulting, it probably would have been worth it in that arms race if it became more of an arms race. Conditional on that being the case it's probably worth more being for buck than anything they're doing on the other side there. But that money right? I thought it was actually to just point out a little bit of hypocrisy and how they're spending money but at the end of the day obviously it was more it was more performative.

Tell us about how you traded Luna.

The whole Luna thing, I'm actually a little bit sore about because I think we could have made way more money than we actually did. Long story short, there's this stablecoin where people deposited to Anchor to farm yield, which is the borrow lending platform. The 20% yield was unsustainable because it was being subsidized by the foundation. I had seen one of my friends at Luna Foundation Capital (LFG), just having studied these kinds of mechanisms in the past, the whole idea of an algo stable coin isn't new, right? People tried this stuff and failed. There was Fet and Tribe and Basis. Cash and Iron and all these algorithmic stables. Three years in a row this thing is like a top 20 coin. This thing's grown huge. I'm like, oh my God, like what's happened? What's changed? I look at it again and it's still like the 8 considerations, everything is exactly the same that I was thinking we're going to short this thing. Now we're going to actually try to short this thing.

Initially we were going to wait, like literally we're waiting. Then there's a thing that triggered it for us is that we were monitoring the curve pools. We're monitoring spot against USDT. And we were watching it de-peg like, thirty bips. And I think it ended up de-pegging like, thirty bips. And in May, when it was starting to de-peg.

And at the time, we weren't sure if it was going to regain back the peg, but we thought it was a very asymmetric risk-reward bet. Because if it regains, we just lose thirty bips. But if it topples, then zero is the bottom. So basically just start shorting it. First of all, we were shorting Anchor to the last day. Until the deploy stopped functioning, we basically just kept shorting it. We take out all of our perpetual contracts, liquidate all the UST, and shorting everything. And one of the reasons I actually regret how I played out is even though we made like fifteen million or so, I think easily we could have made like a hundred million on it. And a lot of it was just not being willing to really go full force and short more. And part of that was because of our mandate. Our soft mandate with the investors was that we're not going to go long or short more than ten percent of the book. So that provides a cap on it. But also like even within my risk crew, a lot of people were in disagreement. Right. Some people thought, yeah, this is a good short. Long or short more than ten percent of the book. Some people couldn't even tell me if we were short term like exactly how we're short from it at some times. There were times where I don't know if we were net long, but at least from these individual traders, they were randomly putting on some short-term longs in the middle of this thing collapsing.

But one thing that we actually did much better than I thought and where we actually made a lot of money was when Anchor then started facing liquidations. So we ended up facilitating a lot of those liquidations on Anchor. And in some ways, actually inadvertently, um supporting the protocol right after that's what's crazy about it right because then they came out with like a whole bunch of conspiracy theories about how we were part of a coordinated attack on Luna and like hell no, the time along the way we're just facilitating like Anchor liquidations right and we're just helping the protocol. The liquidations were super lucrative.

What percent of the P&L was just from the directional short and what percent was from like the neutral stuff from the liquidations?

I want to say half and half. So that's why I think we really should have made a lot more on it, honestly. Like, fifteen million wasn't bad, especially given our fund size at the time, but looking back everything was ideal. I should have just called up all the investors. Look, I got this great trade. I know, you know, we're talking about being market neutral and stuff, but this is a once in a blue moon thing. So this is what we're going to do. Then just deal with it later.

Did you actually hold it to zero or did you like, cover, reshort, cover, reshort etc?

Yeah, we covered and reshorted a whole bunch of different times. There were actually poems Luna was trading at like less than a tick. The exchanges started discretizing the tick even further. And remember at that point, there were times you could just go long and make a 10x within a minute because this thing would go from 0.01 one to like 0.1. Right. I guess you just go and make a trade. Remember that at the very end of it, when it was going through super hyperinflation, supply was doubling every three seconds.

It was a very visceral memory for me that you were tweeting poems about Luna during all of this. You could have a career as a poet. Unexpected eloquence comes from someone who just played video games and had a math background.

Haha I appreciate you saying that, man. I think a lot of it is just borrowing from a lot of the authors that I've read. I think in some ways, I think my writing style is a little bit Germanic with a lot of like clauses and super long sentences, probably just like reading a lot of Nietzsche when I was early on in college.

I think for me when it comes to Twitter, you have to make things entertaining for people for two reasons. One is that people's attention is scarce and I don't think any writer should just write for granted. But second I think especially as an American and in America, the greatest sin is to be boring.

That is a family quote. "Part of your style of trading that I really enjoyed wasn't just being right and making money but that you liked to taunt your counterparties while doing it. It made it like watching a movie."

You got to keep people's attention. I'm not surprised that you enjoy that particular aspect about it. I see you just ruffling people's feathers just for fun, too. And I felt like I think it comes from the gaming background. I come from the trenches. So my mother has been called all manner of things thousands of times. I've been called an idiot. I've been called all manner of names. But I think it's all in good fun. I think some people take it to heart. For me, it's all in good fun.

Do you think that your Twitter antics have helped you with networking and VC or is it a pure entertainment thing for you?

I think it's a double-edged sword. I think on one hand it makes it harder to get deal flow because nobody wants a shorter on their cap table. On the other hand, it's been actually quite a boon in ways that I never expected. One is that it's a good filtering mechanism because the really grifty projects won't even approach me. So they self select themselves out because they know that I'm probably going to eventually short their coin anyway. They don't even want to talk to me. They don't even want them to be on my radar. So that's really seedy guys don't even come to me and it helps me with my time. Plus it connects to me with all sorts of gossip about competitor projects or something.

How has the game gotten harder over the years?

It's constantly gotten harder. It basically never gets easier except for very brief lulls where there's like a bear market where things really just dead by a lack of action, no time to really, sorry. So early on there was this huge cottage industry of these casual traders who maybe didn't even do it job. But I think today, to really do it properly, first of all, you have to be full time. And now I think even taking trading solo, I think is getting harder and harder. I don't think it's prohibitive yet yet. One one hand there's always a natural centralizing force, but also everything on the frontier is always changing. The MEV bots and the HFT have have not automated things on the way cutting edge. And that's where a lot of ingenuity and cleverness can come in. And I think one person with a good view on things who's really studied things very carefully can get an edge. It's like that story with Michael Burry back in the housing crisis days. And he goes and reads the bond prospectuses of all these mortgages. Who would actually do that? Nobody who, nobody who's overoptimistic would do something like that. You know what I mean? So you got to harness the power of autism in a way.

And also the willingness to go through really dry and boring shit and just a willingness to think one step further. Second and third order effects? If your particular coin what are some other coins that might affect down the line not solely just from correlation. If People is popping off obviously Stellar is going to pop off but there's something else where it's like okay this protocol is changing something but other protocols are thinking they're like okay now that we have protocol, we could actually make our move. So time time. I think that it is less competitive because everybody's gonna be focused on the primary thing. So if if you're not fast enough to do the primary thing, you might as well go on to the next thing and just do that faster than everybody else because they'll eventually make that next thing too. I often like the secondary and tertiary order plays more than the primary effect plays. I'm always trying to figure out things with a little bit more lens to read.

Most people are either all in long and delusionally bullish, or they're very short oriented and just hold everything in cash. But somehow you've straddled both sides where you ran your fund with very slight risk constraints. But you manage your PA very conservatively, long only, and you truly believe in the mission of Bitcoin. You wrote it all the way up here. It's like, how do you balance those two beliefs?

I want to say this, which is that it's only degenerate if I'm wrong about this. But what I would say is that even for the fund, we had a Bitcoin share class. So people could come in with Bitcoin and we would use that as a baseline to collateralize margin to trade. So they would get that Bitcoin beta plus whatever market neutral alpha we had and, I feel for me, I'm just a true believer, man. I wouldn't have gotten into it at that point when we had guys, I had to find it. And so to look forward to a world where it is the end of fiat, that fiat must die, and that it is the Bitcoin Reserve asset, etc.

But I think in the short term after going through so many cycles altcoins and shitcoins come and go. If you look at the top ten or top hundred this year versus three years ago versus three years before that versus three years before that, they all come and go. Right. It's very rare to even find, a top other than bitcoin. For Ethereum, at least, I can be a very long cycle view on that, but. So I think when it comes to trading, in the trenches, I don't particularly have very long term convictions on almost anything. But when it comes to Bitcoin, the very first one, I think there is something very unique.

Okay, so you have always had this distinction between Bitcoin and altcoins where you were very long biased on one and short biased on the other. And this trade has had very volatile moves, but has trended towards a certain direction. It just played out as you expected?

Actually, I think I was too optimistic. I thought we would have already been there by now. I thought Bitcoin would be at least 1 million by now, but maybe I was just too optimistic. It was still good. There's still a great run so far. And I almost feel like it's really, you know, some of these bear markets are really nice because I feel like during bear markets, people are coming to their senses. And then, they're starting to reevaluate old seemingly answered questions, but really left open. Things like what is money? Nobody asks that question during a bull market, people are coming to their senses, not versus proof of stake, things that seem like long settled, but really it was just the true that was called, right? At the end of the day, those are just, it was, it was just called by the side of a better environment for everybody claim, right? I think it's nice that now there's a season, a good season again, even though it's going their way, when everybody gets a bit curious, right? Everybody's fighting a bit for market share. Right. So we bring back a lot of these old questions and I think it's important to eventually resolve them. Maybe it'll take a few more cycles, but eventually these questions have to be resolved.

How did you hold resolve in holding Bitcoin over Ethereum in 2021?

I'm just a true believer, man.

You never had any doubts on proof of stake being better or buy into the vision that smart contracts provided more utility?

No, not really. No. I mean, at this point, I've spent uncountable hours just thinking about this stuff so any marginal information at this point would have to be pretty big to change my mind. Like if you told me tomorrow that quantum computing had a breakthrough and it completely broke the elliptic curve or SHA256. I'd have some thinking, but I think a something that followed for a long time. If there is one thing that does cause a little bit of doubt in the end state of Bitcoin when the block reward goes away that there may be instability in the network security. I think it's important to say completely agree with it or completely disagree with it, but I agree that it is a big risk. And that I think is something that I think a lot of Bitcoiners aren't really necessarily willing to grapple with, that in the end, there's just going to be some fork with tail emissions and then both coins will survive. And over time, economic value just migrate from one to the other. And in terms of the timing of the fork, what's going to happen is the tail emissions and the tail emission schedule is the game. So I don't think there's any risk of missing the timing just because there's just going to be more and more that happens.

When it comes to quantum computing, I think that one is a lot harder to say. There are signature schemes that are quantum proof, like there's like lattice based cryptography that we can replace the elliptic curve with. Maybe there's a way to do that without a hard fork. Maybe you have to do that with a hard fork. That I'm not sure. If SHA256 gets broken, which is further down the line, I think that requires something like Grover's algorithm. And further along the line when elliptic curve is getting broken already, you probably need a hard fork. So then it's just like multiple forks will exist and value will migrate naturally.

Now that you're on your break, how do you look back on your career in crypto?

Well, I don't think I'm fully done. I'll probably come back once I get bored. You know, I don't think anybody ever leaves. But I think it's been cool. You know, could have been better, could have been worse. I've enjoyed myself.

What percentile outcomes do you think you realized?

Do you mean like in terms of purely making money or do you mean in terms of building things?

Your interpretation.

I think it's somewhere in the middle I think it's honestly somewhere between forty and sixty I think as I get older I reflect on the past choices that I made and in some ways I wish that I was a little bit more bold couldn't have chosen differently anyway and in some ways I got what I deserved both positively and negatively. So I think overall it was pretty fair. At least from a money standpoint, I would say that at least from what I've seen in the world, at the end of an outsized. But still in the world, if one is an academic, but I think people make what they're supposed to make in that way. Now, obviously, from the bottom end to the top end, that's still a 100x. So there's still a huge luck component. But, you know, getting it within one order of magnitude. It's fair to say the world is pretty fair in that way. Now, obviously, from the bottom and to the top end, that's still a 100x. So there's still a huge luck component. But, you know, getting it within one order of magnitude. I'd say the world is pretty fair in that way.

How do you think crypto has changed you as a person?

I think it's made me a lot more paranoid as a person constantly dealing with seedy crypto characters. It's given me a lot of hope because I was a bit pessimistic about where the world was going with the fiat money system and the central banking system. But now I think Bitcoin is the beacon of light in a world of darkness. It gives me some hope there. It gave me some courage too, man. I was just a young kid coming into the industry wide-eyed and bushy-tailed and really naive and innocent and it's really taken my innocence.

What would you tell younger self?

Well, what I would say is that I think for me, I wasn't courageous enough to start a company earlier. And it was maybe just like wanting to feel ready. But I think at the end of the day, nobody ever is ready, right? And I think it would have been better if I started earlier and just made the leap. And I would also tell myself to just buy more fucking Bitcoin.

Didn't you put all your available fiat into Bitcoin already? You could have put even more?

I mostly did, but I feel like I should have just taken loans. This is not financial advice. I feel like I should have gone into debt. It was a good bet. It was good enough for some leverage, and I, for the most part, had not leveraged it. It was good enough for leverage.

It's so funny because like everyone's answer is always that they wished they were earlier and you were quiet earlier.

You could have always been earlier dude. The Bitcoin faucet back in the day was dripping out full Bitcoins you know what I mean. Remember that movie margin call where the guy goes like yeah there's like three ways to make money. Being first, being smarter, and cheating. And I got to say, when it comes to being first and being smarter, it's a hell of a lot easier being first. That's absolutely true. By the time I finally feel comfortable, like I understand what the hell is going on in the markets. I'm finally like, what are we playing in the markets for? We're just like, we're battling each other. We're battling Jordi. We're battling the GCR. We're battling all these guys, all these firms, all these traders. It's the jump, dare street, everybody's in right. The density of IQ is too fucking high. It's just hard out there, you know? And back in the day if you had two brain cells to rub together you could make a dime.

Is there anything I guess you want to say to the world?

Anything? I'll say one thing, you need to have self confidence. If you don't have a lot of self-confidence, you won't have the confidence to pull the trigger. You'll hesitate and you'll be afraid of the opportunity. On one hand you have to constantly be checking and antagonizing yourself which requires a lot of humility because anything can change at any moment. But generally, I do think it tends to have a lot of confidence. Shoot first and ask questions later. I think if I had done that more, I think I would have been better off.

It's funny because you say crypto is making you more paranoid.

It has. I always assume that these token projects or these VCs or the trader on the other side is always up to no good. You always have to reevaluate your positions and just always just think hmm but what if the other guy knows more than me right. But when you have the right cards you need to know how to push your edge. And then I think also at a meta level, just being confident in yourself on being able to find new alpha too, I think is important and not to panic when your alpha decays. And I think initially that was the case, when all our alphas were going away during the first two years, it's a bit rough, right? We're just like, wait, where's the return going to come from, for next month. But after having gone through a couple of droughts, time to like, we'll always find a way. There is infinite opportunity out there.