He who lives by the crystal ball is destined to eat ground glass.

He who lives by crystal balls is doomed to eat glass broken on the ground.

The author of the Internet celebrity book "Principles" in the investment circle and the founder of the world's largest hedge fund Bridgewater, Ray Dalio, likes to quote this proverb. He jokingly said that he swallowed too much broken glass in his early years, and then realize:"The most important thing is not to predict the future, but to make a correct response to the information at hand at each time node."

The history of the rise and fall of the traditional secondary market has already been written too many times. However, there are more wonderful "barbaric stories" in the similar and more primitive digital currency market.

The methodology that most investors accept, process information, and deal with the market is not much more accurate than watching the sky at night.

At the same time, more "liquid assets" are not flowing.

Big households who got rich overnight, mines that made money in the past, projects that raised C and D rounds of funds in the traditional world when they were born, wallets that have not yet found a profit model...the digital currency in the hands of these people seems to have become a The "numbers" that stay in place, and the opportunities that exist in them, have long been targeted by people who are "not afraid to eat glass".

This year, many teams that do quantitative trading in the secondary market have sprung up in the digital currency market, often throwing out staggering investment returns. However, this transaction process is extremely primitive. A Trader contacted by Odaily said that customers with large sums of money chatted happily with them, so they took out their wallets to deposit coins on the spot. After a month, they would send a WeChat message: You this month The rate of return is xxx, will the money be returned to you or should we continue to operate?

This sounds primitive and crazy, but in fact, looking back at the past, financial-related stories have never lacked madness, and they will always move towards norms.

Today, the global tradable digital currency assets (that is, excluding the primary market) are about 400 billion U.S. dollars. There are already many top funds in the U.S. market, and domestic players are also groping their way forward in disorder.

So how to standardize the digital currency secondary market process, build underlying tools and tools, and educate users?

Odaily conducted an exclusive interview with Lou Jiyue, founder of Tokenmania, and partner Sun Jiaqi, discussing the current market situation, supply and demand, and more possibilities in the future.

Lou Jiyue, who has a background in investment banking, entered the currency market in early 2017 and raised her principal from 5 million yuan to 80 million yuan in a few months. In October 2017, Lou Jiyue and several partners established Tokenmania to systematically carry out quantitative transactions in the secondary market and conduct data analysis.

At present, Tokenmania's self-operated funds exceed 40,000 BTC (about 300 million US dollars), and its quantitative strategy team once contributed more than 3% of the transaction volume of the mainstream digital currency trading market.

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Traditional elites + grassroots heroes, Traders entering the market one after another

At present, the digital currency market is highly "non-marketized", and the self-media relishes the story of the banker, and it is no longer news to pull and smash the market.

At the same time, the market capacity is still small. There are not a few funds in the traditional market that manage tens of billions of assets. limited.

However, the fear of missing opportunities is a "disease" that cannot be cured by everyone in this market.

Lou Jiyue told Odaily, "It used to be extremely difficult to recruit people, until last November, I received calls from rejecters one after another."

Lou Jiyue has been running around since March 2017, trying to find the team with the best strategy from CICC, CITIC, Huaxia, etc., and promised the other party "give them your money, and what you earn is yours, and what you lose is yours." Count on me.” Even so, most “traditional” Traders still have concerns.

And the currency circle trading teams who are well versed in the way of digital currency do not want to be included. One is that they are used to fighting alone and do not want to be controlled by others or expose their trading strategies; second, many trading strategies are "wild ways" with limited capacity and no need for fundraising at all.

“A friend of mine has a principal of 200,000, and it didn't take long to reach 100 million, but his strategy capacity is 1 million, so why would he trade other people's money?" Lou Jiyue said.

At the end of 2017, the currency market ushered in a big bull market. From September to December, Bitcoin rose from less than 4,000 US dollars to the highest point of nearly 20,000 US dollars, a 5-fold increase. Those old players who had hesitated became more and more restrained I want to join Lou Jiyue's command.

Today, Tokenmania has three directly managed asset management teams in Shanghai, Hangzhou, and Beijing, led by traders from Citadel (the world's top three hedge fund groups), Google and other companies.

For teams willing to invest in digital currency transactions in the traditional secondary market, they adopted a loosely coupled MOM (Manger of Manger) model to expand the scale of asset management while ensuring the independent operation of the external asset management team. Lou Jiyue calls it"The most suitable model for the currency circle".

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Nowadays, people in the currency circle like to talk about "value investment" to arm themselves, but "value investment" can only be called a genre of conceptual investment. Trend investment, index investment, and news investment are all parallel schools.

However, the traditional quantitative methodology cannot be directly copied to the currency market. The rules in the eyes of traditional traders may not apply at all.

The digital currency secondary market is traded globally, and the price volatility is extremely high. Derivatives and hedging tools have yet to be established and matured, and there is also a lack of so-called fundamental standards in traditional markets. Mature reference indicators and strategies in the stock, futures and other markets may not be effective in practice. Past "systematic experience" may not be useful, and there is no long-term accumulated data for learning and training to build complex strategies.

At the same time, with the development of the market and the participation of Gaowan, the income space of the highly replicable simple arbitrage strategy has been squeezed to a small extent. New teams enter the market and need to spend time exploring new strategies that are more in line with the digital currency market.

When it comes to the derivatives market in the digital currency secondary market, Lou Jiyue believes that:"It's still in the gradual stage, the market is still too early."

At present, some mainstream exchanges have launched weighted ETFs. It is a simpler way to allow everyone to buy and sell multiple currencies in a package, replicating the familiar idea of ​​buying and selling traditional funds, which has relatively low requirements for exchanges and market makers. However, assuming that there are reverse ETFs, options and other tools, it can provide investors with additional hedging methods and bring higher activity to the market, but such hedging tools do not exist in the currency market.

For another example, in the traditional financial market, the US dollar bonds held by European investors can be linked to a foreign exchange hedging tool to hedge against the risk of US dollar bonds compared with the euro exchange rate fluctuations. The current digital currency market capacity is far from this level.

These mean that today's market does not need complex derivative products at all, because no matter how well designed the product is, it cannot make up for the gap in the infrastructure.

Lou Jiyue told Odaily: "BitMEX's swap product is already very strong, with sophisticated calculations in the background and reasonable leverage design. Such financial products are sufficient in this market."

"Some people always ask, why haven't new products come out yet? Because the blockchain industry is too fast, the bull market will attract a large number of speculators in the short term, but the market will not accelerate its development because of the rapid increase of speculators. With the current market carrying The strength and amount of funds have not yet reached the level of popularization of more complex derivative products. However, a strong team is already in the layout, just waiting for the time to mature.secondary title”

The rate of return seems to be the only criterion for judging, but it is not

In Lou Jiyue's view, so many teams are heading in this direction all of a sudden, some of them, like them, really understand and believe that digital currency varieties will definitely become a part of asset allocation in the future; In the case of speculation.

The fundraising documents produced by some so-called "secondary market experts" have an astonishing annual rate, but after careful consideration, there are many problems. One is how many teams really ran for a year to calculate the actual annualization? Second, what is the AUM (assets under management) of the strategy? As mentioned earlier, some strategies can double daily, but he has only a very limited capacity.

So yield shouldn't be the only focus for investors.

"Sharpe ratio, alpha, beta, etc. of asset management products, many indicators need to be taken into consideration to make a comprehensive judgment. If a product looks like a high-yielding product, some of its performance indicators are obviously not equivalent to the risks it is exposed to, or It is because the average performance of the same type of asset management products in this market is too different, and in the worst case, it may be a Ponzi scheme, so don’t invest in it.” Lou Jiyue told Odaily.

When we look at Alipay now, we can find an embedded section called"Ant Fortune” contains various products, and the list is only a simple seven-day annualization. But this is based on: the unlimited flow of fiat currency, no liquidity risk; and current products are unlimited wealth management products by default. There is no need to consider AUM.

But the real situation is that current wealth management products are supported by basic bonds and monetary funds, and there is no such thing in the currency circle.

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What to use for education funds and matching assets: large-scale products

Lou Jiyue said frankly that from March last year to the beginning of this year, there were actually not many customers, because they couldn't even digest the coins in the bottom warehouse. Lou Jiyue has 5 million EOS in her hand, and the amount of futures on OK, for a while, most of them are her own coins. In addition to the opponent's market, there is no more coins to put in, and there is no room for it. Down.

So why raise money externally?

Lou Jiyue replied: Her own positions are relatively concentrated, maybe half of them are BTC, and she is unwilling to hold other currencies with high liquidity, so she still chooses to raise funds externally. There will also be loans as the underlying assets to solve the AUM problem.

Unlike most quantitative teams in the market that only support BTC, Tokenmania supports 150 mainstream digital currencies, denominated in a package of digital currencies. If users believe in EOS, they must switch to BTC to manage money, which does not conform to the logic of the currency circle.

At the same time, Tokenmania uses Yubibao to provide the industry with a "new way of playing".

"Wallet" is one of the most crowded tracks in the blockchain industry. Many core practitioners are from P2P, but unlike P2P, wallet has no underlying assets and lacks a profit model. P2P has loan income. In the currency market,Their usual method of operation is a single coin issuance, lock-up, and promises annualized users.

In the view of Sun Jiaqi, partner of Tokenmania and head of Yubibao business, this is not a good choice. Not only is a large part of the user circulation locked, but the node that releases the income after one year,This currency will also be "destined" for instant inflation,Users will definitely sell hugely because of nervousness, which is very risky.

What Tokenmania hopes to do is to use a neutral strategy to increase the depth of transactions without affecting the market trend, to quantify the coins that retail investors do not trade, and to avoid direct 2C to allow retail investors to take risks.

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What to use to connect the team and expand the ecology: data + system

In order to attract more professional teams and guide institutional customers to enter the market, Tokenmania has established an investment research team and invested a lot of energy in research and development of trading systems.

Just as Bridgewater did in the past to expand AUM and attract funds, Tokenmania will not only make large-scale fundamental research reports for the public, but also issue research reports for industry segments. Provide their own findings for external platforms and users who lack data, and also serve as research reports for sell-side institutions to provide support for investment decisions.

At the same time, with the increasing number of currencies, teams, and customers, it is hard to imagine that many digital currency asset management teams are still working in the way of WeChat and Excel. In order to deal with a large amount of clearing and settlement work, and to achieve the strategy in the specification, the asset management team needs to develop its own system.

Digital currency exchanges are spread all over the world, with poor API stability, high latency, short iteration cycle, and high development and maintenance thresholds. Lou Jiyue told Odaily that Tokenmania has undergone several reconstructions to build a high-performance trading system and on-chain clearing and settlement background.

Based on the pain points of the industry, in addition to supporting the self-operated team, Tokenmania provides a fast trading platform, data and system support for the traditional secondary market Trades to enter the currency market in a way similar to CTP, and provides a complete set of maintenance environment under the premise that the commitment strategy is not leaked. Investors can put all their minds on strategy.

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Can the digital currency market develop into a stock and securities market?

In general, although the underlying facilities and market capacity are too early, traders and trading strategies in the digital currency market are developing towards professionalism in the competition. All the layouts before dawn are looking forward to the arrival of opportunities.

After all, the data correlation between digital currency and U.S. stocks and commodities is very low. It is an emerging asset that can hedge against price fluctuations of other major types of assets. It also has the opportunity to grow into a certain type of asset allocation. If you hold a large amount of funds Fund management companies really enter the market, and the market size will expand at any time.

And if they really enter the market, the form will not be to invest in the primary market, but to buy products such as ETFs, which provides imagination for fixed-income products of digital assets, bonds, and stocks.

The P2P market has also experienced a barbaric era for five years. Lou Jiyue believes that the digital currency market will gradually become regulated in the barbaric growth, and has the opportunity to develop into a stock and securities market. Today's mainstream currencies such as BTC and ETH may become gold , Totem-like existence.

Odaily also wants to tell all investors that there are risks in any market. Instead of demonizing what already exists, what we should do is to recognize and face up to the risks, and also face up to our own risk tolerance.

In fact, if you think about it carefully, the concept here is an old concept, but many believers and speculators hope that the world will become a new world.