Editor's Note: This article comes fromCointelegraph Chinese (ID: CointelegraphChina), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Cointelegraph Chinese (ID: CointelegraphChina)Cointelegraph Chinese (ID: CointelegraphChina), reprinted by Odaily with authorization.Like many in the cryptocurrency industry, Sam Bankman-Fried (SBF) is in it to make money. As the founder of quantitative trading company Alameda Research, centralized exchange FTX, and DeFi protocol Serum, the curly-haired 28-year-old has amassed a fortune of $10 billion in just three years.
Unlike most people who enter the cryptocurrency space, though, he worked hard to amass his fortune in order to donate half of it. As an "effective altruist", he essentially uses his superb cryptocurrency trading strategy to achieve the purpose of "robbing the rich and helping the poor".
SBF has been hands-on on this path for some time. He spent a few months in 2017 as director of development at the Center for Effective Altruism, and before that he donated half of his Wall Street earnings. He also plans to donate 50% of his cryptocurrency industry earnings — but after he finishes reinvesting his growing empire.However, he will also donate generously if the need for support arises. He was the second-largest donor to Joe Biden's presidential campaign behind former New York Mayor Michael Bloomberg, with $5.2 million.
I'm excited about the impact it (election donations) can have. I basically think it has something to do with the direction of the general election.Additionally, the FTX Foundation was also recently established. It will donate 1% of platform fees, and for every $1 users donate, the foundation will also donate $1, up to a maximum of $10,000 per day. In its first few weeks, the foundation has raised more than $2 million, much of it from user donations, which allow users to vote on charities receiving donations from a curated list.SBF sleeping on office bean bagsThis year's list of "Forbes 30 Financial Figures Under 30" makes SBF's ever-expanding public image attract more attention. "I'm honored," he said, "but I'm used to looking forward rather than backward, so this nomination is kind of cool, but it also passes quickly."
He also ranks third in the recently released Cointelegraph TOP 100 (Cointelegraph Top 100).Usually in the office 24 hours a day. I sometimes take a nap on the beanbag here and of course joke with co-workers and sometimes with people online, but mostly work.
He doesn't have a girlfriend and rarely sees anyone outside of work, but he spends time chatting with family in the US and calls "a few times a week". It's safe to say that SBF isn't one to aspire to a perfect work/life balance, and doesn't even subscribe to the notion that productivity drops after about 11 hours of work.He said: "I think that narrative is essentially overhyped, and the brutal or inspiring (depending on how you look at it) the fact that the more you put in, the more you get back. Motivation, it fills me up, and the other thing is, that's how I think I can make the most impact."How did I get into the business?SBF, whose parents are both Stanford law professors, was introduced to the "effective altruism" movement while studying physics at MIT.Imagine if you work directly for a cause, or if you work on Wall Street and donate to a great cause, which is more beneficial? In many cases, they can be better served by donating. So, I went to work on Wall Street.A friend who interned at quantitative trading firm Jane Street Capital provided his pathway to Wall Street, where he started in 2014 after graduating from college. You may ask, why would they recruit a physics major who has little experience in the financial industry and has just graduated?
It turns out that quantitative trading strategies are "super valuable" trade secrets, so no one in universities teaches these successful strategies. So companies recruit people who are gifted: math geniuses or people with a background in physics or computer science."The company will teach you what you need to know about the market," said SBF, who traded a variety of ETFs, futures, currencies and stocks, and designed an automated OTC trading system. During that time, he became interested in the wildly profitable arbitrage opportunities in the inefficient crypto market, and at the end of 2017 he founded Alameda Research, a crypto quantitative trading company, to profit from it.Alameda Research has now grown into one of the largest cryptocurrency firms with around $2.5 billion in assets under management, and while there may be assets of his own in it, SBF justifies its management with some provisions regarding liquid and illiquid assets of total assets.
Alameda is the Moby Dick of cryptocurrency whales, controlling as much as 10% of all cryptocurrencies in circulation at any one time. "I think at a given time, it's up to 10% of the volume, maybe a little lower on average. It's firmly in the top five to top 10 trading houses in the space," he said.
That means any trades made by Alameda have the potential to move the market and lead to a liquidation. In October last year, Alameda was widely blamed for shorting the YFI price, even though SBF had minimized the impact. He believes that with great influence comes great responsibility."It's definitely a liability," he said, adding that he tried to follow TradFi's approach. “Their job is to find profitable deals, but also provide liquidity and promote market health. Our greatest responsibility is to do no harm to others and to ensure that what we do is, in general, promotes healthy markets and efficient trading. liquidity, rather than interfering in it."Arbitrage trading, for example, can have a positive impact as it increases market efficiency and lowers prices where there is a premium, he added. Identifying and studying how to profit from arbitrage trading is what Alameda was founded on. “One of the first big arbitrage trades we really made money on was Litecoin,” he recalls.For one week in late 2017, Litecoin was consistently trading at a 20% premium on Coinbase GDAX (now Coinbase Pro). One might think "oh, that's cool, earning 10% every half hour, wouldn't that make a lot of money?" Of course, it's not that simple.It turned out that maximizing the opportunity was extremely complex, requiring bypassing transaction size restrictions and a withdrawal limit of one million per day. “Especially a few years ago, a big problem in the cryptocurrency space was figuring out the steps beyond these transactions,” he said.
But the biggest challenge is dealing with the traditional financial system. He said: "One of the most difficult parts of arbitrage, the slowest, most expensive and most frustrating part involves fiat currency." Red tape, bureaucracy, and unbearably slow wire transfers.“We spent five full months, five man-hours a day at various physical bank branches because it takes that long to send a wire transfer,” he said, adding:
Let's say we get there at 10 in the morning and stay with a bunch of people until 1 in the afternoon because of all the meetings that take place every day of the week just to send the same wire that we sent yesterday.This is one of the reasons why SBF is so keen on DeFi-his vision is that DeFi can one day replace the clumsy existing financial system. "Current means of payments are inefficient," he said. "There are trillions of investments and companies that were created to simplify means of payments, but you end up with this incredibly complex network that makes Most people use it. They’re still running on legacy systems that weren’t even designed with Internet thinking in mind.”Influencers in the CryptosphereFor many, during the DeFi boom in mid-2020, SBF presented himself as a cryptocurrency and DeFi guru as he began to make an impact in the cryptocurrency Twitter circle. This is his intention: In 2018 he was happy to remain unknown, because Alameda's quantitative trading focus "requires little publicity, and even most of it is low-key." However, when he launched innovative cryptocurrency exchange FTX in 2019 , he needed to build a community around it, so he took the initiative and endorsed FTX on social media.“Because FTX is a retail-oriented business, the more customers the better. You can make the best product in the world, but it’s worthless if no one knows about it,” he said.One of the most difficult and interesting tasks is figuring out how to attract users, and raising awareness is a big part of that.
He seems to have found the answer, as FTX is the fifth-largest derivatives exchange by volume at a valuation of $3.5 billion. It launched a series of innovative trading markets, including tokenized stocks of companies such as Tesla, Apple and Amazon, as well as Coinbase's pre-IPO products.He’s also using his wealth and influence to try and overcome what he sees as the biggest hurdle preventing DeFi’s mass adoption. He believes that Ethereum, including Eth2, cannot be expanded to meet the needs of cryptocurrencies and DeFi to replace the existing financial system. DeFi can currently process about 10 transactions per second, while second-layer solutions can achieve processing speeds of thousands of TPS.He said: "In terms of development, this is an absolutely difficult and insurmountable hurdle. Unless this problem is solved, DeFi will not develop into an ecosystem at all. Therefore, all long-term plans that do not solve this problem are not feasible ... This is the most crucial issue.” In SBF’s view, even if the Eth2 goal is 100,000 TPS, it is still not enough.
If your goal is to scale to 100 million or 1 billion users, ... if you want to make an application that is potentially the largest in the world, it needs to be able to scale to about a million transactions per second. If this is your goal, then you can simply and permanently cross out those scaling options that don't have the resources to meet your goals, without even considering any other factors.It is for this reason that he has become one of Solana's most vocal supporters. The Solana public chain can currently handle 65,000 TPS, and its team claims it can eventually scale to staggering levels: 710,000 TPS on the 1-gigabit chain or 28.4 million TPS on the 40-gigabit chain.
As a consultant, he participated in the construction of Serum DEX on the Solana public chain. Serum launched its ecological token SRM in August 2020. According to SBF, we can see the advantages of Solana from Serum’s online order book matching engine and low handling fees. “It only costs a penny to send an order, and the transaction will be completed in seconds.”Therefore, you can gain a lot from higher throughput. This really expands the base of the product considerably. I think it's quite possible that Serum DEX has processed more transactions in the six months it's been running than on all Ethereum blockchains in history.But the network effect of Ethereum also means that it will not be easy for DeFi projects and users to migrate to Solana. Even after Chef Nomi handed over control of SushiSwap to him, he still couldn't convince the community to transfer over. “Ultimately we found that it was much harder than we thought to port existing projects over, and it was much easier to create new projects directly on Solana,” he explained, adding:
We will still be very excited if SushiSwap establishes a base on Solana. I think there's still a chance they will. But I also think Serum will move on whether or not it is. Ultimately, all I want is to have the best possible product and users, no matter how that is achieved.(After our interview, a new proposal emerged to build a version of SushiSwap on top of Solana and Serum, possibly called Bonsai).
