Sohan Sen, Sohan, Hong Kong discussed on CRYPTO 101
Right tools. So we're bringing on sohan sen who is the institutional sales lead over at paradigm in Asia. And so sohan, welcome to the crypto 101 podcast. How are you doing? Very good. All right, thanks for having me. Excited to be here. Yeah. Absolutely. No, we're excited because paradigm is a derivatives house, right? I mean, you guys are a marketplace for all sorts of exotic trading derivatives and options, but that doesn't nearly do the explanation justice. So before we dive in really deeply into your background and everything personally, getting you to this point to lead institutional sales of a large financial institution out of Hong Kong, what you're doing currently. What is paradigm? Let's give everybody a, you know, some solid context not to be confused with the popular American venture capital firm called paradigm. Yeah, sure. Yeah, so in a nutshell, we are a place a marketplace to trade derivatives which exists on top of exchanges. So let's say you have something which is particularly large size trade to do or a particularly complex trade to do. To go to an exchange would not do your service as it you would not get the best price because you were if your size is large, you would destroy the order book, or if it's a complex trade, you would have to pay better for on both sides. So what we came into existence because our platform allows you to face and negotiate a trade with people OTC, individual market makers or other players, but then you clear on exchange. So let's say you wanted to buy an option and sell another option. You would come to us and then we would quote you a bespoke price from a universe of market makers and then you would trade it the best price, but the nuclear and exchange so you don't actually have to face any extra credit risk to what you were doing by facing somebody OTC. So the most important thing for us is we are completely non custodial. We don't touch your assets. We focus on price discovery for you. Using our network of let's say about a thousand different clients. And we focus on derivative space. So options, futures, combinations, we also are in both cfi and DeFi. I focus on the exchange side here right now, but we also clear on the blockchain. There are many, we can go into that a bit later, but there are many DeFi protocols who use us for price discovery because our network gets them the best price on whatever they clear on exchange. So let me just say there's so much to dive into on the specifics there as well as I really want to talk about FTX as well because I know that there was some level of partnerships on some kind of prepackaged future spreads that I think I remember reading about. So we'll talk about just from your perspective what went wrong and how the industry moves forward, but let's acquaint you with the audience real quick. You know, how did you come into the crypto world? What were you doing before that? Yeah, so before crypto, I spent about 14 years in the major investment banks, I was a structure for complex products, basically. So in FX and rates. So this is a very tread fi equivalent to what paradigm does in a way. So in investment bank, what happens is a hedge fund or some other person would call in. And say, look, I want to price on this complex product. Two options or the option in the future. And I want you to quote me the best price. The bank would quote the best price, but then it would find on the other side somebody who would take to take the other side. So in a way, we are electronic version of what I was doing for 14 years. And the underlying is just crypto. So that's basically how the transition happened. It was an accidental transition because about in 2018, I started playing with options in crypto. And I liked it. I liked it a lot. I thought there were many opportunities in the market. I think people were mispricing how because it's a very early stage market. In traditional finance, these options were priced correctly, 20 years ago, in my opinion. And then I saw them in a 2018. I was like, oh, this isn't quite exactly what it's supposed to do. I was always playing with it and training on it. And then I was actually trading through paradigm. So yeah, that's how I know like an under CEO. And then, yeah, I ended up I ended up working here because it was so similar. It kind of reminds me of like, in some of these movies where this guy, they go, they're like working on the product, and then they're so good at it. They beat the game and the founder of the product is like, why don't you come work for me? You did really good on our platform. You could use a guy like you around here. Yeah, I mean, I guess it helps to have used the product. When you are a sales guy and you want to sell something, it's always good to be a user first, right? Because then you're not, you're not faking your experience in a way. I guess that was a good thing. Yeah. I think it's important for our listeners to know that there's actually three different markets that we're talking about right now that have their own prices in there. There's going to be a different Bitcoin price, whether you're looking at the spot market where most of us buy and sell Bitcoin on a coinbase, for example. Versus a futures market versus an options market, which actually includes a shifting amount of time. You're not just talking about right here and right now you're talking about in the future. So that's really important to remember you're kind of like trading in 3D versus just a one dimensional trade like most of us do and it's important to remember when you're talking about complexity, somebody has to take the other side of that trait and often when we as little retail traders are, we always just go under the assumption that we can buy and sell whenever we want. But if we make something that hundred X's or thousand X's and all of a sudden our $10,000 now $10 million, we have to find someone to actually give us $10 million for all that crypto or we can't get out of that position or equities. Yeah, there's always somebody on the other side of the trade, right? And if you think about what paradigm does, you know, correct me if I'm wrong, but it's not a house filled with a bunch of retail traders all speculating and buying call options. You're basically the place that's making the market so that if you do want to speculate on Bitcoin and say somebody wants to buy 200,000 calls on Bitcoin. It's like, you can't really go to coinbase and do that. You can't really go any anywhere to do that. You have to go through someone like you, right? That's exactly right. So yeah, if you want to do like a large ticket, or you want to do an out of the money ticket, right? It definitely makes sense to use us because what we focus on is there'll be somebody out there who will make you that price, right? At that person isn't going to be showing you that price on an exchange just without being prompted, right? There needs to be some kind of negotiation. There needs to be a price request. So the way I would think about it is, if you want to do something which everyone trades, ten times a day, and it's very simple. An outright future. Just to outright future, of course, you would go to an exchange like the major exchanges. If you want to trade a massive size of that, you would, of course, come to somebody like paradigm, right? If you want to trade like an option or where something like 40% of the global option crypto options volume. It is always a discussion. It's not always that you can't just find what you want on a screen. For example, right now, right? I'm very bullish. I actually think the bottoms in. I think the market really could rip much higher. But I have a view that ether will go higher, but he won't go that much higher. So I have a view that eta will go, let's say, in the next three months, it will go to something like 2500.