Edward Yu – Bringing OTC On-Chain and the VariationalOMNI Perp Dex (S7E18)
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Hey, everyone. Corey Hofstein here. If you've been tuning into Flirting with Models, you know I'm all about rethinking portfolio construction, and I wanna personally invite you to an event that's doing just that. On October 8, we're hosting the Return Stacking Symposium at Cboe Global Markets in Chicago. It's a one day in person deep dive into capital efficient strategies, and we're featuring speakers like Jonathan Glidden, CIO of Delta Air Lines, Patrick Casley from One River, and Mark Horbel, managing director of the Systematic Strategies Group at Canada Pension Plan. This is your chance to
am. Yeah. Alright.
321. Let's jam. Hello and welcome everyone. I'm Corey Hofstein and this is Flirting with Models, the podcast that pulls back the curtain to discover the human factor behind the quantitative strategy. Corey
Hofstien is the cofounder and chief investment officer of Newfound Research. Due to industry regulations, he will not discuss any of Newfound Research's funds on this podcast. All opinions expressed by podcast participants are solely their own opinion and do not reflect the opinion of Newfound Research. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Newfound Research may maintain positions and securities discussed in this podcast. For more information, visit thinknewfound.com.
In this episode, I speak with Edward Yu, cofounder of Variational. We begin the conversation with Edward's background in crypto OTC markets. He explains how the space evolved away from Telegram chats, the complexities of pricing derivative structures on the long tail of alternative cryptocurrencies, and the sources of natural flow in the space. This experience led Edward to co found Variational, which seeks to bring the trillion dollar OTC derivatives market on chain by disaggregating settlement, margining, and derivative payoff logic into programmable primitives. Built on top of Variational i
you for having me on, Corey. Excited to be here. I
wanna start with your personal path into the world of crypto. You originally studied applied maths at Columbia. You started with trading FX, jumped into stat arb in crypto before perps were even really a thing. Talk to me about what was the early edge that you saw in the crypto space? What made you move into crypto so early? What gaps were you seeing that maybe others weren't?
This was basically 2017 and earlier. Before 2017, I was just an undergrad at Columbia. And my personal passion back then and still to this day is basically in Bayesian statistics. We were trying to find a way to make that useful or applicable. And so naturally, we wanted to try our shots at quantitative trading. The first thing we actually started out with with was FX trading, but we didn't really get very far there. And at the time, crypto market was sort of developing. And immediately, we saw, okay, there's a 100 times more opportunity here. It's growing so fast. It's very exciting. So right
Your experience in those early days of connecting with OTC eventually saw you get brought into Genesys to quote unquote electronify their OTC flow. I was hoping you could spend a little time talking about what the OTC landscape was like at the time and what your team did to change it.
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