Arthur0x: "...why I’m even more bullish on DeFi!"
token economics, Synthetix and the future of DeFi
For this edition, we sat down with Arthur Cheong, also known as Arthur_0x on Twitter. He is a well-known crypto trading analyst and a leading figure in the Synthetix community. Arthur works at Zilliqa, does research on token projects and is an experienced trader and investor, so we spoke about all these things.
Check out this second edition of My Two Gwei by dex.blue – enjoy!
A chat with Arthur0x
Who is Arthur0x?
My Two Gwei: To begin, could you briefly introduce yourself?
Arthur: I studied economics for my bachelors with a minor in entrepreneurship and have been investing actively since university. After I graduated, I then worked in the oil trading arm of BP.
One day a colleague told me about Ethereum and how he was making 100x. I thought:
“I have to look into this, I might be missing out!”.
And after that, I fell into the rabbit hole. I spent lots of time researching Ethereum and finally quit my job to set up my own crypto research start-up.
I then was a full-time crypto trader mainly trading perpetuals, futures, and options with BTC and ETH.
Now, I spend time helping the Synthetix and the broader DeFi community and work full-time at Zilliqa as VP of growth and strategy.
My Two Gwei: As a trader,what strategies do you follow?
Arthur: I’d say I am a discretionary trader using a multi-factor model to make my trading decisions.
This means I identify trends, perform market structure analysis and try to get a feeling for the markets’ sentiment. I do this through various channels such as the fear & greed index and crypto Twitter.
Also, a big thing to look at are deposits to and withdrawals from crypto exchanges. When people deposit Bitcoin, they’re likely to sell and when they deposit stablecoins, they’re likely to buy. Simple, but actually one of the most reliable factors to look at!
Why Token Economics?
My Two Gwei: You are an expert on token economics. Why exactly is it so important?
Arthur: Cryptoassets are an entirely new asset class. I’d say a bit of a hybrid between commodities and currencies. Unlike a traditional financial asset, cryptoassets don’t directly entitle you to any economic right. Take Ethereum for example: Ether lets you pay for gas fees but that’s it. The same goes for most projects. If you buy a hundred-dollar worth of token, it’ll last you a very long time. And clearly, most people come into the space for investing and not as users.
Traditionally with stocks, you have dividends and shares and are thus entitled to economic ownership of the company as a shareholder. But in crypto, you don’t have this, so it’s really important to look at what exactly it is you are buying. This should always be the first question you ask.
You can have a very successful project, but the token might capture none of the value. Especially when the project itself also has traditional equity shareholders. Because between a token- and a shareholder the shareholder will always win since they have the economic right.
So, if you want to invest long term you really need to know what you’re buying!
What’s up with Synthetix?
My Two Gwei: You are strongly involved with Synthetix. What do you think they got right on the community side?
Arthur: The Synthetix team is very active and always happy to discuss ideas coming from the community. We saw this for example with the sUSD peg issue early this year. It showed how powerful working together with the community can be.
The team does a very good job at combining a more traditional start-up-way of moving fast with the crypto-ethos of decentralization.
I think what also helped were passionate members, like myself, helping and educating from early on. When you have smart voices in your community more people start to join. Even in a bear market.
On a more technical level I think moving away from Telegram helped a lot too. Telegram isn’t exactly a good channel to inspire an intelligent discussion. You have a few loud toxic members that will flood the entire channel.
Now, in Discord, we have some very smart community members giving a lot of good suggestions and attracting more and more smart people to join the discussion. With intelligent discussion, you attract a lot of like-minded people that then add their input.
My Two Gwei: So, what is up next for Synthetix?
Arthur: In the next three to six months the goal should be product improvement. I think we have enough marketing and exposure for people to stake the token. What we want now is more users to actually use our platform for trading. Since I think the product we are offering is very solid at the moment.
So, I think what the project needs now is continuous organic growth and more composability within the entire DeFi ecosystem. Also, allowing sUSD to be used as a collateral to lend and borrow on other DeFi platforms. That is the general idea right now.
On the future of DeFi
My Two Gwei: What are your sentiment and your general expectations for DeFi in the near future?
Arthur: I went to San Francisco a few weeks ago for the blockchain week and I came back very inspired. There is a bright future for DeFi and it’s way more bullish than what people are even imagining. I think everyone that’s in the industry is freaking bullish because they know we are building something big, but everyone that isn’t involved thinks this is just a very niche crowd that is doing something for the niche community – which is absolutely not true!
We are likely to soon witness an inflection point where some decentralized exchanges will be able to compete with centralized exchanges on a full stack of user experience and trading performance.
Centralized exchanges right now are failing their users, an example would be the fragility of many index prices which are often poorly constructed and prone to oracle attacks. And they are being so lazy about it even though it’s such an easy job. There are quite a few commercial index price providers, so why are centralized exchanges using their own price feed?
The thing is, you can look at how DeFi is taking a very different approach. Almost every team that is doing margin trading and derivative recognized that price oracles are a big issue and a lot of teams are actively solving it by either integrating Chainlink or decentralizing the oracle.
Honestly, DeFi projects care about their users while centralized exchanges are making too much money, so they just don’t give a damn. This is why I’m even more bullish on DeFi!