https://teapaw.org/t.co/RbwcnbOth2
Network state
Joined March 2018
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Orlando.FRQNCY retweeted
In mid-September, we made the decision to allocate a large chunk of our dev resources towards auditing and further improving protocol security. This included additional audits of both the codebase and our operations, AI-enabled pentesting, red teaming, and more.
Public mainnet is now right around the corner, and the trading API is being rolled out to a small set of whitelisted alpha testers before being publicly launched this month.
We remain on track for this year’s TGE and major partnership announcements that we alluded to in our tokenomics update. Expect to hear much more from us beginning later this month!
Orlando.FRQNCY retweeted
BREAKING: Europe is under a massive widespread cyber attack right now Sweden, Belgium, Luxembourg, Estonia, Ireland the Netherlands and just now Finland are all experiencing disruptions to supermarket refrigeration systems causing food to go off.
The attack is spreading...
Orlando.FRQNCY retweeted
2/ Train yourself to go from 10 to 40 to 100 hours of focused work a week. I did this for months building an automated trading system from scratch. 5am-10pm 7days/week
99% of people need #WorkLifeBalance or whatever, and that's great. But I'm talking to the people on a mission.
distribution, capital, credibility, relationships, liquidity, community
there is increasingly no product moat left
might be hard to hear for engineers who believe the best product always wins
these guys just reverse engineered pump at the bytecode level
distribution, capital, credibility, relationships, liquidity, community
are the real moats now
and almost all of them are fundamentally human/relationships driven
Orlando.FRQNCY retweeted
Thanks to @koolkrypto223 for his comments, I do not see his post as FUD at all but rather constructive discourse.
On single dealer
I think we've been quite transparent about being a broker-like model rather than an exchange. This actually necessitates the use of a single dealer: unlike spot assets, derivatives in crypto cannot be transferred between different exchanges. If we were to route your order split across 5 exchanges, you would not want to see 5 different positions displayed in your account. You want a sophisticated counterparty to do the liquidity aggregation. We've achieved the benefits you describe:
✅ more listings than any other DEX
✅ best in class liquidity on any asset class even as a new entrant
✅ liquidity aggregation of the best primary venues; no need to open 20 different exchange accounts and keep switching between them
On the moat
Bringing all of TradFi onchain will take years, if not decades. Swaps, for example, are a fundamentally bilateral contract that cannot be replicated by DEXes, and I don't even think any are trying. This is the first time we've seen direct TradFi liquidity ported onchain with stable funding rates (the routing actually doesn't touch a single crypto venue). Getting the partnerships in place for this was not easy; I think we'll see the same type of consolidation into a few winners as we see with CEXes, DEXes, and TradFi brokerages.
On price discovery
Our opinionated take:
a) You do not give a flying fuck as a user where price discovery is happening
b) In fact most users should not touch exchanges directly at all
Currently, no price discovery happens on any DEX, except in very niche scenarios. To say otherwise is massive cope. To build a venue for price discovery means catering to the very fastest HFTs: wake me up when DEXes have matching engine latency on the order of nanoseconds. Do a lead-lag analysis on prices between DEXes and CEXes, or DEXes vs CME, and it's obvious where price discovery originates. The only question is do you want a shallow clone of TradFi liquidity or direct access?
As a user, you primarily care about best execution, and that's what we optimize for. Additionally, the reason why brokerages exist in TradFi is to add another layer of protection between the user and the exchange.
▶️ When 10/10 occurred and billions of dollars of ADL were forced upon users at other venues, Variational came out squeaky clean.
▶️ When Binance was hacked for billions, we immediately put out a statement that said that user funds are safe in self-custodied smart contracts and not moved to offchain hedging venues. OLP puts up its own capital for that.
Variational Pro
Variational Pro will be multi-dealer: you will be able to request a quote and dealers will bid for your flow. This increases the complexity of the product but will have massive unlocks for institutions, including allowing for subnetworks of markets where OLP is not involved.
If two parties want to trade swaps or other derivatives peer-to-peer at infinite size we will facilitate the infrastructure for order matching, clearing, and margining for that.
Reminder that the tech for this has already been built; it's the same underlying protocol that clears billions every day for Omni! I hope you will see our vision to bring TradFi onchain is a multi-year one and cannot be cleanly segmented into "oh it's just a DEX" or "oh it's just a CFD broker". It's so much more than that and we encourage everyone to follow our roadmap which we publicize on our docs page.
The discourse over @variational_io is...bizzare.
Everyone knows it's a single dealer RFQ platform (or at least I'd hope by now).
This is neither inherently good nor bad, but it should shape your expectations.
Similar to a CFD broker, I'd expect Variational to trade at lower multiples than actual exchanges. IG Group trades at ~half the multiple of CME for example.
There's nothing terribly new or interesting about "RFQ", I'm not sure why people think it's a big value proposition or moat.
The real value prop of Variational is that in crypto, UI for DEXs is largely solved, and UX all comes down to liquidity. Variational can potentially list assets faster, get better liquidity on long tails, and generally abstract away a lot of the awkwardness of bootstrapping a brand new marker that a CLOB has. This has been and will likely continue to be enormously successful with their RWA swaps.
That's a very real value prop, for now. The problem is that they have much less moat than actual exchanges; they are not the venue where actual price discovery is happening. It's significantly harder for TradFi entrants to replicate what @HyperliquidX has built than it'll be for them to do what Variational does, but better. B-booking retail crypto traders and points farmers in OLP is enormously lucrative now, but how durable will those margins be over time?
Depending on the exact flavour of regulatory clarity we get, the value prop they offer for TradFi liquidity can pretty easily shrink as more TradFi market makers are willing/able to quote directly on permissionless CLOBs. I don't know where regulators will land here though; there's worlds that it's very good for Variational and very bad.
I see Variational as more of a bandaid fix/reg arb, but a lot of crypto falls into that category. It's attempting to solve a very real issue, but will that issue be as prevalent in 6 months? 1 year? 2 years? Hard to say.
Personally, I see $LIT and hyperliquid:native as more pure expressions of longing the proliferation of perps as an instrument and DeFi as a sector, where as I see $VAR as more of a business with more operator risk, but it could easily print money for months-years. $GMX might be a good example in that it printed fees for a long time and then eventually became more obsolete.
I actually don't think any of this impacts point price much at TGE, and that's what everyone seems to care about. Market conditions at the time of TGE probably dictate $VAR performance way more than any of this.
Orlando.FRQNCY retweeted
Just my 2c.
1. Valuations
Regarding brokerage valuations, I'd look at Robinhood and Interactive Brokers rather than anchoring on IG Group.
CME: $109B, 25x P/E
ICE: $94B, 23x P/E
Robinhood: $77B, 39x P/E
Interactive Brokers: ~$131B implied, 29x P/E
IG Group: ~$4B, 7x P/E
Both HOOD and IBKR actually trade at higher earnings multiples than CME and ICE.
2. Competitive landscape
Literally every perp DEX is fighting to become the next CME.
Meanwhile, Variational is arguably the only project pursuing the on-chain brokerage model at scale.
And the team is uniquely equipped to execute on this.
They've spent nearly a decade dissecting, sourcing, and routing liquidity across four iterations:
i) Qu Capital (2017)
ii) Genesis Trading / DCG (2019)
iii) Variational Prop/MM (2021)
iv) Variational Omni (2024)
Each iteration has built on the liquidity expertise of the previous one.
Personally, I'm super bullish on the differentiated approach and the team's ability to execute.
Orlando.FRQNCY retweeted
"Variational traded $114.2B in Q3, against $62.8B in Q2, while its average open interest rose from $410M to $741M and closed the quarter at $1.01B."
Thanks to @AleaResearch for highlighting Variational's Q3 growth, driven by swaps adoption over the final month of the quarter!
Agree with these inprovements and believe theyre really important
I farm Variational, so I read the contracts myself after this. The on-chain part checks out: your USDC sits in your own pool, but only Variational’s 17 operator keys can take it out, 16 of them plain wallets, and the admin is one wallet
To be fair, there’s a reason it works this way
Margin and PnL are calculated off-chain, so the pool contract can’t know how much of your balance is free. The docs say you can withdraw up to the maintenance margin requirement, and only their engine knows that number. Their transactor also pays the gas on every deposit and withdrawal, which is why the keys send them and not you
Pools are isolated too. A blown-up account can’t touch anyone else’s pool. The contracts were audited by Zellic and Spearbit, and there are no reported losses so far
Of the big perp DEXs, Lighter is the only one you can exit without the team
Still, one key being able to pull any amount out of any pool is a lot of trust for ~$290M. What would fix most of it without changing how trading works:
- Admin on a multisig with a timelock instead of one wallet
- collectFees paying a fixed treasury address, not whichever key calls it
- Hourly withdrawal caps per key, so one bad key can’t empty everything
- No new party added to a pool without the user’s signature
- A forced exit if a withdrawal isn’t processed in X days
- The OLP vault from the docs as an actual contract
- Publishing what the Fireblocks policy enforces
@variational_io would love to see this on the roadmap. Still farming
Orlando.FRQNCY retweeted
🚨BREAKING🚨: Scientist says the sun may be conscious, intelligent plasma clouds may transmit semantic information across outer space, and ball lightning seems to behave intelligently, mimicking biological life.
Rupert Sheldrake, a biologist known for constructing morphic field theory, which involves inherited learning across generations of species beyond genetics and epigenetics, says organized plasma might support a mind without a brain. He points to magnetic plasma filaments stretching between galaxies and describes a theory from independent researcher Robert Temple: a cloud at the L5 Lagrange point between the Earth and Moon might be intelligent enough to return radio signals seconds after transmission (explaining the “Long Delay Echo” phenomenon in the early 20th century at the advent of the radio).
Sheldrake’s other investigations into morphic fields, consciousness outside the body and “the sense of being stared at” have drawn attention from British intelligence. He has long documented the idea of “scopeasthesia” (the sense of being stared at) by subjects in controlled experimental conditions. He says a visitor from MI5, Britain's domestic intelligence agency, asked whether terrorists could learn to sense security cameras.
His theory of morphic resonance goes further, proposing that nature inherits patterns of behavior across time and distance. Sheldrake cites rat water-maze studies in which rats at Edinburgh and Melbourne began at the level reached by Harvard rats after generations of “training” to follow the correct route in a maze. He interprets this as possible evidence of shared memory. To illustrate how invisible fields can influence chance, he uses magnets to change the distribution of steel balls falling through a Galton board.
Sheldrake wants practical tests of these unusual abilities. He proposes a global app collecting reports of strange animal behavior before earthquakes, and is surveying firefighters who say they wake moments before unpredictable alarms. He believes he can construct a workable model for presentiment that may become practical for specific use cases.
Full conversation live now. youtu.be/uvRzhb2Pef4
Orlando.FRQNCY retweeted
Variational is basically a single dealer platform. not a traditional perp dex
and that’s actually what makes it interesting
so are Citadel Connect / Jane Street JX / HRT / Jump / Virtu VEQ Link / XTX
TradFi liquidity lives across exchanges, dark pools, and single dealer platforms. crypto has built a lot of exchanges, but very little of the other two
my bet is this becomes a much bigger part of crypto market infrastructure
curious if crypto eventually moves toward more dealer and less lit liquidity, similar to TradFi
Orlando.FRQNCY retweeted
today, we introduce a little mischief to the world.
for four years, we’ve been brewing real brain cells on electrodes to understand how they compute. now, we’ve turned those discoveries into a video model anyone can use.
from 0.5¢ a second, mischief 1 is at least 5x faster than its base and the cheapest image-to-video model on @fal and @OpenRouter. soon to be on @awscloud marketplace.
it’s not a delusion anymore. biocompute is real, commercial and this is just the beginning.
happy halloween.
Orlando.FRQNCY retweeted
Implied value of @variational_io = $21B ($610/pt) when comparing to all time high fdvs based on current avg vol/oi.
Orlando.FRQNCY retweeted
there's a lot of folks out here FUDing on the TL who have never bothered to even give the @variational_io docs a read
we get it, you don't have $var allo
but at least accurately get how the system works before claiming something :)
