Lou Yue: why is it important to develop the underlying assets of the digital currency extra market?

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Hello, everyone. I’m Lou Mengyue, the creator of Tokenmania. Before getting into the blockchain industry, I proved helpful in securities companies in traditional financial marketplaces, where there are extensive business areas, including brokerage business, underwriting and suggestion, financial advisors, securities investment consulting, securities self-management, securities asset management, securities investment finance underwriting, margin trading, etc., therefore i have the chance to have more organized access to the job connection with these business departments, such as brokerage, underwriting and suggestion, financial advisors, securities investment consulting, securities self-management, securities asset management, securities investment finance etc, margin trading and underwriting. This also laid some base for later getting into the digital money market to produce a more complex design.

If digital money is undoubtedly a kind of asset allocation, the supplementary market of digital money is not so not the same as the supplementary market of other assets. All traditional financial supplementary marketplaces have business patterns which exist in the digital money market. The difference would be that the digital money market is prematurily ., such as brokerage business, escrow business, money financing business etc, never have been systematically applied, however the prototype has recently appeared on the market.

At the start of 2017, I officially inserted the forex market to do trading. in those days, there were few professional investors in the digital money market, and few exterior asset management groups wished to enter the marketplace. I am hoping to have the ability to process, specialize and produce digital money asset management. So, around March, we started to get ready for the establishment of Tokenmania, an electronic asset management company.

Currently, we have a complete of 11 asset management groups, which 5 are direct management, and the primary companions are also top investors poached from Citadel (the very best three hedge fund groups in the world), Google and other companies. The other is running in loosely coupled MOM (Manger of Manger) mode.

Why use MOM mode? This is what I think is the most suitable way for the digital currency quantification team when I have been in continuous contact with the quantitative trading team of the traditional financial market and the digital money market in this small 12 months. It can not only ensure the impartial operation of the external asset management team, do not be controlled by others, do not expose the team’s trading strategy, but also expand the asset management level of Tokenmania.

After connecting with so many asset management teams, we are faced with the problem of managing the assets of multiple clients in the accounts of multiple trading teams, in which valuation and clearing are more complicated. so dig a lot of energy to build a high-performance trading system and chain clearing settlement background, used to manage the company’s internal asset management team.

At the end of last year, a big quantity of external asset management teams wished to enter the forex market one after another, and we discovered that the machine was also a rigid demand, so that it was used as a traffic entry, producing a lot of other institutional business.

Furthermore to coinbase,group and bitgo, at least three Wall structure Road giants operating escrow functions– Bank or investment company of NY Mellon, JPMorgan Run after and Northern Trust– are learning cryptocurrency escrow services. Which means that digital money will break through the regulatory shackles, and if it can, it could stream 20 billion dollars of institutional money in to the market next calendar year.

The characteristics of institutional funds will vary from those of retail funds. How come Wall Road need to place money into the forex market so urgently? On the main one hand, it is because the competition in the digital money market is indeed inadequate, and on the other hand, the correlation between the prices of digital money and the prices of other bulk assets is particularly small.

Why today I chose the topic of “Building the important assets at the bottom of the digital currency secondary market” because I saw a piece of news: in addition to coinbase,group and bitgo, at least 3 Wall Road giants operating escrow functions– Bank or investment company of NY Mellon, JPMorgan Run after and Northern Trust– are learning cryptocurrency escrow services.

Increasing numbers of people allocate digital money as some sort of asset target.
This news means that digital money will break through the regulatory shackles, and if it can, it might flow 20 billion dollars of institutional funds in to the market next year. However the characteristics of institutional money will vary from those of retail money, so why will Wall Road need to place money into the forex market so urgently?

On the main one hand, for the reason that your competition in the digital money market is definitely inadequate, and on the other hand, the correlation between your prices of digital money and the costs of other mass assets is particularly small. Like a hedge account, hedge risk is the biggest demand. Macroscopically, digital currency can be allocated as the prospective of a class of property, and can match the market capitalization of other asset etc, classes, such as silver and bonds.

When large institutions enter the marketplace, they want tools to hedge their risks.
When large institutions enter the marketplace, they want a lot of tools to hedge the chance of digital currency debris. For instance, swap agreements, options, futures, etf, etf counter-reference etc.

Although asset management makes money, Tokenmania is putting a lot of energy into performing a lot of work related to underlying assets, such as derivatives.

It may seem it is futures, but I’d like to give out an undisclosed information on the exchange that many people are acquainted with: among hedge funds in america, the biggest trading volume is in fact over-the-counter options. the quantity of a single deal is in the amount of huge amount of money.

For the most controversial problem of option futures prices, we should first understand the type of trading options, the essence of trading options is trading volatility. Digital money option prices model, Tokenmania’s professional team examined a great deal of models, and found some very appropriate models, which may be priced.

Even though many people remain worried about the direction of investment, many leading exchanges have actually begun to construct derivatives, and Tokenmania offers a complete selection of design, issuance and market-making programs for a few exchanges on the market.

The marketplace needs other underlying assets for fixed-income allocation.
In addition to derivatives, the digital money market will also need some other underlying assets to be allocated as fixed income, similar to money funds in traditional markets.

Another point is that when we do market maker business, we will encounter different types of cash in currency / current trading pairs in different countries. The TOkenmania team’s model will have some solving skills, but for the average investor, they will need some tools.

In many secondary market businesses, liquidity is the core competitiveness, so, although there are no giants in the digital currency secondary market at present, the Matthew effect in this industry is obvious, and it is only a matter of time before the digital currency secondary market giants appear.