Primer: Pat Doyle is the Co-Founder of Pink Swan Trading, the holding company of Genesis Volatility and DegenData. The former is catered to highly sophisticated options traders while the latter provides analyses of NFT projects. Get to know him and his Co-Founder, Greg Magadini, in this episode of Zima Red.
Background
Is a data scientist
Previously was in data science & healthcare until a friend mentioned crypto to him in 2015/2016
Started looking at crypto from an analytics perspective
Started building the data science stack in crypto
Ran a team of data scientists at an on-chain analytics company in 2018/2019
In 2020, he and his business partner, Greg Magadini, launched Pink Swan Trading, a crypto analytics product company
Initial Attraction To Crypto
A combination of finding it interesting and looking at it from a data science perspective
"I was like, wow, like, I can literally see financial transactions occurring in a global financial ecosystem, and I can start to understand how people are doing things." - Pat Doyle
Pink Swan Trading
A crypto data lab
Saw the need for a lot of picks and shovels to be built in the crypto space to drive adoption and insights
Pink Swan Trading is their holding company. Under their holding company, they run a couple of data brands:
Genesis Volatility — catered to highly sophisticated options traders
Another is focused on NFT trading (DegenData) — analyzing trends over time, floor price movements, etc.
Meeting Greg, His Co-Founder
Met each other at a skate park
Sat down to talk. Brought up their professional careers
Learned about crypto from Greg. Found it very cool. Greg helped him to setup a MetaMask wallet
Started doing research together every weekend
Greg was very passionate about options. When crypto options became tradable, he saw the need to build the tools because both of them have the skill sets to do it
Began building their product in January 2020
Options Market
Can view options as an insurance policy
It is about making a bet on the future value of a crypto:
If you are right, you earn some money
If you are wrong, you lose some money
Like TradFi, options trading is mainly done by institutions
Saw the opportunity to onboard institutional investors into crypto by building tools for them
A big part of their approach is to drive education. Hence, they run YouTube series and weekly newsletters to educate people on options
Genesis Volatility
Example Of How Options Work
Making a bet on the future price of ETH
If you think that ETH is going to be $10,000 by the end of this year, you can buy an option contract that expires on 31 Dec at a $10,000 strike price
Assume the cost of buying a contract is $100
If ETH is at $10,000 at the time of expiration, you can exercise the contract and someone has to deliver you 1 ETH at the value of $10,000 while you only paid $100 for that contract
Platform
Allows users to understand where traders are buying and selling at different strikes and expirations
Collectively, this metric is measured as open interest or the amount of contracts outstanding
Allows people to see how traders are placing their bets and to form their own thesis for trading
Making Options Contracts More Liquid
CeFi allows the trading of Bitcoin and Ethereum options as they are large enough to have some depth to them
If you are going the CeFi route, trading of more exotic options would be done OTC
Most DeFi protocols use an AMM or a pooled model where the liquidity is quoted from the pool. This makes the DeFi options market more liquid
An illiquid options market can be manipulated by pumps and dumps
People have to understand that there's no regulatory entity monitoring the smart contract and that there's risk involved
Types Of Entities Utilizing Genesis Volatility
Crypto hedge funds using their APIs for more granular data feeds
Retail users using their analytics dashboard. Product is priced at their level
Andrew: why don't the hedge funds create their own options data?
Pat: Thinks that it is a time and resources issue. Hedge funds would rather trade the markets than create their own data source
Example Of Insights That Traders Used To Make Money
Recently launched a new feature allowing the comparisons of the CeFi options market to the DeFi options market
Knowing where the inefficiencies are, traders can buy options at where they are priced cheaper and sell them at places where it is priced higher
Could Someone Create Option Contracts For CryptoPunks?
Yes, it's possible
Thinks that people can trade options for a CryptoPunks index in the future
How Did Greg And Himself Get Into NFTs?
Learned about NFTs through Andrew around 1-2 years ago
Started doing research on NFTs, but didn't have the time to fully go in
As things started to heat up, he went to revisit the space
Greg has been in the NFT space for quite some time. Have been playing Gods Unchained since their launch
DegenData
Hashmasks was the first NFT project he aped into
Started to build tools for research
Found inefficiencies in the market and decided to share the tools he built
Started to get a lot of requests for different projects
"I figured, like, while we're building these tools, let's continue to build these out so people can understand what's going on in the market." - Pat Doyle
After that, they started looking for projects with a strong community and high liquidity to be added to their tool. Could not include small NFT projects as they lack sufficient on-chain data
Was There A Specific Catalyst That Made Them Create This New Product?
Observed the growth in NFT trade volume and total transactions
Recognized that they had the skills to support the NFT space
How Hard Is It To Integrate A New NFT Product Onto The Platform?
Relatively easy to integrate
More time is spent on researching and understanding the project — what are the valuable traits, what are the things people look for, etc.
Research is done using a qualitative approach
Difference Between Genesis Volatility Users And DegenData Users
They are totally different markets
Genesis Volatility: professional options traders
DegenData: general retail NFT crypto natives
Example Of Insights That People Have Used To Make Money
Integrated MoonCats early on
People started assigning value to older minted cats —> started accumulating them
Floor price increased by 10x - 20x
Will The NFT Markets Become More Quantitative?
Thinks that it doesn't need to be overly complicated
Tracking the floor price over time can be used to determine the health of a project
How Will DegenData Evolve?
Starting to see platforms where users can collateralize their NFTs for loans
Thinks that there is a unique opportunity to build out a pricing appraisal oracle service that provides a fair market valuation for NFTs
It's something like real estate and comparable sales. The model gives you a gauge based on how the markets trade; it doesn't tell you what you are going to sell it for
Upcoming DAO — called System of a DAO
Thoughts On Play-To-Earn
Highlights the fun component of why people get into NFTs
Unlocks a lot of value in the gaming world
Business models are shifting away from user pays for product —> both product and users are winning
Creating A Game Loop
zapper.fi and coingecko are doing a good job to gamify their apps
Users drive value to the platform, so they should derive some benefits from it as well
Where Are We Headed?
Business models are changing
In a Metaverse world, a creator can sell digital assets on a plot of land they own
Thinks that it will happen in 5 years
"Like every day, you get new smart people entering this space, somebody who's super excited about building something so like, the crypto space, I feel like it's like a black hole for talent, it just keeps, like sucking in people." - Pat Doyle
What Sector Is He Most Excited On?
Excited about DAOs. Interesting groups are forming on Discord and Twitter and they are actually implementing and executing their visions
Starting to explore the building of tooling around the DAO space
Grand 5-10 Year Vision
Continue building and shipping data products for the crypto space
Same for Pink Swan Trading as well
Favourite Video Game
Legend of Zelda
Single Favourite NFT
His CryptoPunk
Bought one that looked like himself
Most Controversial Thought On NFTs
Thinks that there's a lot more value in a project at the smart contract level
Innovations in smart contracts are what pushes this space forward
Is An On-Chain Project More Valuable?
On-chain project allows for more interoperability
Takens Theorem has been doing interesting stuff where users can directly write CSS on-chain to change what the NFT looks like
If You Could Change Something In The Space
Changing the misnomer of what NFTs are. People are still thinking of them as JPEGs
Crypto In 3 Years
Adoption of the Metaverse
People are going to start figuring out ways to monetize the metaverse content
Merging of DeFi and NFTs will become more prevalent —> increasing institutional adoption
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