May 21, 2021

138: O.G. | Joseph Chang, Gray Webb and Liquibit Capital

138: O.G. | Joseph Chang, Gray Webb and Liquibit Capital

This week, Joseph Chang and Gray Webb join the show to share their story on Liquibit Capital, a quantitative-driven investment management and technology company focused on producing consistent yield-like returns. In this conversation, we get into the converging paths that brought Joseph and Gray together with Liquibit, each of their respective ‘awakenings’ on crypto, how arbitrage works across the 24/7 crypto markets, how they’ve merged the benefits of their careers in institutional finance and technology into an institutional investment platform in a new asset class….and merging interests in aqua-scaping and wine!


MoneyNeverSleeps is sponsored by PAT Fintech, the training partner that demystifies fintech and digital finance for financial services professionals.

HIGHLIGHTS:

Joseph Chang on the opportunity in the crypto space: “It's interesting how in every part of our lives whether it's hailing a taxi, ordering food, ordering groceries, everything has been disrupted, but in finance, it hasn't been yet. I see crypto as one of those vehicles that potentially is the beginning of the disruption of traditional finance.”

Joseph on innovation in traditional finance: “I think traditional finance has lost its way to innovate because it's so suffocated by regulations that haven't really been evolving and more importantly, clients’ demands have changed. I think the structure of finance, the structure of banks and wealth management, haven’t been able to change in a flexible manner to meet that demand.”

Gray Webb on his awakening to crypto: “When I heard about Ethereum in 2014, walking along Des Voeux Road here in Hong Kong, I was listening to Vitalik [Buterin, Ethereum co-founder] on a podcast and he started talking about smart contracts.  That was the lightbulb moment.”

“With my derivatives background, trying to deliver derivatives risk management and lifecycle management systems, smart contracts are another way of doing something like that, but in a much more direct way. That's when I started to go down the rabbit hole.”

Joseph on the origins of Liquibit: “Originally it was really just to trade our money ourselves in a more risk-managed and proper and sustainable way. Then we sort of realized there will be friends and family that would be interested because everyone's ultimately looking for some kind of income, a strategy that can consistently return income, but that is also not correlated with the rest of the markets.”

Joseph on the difference between trading in crypto markets and in traditional markets: “The nice thing about trading crypto is that your operational burden with settlements and trade monitoring is actually a lot simpler than traditional asset classes because if you've got the right technology and the right service providers, you can actually do this on a laptop from anywhere in the world.”

Gray on the Liquibit operating model: “The fact that we happen to be trading in crypto assets as the underlying asset class enables us to generate the returns that we have, but with the way we go about it, the operating model will look relatively familiar to anyone from an institutional finance background, with the exception of course, that we can handle eight decimal places.”

Gray on discipline: “In terms of the level of change that's happening in the things that we can't control, we have to be reactive and nimble to that, but let's make sure that we do a bloody good job of staying on top of the things that we can control. That is done by sheer hard work and testing against what we hope the outcomes to be.”

Joseph on bringing it all back to the basics: “It's having that appreciation for managing other people’s money, making sure you're doing things from the ground up, step by step to prove your process and bolster your credibility. I think that's where we have some edge over the 20-something-year-olds that are trying to do the same thing.”

LINKS:

Episode title inspired by OG Original Gangster by Ice-T

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Joseph Chang

Co-Founder and CIO, Liquibit Capital

Gray Webb

Co-Founder and CTO, Liquibit Capital