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SBF Legendary Life: 28-year-old young trader, “Empty Glove White Wolf” in the Encrypted Market Achieves Hundreds
“SBF donated $5.22 million to Biden!”.
On November 5, the third day of the US general election, when the Democratic presidential candidate Biden temporarily led Trump with 214 votes by 264 votes, news of Sam Bankman-Fried (hereinafter referred to as SBF) donating to Biden suddenly appeared. It spread in various WeChat groups. Some people commented that the money “has earned it back from shorting DeFi”, while others commented that he “is really a trader, betting on everything”.
SBF is most well-known for his identity as the founder of the FTX trading platform, as well as his takeover of Sushi and short DeFi under the brand name. Some people call him “a genius trader without faith”, while he claims to be a believer in “Effective Altruism.”
Today, let’s take a look at the new legend of the blockchain who started as a trader and is only 28 years old this year.
01 From physics to trader, a major turning point in his career
SBF was born in the San Francisco Bay Area. Both parents are law professors at Stanford University.
In 2010, SBF successfully entered the Massachusetts Institute of Technology (MIT) to study physics with excellent results. But it didn’t take long for him to discover that the academic route of physics was not suitable for him, but he was also at a loss for a future full of unknowns.
By chance, he came into contact with 80,000 Hours, a non-profit organization dedicated to the career development of college graduates. What 80000 Hours pursues is “effective altruism”, that is, to improve the world and have a lasting positive impact on the world, use rational thinking to derive effective ways of improvement, and work hard to practice. With the help of 80,000 Hours, SBF decided to give full play to its mathematical and quantitative analysis skills, and tend to make money first in the short term.
After graduating from college, SBF joined Jane Street, a well-known securities trading company on Wall Street, as a trader. Jane Street is a company with a strong engineer culture. Its main business is market maker and ETF arbitrage in traditional financial markets. It has offices in New York, London and Hong Kong.
SBF has worked for Jane Street for three years and four months. This work experience transformed him into an excellent professional trader and laid a solid foundation for his future entrepreneurship.
02From Alameda to FTX, the continuous expansion of the territory
“Compared with the traditional financial market, the cryptocurrency market is still in its early stage and not mature enough. There are many opportunities for secondary quantitative trading, so I am here.”
In September 2017, SBF resigned as a professional trader on Jane Street. Two months later, he completed the formation of the team and established Alameda Research, a secondary market quantitative trading startup, to provide liquidity for the leading cryptocurrency trading platform.
The cryptocurrency bear market in 2018 and 2019 caused heavy losses for many quantitative teams. Alameda Research has developed in full swing and has become one of the largest liquidity providers in the cryptocurrency market in a short period of time, with daily transaction volume. At six to one billion US dollars, Binance, Huobi, and OKEx are all his customers.
On July 10, 2019, the Binance trading platform suddenly appeared on the spot selling order of 7,500 bitcoins. Alameda Research digested this huge selling pressure in just 20 minutes through quantitative trading. The entire transaction process was recorded by an employee of Alameda Research and posted online. Binance founder CZ also tweeted like after watching it.
On May 1, 2019, the second company created by SBF, the FTX trading platform, was officially launched. Its services include over-the-counter trading, futures, index and spot trading, and its headquarter is located in Hong Kong, a more friendly cryptocurrency regulatory environment. Alameda Research logically acts as a market maker for FTX and provides it with liquidity.
On December 20, 2019, Binance announced that it had completed its strategic investment in the FTX trading platform. At that time, the FTX trading platform was launched for less than 8 months.
The cryptocurrency trading platform has long been a red sea, and the traffic is mainly controlled by several top companies. The newly promoted FTX, through differentiated competitive strategies and continuous innovation, has opened up its own territory in a red sea.
In addition to Alameda Research and FTX, SBF also formed a team to launch Serum DEX, a decentralized trading platform based on the Solana public chain. Just a week after Serum DEX went live, it received investment from Jump Trading, the world’s top high-frequency trading company with a long history and brilliant performance.
In addition, SBF also acquired Blockfolio, a crypto asset management tool, for US$150 million this year. This transaction is currently the sixth largest acquisition in the history of cryptocurrency.
From Alameda Research to FTX, Serum DEX, Blockfolio, SBF’s territory is constantly expanding.
03Floating loss of 13 million US dollars, if you want to wear the crown, you must bear its weight
In February of this year, it was discovered that Alameda Research’s contract account on the Bitfinex trading platform had lost more than 13 million U.S. dollars. Suddenly, there was a voice of suspicion in the community. First, some people questioned that SBF misappropriated users’ assets to make contract transactions, and then everyone mocked that “giant whales” would be harvested by the market.
There are also some “knowledgeable” netizens who defended SBF, saying “Don’t worry, he earns more on other platforms”, “You may not know that three of the top ten profitable Bitmex accounts are owned by FTX boss Sam”, “Go Look at the funding rates of Bitfinex and Bitmex and you will know why he has to hedge more on Bitfinex”…
Soon afterwards, SBF came out to clarify that the funds for the contract were private funds, and hedging contracts were opened on other platforms.
The FTX trading platform also immediately issued an article “Answer|Hedging Arbitrage Trading Strategy”, explaining that no matter whether the market is up or down, hedging and arbitrage trading strategies are profitable:
The BTC spot on Bitfinex is cheaper than other trading platforms, so it is more cost-effective to do more BTC on Bitfinex. We are long spot on Bitfinex, and then short futures on other trading platforms, arbitrage an average of 20 basis points from the funding rate every day… Generally speaking, we are still profitable because of the futures funding rate.
Although this matter has come to an end, there are still a small group of people who are faintly worried: if one day, SBF’s positions in other places are exploded, they need to continue to cover up positions, even if the user’s funds are not used now, will they not be used in the future? Who is supervising? After all, we cannot see the internal transfers of the trading platform.
04 Fun with Sushi, short DeFi
In the DeFi liquidity mining boom in the second half of this year, SBF showed traders’ keenness of funds to the fullest: FTX launched the DeFi index before most people were aware of the DeFi trend; SBF himself was also number one. Time to participate in various DeFi mining projects.
In this DeFi carnival, the performance of the decentralized trading platform Uniswap is particularly eye-catching. There are countless projects that want to fork Uniswap and grab traffic. Among them, SushiSwap has the biggest response. An anonymous programmer nicknamed Chef Nomi forked the code of Uniswap and borrowed YFI’s Token distribution mechanism to encourage Uniswap users to deposit LP Token (liquidity mining certificate) to SushiSwap to participate in secondary mining.
Because SushiSwap has Token SUSHI rewards, in just a few days, more than half of Uniswap LP Tokens were deposited in SushiSwap. When the market was enthusiastic about SUSHI, SUSHI encountered the founder’s crazy smashing.
On the evening of September 5th, Chef Nomi exchanged part of the SUSHI Token allocated for ecosystem development into 17,971 ETH, and claimed that after converting SUSHI into ETH, he can no longer care about the currency price and can focus on migration. At the same time, Chef Nomi withdrew all the 20,000 ETH previously used for liquidity mining.
Chef Nomi’s move not only caused the price of SUSHI to drop by more than 50% in a short period of time, but also aroused strong dissatisfaction among other people in the community. Everyone accused Chef Nomi of being a “liar” and prepared to “run away”.
On September 6, Chef Nomi suddenly announced that the control of SushiSwap (that is, the private key) was handed over to SBF.
“I was completely stunned! At that time, I fell asleep on the lazy couch in the office, and someone yelled to wake me up. All this happened too bizarre!” SBF recalled in an interview afterwards.
“I quickly realized that if no one did anything, SUSHI would die.” SBF played the role of SushiSwap “savior”:
First of all, SBF initiated a multi-signature vote in the community to assign control of SushiSwap to 9 people. Any subsequent actions require at least 6 of the 9 multi-signature members to sign.
Second, escort the migration of SushiSwap. On September 9, after the code was audited, Sushiswap officially activated the migration. A day later, SBF tweeted that the migration was completed and nearly $1 billion in assets had been transferred to Sushiswap. On the second day, Sushiswap’s lock-up volume soared by 46.15%, hitting the $1.5 billion mark, and for the first time ranked first in the DeFi protocol lock-up volume.
Afterwards, many people may know that Sushi has set up a lot of people, and Uniswap counterattacked by issuing UNI Token, and the scale of locked-up crypto assets once again exploded. At the time of writing, Uniswap’s lock-up volume reached US$3.01 billion, and Sushiswap fell to the fourth place in the DEX category.
In October, the liquidity mining boom of DeFi gradually faded, and the annualized yield of many projects fell from a few hundred percent to more than ten percent before. SBF, with a keen sense of smell, began to borrow money to go short.
On October 6, SBF borrowed 165 YFIs to the centralized trading platform for trading. In addition to YFI, DeFi projects such as UNI and Link have also been shorted by SBF borrowing money.
Regarding shorting DeFi Tokens, SBF said that he was not malicious, but simply felt that the value was overestimated. When the market plummeted, he would buy tokens that he considered underestimated from panic sellers.
In fact, SBF had already donated to Biden long before the U.S. Election Day. The Wall Street Journal reported in an article titled It’s a Close Race for CEO Support, Too published on October 28. It’s just that the news from the media on the blockchain is lagging behind.
From a securities company trader to the founding of Alameda Research, from FTX to Serum DEX, everything SBF does revolves around “trading.” By donating to Biden this time, SBF undoubtedly wants to expand its “transaction” territory again.
Some people think: “The Sushi incident, for someone, made money, but lost character, and “explosive head” items must never be touched.” What do you think of this incident? Welcome to the message area and write yours view.