All right, everybody. Welcome back to another episode of the Crypto 101 podcast. I'm your co-host, Bryce Paul, as always, joined by my good buddy, Brendan Vehman. Brendan, how are you this morning?
Bryce? I'm doing fantastic. I'm feeling good. The markets are doing good. Uh, man, we have you here for an early one. And what an important one it's going to be. This is going to be a legendary rating podcast. Lots of good stuff to talk about with one of the legends of the space.
Yeah, we are very pleased and honored to have Paolo Ardoino, the CTO of Bitfinex joining us. Paolo, uh, how are you doing?
I'm great. Thank you very much for having me.
Absolutely. We're excited to dive into all things Bitfinex, everything you guys are building over there for more than a decade now. I mean, you guys are some of the OGs of crypto. We want to know the whole story. Um, and a little bit about what you guys are doing. But first, let's just dive into who you are. Introduce yourself to our listeners here at Crypto 101. Who are you and how did you get into crypto, this crazy world of crypto?
So, um, absolutely. Bitfinex was born 2012, right? So yeah, we could call it OG because you know not many exchanges before Bitfinex survived to this day. So we try to maintain that ethos, that philosophy that I think was at the core of Bitcoin and uh it's sometimes you know it's tougher over the years with uh you know players that joined late and might not have the same ambition of keeping Bitcoin true. But um I was lucky enough to join Bitfinex in 2014. I joined as a senior software developer. My career has been all in coding. I started coding when I was eight and then went uh well like I was a hacker for as long as I can remember and then uh went to university computer science and math and then became a researcher. Then was paid nothing as always happened as a researcher in Italy and then decided to move on and learn about finance. So I studied finance by myself and then built some uh financial applications and then I met um the co-founder of Bitfinex and the founder of Tether, Giancarlo Devasini. I joined into Bitfinex and since then basically I completely focused my life on uh on this adventure and I'm you know I was extremely grateful for the first two years was uh um you know I just was working on the trading engine just you know the core part of the platform purely designing you know the next phase of growth of performance and optimizations to sustain you know when I joined all the exchanges felt more like e-commerce for Bitcoin rather than actual um trading platforms. I had the opportunity to work on some important trading platform. So I was like when I joined was kind of weird the space because it was very amateurial and then but um we could see already in 2014 the need of stepping up the game because more professional traders were coming in and so you know I was tasked to build at core the engine and uh you know 2016 was a big year um in negative and positive. So, Bitfinex was hacked um the 2nd of August and uh I was tasked to rebuild the entire platform also take care of the security become the CTO and so since then you know I proudly became and still I am the CTO of Bitfinex trying to keep the platform running and you know now we have an amazing team that uh that is uh continue to accrue value to the platform at the same time maintaining the you know old um good old standards of security that uh we were able to set in you know early days after 2016.
Man definitely a lot has changed uh since the unpaid days of uh researching. Now uh you know Bitfinex is one of the most profitable exchanges and you know one of the most successful internationally in terms of many different metrics. So, uh, bravo, uh, for finally escaping, uh, the unpaid research life and building something really incredible and lasting.
Yeah. I mean, it's Sorry, go ahead.
Oh, no. I was just going to agree. I've been around for a while in the space as well and I remember you guys back in the day and you guys have just continued to grow and grow and uh what people don't realize as listeners is back in like 2012 2014 really anything like pre-2016ish if you wanted to get your hands on crypto it wasn't like you do today where you can go to any brokerage any account you know there's all these different crypto exchanges there's lots of safe ways to do it I mean heck I think now you can get exposure through like PayPal and Venmo and everything. Um, but it's I was just going to say it's been super interesting to watch the crypto space change over the last like 10 15 years. Uh, and you guys have really been at the forefront getting to pioneer and being a part of a lot of those changes.
Yeah, we also try to do that as I said to maintaining our spirit right. So um it has been in a certain way the last few years uh the change accelerator right now you have also ETFs I remember since I joined in 2014 there was always the meme institutions are coming you know for 10 years institutions were coming but actually were not coming so every cycle was the new narrative of institutions coming to the space and then eventually 2024 you had the ETFs approved And yes, institutions are finally coming. But you know, we were running an exchange that uh that saw different market cycles. There was the ICO boom in 2017 and um and uh there was a lot of craziness in 2018. the market um tanked and then I remember was March 2020 with a pandemic when when I think was still Trump that back then that announced closing of the inbound flights into the United States because of COVID and so the market tanked and uh I was very proud in that moment because we every single exchange was down so the price of Bitcoin went from $9,000 to 4.5 $5,000 BitMEX and everything was um BitMEX was huge back then and the coin everyone was down and we were like there running orders and and you know liquidating in a good order um you know the long positions but at the same time we were able to serve everyone with the good latency and so you know we almost like we always prepare Bitfinex for the worst of the market so that we when that comes we are basically the last man standing. So I like that about us. I mean um volumes are uh of course good um in the platform uh but uh really is the place where when hell breaks loose you can still find liquidity and you can still trade.
Yeah, absolutely. And I also think I saw recently I'm not sure if it was just momentary or if it was permanent now there's no fees to trade on Bitfinex. Is that right?
Yeah, that is that was an interesting decision. So um Bitfinex now that is few months that with is running without fees remains highly profitable and so keep in mind we have a probably the biggest peer-to-peer lending market. we have so many services and so when I remember when Bitfinex started um maker and taker fees were around 20 basis points each and then after two years became like 2010 and then became like uh 20 and then basically start it's basically fees trading fees are raised to the bottom and so the thing that is unfair about fees is that rich guys don't pay fees so the market makers are for by are paid by most of the exchanges to they are paid to trade there. And so instead the little guys are the ones that pay super high fees. some of the retail exchanges the I will not name them but the most known probably exchange in the United States like you have super high fees for retail and so I think I always felt like is unfair right so is like the inverse and so um we did some calculations on our side we saw that the exchange would remain extremely profitable and you know from once I mean if you have an exchange it was never the case we never uh had uh you know negative fees for market makers. But um if um if you still if you need to pay some market makers and then you have to charge the retails, you have anyway net to zero. So we calculated that in our case we were not um subsidizing market makers. We were not charging high fees to retail and in the end fees like trading fees were negligible in the grand scheme of fees of Bitfinex profitability and so we removed them. The volume uh went up actually we acquired so much more user base and our peer-to-peer lending market grew. It's like several several billions in the peer-to-peer lending market and so the efficiency of the system just grew incredibly well. Um so was the right decision? I believe that many changes will follow our path in the future.
Yeah. And like you said, I mean the products and services have expanded since day one. Uh day one it was you know pretty much spot trading and then you guys you know had lending and then all sorts of new derivatives products are coming out now. And so um I believe you know um options are here maybe or options are coming uh to the platform and so we just want to hear about um sort of the road map uh for Bitfinex. What have you just recently launched and what's kind of near-term expected?
So options we are servicing options through um partner platform. um they're doing a very good job and so we have so our offering is um is of course spot trading with um you know highest efficiency possible margin trading where we have I think the deepest liquidity in the lending peer-to-peer lending book um we have uh perpetuals we have um uh we have options offered by colleagues but also uh we have Bitfinex securities I'm in big love with Bitfinex securities because it's our we were the pioneers also in the tokenized security space. Um I think every time we try to launch a feature, we think like okay what what is what would be the Bitcoin way to launch a new feature like Bitfinex securities and um the way everyone now is thinking about tokenized securities, right? So Apple tokenize Apple shares and Tesla shares and I think is extremely boring. Uh I think the you know the idea around Bitcoin was to create the highest level of uh of inclusion possible for people that could not have a bank account. Um and uh and so create almost like a even playing field for everyone. And so if I have to think about the Bitcoin way to offer um securities um in an overly crowded world would be focusing not on Teslas and Apples tokenized shares but actually create a platform that would allow small companies that are outside the United States that would have otherwise a very hard time to have access to liquid markets for capital raises to have a capital raise on Bitfinex securities. So we first built this capital raise platform that over the years actually kept increasing uh the liquidity and now we are going through raises that are in the tens or 50 or hundreds of millions of dollars um through Bitfinex Capital raise and on top of that we offer the secondary markets um for this uh this uh this tokenized shares and not only shares but you can raise capital for for bonds tokenized bonds or even funds. And so that in my opinion like think about a beautiful great company that is maybe in Argentina. That company at imagine two companies one in Argentina and one in United States and the one in Argentina offer the same exact product service of the one of the United States. The one in United States was with a snap of a finger would raise probably 20 30 times more capital than one in Argentina. that I think is a huge uh bottleneck for development in the emerging market. So that's how we wanted to position Bitfinex securities and I think that is the future of our platform. You could see over time we have reduced the number of altcoins um on the platform. So at peak we probably had 400 and now we have I think less than 200 and we are decreasing those. we are you know we are removing all the ones that are not trading enough they don't have good liquidity because the world anyway is shifting towards real world usage and real world assets and again we have been pioneers in that um but I think everyone is focusing on their own thing apart Bitfinex and Bitfinex is focusing on what matters the most that is actually creating the right even playing field also on the real world assets landscape.
Yeah, it's interesting to watch all of this unfold. I mean, the whole RWA tokenization revolution can lead to, you know, all these different global companies settling their trades on something like Bitfinex. Would you say that that's the end goal?
I would love for our end goal would be um all the companies in emerging markets, developing countries that would never had access to a liquidity uh a liquidity pool or a platform that would help them to raise capital and list their shares. They have now an opportunity. So So if they can't list themselves on NASDAQ or New York Stock Exchange, Bitfinex opens their arms to them. Exactly. Because usually there would be too too too little for NASDAQ, right? And to listing on in the United States is extremely extremely expensive. Like you know, you have to go through 16 different bankers and uh you know, everyone will milk you.
The lawyers man I can't imagine how expensive those lawyers are.
And keep in mind that we are doing all that process with good regulations under the El Salvador regime. very sensible piece of law, very very uh conservative as well and there is a good regulatory oversight and all of that but is much more accessible and on Bitfinex you have already huge liquidity you know lot of Bitcoiners are you know the Bitcoiners never wanted to have much exposure to the altcoins and so Bitcoiners are definitely the ones more interested to have access to if they want if Bitcoiners seek for alternatives they would seek out for alternatives in the real world not in another separate token. So we are trying to build something that is reasoning with our current user base that would allow them to invest their you know profits for example into something different that would still make sense and would have an impact in the real world.
