E185: Variational CEO: This Hidden Fee Is Quietly Draining Your Crypto Account

Lucas Schuermann (0:00)

We are a lot Wall Street Liquidity is coming on chain. So what happens when it comes on chain? We'll see a Cambrian explosion of people trading on chain. And I think we're just going to see an absolute explosion of interest from all parties. We'll be pulling flow from traditional brokers and antiquated platforms.

Kevin Follonier (0:12)

Who gets destroyed when Wall Street Liquidity comes on chain?

Lucas Schuermann (0:17)

Who gets destroyed?

Kevin Follonier (0:18)

Lucas Schuermann, the founder and CEO of Variational.

SPEAKER_3 (0:22)

A peer-to-peer derivatives protocol built on Arbitrum, a former Genesis executive and quantitative trader. Connecting DeFi with traditional markets.

Kevin Follonier (0:30)

He went to Columbia University at the age of 12

Lucas Schuermann (0:33)

I started at the University of Oklahoma at the age of 12, and I moved to Columbia a little bit later, around 17, 18 My mom used to have to drop me off at college. I had a lot of people treat me very, very nicely given the circumstances, people who kind of looked past the fact that I was some weirdo 12-year-old in their class.

Kevin Follonier (0:47)

You started a hedge fund when you were 20 years old. Why?

Lucas Schuermann (0:50)

Hubris. Hubris of the young. It actually started as a paper reading group at Columbia's campus. It's ridiculously cringe. It's called the Columbia Quant team. We were pitching a few other household names, New York funds, and we ended up getting a term sheet. We didn't take that deal. It was a little bit on the predatory side. But when we got that term sheet, that's when it clicked in our heads. And that's really when we kind of entered into finance for real.

Kevin Follonier (1:09)

If hyperliquid is the Amazon Web Services of Liquidity, what is variational in this?

Lucas Schuermann (1:13)

Variational is the interactive brokers or Robinhood of on-chain trading. But it's one that can provide unique innovations that neither of them can. Hyperliquid is an exchange. It's like CME, CBOE, NASDAQ. And we would put that in infrastructure wrong, like AWS. I would put variational as like Apple. We want to build the best possible user-facing product.

Kevin Follonier (1:31)

If it's possible to charge zero fees, does that mean that fees are a scam?

Lucas Schuermann (1:36)

I'd hesitate to call them a scam because I think...

Kevin Follonier (1:42)

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It's good. They sent that and I was like, this is awesome.

Lucas Schuermann (2:16)

It's great.

Kevin Follonier (2:16)

I was like, let's do something in the background. It was so cool.

Lucas Schuermann (2:21)

Yeah, no, I love it.

Kevin Follonier (2:22)

Actually, I showed that in the last two or three episodes we released to the team. And they were like, like, Justin, and they were like, I want that.

Lucas Schuermann (2:31)

I want one on my desk. Yeah, exactly. I need one. I don't get the cool stuff.

The thing I love to joke about is like, I was the last person to get a VIP merch box. Like, they literally, I had to beg for one. And we did an on-site in Tokyo. Like, I finally just stole one that Kassa brought out. But, you know, I never get the cool stuff, right? It's all for you guys. But no, it's awesome. It's fun. It's fun. I like kind of those cool merch ideas.

Kevin Follonier (2:55)

Yeah, absolutely. It makes a big difference, especially in a very serious, nerdy kind of industry in general, but even so in company that you guys are building. For sure, you need some creative minds.

Lucas Schuermann (3:08)

Yeah, yeah, yeah. I mean, I kind of like that idea. I'd say we're a six or seven out of 10 so far, but as we grow kind of a lot of the scale we can use to fund these interesting ideas. And that's a way to differentiate, right? Think about all the US FinTech brands like Robinhood.

They're super playful. They actually have some cool ideas there on growth campaigns and merch sides. So we'll see one day. We'll get bigger.