AD Derivs. Podcast (Ep. 73) - Chris Chung, CEO and Co-founder @TitanDex.io

Speaker A: Hi everyone and welcome to the Amber Data Derivatives Podcast. I'm here with Chris Chung, the co founder of Titan, which is a Dex aggregator built on Solana. Chris, how are you?

Speaker B: Uh, doing great. Greg, how are you?

Speaker A: Doing great. I mean, uh, it's nice to meet you. I'm very excited to dig into everything that you're building, um, but I'd like to maybe just jump into a little bit about your background. You have a really interesting background in the equity space. Uh, I think it'd be pretty useful for a lot of our listeners who are traders to kind of hear, um, how you got started in finance, how you made your way over to crypto. Crypto and then finally how, uh, you co founded Titan.

Speaker B: Yeah, sure thing. So I guess my background lies in more in the US and Canadian equity side of things. So there I was really building out low latency analytics. So you can imagine like pulling all this data from Bloomberg S P, fundamental data, macro data, pricing data, corporate actions, and like you know, making thousands of valuation models for a single equity over 20 years of data. So command 20 years of daily valuations, 5,000 valuations every single day for those 20 years and up spinning them out in under a second for each stock. So if you can horizontally scale it, being hit off the entire US equity market survivor survivorship, bias adjusted. So that's what I was really up to back in the day, uh, as a background.

Speaker A: Yeah, that's, that's really interesting. So when we're talking about sort of those late, low latency models, are we looking at like top of book level two order book updates? Are we trying to figure out like spot and queue stuff like that.

Speaker B: So on the, on the stuff I was primarily focused on, it was just trying to make valuation model. So you could think of your classic dcfs, DDMS stuff m like that, that uh, you know, take it out of Excel, put in a systematic model and just run thousands of these and see which ones hold up the best under what market condition, what market conditions currently exist. So that's what I was more looking at. I have looked at, you know, pricing, uh, and pricing data like you were talking about before. But main focus was uh, on the fundamental side of things.

Speaker A: So that's really interesting. So it was a low latency approach to the fundamental model. So is the idea something like I have this DCF with all these assumptions, earnings comes out, let's just say it's outside of guidance to the downside or whatever to the upside. And now you're seeing how quickly that adjusts to the new value of the model or is that kind of the idea?

Speaker B: Exactly, exactly. As well as finding out what valuation model is holding up under what regime. Right. So some models may fall out favor, some models fall in favor on that side. So it's a, it's expanding the universe. And this really helped like uh, the fund that was at. Because there was uh, there wasn't that many people, uh, on there. So it really helped the fund manager really expand his universe of stocks. And then also like eventually broached out to European equities as well because it was a fully systematic model. Just like data and scaling up servers.

Speaker A: Yeah, that's really interesting. That makes me think because, you know, often we hear uh, a conversation topic of value versus growth and I think both have their places in different market environments. But, but from what I'm hearing you say it sounds like different models might also have their own sort of seasonality to different market environments. Like would a DCF work better in a bull market or bear market? Is that kind of like the type of idea?

Speaker B: Yeah, that's the type of idea. You can also look at like, you know, momentum factors that may exist. So a lot of it is also factor investing as well. So if something is like really high growth, like lots of momentum on the pricing side or lots of volatility, you might be, you might uh, place a higher weight on those in certain market cond.

Speaker A: Yeah, very interesting. And then when you're analyzing markets like this or when you were doing that in your previous career in tradfi, um, did you view the market as like different segments of participants, Like HFT participants versus investors versus kind of speculators, or did that not really apply?

Speaker B: Um, I think it was more on different segmentation of investors. Right. You have your HFT firms, your quant firms are just running pure mathematical models on, on that side. And then you have more classic portfolio managers are picking what they like based on, you know, set number of criteria, whether that's a valuation model, whether what they think on the macro changes on that side. So, you know, less quantitative focus. But you know, everybody has to move towards utilizing more data. If you just, if you are stuck at just looking at like 20 equities, um, then I think you don't have an edge and you quickly lose any advantages you may have had. Even if you're like the best stock picker out there.

Speaker A: Yeah, yeah, Fascinating. So after this tradfi, uh, career, you found your way into crypto. So crypto is very interesting. A lot of people have argued there's no fundamental value, there's no intrinsic value. Coming from someone who's worked with a lot of fundamental analysis, uh, and different models. Did that scare you off from crypto? Did that pique your interest because you thought, hey, these people are wrong. Like how did you find your way into the crypto side of the world?

Speaker B: Yeah, so I started wanting to work more and more like, you know, tech level data and nyse. NYSE is expensive if I want to do it myself. So crypto, uh, tech level data was completely free. So I started playing around with and found it really fascinating. Value is what we subject it to be like crypto to me. You can take a look at it more like FX or a commodity. Right. What is really the value of gold? Um, it's something that we imaginary place onto it because there's very limited actual usage of gold for actual industrial purposes. It's all because like, you know, humans think it's shiny and cool and as a store of value, if we place that same type of logic on cryptocurrencies, it just holds up the exact same manner for me.

Speaker A: Yeah, yeah, I definitely agree. Like especially with the bitcoin narrative being sort of digital gold. That makes a lot of sense. And to your point, why does gold have any value? I think in my, in my mental model is because it was worth this yesterday plus some variance and it'll be worth this tomorrow plus some variance. And you can sort of extrapolate that and apply that same model to crypto. So one of the things you mentioned is working with the data space in crypto. Um, did you start working with on chain data or trade data from exchanges or a combination of both when you first got started here?

Speaker B: Yeah, when I first got started, defi summer wasn't a thing yet, so there wasn't really much on chain data. So it was mainly working with the centralized exchange data into our data feeds, you know, um, working with basic web sockets or even like normal uh, rest calls on that side. So nothing advanced, you know, like fixed calls or anything like that. Um, so it was very, very interesting. And then it eventually got more and more onto the defi side of things. As I thought that was more interesting than taking a look at the tick level data on the centralized exchanges.

Speaker A: Yeah, that's fascinating. And so a lot of people started in sort of the Ethereum space. Uh, is that where you started or did you start in the Solana space? Because, uh, we'll get to this in a second, but Titan is a Dex aggregator built on Solana. Um, how did you first start uh, navigating the space in general.

Speaker B: Yeah, so first exposure was definitely in Ethereum space. That's when it was like Defi Summers is coming out. There are a bunch of projects uh, on Ethereum space, you know, uniswap, sushiswap and stuff. So was getting more acquainted with those. I only recently got into Solana uh, compared to other people because my co founder, he actually left uh, the hedge fund I was with to uh, work on the Solana project back in 2021 and then he pulled me on it when we met back up again last year. So that's how I got into Solana.

Speaker A: Oh, that's fantastic. Okay, so you guys started digging into the solana space in 2021. We had essentially in 20, in late 2022, the FTX crisis, um, did that affect any sort of opinion on Solana for you guys? When we had the bankruptcy of ftx, obviously prices dropped a lot. FTX had a lot of Salon on its balance sheet. Or were you thinking, you know, this doesn't matter, I'm building in space, this doesn't change those dynamics.

Speaker B: Yeah, I think everybody was cautious, everybody was scared about the price action. But the fundamental tech is completely solid. We see it today, there's so much trading volumes running through to it. It flipped Ethereum on multiple occasions. And I just think it just proves that if the underlying tech is there and there's enough support from the ecosystem, it is going to flourish regardless of what exogenous events may happen.

Speaker A: Yeah, that makes a lot of sense. So for anyone who's new to Titan, can you give us a brief background uh, of Titan and the value proposition and what you guys do over there?

Speaker B: Yeah, sure thing. So Eiden is a Solana Dex aggregator. So what a Dex aggregator is is that we search through all the on chain liquidity that may exist on, on every decks inside the ecosystem. So when you trade, let's say for example USDC to Sol, we find the best liquidity uh, throughout the entire ecosystem. We route the liquidity for you in ideal percentages and you find the best uh, route for you to maximize the amount of soul you'll get from the trade. But Ty is also a meta Dex aggregator. By that I mean in addition to our own algorithm which does perform pretty well, it wins around of the time compared to our competitors. The MetaDax aggregator also aggregates other aggregators so like ourselves, Jupyter, D Flow, Pyth, Express Relay and it just uh, routes the user to the best price with no fees attached. So we're agnostic at who is providing the route. We just want to provide a user the best price there.

Speaker A: Oh, uh, that's fantastic. So if I made the analogy to the tradfi space, it's almost like doing like routing a smart order as opposed to routing to a specific exchange, uh, when I'm buying some options or buying some stocks. Is that a way to think of a Dex aggregator?

Speaker B: Exactly. Well, I would say the meta dex aggregator portion is more like your brokerage and each individual Dex aggregator is like your exchange level. So when I place the order on the meta dex aggregator level, then I could split, I could find the ideal route between different, uh, exchanges.

Speaker A: Oh, that's fantastic. Now, something else you mentioned is that Titan does not charge a swap fee. How is that possible? How can, uh, tighten make money or keep operations going without charging a fee?

Speaker B: Yeah, for big traditional equities. Right. Robinhood and all the other American brokerages, they don't charge fees anymore. They rely on a payment for order flow method. In crypto, I think we're still a bit, um, you know, a bit new to be charging for payment for order flow. But other methods that we like, we could charge for like specialized order types, like limit orders, DCA orders on chain that we could start charging a certain amount for. So it's been shown with some other products that they can do it. I know some other algorithms do charge on positive slippage, but, um, for our objective, we are targeting these specialized order types first.

Speaker A: Oh, that's fantastic. So basically you guys, the play in my, the way I'm hearing it is you guys are purely offering a positive expected value service to users. And the idea is you're going to acquire a lot of users and then maybe at some point in the future, if we get some sort of payment forward or flow in this space, then you guys would have essentially a pretty valuable user pool. Is that a way to think about it or not necessarily.

Speaker B: Yeah, I think that's the best way to think about it. What we really want to do is grow the ecosystem. And the reason why we're all in crypto is for me not to pay like fees, like 10 basis points to do a $10,000 swap. I might as well just trade through my Canadian brokerage account instead.

Speaker A: Uh, that's fantastic. So one of the things I've always wondered about, especially with Dex aggregators, is, I mean, I'm sure there's dev work involved to incorporate Dexes that you would route orders to. Um, you know, what's the process of adding a New Dex that's you know, eligible for order routing too. Uh, and how do you guys decide which dexes to integrate or not integrate?

Speaker B: Yeah. Okay. So yeah, the dex integration portion takes around us four days to do all the testing and making sure that everything works on that side. But you know, the critical thing here is that we are evaluating if the quotes are tight from the decks. If they aren't, then we go back and ask them to update it when we're just doing all the double checks to make sure the speed is correct, the speed is fast enough to keep up with the entire ecosystem. And we just plug into the algorithm at the end and let's let it run because getting more and more liquidity is extremely important.

Speaker A: Yeah, that makes a lot of sense. And so I'm guessing that a lot of the dexes that you route to have kind of two models. One is maybe more the central limit order book model and the other one is maybe more of the Uniswap sushiswap pool model. Is that the case? Like do you guys integrate both types?

Speaker B: Yeah. So there's actually more types on Solana now on that side beyond the I'm uh, passive liquid like uni V2, uni V3 type of pools.

Speaker A: Mhm.

Speaker B: As well as like central limit order books. So it seems like on my perspective, uh, clubs have pretty much fallen out of favor because of the gas fees involved. Right. But there seems to be a proliferation of like professional marker making makers actually coming on chain and coding like they're an amm. We do support RFQ as well, but these like so called prop AMMs are offering very tight spreads and taking a majority of the volume on Solana today.

Speaker A: Oh, interesting. Yeah. And um, does Titan uh, currently also do aggregation for some of the derivatives products such as perps or anything like that? Or is that something outside of the scope or maybe on a future roadmap?

Speaker B: Yeah, something off the scope. Right now I think our focus is just on the pure swap market, spot swap markets on that side. If a ah, perpetuals platform, M, let's say Drift or Zeta, I ah, guess they're called Bullet now wants to use us to facilitate any spot transactions. We're more than happy to integrate our side but on our focus we just want to provide the best spot swap transactions possible.

Speaker A: Yeah, yeah. Fantastic. And one of the things that we've really seen in the space a lot is like um, coins with embedded yields to them, um, things like that. Ah, how do you think about this potential for yields in sort of the Solana Ecosystem. Uh, are there coins like that where there's embedded yield, uh, into the coin, things like that?

Speaker B: Yeah, no, there definitely is. Um, from the Dex aggregation perspective. Right. It's just a tradable asset on our side. So all we have to do is make sure we price it correctly and the algorithm will route it and we just don't want to trade. But for a trade for the coin with actual yield embedded, I think that's probably where the future is going to be. Because if I'm holding usdc, I would probably expect a yield as like if I were holding in a savings account. Or better yet, since we're on defi, actually, you know, use it. Yeah. Have that money. Invest in a money market type of instrument.

Speaker A: Yeah, that makes a lot of sense. So kind of jumping into sort of Titans roadmap and where we stand today. Are you guys in beta? Are you guys live? If people want to come explore the website, um, and the app, where would they go? How would you get more information?

Speaker B: Yep. So currently, uh, we've been in private beta for around one month at this point. Um, so you will need the access code. Um, in order to get an access code, you just go sign up on our website at Titan Decks IO and then, um, you just wait for email or you come across access codes within our discord. Now, uh, the good thing is that our private beta has seen a lot of traction going forward. Um, over the past month we've done like over 100 million with just a couple thousand users. Um, like the usage has been amazing from our perspective. Like 10% of our users come and trade every single day in our platform. And getting around 8 to 10 million, uh, daily volume at this point with just that limited subset.

Speaker A: Oh, that's fantastic. And so, uh, just kind of jumping back to the Solana ecosystem. So there's kind of been this narrative, especially over the past year, that ETH is losing a lot of favor. Um, there's kind of infighting in the foundation. The EIP 1559, uh, ultrasound money narrative kind of got overshadowed by L2 transactions. And on the flip side, Solana has been gaining a lot of traction. We just recently had CME launch Solana Futures and we just had ETFs built on top of those futures. I think there's speculation of a Solana spot ETF coming along, uh, pretty soon here. What's kind of your take in sort of the adoption from Tradfi of the Solana ecosystem?

Speaker B: Yeah, I think, uh, it's undoubtable that like, uh, institutions want to Come onto Solana more than Ethereum. Like, Solana is just operating at far lower gas fees and far lower latencies. And that's really what's required to have, like, a fully functional modern financial system. Right. You just can't operate 12 seconds. That's, like, forever in a system where people are used to nanoseconds. Like, even a millisecond is really long. But Solana has managed to get this on a decentralized path. That's why you're seeing so much volume flowing through and institutions starting to move money and deploying the Solana ecosystem rather than Ethereum.

Speaker A: Yeah, yeah, that's fascinating. We also saw a lot of Meme Coins, uh, being built in the Solana space. We have, like, pump fun, we have the Trump coin, the Melania coin, things like that. What's your take on that side of it?

Speaker B: Yeah, so, like, the, uh, the way I view Meme Coins is like, I kind of the way how I view pink slips or, like, you know, penny stocks in traditional markets. These things are highly volatile. But the good thing for Meme Coins and Solana is that it's really upgraded the infrastructure. It's for salon developers and to really think about how they design apps, how, uh, what they really need to upgrade to sustain all the, you know, all the volume that's flowing through trading through meme Coins. I think, honestly, it's at a better place today because, like, it's shown that it can handle the vast amounts of volume. Like, when Trump dropped, there were no issues with the blockchain at all. It was just like when issues happened, when millennia came, and then it was on app level versus a blockchain level. So the app level had some issues which have been fixed now. Um, the blockchain itself functioned perfectly. So I think it really gets the rails up so that we have a modern financial system that's ready for the future in a blockchain sense.

Speaker A: Yeah, that's a really interesting perspective. It really hardened sort of the underlying infrastructure in the railways. Speaking of infrastructure, the US Regulatory landscape, it looks friendly and friendlier to crypto. Um, what's your take on that? Where do you hope that things go, um, when you're kind of looking at the regulatory landscape?

Speaker B: Yeah. So I think the most important thing is this regulatory clarity. Right. Because I think for the longest time, especially US Founders were really, like, hobbled on figuring out what they can do and what they couldn't do because there was just no clarity. It's like, will I be investigated by the SEC tomorrow if I go down this path, nobody really knew. But if there's clarity on what's allowed, what's not allowed, I think that could really, like, let loose the floodgates on American innovation, on really developing new, unique financial use cases on Solana specifically, um, because, you know, uh, the US's most deep capital markets in the world, and that's where most of the innovation in the financial space does come from. So, really excited to see what happens as we get more clarity from the Trump administration.

Speaker A: Yeah, yeah, absolutely. It's an exciting time to be in the crypto space for sure. So, um, for anyone who's listening, we're going to put the links to Titan in the show notes. But before we, uh, log off, we do have some fun questions that we usually end our podcasts with. So the first question, Chris, is, you know, if someone had or wanted to have a career like yours, um, you know, what would some advice or one piece of advice that you would give to them or either your former younger self.

Speaker B: Yeah. So one thing, like, beyond, you know, knowing technical skills or being interested in finance or any of that, and the most important skill set that you could really develop in business school or any other anywhere else is sales. Right. Because so everything you do, everything in life is literally sales and end you. If you want to pass an interview, you have to sell yourself. You really want to, uh, push like, you know, a direction for the company, you have to sell that direction. That's what I think is missing from a lot of, like, you know, theoretical academic, uh, classes or courses. Ah. These days it's just that ability to really sell, you know, a product, your own vision, yourself to other people and really push yourself forward. So I think that's probably the most important skill set that anybody can have going up.

Speaker A: Yeah, that's fascinating. Yeah, that's a great point. Um, what do you like to do for work? Excuse me? For fun outside of work?

Speaker B: Yeah, I mean, I enjoy playing squash quite a bit. It was, uh, happy I developed a university on that side. So it's just like this rapid reaction. It's just fun. It's also very, very good workout there.

Speaker A: Fantastic. And then the last question here, um, there's a lot of books in finance, a lot of trading books. Do you have any favorite books in the financial space that you found influential throughout the years?

Speaker B: Yes. So I don't recall the exact name, but George Soros's book, I think, was called Reflexivity of Finance or something like that. That gives a very good understanding of how Psychology of Markets actually work. It's like this flywheel of, um, this drives this. Which drives the initial, uh, drives the initial catalyst. Right. And this is true of many other things other than finance. It's true of, you know, grabbing users in a startup. It's true of, uh, you know, generating. It's true of many, many things. So I think it's the most impressive financial book, although he call philosophy book more than anything.

Speaker A: Yeah, I think it's the alchemy of finance. I know what you're talking about. That's a very interesting book for sure. Well, Chris, thank you so much for coming on. It was a great honor. I'm very excited to see all the developments at Titan and where you guys bring the space forward to.

Speaker B: Perfect. Thanks for having me.

Speaker A: Absolutely, absolutely. And to everyone who tuned in, we'll catch you next time.