Nov 8, 2023

As part of CoinDesk's Trading Week 2023, presented by CME Group, Injective Labs co-founder and CEO Eric Chen joins "First Mover" to share insights into some of the strategies for DeFi traders, including 64% saying they trade on both a centralized and decentralized exchange.

Video transcript

It's trading week at coin desk. And a recent survey found that 64% of crypto traders are focused on huddling injective recently surveyed defi traders to get a better understanding of how professional and amateur traders are approaching the space. Joining us now to discuss is injective co founder and Ceo Eric Chen. Welcome to the show, Eric. Hey, thanks so much for having me. Thanks for being here. Now, before we get into the to the survey, I wanted to talk about the native token of injective. It surged over 1000% this year and is backed by the likes of B and Mark Cuban. Talk to us about the progress the project has made over the year and why you think that um so many folks are excited about it? Yeah. So I think for us at Injective Labs, we've just been, you know, continuously building and shipping new products, uh you know, according to plan and we've been, you know, relatively more um you know, consistent in terms of efforts in terms of planning, regardless of any type of market condition. And I think once, you know, certainly pleasant surprise is that, you know, there has been a lot more firms and, you know, companies joining the injective ecosystem, you know, building contributing to various aspects of, you know, the chain and the network itself along with a lot more stakeholders these days. Um And yeah, it's, it's truly exciting to, you know, see them all, you know, coming together and build towards a brighter financial future. All right, let's get into this survey. Now, talk to us about your sample size. How many traders did you survey? What did you set out to find? Yeah. So I think one of the most uh you know, exciting part is that I believe, roughly, you know, 63 or 64% of most of the respondents uh uh you know, engage with both uh decentralized and decentralized exchanges. Um And then, you know, uh the 64% are typically, you know, uh working on the holing strategy or long term holding, you know, going for like a lower frequency and potentially, you know, deploying our capital in a much more, you know, passive way. Um Whereas only, you know, I think 32% or so are um performing day trading, you know, longshore strategies and discretionary trading. And there's certainly, you know, a wide diversity of others. Um And then certainly, uh I think, you know, unsurprisingly 62% or so, um uh believe that, you know, engaging with the D five projects are in part, you know, driven by the incentive provided by these D five projects and that kind of motivated them to, you know, engage with all these projects. And yeah, overall, you know, it's been very, very promising and I think, you know, this number is going to keep grow growing to a point where it's going to be 80 plus percent for, you know, both sex index, how, how many, how many traders were sampled? Um I, I don't have the firm number on my hand. Um But, you know, I, I believe it's, you know, within a range of uh hundreds. OK. And, and the, the ones that the 64% that said that they were holing, do we have any sense of uh people can say that they are long term players, but when we actually see their, their, their trading uh statements, it always looks a lot different than what they always claim. I mean, you know, you asked me if I, if I'm a long term investor, I'll say yes, but my statements don't say that. So, uh do we have any sense of how many people are claiming to be uh uh long term holders versus what their frequency of trades are? Um So, so obviously, you know, like it will be a fair, fair, fair amount of invasion of privacy if uh you know, you, you verify that you can ask them how often, but you can ask them how often, how were they asked, how often they trade. Yeah. So, so basically, um typically, you know, the, this uh description of, you know, self identifying as like a long term holder or like a holing strategy. Um It's not, you know, what you think, you know, as like, you know, a Hodler and, you know, uh uh belief or, you know, were like long term investors and like a projects, etcetera. It's about, you know, the frequency of your trade where, you know, you might be uh you know, making a trade once every week or once every month. And those all come under, you know, on the lower frequency and which can be, you know, more classified into like a Hodler. Oh my God. Such short that that's incredibly short term. I think that that's not threshold, right? But, but when you, when you say they, they are a long term holder saying that they hold it for a month is not long term, that's, that's incredibly short term. Yeah, it's very hard to draw the line. And you know, typically you see like, you know, people trading like five or six times per day when they, you know, are employing their strategy if not hundreds and thousands of their uh algorithmic. So, you know, drawing a line of, you know, what, what is like a low frequency, you know, longer term strategy typically, you know, uh they would draw it at like one week or one month plus uh frequency. Yeah, I, I hoddle every you know, every 12 seconds. Does that count? I think you fall more in the range of day trading. Then any idea what assets uh these traders are holding on to when they say that they're huddling. Um not exactly sure, but I think one interesting insight is that um you know, uh paddling means that, you know, you're training in a low frequency, but at the same time, um there are also roughly, I believe 4% you know, that are deploying into liquidity protocols and yield farming. So this means that, you know, um there could be an overlap between those who are, you know, establishing a long term position or, you know, trading and low frequency. But, you know, done did so in a way via, you know, liquidity provision which implies, you know, a lot more dynamic allocation. Um And then basically, you know, we didn't really survey like the asset that they hold in particular. But um I, I believe, you know, usually the case is that uh the majority are holding, you know, the majors and follows like a Power Law. All right. And I, I pulled this stat from the survey just about 10% of people said they weren't sure if they were operating on a centralized or decentralized exchange, I guess, give us some more of the qualitative data here. What does this tell you about decentralization? Did you ask them why they weren't able to differentiate between centralized and a decentralized exchange, especially if, if they're, you know, trading days at a time or weeks. Yeah, actually, that's a very, very interesting insight. And so honestly, you know, like a highly promising sign for the evolution of defi I think for a lot of defi projects, the goal is for the users to have such a smooth onboarding experience and user experience that they might not necessarily be able to critically discern that. Oh, I'm trading on a centralized platform or I'm trading on a decentralized platform. And certainly, you know, uh Helix Strives to be that by having all the centralized exchange, you know, features and functionalities. But I think in this case, you know, there are certainly uh um a group of individuals uh you know, that are being surveyed who are, you know, more on the inexperienced end of a spectrum or it could be on the other tail, which is experience where, you know, on the, on the lower end, like they don't know, they don't necessarily, you know, understand the difference between a decentralized or centralized platform. They're simply finding venues with enough liquidity to uh you know, perform their strategy or their activity or maybe, you know, driven by incentives to on board to a certain platform where they don't have, you know, the sophistication to discern oh because the centralized or does is decentralized or perhaps it's not too relevant for them. But on the higher end uh uh of sophistication, there could be also cases where, you know, they have a more fine grained definition of what a centralized versus decentralized venue is. Um And this means that, you know, for like a dexter self custodial, um and uh you know, uh fully, you know, partially on chain, not fully on chain um to, to in their mind, it might be, you know, more like a centralized exchange rather than a decentralized exchange. All right, Eric, we're gonna have to leave it there. Thanks so much for joining and unpacking some of those insights. Appreciate it. Thank you so much. That was injective ceo and co-founder, Eric Chen.

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