FluidAI Live – Korea Blockchain Week Exclusive: James Woolley, CMO, and Calvin Ferreira, Director of Partnerships, Metavest Capital
Korea’s premier crypto and blockchain event, Korea Blockchain Week, saw crypto enthusiasts from around the world converge in Seoul for inspirational keynotes, panel discussions, pitch competitions, investor meet-ups, and world-class networking opportunities.
In an exclusive FLUID Live interview, FLUID’s Head of Marketing and Communications, Matias Jeldrez, spoke to James Woolley, CMO, and Calvin Ferreira, Director of Partnerships, Metavest Capital, to gather their thoughts on fragmented liquidity and how it impacts the crypto industry.
Q. How has Korea Blockchain Week been so far?
Calvin: We’ve been enjoying it so far and have seen some good talks and met some people. It’s nice to see the industry thriving in these difficult times. It’s our first time in Korea, so to us, this is amazing.
Q. Can you tell us just a little about what you guys do at Metavest Capital? What’s the whole idea behind it?
James: Metavest Capital is a blockchain VC firm focused on Metaverse and NFT gaming projects. Our core investments include play-to-earn games, digital tokens, and in-game assets. We look at early-stage investment, seed, and equity in web3 projects. In general, we’re focused on the web3 gaming metaverse and are super bullish on that sector.
Q. Fragmented liquidity is a critical issue in the industry, causing prices for a single token to vary widely across exchanges. This leads to oligopolies that are highly powerful entities, siloed liquidity, and the potential for arbitrage, market manipulation, flash crashes, and other activities. Does this remark strike a chord with you? What does it entail to be your own liquidity aggregator?
Calvin: Volatility is more often a friend than an enemy for many institutions. But a lot of novice investors find volatility to be rather frightening. I believe the entire point is to have arbitrage and make money across various exchanges, which has been in the traditional sector and more so in the crypto sector in the last five or six years. Investing in tokens that fluctuate by 20% per day isn’t as inviting for retail investors as it is for institutions or governments that can trade these kinds of crashes. But in terms of that fragmented liquidity, I believe you currently see it with many small-cap tokens where they trade on a few tier-two or tier-three exchanges, and the volume on one exchange might be not higher than ten thousand and on the other exchange, fifty or a hundred thousand dollars. You see these massive price differences. For a retail investor who knows no better, it is extremely unfortunate because they might buy a token at 50 cents on one exchange without knowing the same token is 30 cents on another exchange and end up paying more than they should. That, in my opinion, is one of the key reasons we decided to invest in FLUID. We saw a good potential across liquidity aggregators overall for a more sustainable and equal market for all.
James: We’ve also observed it with a few of the projects we’ve invested in or partnered with that have been a little bit more predatory in their approach and have used these things to their advantage at the expense of retail. For example, these projects have been listed on a new exchange with their prices pumped but on another exchange the price is cheaperand people have been attempting to make that trade, but the withdrawals and deposits have been locked, and things have gotten complicated. Then we just see the investors get wrecked because of this, and it is something to be solved in one way or another.
Q. One of the things we realized in the market was a lack of education on the retail side, and the big thing is that institutional traders know when to sell. Do you think education is needed in the market for retail investors?
James: Education is crucial for anyone working in the crypto industry and the right kind of education. In a bull market, you have many individuals positioning themselves as educators but they’re simply promoting their own ideas or projects . But when there’s a lot of money involved and folks are preying on these newcomers, it is imperative that investors know what they’re doing and who they’re dealing with. So, to be sure, education is crucial. Still, in the case of cryptocurrency, I believe you need to learn the ropes and have a few cycles under your belt to properly take advantage of the fortunate and unlucky opportunities.
Players like FLUID and others in the industry are going to be a one-stop shop to be able to exit all in one place. What does it mean to devise a solution allowing you to escape and buy you some extra time and breathing room?
Calvin: Everyone has access to a wealth of information on cryptocurrencies on the internet. Brock Pierce gave a fascinating lecture in Davos a while back, in which he said that the easiest way for someone to become engaged in the industry and begin learning is just to buy a small amount of bitcoin, to begin with, make that first transaction, and send it someplace to discover how it functions. Then, learn more about it by reading up on exchanges, volume, liquidity, the many VCs engaged, and what a VC is. These are a part of the education process. I believe that many retailers lack the financial foundation and go with the crypto ideology of wanting to get rich quickly and end up suffering serious financial setbacks because they don’t fully grasp the principles at play.
I believe that the individual’s education is a significant factor in the process. We’re all essentially self-taught in the crypto space. For example, you need to go through a few cycles to learn how the market operates and how volatility fluctuates , but I suppose that’s also to be anticipated given that the market size is now so small. Of course, there will be a lot more volume and liquidity, and the price will be much more stable if we reach a market value of 10, 20, or 30 trillion, but once again, the chance to create these large-scale games that we now have will likely be gone by that time too. So it’s all about how risk-averse you are or how big your appetite is, and what your appetite is for learning and educating yourself about what the space consists of and entails.
James: Similar to traditional finance, I might first explore various financial products like retirement plans, and then I might want to dabble in the market with CFDs, which are leveraged instruments. After that, I began studying specific stocks and eventually switched to investing in ETFs, which did most of the hard work for me in terms of a more passive investment. So, in my opinion, the market requires a few more passive investing strategies or just some sorts of investments that you can do without being as active. At the time, bitcoin may serve as the most fantastic proxy for it, but if you have any methods or solutions that allow retail investors to access it without constantly being active, please let us know. That, in my opinion, is something that the area needs.
Do you think regulation is needed in the crypto space? What are your thoughts on that?
Calvin: I’m an avid supporter of regulation, and we have seen the need for it in the previous six to twelve months with a few projects and what transpired with them. People lost a lot of money as a result of that. There’s a lot of insider trading happening as well, where a man will call another and tell him, “Buy my token, we’re going to pump it on this channel or that channel,” among other things. It is widespread in this market, but only because there’s no regulation. It’s an uncontrolled market where governments and billionaires may trade freely. If we look at what some people at Wall Street did in the past before there was any regulation, they earned a lot of money, but many retail clients suffered.
I believe widespread use will increase with regulation and that big institutions will begin to take the industry more seriously, so in that sense, I’m in favor of regulation.
James: I believe that a middle ground is unquestionably required. I’ve seen a lot of people get burned in this space, and we’ve dodged a few bullets ourselves. It was interesting to see what happened with Tornado Cash and Circle freezing wallets. Obviously, people have been shocked by those events and seen it with a certain negativity, but it also proves that players like Circle can show regulators and governments that there’s space for good actors to come to the rescue. There will always be hazards, but I believe there needs to be a middle ground between the Wild West and being wrapped in cotton gauze. Although additional regulation will bring in more money, we still want the independence that crypto provides.
What’s your future outlook on the crypto industry?
James: We have a lot of faith in this area. We have a sizable investment as a result. Since I made my first bitcoin purchase in 2013, I’ve been involved in this industry in many capacities. I observed the 2017 cycle and am now watching the 2021 cycle. There is little doubt that the market will continue to rise in the foreseeable future. In our opinion, decentralized asset ownership and an in-game economy will promote the use of Web3 gaming and NFTs. We have high hopes on that front. However, DeFi has undoubtedly caused a lot of disruption.
Although it is still cliche to claim that anything is the future, I believe this is the case regarding cryptocurrencies. We believe it has a significant position in this world, and we’re excited to be here and see what will happen.
Calvin: I agree with everything James said. I think it’s great to be here in this space and one of its early adopters. We’re excited to see crypto’s place in the financial system moving forward.
To watch the interview, click here.
