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SBF
@SBF_FTX
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@SBF_FTX
7) So basically, Bullish going to is a standard exchange, except that it'll use it's $6b of capital to provide a bunch of liquidity. Is that worth $3B? You can be the judge of that.
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SBF
@SBF_FTX
8) What about that liquidity providing? Well let's dive into an example. They have ~$5B of BTC on hand, and ~$1B of cash. Let's say they raise more and end up putting $1B each of USD and BTC in a BTC/USD pool, using x*y=k. Then, the pool has ~$5m offered within 1%.
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SBF
@SBF_FTX
10) They're assuming 75% annualized BTC volatility, which isn't crazy. If BTC goes up 75% this year, ignoring fees/spreads: Without providing: $1B USD, $1.75B BTC = $2.75B With providing/IL: $1.32 USD, $1.32B BTC = $2.64B So it's paying ~$100m/year to get 20% of FTX's depth
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SBF
@SBF_FTX
11) Which means paying $500m/year in impermanent loss to get top tier liquidity for BTC/USD. Maybe $1B/year for all their books combined. That's..... a lot to pay.
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SBF
@SBF_FTX
13) Well, basically, they're: (a) ignoring IL (b) assuming that customers are paying 16bps to trade (c) assuming $1b/day of volume (d) assuming they have $2.5B of USD to provide with (for BTC/USD--and more for others) Wouldn't we all love to have those!
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SBF
@SBF_FTX
14) Also, just for fun, here's a chart of competitors' 2023 EV/EBITDA. I love these charts! Though somehow they bury the lede: if I knew every company's 2023 EBITDA, I would go bet on stock and crypto prices, not think of relative exchange valuations.
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SBF
@SBF_FTX
15) But anyway, maybe this is all besides the point. Bullish seems to be comparing itself to Bakkt and Coinbase, but maybe that's not really what it is. Maybe Bullish is really another MicroStrategy.
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SBF
@SBF_FTX
16) Create a company, put $6B of crypto in it, SPAC it at $9B, and now people have a way to buy crypto with their brokerage accounts at a 50% premium. Maybe they will!
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