Produced | Odaily (ID: o-daily)
Produced | Odaily (ID: o-daily)
In the past few months, the price of Bitcoin has continued to climb, setting new historical highs, and is currently oscillating around $27,000. Grayscale, which has increased its holdings of 100,000 bitcoins in three months, has taught investors who are still on the sidelines a lesson.
In the context of the raging epidemic in 2020 and the Fed's continuous printing of money, no investment = less money in hand, all kinds of mainstream financial assets have risen to varying degrees in the past year, but as a safe haven in everyone's mind The year-to-date increase of gold is only 23%, while the increase of Bitcoin has reached 275%. At the same time, the market value of Bitcoin exceeds 730 billion U.S. dollars, ranking among the top ten assets in the world.
As a result, many Wall Street giants who once bad-mouthed Bitcoin and believed that "all are bubbles" have "woke up" one after another, and their layout is more active than before. Analysts at JPMorgan Chase said that many funds such as family wealth management offices are selling their holdings. Some gold ETFs switched to investing in Bitcoin. In November, the fund reduced its holdings of 93 tons of gold, worth about 5 billion US dollars. Interestingly. The query found that Grayscale's bitcoin trust assets increased by nearly $4 billion during the same period.
Of course, not all professional institutions are so slow-witted, and smart money will always be deployed in advance. Whether it is an institutional investor or an ordinary investor, if they want to choose digital assets, they must hope to put their money in a platform that is safe and reliable, has a strong professional background, and is deeply involved in vertical industries and understands native encrypted financial products.
There are not many such institutions in this vertical industry, and Amber Group is one of the best.
Amber Group is a company that provides a variety of encrypted financial services around encrypted assets. The founding team comes from professional Wall Street investment banks such as Goldman Sachs and Morgan Stanley. The team has been engaged in encrypted asset business for more than five years and serves many large institutions and family funds around the world. , Internet tycoons, high-net-worth individuals, etc., the capital includes Pantera Capital, Paradigm, Polychain, Coinbase Ventures and other well-known funds in the industry.
This year, Amber Group also further polished its product matrix according to market demand, enriched its services and launched the Amber App, which integrates financial management, transaction, and wallet functions.
Standing at the end of 2020 and the beginning of 2021, Odaily had the honor to interview Michael Wu, the co-founder and CEO of Amber Group. He explained the reasons behind the rapid and steady growth of Amber Group's business in the ups and downs of the industry, and from a professional perspective The perspective makes a judgment on the industry development trend, potential opportunities, and investment opportunities in the next year and the future.
secondary title
How to maintain a competitive advantage in a volatile industry?
Starting from the founding team in 2017, Amber Group has now become a global encrypted finance with a team of nearly 200 people worldwide, providing a transaction volume of over 230 billion US dollars, an average monthly transaction volume of billions of dollars, and a management scale of over 300 million US dollars. Smart service providers, from the start-up AI algorithm into trading, to providing comprehensive services in asset management, trading, derivatives, lending, liquidity, etc., have gone through a complete cycle of the industry and have maintained competitiveness and product excellence. Iterative ability. This is very rare in the encryption industry where it is easy to start a business but difficult to maintain a business. How did Amber Group do it?
Interestingly, the predecessor of Amber Group originated from a part-time entrepreneurial project among a group of colleagues and friends. The six founders of Amber Group are all Chinese who studied in prestigious European and American universities. After graduation, they joined Wall Street investment banks such as Goldman Sachs and Morgan Stanley or financial technology companies such as Bloomberg.
At the end of 2014, they began to explore how to apply cutting-edge algorithms such as machine learning and neural networks to financial transactions, and then resigned at the end of 2017 to devote themselves to the encrypted financial business and established the Amber Group.
Around 2017, practitioners in the encryption industry were relatively weak in terms of professional background. Amber Group quickly gained a competitive advantage by providing professional trading services. The encryption market has been a fish in water for a long time, and many of them have left the industry actively or passively. Few of them can persist until today like Amber Group.
In this regard, Michael said that the encryption market is still very young, and many infrastructures have been built in the past two or three years. This industry has its own uniqueness. Compared with traditional finance, encrypted finance is a faster, more open and innovative environment. Therefore, although the professional background is one of the advantages, in the long run, it is necessary to adapt and learn the unique innovation mode of this industry.
The models of many traditional financial products cannot be completely copied to encrypted finance, because the encrypted market is inherently global, and at the same time, it is a special market 24 hours a day, 7 days a week. Even if it is to copy the traditional financial model, it needs to be innovated again. For example, Michael said that from futures to encrypted finance, various futures deliverable/undeliverable can be derived, and even some products like perpetual swap, options are also Same.
DeFi creates products and models native to encrypted finance from a technical level. It is highly composable, and the entire pricing logic behind it is not available in traditional finance. The low threshold, globality, and openness of DeFi make It has the opportunity to become an innovative model ahead of traditional finance in many ways.
Amber Group has been exploring cutting-edge trends. It has been involved in the DeFi ecosystem since 2018. It is the earliest service provider to dabble in option structured products and other derivatives. Compound found Amber Group when it was just launched, and Amber quickly became their partner. As a liquidity provider, Michael said: Amber Group’s team has always paid attention to the development of technology finance in this industry and original innovation. If traditional users want to participate in DeFi applications, Amber Group will also provide customized services while maintaining risk control.
When it comes to encrypted financial institutions, investors generally think of lending business first, and domestic miners have long-term borrowing needs. On the one hand, on the asset side, they will continuously mine new coins; on the other hand, on the debt side, they need to pay electricity bills, pay operating costs, purchase more mining machines, etc., and even invest through debt.
Michael said that the asset side is encrypted currency, and the liability side is fiat currency. This mismatch has led to miners’ business needs for digital currency-based lending. This demand must be constantly changing with the ups and downs of the market, because the nature of this demand It is leverage. And through mortgage lending, it is tantamount to adding another layer of leverage to aggravate this mismatch.
We all know that when the market conditions are relatively good, investors will increase leverage, when the market is relatively bearish and the market is relatively bleak, investors will deleverage, and even when the market plummets, there will be drastic deleveraging. . Therefore, the core of the lending business lies in risk control. Many people think that lending is a business with simple logic, but the core of really doing it well lies in risk control.
In fact, it is not only the lending business, but also the generality of the encryption business. In such a market with huge fluctuations and drastic changes in liquidity, whether the risk control can be done in a complete and timely manner is the basis for whether this business can be done well in the long run.
There are too many teams and businesses in this industry that are short-lived. Amber Group has always focused on long-term, stable and customer protection in business.
At the same time, because Amber Group's service groups span various countries and regions, Amber Group has been actively adapting to different regulations in various regions of the world, and cooperated with regulatory agencies of different styles. Last year and this year, it won the MSB of the United States and Canada respectively. Licenses are also being applied for licenses in Singapore, South Korea, and Hong Kong, China.
Michael told Odaily: We have understood from the beginning that Crypto itself is a global phenomenon that crosses borders from the beginning, which means that anyone anywhere in the world, as long as there is a network, can obtain encrypted financial services. What we mainly do this year is to implement strategic upgrades such as productization, platformization, and scale, so that Amber Group can meet the needs of a wider range of users as much as possible.
The shareholders of Amber Group include Paradigm, Pantera, Polychain, Coinbase and other top overseas Crypto Funds, Dragonfly and Fenbushi who focus on encrypted assets and blockchain investment in China, as well as VCs such as Plum Blossom Angel and Jieshi Investment, including the former chairman of the board of directors of Hong Kong Stock Exchange Ronald Arculli and other high-net-worth individuals, most of them are also customers of Amber Group. This also allows Amber Group to form its own stable customer network.
For example, Paradigm, the leading investor of Amber Group’s A-round financing and a well-known cryptocurrency fund in Silicon Valley, has been using Amber Group’s transaction execution services and derivatives services. Based on the recognition of Amber Group, they also continue to recommend their own portfolio company. , The executives of these companies have also become customers of Amber Group.
In addition to serving these global institutional clients, leading funds, project parties, traditional asset management outside the industry, multinational companies, etc., Amber Group has also reached business cooperation with many of them.
For example, Amber Group attaches great importance to the level of security and hosting. They have always been a deep partner with Fireblocks (a well-known encryption security company). In terms of asset management, Amber Group has always had business cooperation with shareholder Fenbushi, which is now gf.network. And as mentioned earlier, the Amber Group began to explore the DeFi field as early as 18 years ago, and has reached a lot of cooperation with Compound.
Michael also revealed that many other important partners cannot be named because of mutual confidentiality agreements, including some traditional asset management companies and giant multinational companies with a management scale of tens of billions of dollars. Amber Group often New business models will be explored according to their needs, and replicated and scaled, because many traditional institutions are now entering this emerging industry.
At the same time, through the mobile product Amber App launched this year, Amber Group is also expanding its customer base and bringing more convenient encrypted financial services to small and medium investors around the world.
Paul Veradittakit, another lead investor of Amber Group and a partner of Pantera Capital, one of the oldest cryptocurrency institutional funds in the United States, also told Odaily: Amber Group is in line with our investment philosophy because we are investing in the infrastructure of the cryptocurrency market. Invest, as cryptocurrencies become globalized and liquidity is fragmented across exchanges, Amber Group successfully simplifies trading and liquidity using its technology to provide a one-stop solution.
Paul also said: “We are still very early in the crypto market cycle. Many businesses are still figuring out scaling, liquidity acquisition, etc. We are about to enter the next phase, where user experience and developer tools will enable entrepreneurs to Build "killer" applications on decentralized technologies.
secondary title
Looking to the future of the crypto market: the potential is limitless
For the future of encrypted assets, Michael is full of confidence. He told Odaily that within a short period of one or two years, the allocation demand for encrypted assets has already been established, and this demand will inevitably become more vigorous. More and more institutions, high-net-worth individuals, family funds, etc. will definitely use encrypted assets as a Allocation of a variety of alternative assets into their portfolios. This brings great opportunities to encrypted assets and platforms that provide asset management services and related financial services around them.
In the medium and long term, the application scenarios of encrypted finance are very extensive, not limited to the current transactions, wealth management, lending and basic derivatives. Michael believes that first of all, it will sink to the payment level, and it will sink to the level of cross-border payment and trade financing combined with entities, and the boundaries of encrypted assets will continue to expand.
We have seen USD stablecoins such as USDC and Paxos being first implemented on the chain. In the past few days, Visa has also announced the news of USDC cooperation. Michael believes that more and more assets, even securities, will be traded in these forms. Circulation has been added to the ecology of encrypted finance.
In the long run, Michael even believes that the final encrypted financial ecology will be far ahead of the traditional financial ecology because it is more innovative. Therefore, Amber Group will adhere to this concept, deeply cultivate the industry, avoid speculation, and continuously enrich encrypted financial services with the goal of achieving long-term value, and continue to create value for users.
