Lucas Schuermann – Swapping Out Perpetual Futures (S7E34)

My guest in this episode is Lucas Schuermann, co-founder of Variational, which seeks to bring the trillion-dollar OTC derivatives market on chain.

This is my second episode on Variational. A little over a year ago I spoke with Lucas's co-founder, Edward Yu. In that time, the mission hasn't changed, but a lot else has.

We begin with a re-introduction to the business and its retail-facing platform, Omni. Unlike a central limit order book, where a crowd of competing market makers quote against unknown flow, every trade on Omni is quoted by a single, internal liquidity provider — OLP — through a request-for-quote model that segregates flow. Because OLP knows who it's trading with, it can price retail flow as non-toxic: netting offsetting positions against each other, warehousing what it chooses to keep, and hedging only the residual risk externally. It's a model that let Variational list a long tail of crypto-native assets at competitive spreads, even where on-platform open interest remained thin.

The surge in demand for real-world asset exposure on chain has pushed that model in two directions.

The first is widening where those hedges can go. Rather than trying to rebuild forty years of traditional market depth on a crypto order book, Variational has built a global network of dealer relationships to tap into it directly.

The second is questioning whether the perpetual future is even the right instrument. Perp funding is driven by where the contract trades relative to its index, which makes it volatile and hard to forecast. Variational's answer is a swap: a price-return leg plus an explicit financing leg, priced off short rates — a far more predictable cost of carry for anyone who wants to hold levered exposure for the long haul. And there's currently over a billion dollars of dealer capacity behind it.

I hope you enjoy my conversation with Lucas Schuermann.