E186: Variational CEO: This Hidden Fee Is Quietly Draining Your Crypto Account

Lucas Schuermann is the founder and CEO of Variational, a peer-to-peer derivatives protocol built on Arbitrum. Former Genesis executive, former quant, and someone who went to Columbia at 12 and started a hedge fund at 20.

Today we get into why variational charges zero trading fees, how it's aggregating liquidity from traditional finance to list hundreds of assets on chain, why perps have a funding rate problem most traders don't understand until it costs them, and what happens to old-school brokers once this liquidity actually moves.

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PARTNERS

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⚖️ Ethena is a synthetic dollar protocol on Ethereum, offering a crypto-native, non-bank-dependent stablecoin called USDe. It uses a delta-neutral hedging strategy with staked ETH to maintain a $1 peg. https://ethena.fi/

♾️ Coinsilium provides vital funding and expert advice to Web3 and AI-powered early-stage technology companies. https://www.coinsilium.com

🚀 Kalshi is a US regulated financial exchange that allows users to trade on the outcomes of real-world events : https://kalshi.com/category/crypto

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DISCLAIMER

The info contained herein is for informational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice. The content of this video is solely the opinions of the speakers who are not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speakers do not guarantee any particular outcome.

Timestamps

0:00 Intro

2:20 Merch, Travel & Being Back in Singapore

5:13 Who Is Lucas Sherman?

5:24 How Lucas Thinks About Building Trust

6:03 Starting College at Age 12

8:26 How Do You Actually Skip That Many Grades?

9:45 Making Friends Six Years Younger Than Everyone Else

10:40 Are You Still a "Weirdo" at 30?

11:40 Starting a Hedge Fund at 20 - "Hubris of the Young"

14:09 From Paper-Reading Group to a Real Fund

16:50 Acquired by Digital Currency Group at 21

18:59 Why Sell the Fund to DCG?

19:54 Sponsors: Variational & Bitwise

20:47 Did You Regret Selling That Early?

21:51 The Money DCG Made Off Their Work

22:38 Starting a Market Making Firm

24:46 Explain Variational Protocol to Your Mom

26:49 Biggest Mistake Building Variational

28:13 The "Holy Sh*t, We Built Something Massive" Moment

29:54 Reason #1: Zero Fees

32:59 How Do You Trust the Price With Only One Market Maker?

34:33 Are Trading Fees a Scam?

35:29 How Much Do Fees Actually Cost Traders?

36:33 Reason #2: Asset Selection & What "Liquidity" Really Means

40:20 Why Hasn't Crypto Solved This Already?

42:39 Where On-Chain Order Books Break at Scale

46:04 Sponsor: KAST

1:07:30 Sponsor: Jupiterexchange & Ethena