Digital asset quantitative investment firm Strix Leviathan, modeled after DE Shaw and Two Sigma, has hired Matthew McBrady, formerly of the US Treasury and BlackRock. McBrady will head up the company’s strategy, following a recent outside investment in the business, according to an announcement Tuesday.
“We’ve got some resources, we’ve expanded the team, and now we’ve got the bandwidth,” McBrady said. institutional investor. “We have more people to do more work, but now that means someone has to have more time to think about spending our researchers’ energy in the right places.”
McBrady, a professor at the University of Virginia, served as CIO at BlackRock’s multi-strategy hedge fund from 2014 to 2016, before stepping down from an expected political role.
The US Treasury graduate, who worked with the government during President Bill Clinton’s administration and hoped to do the same in Hillary Clinton’s administration, was surprised by Donald Trump’s election victory. He took some time to decide what his next step would be, and settled on teaching lessons and advising for asset owners and startups, including Strix Leviathan.
The Seattle-based investment manager currently manages a long-running digital asset-only strategy and a market-neutral fund that uses risk-balancing and liquidity-provisioning strategies, each of which uses the company’s research to invest for clients, which are essentially family offices at the moment. According to McBrady, the company plans to build more market-neutral strategies and target larger organizations.
But before these strategies could be implemented, Strix Leviathan had to build an infrastructure to run it. In the cryptocurrency markets, investors can either trade assets on exchanges like Coinbase or Binance, or discover a way to liquidate trades themselves, usually by dealing with a market maker. “Infrastructure is a real barrier to entry,” said Sadi Rani, founder and CEO of the company.
According to Raney, Strix Leviathan has built software that simplifies the trade clearing process, freeing up employees to focus on product research and development. McBrady likened the company’s business to the way some major hedge funds focus first on technology and computer science, and then on investment strategy.
“The easy explanation for the success of De Shaw and Two Sigma is that they were founded by computer scientists,” McBrady said. “They had better infrastructure. They had better data, and they could access it.”
While digital asset data is relatively accessible — after all, the nature of crypto markets is transparent — the depth of information collected by data providers is rather weak, according to McBrady.
Among other things, the Strix Leviathan team collects data on transactions per block, block size, pricing, and the number of layers that the Layer 1 coin has. While some of the coins the Strix Leviathan team analyzes are incredibly new, Rani said the team has developed a strategy To generate synthetic months of performance using random samples that can provide more information about how a particular currency behaves.
“There are two central providers of Layer 1 data,” McBrady said. “They have between two and six different nodes there to monitor this information.”
Nodes are used to keep track of the distributed ledger, which keeps track of crypto transactions. According to McBrady, Strix Leviathan currently has 24 nodes of monitoring data. The company will use this information to build trend-following strategies that will identify imbalances in supply and demand and then trade on them.
“This is just a data-rich world, and it’s all completely transparent,” McBrady said. “There is no such thing as proprietary data, except that it is really hard to get and understand.”
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