What TradFi Needs to Make the Multichain Future a Reality

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  • Pyth has large­ly grown its new clients organ­i­cal­ly through word-of-mouth
  • The ora­cle data and price-dis­cov­ery provider says it has yet to see much of an impact from the mar­ket downturn

Cryptocurrency’s mul­ti­chain future has a long ways to go in terms of pro­vid­ing con­sis­tent price dis­cov­ery across the mar­ket. This uneven land­scape is still rife with traders gaug­ing dis­crep­an­cies in val­u­a­tion between protocols. 

The cryp­to mar­ket needs a solu­tion where insti­tu­tion­al and retail traders alike can eas­i­ly port and trans­act across blockchains of all ilks. Dig­i­tal assets ora­cle provider Pyth, backed by the likes of Jump Cryp­to and Jane Street, has of late been increas­ing­ly gain­ing mar­ket share and lay­ing out its own blue­print for how to accom­plish just that.

The over­ar­ch­ing pic­ture, to an extent, has been com­pli­cat­ed by reg­u­la­to­ry uncer­tain­ty, espe­cial­ly in the US. But Pyth Direc­tor Mike Cahill told Block­works the one-year-old start­up, based on the Solana blockchain and its relat­ed pri­vate pro­to­col solu­tion, has been grow­ing organ­i­cal­ly by word-of-mouth — in what Cahill views as a telling indi­ca­tor of the impor­tance of trans­par­ent, even-hand­ed asset pric­ing across dig­i­tal assets.

And that’s per­haps even more true through the lin­ger­ing bear market. 

Block­works: Tell me about your busi­ness devel­op­ment. How’s that work?

Cahill: Yeah, so we basi­cal­ly have been real­ly lucky about get­ting a lot of ref­er­ences from word-of-mouth. So, I think, by hav­ing a real­ly strong core group — and this is what we kind of had envi­sioned — in terms of Jump to FTX to LMAX, Alame­da, [they] were like the ini­tial founders of the group.

And so, because you had such high cal­iber, there, it made it easy to con­vince oth­ers to join. And I think that’s been like the strat­e­gy from the tip. Full stop.

So, we can get into more of the growth on the sup­ply-side, but on the demand-side, Pyth was like, well, this would be a proof of con­cept. We’ll run it on Solana. There’s mar­ket struc­ture-type things that are impor­tant to be on the fastest blockchain — if you want to be the fastest in terms of blockchain scalability.

And, as soon as you’re not the fastest, you have the arbi­trage open, right? So, some­one comes in a lit­tle bit faster, every HFT [high-fre­quen­cy trad­er] under­stands. So, we had to be on the fastest one, and if some­body cre­at­ed a faster blockchain, we’d have to fig­ure out a way to be on that.

Block­works: What you’re doing is fair­ly com­pli­cat­ed, even by cryp­to stan­dards. And Solana, in some ways, makes it more so.

Say prospec­tive Trad­Fi clients under­stand macro. They know a bit about Bit­coin, a bit about Ethereum. How do you explain this con­cept to them, from a busi­ness-devel­op­ment per­spec­tive, with­out run­ning into lan­guage barriers?

Cahill: They under­stand that the space isn’t going away, and hav­ing some­body to guide them in — which is very de-risk from a rep­u­ta­tion­al per­spec­tive, because you’ve got these oth­er firms that are in — [gives them] their first step.

And, as you said, it’s not a triv­ial amount of tech­nol­o­gy work. Every one of these data providers is sub­mit­ting prices and updat­ing on-chain. They have to val­i­date, or they have to inter­act with gas fees and things like that. And, so, we most cer­tain­ly see this being a chal­lenge for a lot of peo­ple to get over. And, I’d say that a lot of the trad­ing part­ners that are involved don’t do much in cryp­to, this is the way they view [what needs to happen].

They don’t want to play leapfrog. So, let’s just put our flag in the ground and say we’re going to be join­ing this and see what it’s like, and we can ask the experts here — see how this gets done. 

And as a result, you’ve now learned some­thing. And, so, we get some­thing kind of intan­gi­ble out of it as well.

Block­works: How has the cur­rent mar­ket down­turn affect­ed your business?

Cahill: Yeah. So, I think the roadmap for Pyth is pret­ty well-defined. In terms of the prob­lems [we are try­ing to solve] that is pret­ty well-defined.

So, if you can get this real­ly high-qual­i­ty tool­ing out there, then no mat­ter what excites peo­ple to go build stuff, they’re still going to need that tool­ing at some point. So, I’d say the only way that it real­ly impacts some­thing like Pyth is that as Pyth goes to more and more chains, which I think we see to vary­ing lev­els of degrees of excitement. 

Are peo­ple want­i­ng to build decen­tral­ized appli­ca­tions [dapps] and use this as the main tool­ing pur­pose for pro­fes­sion­als? So, we haven’t seen a huge fall-off inter­est of builders. Are you still see­ing peo­ple migrate? It’s kind of fun­ny that the pric­ing doesn’t rep­re­sent this. 

Block­works: Can you elaborate?

Cahill: We want to go build stuff. And, so, yeah, we sort of ignore it. And I think that’s prob­a­bly the right way to be when you’re build­ing infra­struc­ture — you’re just sort of bet­ting that the whole ecosys­tem is going to grow.

This inter­view has been edit­ed for length and clarity.

Mike Cahill is the direc­tor of the Pyth Data Asso­ci­a­tion, the Swiss asso­ci­a­tion behind Pyth, a decen­tral­ized ora­cle solu­tion that ports finan­cial data across asset class­es on-chain. Based in Por­tu­gal, Cahill also serves as the head of Euro­pean busi­ness devel­op­ment for dig­i­tal assets at Jump Cryp­to, a Pyth data provider. Pri­or to join­ing Jump, Mike spent 13 years in for­eign exchange roles at Cboe FX, KCG, Nomu­ra and Mor­gan Stanley.


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  • Michael Bod­ley

    Man­ag­ing Editor

    Michael Bod­ley is a New York-based man­ag­ing edi­tor for Block­works, where he focus­es on the inter­sec­tion of Wall Street and dig­i­tal assets. He pre­vi­ous­ly worked for the insti­tu­tion­al investor newslet­ter Hedge Fund Alert. His work has been pub­lished in The Boston Globe, NBC News, The San Fran­cis­co Chron­i­cle and The Wash­ing­ton Post.

    Con­tact Michael via email at [email pro­tect­ed]

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