Exploring Ladder Finance's Approach to Decentralized Asset Management with the Head of BizDev

Ladder Finance presents an approach focused on secure and transparent asset management. We spoke with Jimmy, the Head of Business Development at Ladder Finance, to understand how the company navigates the complexities of decentralized asset management. 

In this interview, Jimmy discusses the company’s methods for safeguarding assets, their investment strategies, and the role of zkSync in their platform’s development. The conversation also touches on Ladder Finance's future plans and the potential benefits for users, providing an informed perspective on how the company operates within the decentralized finance landscape.

Questions For Jimmy, the Head of BizDev in Ladder Finance:

1. Hello, Jimmy, and thank you for talking with us! Can you please introduce yourself and describe the role you play at Ladder Finance? 

Hello, I'm Jimmy from Ladder Finance. I started my first IT role at Apple. I'm the head of business development for the Ladder Finance team. In the past, I've also worked in the crypto space as an investor in an accelerating company and VC.

2. What struck me about Ladder Finance was seemingly a do-one-thing-and-do-it-well approach. Would you agree? What is the thing that you hope to provide?

I think you're half right. Finance is complex. It's about marketing and proper profit sharing and being able to create something more than just trading options.

We understand that it's difficult to do something at the optimal market timing and it's our job to provide services to help you grow your wealth a little more safely than the hard way. We're going to provide several services to help us be a pioneer in the field of decentralized asset management (DEAM).

3. Suppose a user deposits assets into your contract. What happens with those assets? Is there a degree of transparency for the users?

The assets are sent to the custody company, and we receive the wrapped Ethereum, and the contract allows that wrapped Ethereum actually to float in the market. We want to try to increase security through contract security and custody company, and we're working on that right now. Our goal is to be just an operator.

4. Let's talk more about the investment strategies. Can you let us in on which strategy has been the most profitable so far?

This probably depends on when you ask the question. In 2022, arbitrage between exchanges showed the best returns. In 2023, a lot of profit was made from Naked-Calls through traders, of course, this was lucky.

As of 2024, the most effective strategy is a synthetic strategy, which is to predict the covered calls and VOLs monthly and build a hedge position with a long strategy in between. This is a good strategy, especially when the market is unstable, and this is one of the areas where Ladder Finance is most confident.

5. Options, quantitative trading, arbitrage, etc. These might sound a bit scary to newcomers. Can I use Ladder Finance without understanding the strategies?

Sure. Our service is initially just custody of assets, but later, as we become an updater, we will also try to turn this into a little game. For example, predicting price ranges like Predict.

This is a short-straddle strategy, but I think it's one of the ways to approach it in a friendly way. Of course, this is specific to options strategies. Quants and arbitrage still have a harder time being approachable to the masses. However, in the case of quantitative strategies, we can modify our strategies by voting through the DAO, so we're thinking about enabling that as well.

6. Some of your strategies involve manual intervention by a professional trader. Who are these traders and how do you manage potential trust concerns? 

The traders of Ladder Finance are an options team that has been working at a licensed asset management company for over a decade. They are strong in traditional financial markets, but have been dipping their toes into crypto since 2021 and have had some success in bridging the gap between traditional and crypto markets and localizing many traditional things in crypto.

On the trust issue, they use specific assets that are wrapped through a custody company, so the chances of their funds being stolen are significantly lower. We also want to address the reliability issue by spreading the risk by outsourcing some of the assets to external trading teams other than our own trading team.

7. How much profit can I make with Ladder Finance? Why not choose one of the many available trading bots instead?

We choose a return that is slightly higher than the return of the market index. This follows the most basic rule of trading: make a lot when you win and lose a little when you lose.

We aim for returns that are about 30-40% higher than the market's overall index. This is one of the highest of any DEAM on the market that utilizes your money.

Other trading firms are good enough, but a lot of them went out of business in 2022 and 2023. Note that Ladder Finance has survived since opening in 2021.

8. Could you describe the process of depositing and withdrawing assets on and off the platform? Can users withdraw their profits permissionlessly?

Emergency withdrawals are not currently available. If you have assets allocated to a strategy and are in a weekly option, you can withdraw them starting on Friday, when the option ends.

9. You have chosen ZkSync as your network of choice. Why is that? What advantages does it provide to the platform?

zkSync is not currently in 2.0, so its anonymity is not as good as other mainnets. But we're looking at the future. What zkSync is trying to accomplish is to send transactions without exposing the details to other parties. This is exactly what we want for DEAM as exposing our positions on-chain could pose a threat - simply too good an opportunity for other hunters. 

We are working on zkSync as our main project because we believe that once zkSync's anonymity update is complete, we will be one step away from this threat and will be able to trade safely.

10. What upcoming features or services can users expect from Ladder Finance in the near future?

Build your own customizable strategies, Support for trading bots, Emergency withdrawals, Join the Eigen Layer DA to build a stable Stake APR, and more.

The Bottom Line

We thank Jimmy for this excourse inside Ladder Finance. I believe that we have learned something about how decentralized asset management works or that there even exists such a service. This kind of active management is quite common in traditional finance, but not so in DeFi, however, given that Ladder Finance has operated since 2021 it seems like a viable model for many users.

If you are a DeFi-curious person wanting to capitalize on this industry but don't want to burden yourself with learning all the details, DEAM might be just the right service for you to secure some gains. You can check out Ladder Finance on their website, X, and Discord. Also, remember that crypto is about sovereignty and personal control, which is best facilitated through asset ownership and permissionless, secure transacting.