Compiled & Edited by: Shenchao TechFlow
Guest: Jez (former TradFi quant, Millennium and Morgan Stanley background; a trader who has been liquidated multiple times and come back, now co-builder of onchain derivatives protocol PaperTrade)
Host: Taiki Maeda (@thehumblefarmer)
Podcast source: Taiki Maeda YouTube channel
Original title: How to Make it in Crypto (without getting lucky) - Jez
Air date: 2026-10-09
Key Takeaways
Be cautious with derivatives: World-class market-making experience told him that even if you get the direction right, 8x leverage turns into negative expectancy under random volatility; for most people, holding spot is far better than adding leverage.
Concentration beats diversification: Small accounts can only grow large by going all-in on one or two coins with high conviction; diversification is for protecting an account, not for making money.
From 100K to 1M: Don't rush to quit your job; treat your salary as a risk-free rate farm; save your bullets and only take the shot with the highest conviction.
New coins good, old coins bad: Price does not equal value; the key is future cash flow and marginal buying pressure; old coins carry a bunch of trapped holders waiting to sell at breakeven, so they are naturally under pressure.
Find your circle: A private group chat of extremely sharp players is a leading indicator earlier than price, and can correct you before the market teaches you.
Own the house: The speculative wave is irreversible; rather than telling people not to gamble, it is better to own the house; the perps sector as a whole will still rise many times more.
The underlying logic of long-term speculation: When real returns are compressed and traditional paths of upward mobility disappear, young people can only get ahead through speculation; this is a structural force and will not change through persuasion.
Comeback relies on high-conviction spot + leaving to reset: In 2023, going all-in on Pepe turned things around; after liquidation, he flew to Chengdu to watch the League of Legends World Championship to force an untilt; compounding is the biggest cost destroyed by "burning the boats."
II. Highlights
"Should people be allowed to trade derivatives? Probably not. If everyone only traded spot, the world would be much better."
"I have seen more traders die not from bad trades, but from bad jobs and bad builds, things that took too long and ultimately did not work out, which are more fatal than a bad trade."
"Why use capital to bet on the second-best idea? You often lose big precisely because you spread the same money across a marginal idea."
"Price does not equal value. Whether something is expensive or not does not matter; what matters is whether anyone will still buy it. Future cash flow determines future price."
"Find your circle. And look for people who do not yet have a circle either, so that you are building a home for them."
"This perps market as a whole will still rise 10x, so how much share you have in this market does not matter at all, as long as the pie gets bigger."
III. Main Text
1. Should you touch derivatives (first, don't lose all your money)
Host: Let's start with an appetizer question: should ordinary people trade derivatives at all?
Jez: Probably not. If everyone only traded spot, the world would be much better. There is a very interesting study: even if you get the direction right and the asset rises within an hour, as long as you use 8x leverage, your trade expectancy becomes negative because of random volatility. So the problem is not direction, it is variance. The most poisonous thing about leverage is that once you drag that slider, you cannot stop. I have never seen myself open a position and end up with a smaller position than at the start; it always gets bigger and bigger. Add the hard line of going to zero, and once variance expands, the person is gone.
Host: But you cannot stop that urge to speculate.
Jez: Right, one big problem with Crypto is that our capital base gets wiped out every time it drops 5%, when simply holding spot and compounding could have rolled to infinity. People will push risk; this is what Uber's chart says. External market forces are too strong to stop. So all I can do is guide people into better products: compared with options, I have seen more success stories of people making comebacks through perps; perps are friendlier to people than options. Put simply, if you cannot open a casino, then own the house, own the house.
2. Concentrated positions or diversification (how to really grow an account)
Host: You have repeatedly grown small accounts, relying on going all-in on one or two coins, which is completely opposite to the traditional advice to diversify risk.
Jez: To grow a small account, concentration and high conviction are the only way. I had a friend in Discord post a pie chart of his holdings, diversified so much that you could not even see the gaps. In the end, he himself said that most of the returns actually came from that one or two coins. Diversification is for protecting an account, not for making money. True high conviction is when you understand it far better than the market, and a 20% drawdown does not panic you, because you know the market is wrong and your investment thesis needs 6 to 9 months to play out.
Host: How do such opportunities come about?
Jez: It should come to you on its own, not be forced by you. My judgment on perps back then took about 6 years to be realized. The most typical example is Lighter: I was their advisor and spent countless hours with the team, so even when the coin fell from $3 to below $1, I kept buying all the way. Market sentiment was panicking, but my conviction was higher than it, because zero-fee retail trading, plus that long-ignored group of decentralization maximalists, makes Lighter the best example of the complexity and hardness that can be built on Ethereum. The best opportunities are often hidden in assets that are mispriced because investors are confused.
3. From 100K to 1M: advice for ordinary people (the most practical path)
Host: Suppose someone in your audience has 100K and wants to turn it into 1M or even 10M. What would you say?
Jez: First, something unpleasant: until Treasuries alone can earn you your salary, do not quit your job. Having a job is an excellent risk-free rate farm, giving you time to refine a high-conviction thesis. Then it is about saving bullets. I learned the concept of VPIP from playing poker: do not fire randomly in marginal spots. You can ask yourself one question: if you could only make this one trade this year, would you choose it? If the answer is no, then it is a bullet that should be saved.
Host: What about from 1M to 10M?
Jez: At that stage, you hit the limits of liquidity and position size. When I was at $1M to $2M, I went all-in on ROBIT. If that trade had not worked, I would have been worse than an LP and could not have exited cleanly at all. So at this size, the marginal gains in quality of life diminish, and it is more reasonable to slow down a bit and diversify positions moderately, unless your edge is absurdly high. Essentially it is the Kelly criterion: however big your edge is, that is how big your position should be.
Host: Isn't social media making people more anxious?
Jez: It is so toxic. Every day you log in and the screen is full of "buy this, that one is pumping," and you easily open your computer to copy trades. Over time, you get sliced into minced meat by your own impulses. Look at Evan SS6, one of the top investors this cycle. He ran out of ammunition long ago, does not take marginal opportunities, and just sits firmly in his high conviction, so there is not much to talk about day to day, because the investment thesis is the same as yesterday. Poker taught me the same thing: abandon VPIP in marginal spots, punch fast, punch hard with heavy blows, bluff cheaply when you have no hand, and bet big when you have one.
Host: From trader to Builder, is that transition smooth?
Jez: I have seen more traders die not from bad trades, but from bad jobs and bad projects, things that took too long and ultimately did not work out, which are more fatal than a bad trade. You go from being someone who can focus at any time on any corner of the market to someone contractually locked into doing only a small piece, possibly stuck in dead ground for a year or two. But with Paper Trade I do not feel that way. I am no longer very active in trading and have shifted to a long-term perspective, talking with Claude and Codex all day, and instead have moved away from dex screener. I would not trade this experience for anything, not even for an hour.
4. New coins good, old coins bad: a cash flow perspective (what to buy)
Host: Many people say Hyperliquid is already at $94, too expensive. How do you respond?Jez: You're missing the forest for the trees. Whether the price is expensive or not doesn't matter at all. What matters is whether anyone will still buy it. Future cash flows will change the future price; it has nothing to do with the current price. New coins have almost no disillusioned holders, while old coins carry a pile of trapped supply. These people will sell once they break even, creating continuous selling pressure. The marginal buying in new coins is cleaner, and its thesis hasn't finished playing out yet. Even if it doubles in a day, you may not necessarily be in a hurry to sell; old coins are the opposite. That batch of disappointed holders is always there waiting to exit once they get back to even.
Host: So is Hyperliquid at $94 expensive or not?
Jez: My perps model is that this sector still has enormous room. They are now purely growth businesses. I don't care at all what the revenue multiple is. By the time perps get so big that options are almost being eaten alive and people start writing "options are dead," that's when I'll consider taking profits. By then, just own the whole basket.
5. Find your circle (information advantage)
Host: You repeatedly emphasize finding your circle. Why is this more important than scrolling Twitter?
Jez: A private group chat of extremely sharp players is a leading indicator earlier than price. From 2017 to 2021 I was in a Discord all the time, and sometimes I doubted whether I was wasting time chatting nonsense. It turned out that one anonymous guy in there was actually the founder of some project. His funding round was led by Standard Crypto. The investor asked if there was anyone reliable, and he directly nominated my Discord account, saying, "This guy occasionally says some pretty smart things." And just like that, I later joined Standard Crypto. So you don't need to wait until you're professional enough to invest together before finding a circle. You should find one now. This is far more important than scrolling Twitter or dex screener.
Host: How are you operating now with Will Price and the Blur trio?
Jez: Calling it a fund is flattering. It's just three people in a group. Will Price is the most effective and strongest angel I've ever seen. His impact on Lighter has been huge; Blur is simply the god of onchain. The three of us have complementary skills. We each write personal checks, but we present ourselves as a group, and the results have been absurdly good. And even before I entered Crypto, when I was a quant at Millennium, I was already hanging around degen Discords. At the time, because Milken was blocking my Crypto stuff, I was thinking, "Why leave free money on the table?" So I went to talk to Hudson River Trading and Jane Street.
Host: So how do you choose a circle?
Jez: Go find people who also don't have a circle yet. That way you're building a "home" for them. If the other person already has a circle, it's hard for you to provide enough value to be added, and he won't spend time in your group either. Also, for people who do retweet giveaways and ask for money right away, I won't give them even an hour.
6. Risk management and comebacks
Host: You've blown up several times in the past. How did you come back from that?
Jez: The biggest lesson is risk management, and also emotional management. My method for coming back was never to go into the trenches and chase pumps and dumps every day. It was to turn off the computer, settle down, and spend 16 hours a day researching what the market was truly missing. After a loss, first give yourself two or three days to hide under the covers, then get back up. I'm calmest and most satisfied in high-conviction spot positions, because I don't have to think. I know I'm right and others haven't caught on yet. I just sit and wait. And that kind of money doesn't give a dopamine rush, because you already know the outcome.
Host: But you say blowing up and coming back has a bit of a heroic flavor?
Jez: I admit it. Fighting with your back to the wall is indeed romantic. It requires forcing yourself to trust yourself. It's thrilling. I don't want to trade that situation for anything. But compounding gets badly hurt by it: if I had steadily compounded back then, instead of repeatedly blowing up and coming back, I'd be in a much higher position now. That "slower person who is still compounding at 30" actually outperforms on a long-term average compared with the version of me who became a long-term speculator at 20. There's a saying in Market Wizards: "Everyone gets what they want from the market." Sometimes I wonder whether subconsciously I wanted to lose first and then earn it back. But the more practical answer is: after getting lucky so many times, you attribute it to "putting yourself in a position to catch luck, and then maximizing the edge."
7. Long degeneracy: the structural root of speculation (understand the casino you're in)
Host: What exactly is your long degeneracy thesis saying?
Jez: The core is one sentence: when real returns get compressed, risk-taking rises. The most typical example is the traditional path: go to college, get a good job, get married, buy a house. In many cities, that no longer exists. When I was 22, I did the math with my girlfriend at the time. The savings in my account weren't even enough for a down payment on an apartment in New York, but if it went 10x, maybe it would be. Once the path disappears, people start taking big risks. Crypto's product-market fit, plainly put, is speculation, selling a dream.
Host: You also admit this is Crypto's PMF?
Jez: Yes, speculation, selling dreams. That's the real reason most people enter. I have one observation that is especially reliable: many people enter because they see someone they think "I'm smarter than him" making money, and they think, "If you can do it, I can do it too." FOMO is a variant of this. So long degeneracy is not a slogan telling people not to gamble. It's a judgment about the world: this wave of speculation is irreversible.
Host: So were your own blowups caused by long degeneracy?
Jez: Actually, no. I attribute most of my blowups to greed, poor risk management, and getting too emotional, not to the long degeneracy judgment itself. Long degeneracy is a thesis you can use to position yourself, not an excuse to go all in and gamble.
8. Paper Trade: from trader to builder
Host: Why did Paper Trade choose to launch on October 10?
Jez: Because that day happened to be the one-year anniversary of my blowup last year. On October 10 last year, I was in Hong Kong. Bitcoin had just hit an all-time high. I was euphoric. I woke up to find my positions had been washed out more than I thought. But two years earlier I had set a hard rule for myself: no positions while traveling. On 1010 I only lost 2% of the portfolio, completely acceptable. What really put me on alert was a month later, when Bitcoin fell below $100k. I went long around $103k and lost a bit more than on 1010. I realized my position was too heavy, so I did something I'm now quite proud of: I called my friend Anthony. At the time there were still two days until the League of Legends World Championship final. I asked him to help us get two tickets to Chengdu. I wanted to create a 36-hour coma for myself to force a calm reset.
Host: Tell us the story behind Paper Trade?
Jez: At the end of 2022 we discovered ROBIT, that 1,000x zero-slippage perps thing. It was absurd. I became a large token holder and investor in it. But later I banned myself from ROBIT because of high leverage, because opening a few thousand dollars of Bitcoin at 200x means a 0.5% drop is enough to hurt you, yet it can lever up an enormous notional position. Back then I told everyone how great 1,000x zero-slippage click trading was. Only Avantis really listened and used it to generate massive volume. Later we wrote the Martin Gayler whitepaper (renamed Tunichra when we saved it, because the whole thing quoted him). The core idea was to cold-start an LP from zero using users' aggregate losses: the first user comes in and wins, and the protocol owes him a debt, but as long as everyone believes the casino will pay later and players will keep playing, it can survive temporary insolvency.
Host: So how did Hyperliquid's precompiles help?Jez: The key breakthrough is the precompile on the Hyperliquid testnet, which lets you read Hyperliquid's BBO order book price for free and without gas every 1 second. It's essentially a reliable on-chain oracle, and it itself is an extremely deep market. To manipulate it, you'd first have to slam eight figures into the order book and then pull it out, which makes the cost extremely high. On top of that, AI also built the front end, so right now it's just me and Blur, two people, no team needed. As for that asymmetric fee: at 1000x leverage, a 5 basis point taker fee is 50% of your collateral. You'd liquidate yourself just opening and closing, so you can only quietly skim from the winners. The curve is steepest at the very bottom, specifically to prevent attacks. Once price moves 1%, it quickly flattens to preserve 90% of your profit, and at the tail the protocol takes 10%. For traders, that's a good deal. You can even open a delta-neutral long/short, close the losing side, and farm tokens, while the LP still gets healthier.
9. Those Comebacks and Blowups
Host: What are the trades you remember most?
Jez: The worst one was in 2017 when I sold my entire Amazon position to swap into an altcoin. For a long time it was my worst trade. The real successes were mostly bets on exchanges: Uniswap, GMX, ROBIT, HYPE, DIYX, Lighter, variational. The pattern is too obvious. Watching charts and scalping has evolved way too fast over the years, and for most people it's not a good game. Your opponents want to kill you more than they do elsewhere. The one that really brought me back was Pepe in 2023: I had just gotten liquidated from a high-leverage ETH short, and Blur and I were holed up in London. When Pepe came out, its market cap was only $30 to $40 million. I went all in with everything I had left. My friends all called me an idiot, and that's how I came back, which also kicked off that memecoin run. There's an even crazier one: someone in an OG Discord posted their own coin called Ben. I got into the pre-sale and immediately lost 95%, so I closed the chart and couldn't be bothered. Then two days later Bit Boy (real name Ben Armstrong) found the coin and said, "My name is Ben, and this coin is also called Ben," and it immediately CTO'd (community takeover). By the time I woke up, it had already come back, and I took profit into it. So Ben's edge is that his name is Ben.
10. From TF2 Hats to Wall Street: Jez's Trading DNA
Host: A lot of people think you're just a lucky DJ. Can you talk about how you got into trading?
Jez: That's true, I really was lucky. But my trading origin is pretty lame. In high school I played TF2 competitively, and when the game introduced hats as items, I went straight from playing scrims to flipping hats all day. And I had to clear my inventory the same day, never hold overnight, making the spread on buys and sells. In that moment I realized I liked trading and I liked math, so I should become a professional trader. Later I got into high-frequency options market making, and I also market made for some of the earliest Wall Street Bets crowd. That was still 2015 to 2019, before GME and AMC became meme stocks. Those tech and finance guys were betting on short-dated options and wanting high-delta leverage. I understood that psychology way too well.
Host: Is that competitiveness in you innate?
Jez: Maybe it really is. I'm half Korean, and in Korea there's a tradition where when a child turns one (two by Korean age), they dress them in emperor's clothes and sit them down with snacks and toys spread across the table, and let them crawl over and choose. Apparently when I crawled out, I grabbed a U.S. dollar bill. So money has had a hold on me since I was little. I'm the kind of person who's bad at free-for-all games. Too many opponents makes me panic instead. Team one-on-one is what gets me excited, because the goal is clear: beat that one person. I later realized that what I enjoy most isn't making money, it's "I was right, and more right than everyone else, so right that no one could be more right than me."