Lucas Schuermann – Swapping Out Perpetual Futures (S7E34)
Summary
Lucas Sherman, co-founder of Variational, explains how their retail platform, Omni, uses a request-for-quote model to aggregate liquidity and offer zero-fee trading with tighter spreads than traditional order books. He details the strategic shift from hedging Real World Asset perps on crypto venues to directly accessing traditional finance dealer networks, bypassing the need to rebuild decades of market depth on-chain. The discussion also covers the transition to swap instruments, which provide more predictable financing costs compared to volatile perpetual futures, and addresses how Variat…
Topics discussed
Introduction and Return Stacking Symposium announcement
Guest intro: Lucas Sherman and Variational's mission
Why Variational uses swaps instead of perpetual futures
Reintroduction of the platform and target audience
Economy of scale and execution quality vs. order books
Flow segmentation: Retail vs. toxic HFT flow
Hedging challenges and the 'dream scenario' for Variational
API roadmap and managing toxic flow at scale
RWA perps explosion and the liquidity gap in crypto
Bridging the gap: Direct TradFi dealer connectivity
24/7 trading advantages and structural barriers
Phase 1 to Phase 2: Market share and product evolution
Challenges with perp funding rates and fungibility
Designing funding mechanisms for broker-like models
Instrument-specific design: Equities vs. Commodities
The case for swaps: Simplicity for retail traders
Swap mechanics: Fixed carry vs. variable funding
Education, 24/7 access, and execution quality of swaps
Carry leg evolution and asset-specific spreads
Comparing retail vs. institutional financing rates
$1B open interest capacity and global expansion
Binding constraints: Dealer capacity and regulation
Institutional value proposition and future products
Closing: Personal interests and robotics background
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