Research Summary
Ciamac Moallemi, a professor at Columbia Business School and director of the Briger Family Digital Finance Lab, has joined Paradigm as a Research Advisor. Moallemi will focus on applied research in mechanism and market design, particularly in decentralized finance (DeFi). He brings a wealth of experience from his academic background and his work as a quantitative trader.
Key Takeaways
Moallemi’s Role at Paradigm
- Focus on DeFi: Moallemi will concentrate on applied research in mechanism and market design, with a particular emphasis on decentralized finance. His work will involve advising the next generation of crypto startups.
- Collaboration with Paradigm Team: Moallemi will work closely with Dan Robinson, Matt Huang, and the rest of the Paradigm investing and research teams.
Moallemi’s Background and Experience
- Academic and Professional Background: Moallemi has a background in engineering and applied mathematics, with a focus on dynamic programming and stochastic control. He has been a professor at Columbia Business School since 2007 and is the director of the Briger Family Digital Finance Lab.
- Experience in Quantitative Trading: Moallemi has experience as a quantitative trader, trading bonds and interest rate derivatives as a partner in a hedge fund while an MIT undergrad, and more recently developing stat arb strategies for trading stocks.
Moallemi’s Journey into Crypto
- Interest in Bitcoin: Moallemi’s journey into crypto started in 2016 when he began analyzing the economics of the Bitcoin transaction fee mechanism. His research resulted in one of the first economic analyses of Bitcoin.
- Focus on DeFi: Since DeFi summer, Moallemi has been interested in understanding the mechanisms for decentralized trading, particularly automated market makers such as Uniswap.
Moallemi’s Research on AMMs
- Research on AMM Mechanisms: Moallemi and his collaborators identified and quantified the main mechanism of adverse selection for AMM liquidity providers, loss-versus-rebalancing (LVR), and determined how it is affected by fees, block time, and volatility.
- Impact of LVR Paper: The LVR paper has captured the attention of practitioners and has become an important paradigm for AMM design, with many protocols proposed to mitigate the losses from LVR.
Moallemi’s Vision for Blockchain and Market Structure
- Potential for Innovation: Moallemi is excited about the potential for blockchains to enable significant innovation in market structure, compared to traditional financial markets.
- Role of Paradigm: Moallemi sees Paradigm as the ideal place to contribute to this revolution, given its research-driven approach, inventive culture, and focus on practical applications.
Actionable Insights
- Explore the Potential of DeFi: Moallemi’s focus on DeFi underscores the potential of this sector for innovation and growth. Stakeholders should explore opportunities in DeFi and understand the mechanisms for decentralized trading.
- Understand the Impact of AMM Mechanisms: Moallemi’s research on AMM mechanisms, particularly LVR, highlights the importance of understanding these mechanisms and their impact on liquidity providers. Stakeholders should consider the implications of these mechanisms for their strategies.
- Consider the Role of Blockchain in Market Structure: Moallemi’s vision for the potential of blockchains to innovate market structure suggests that stakeholders should consider how blockchain technology can be leveraged to drive innovation in their markets.
