HodlBot Founder: Lack of Killer Apps Is the Biggest Hurdle to Crypto Mainstream Adoption

Before HodlBot, I spent a few years working in finance & consulting before moving to growth at a software company. I was a growth lead at a YC B2B SaaS startup for about two years before I left to pursue HodlBot full-time.

During my time in finance, I developed an interest in passive investing, ETFs, and indexing. Those experiences pushed me to build a passive portfolio management tool for cryptocurrency.

I was first introduced to cryptocurrency back in early 2010 by a brilliant academic named JP Vergne. He's one of the leading scholars on piracy & the economics of black markets. In his lectures, he would often bring up ideas on how blockchain was going to disrupt various industries. One time, he made the entire class do an exercise on open-source composition. 

The mission has always been to democratize investing for all people.

We started with cryptocurrency because the tools & products at the time were very primitive and underdeveloped. Also, to me, the ethos of cryptocurrency represents financial sovereignty and self-custody over your wealth.

Our headquarters is in Toronto. Our 3-person team all grew up or went to school around here. We spent our first year bootstrapping our company in Toronto. Toronto is a fantastic place because it's got a high concentration of tech companies and a large pool of tech talent. Plus, it’s so boring, the only thing you can do is work.

We crossed $100M in trading volume sometime this year.

We did this with $0 spent on marketing and a team of 3 people.

Most crypto trading bots tend to promise outrageous returns and then underdeliver. They try to beat the market and completely miss the mark.

Or they try to offer complex, non-user-friendly trading options that are only really suited for a handful of extremely sophisticated quantitative traders who don’t know how to code themselves. These people don’t mind spending full-time hours figuring out how to automate their strategies.

We think of ourselves as a portfolio management tool. We take simple, proven investing principles like portfolio diversification and rebalancing and apply them to the world of cryptocurrency.

We’re here to automate all the boring stuff that would otherwise take you way too much time to do manually.

The thing we do best is indexing the market. In equity markets, 80% of active money managers fail to beat the index. We believe that it is a similar case in crypto. With HodlBot, you can choose a pre-made index (top 10, 20, 30), or create your own. We handle everything else, like portfolio rebalancing automatically.

Finally, a word of caution: if trading bots are offering you something too good to be true, be wary. Think about whether it would make strategic sense for a trading bot with a winning strategy to share that with anybody else. Why not just raise money and keep the secret sauce to themselves?

1. Including futures in custom portfolios for hedging purposes and for active traders who want to bet against the market.
2. Simple rule-based trading configurations (e.g., switch portfolio A → B when X happens).

3. Smart order routing to capture lower fees.

The single biggest challenge for us has been learning how to cater across customer needs because the range between our customers’ backgrounds and personalities is astoundingly vast.

You’ve got older dads who are super meticulous, conventional, and super savvy with personal finance. They understand everything about passive investing and are super onboard with our existing features.

You’ve got extremely active traders who want to make trades every millisecond. (They probably closed five orders the last time they took a breath). If they’re not trading, they better be asleep or dead.

You’ve got privacy, security idealists who want everything about our platform to be open-source and decentralized at the same time.

You’ve got developers who are trying to ask you what your API rate limits are for various endpoints, so they can possibly leverage your API and run their code on top of HodlBot.

Because our philosophy has always been about democratizing investing for everybody. We care about inclusion and don’t want to shut out any groups of people. We’ve been careful about not letting a tiny vocal minority dilute the platform’s quality for a broad audience.

I like the Compound protocol. It's a protocol for money markets. You can lend crypto and earn interest. In traditional finance, financial institutions like banks and discount brokerages make a huge portion of their revenue by lending out deposits in bonds & money markets. I think there is an opportunity for cryptocurrency exchanges, who hold a bunch of idle capital, to do this as well.

I think the cryptocurrency market will be in a better place when we see correlations between coin prices go down.

 I wrote a piece that found that 70 percent of cryptocurrencies had a correlation coefficient of 0.87 or higher in 2018. If everything just moves up and down together, then we don’t have real individual cryptocurrency price discovery based on any concept of intrinsic value. It means we can’t weed out BS.

1. Regulatory hurdles. While the government can’t shut down a decentralized cryptocurrency per se, they can certainly block the flow of fiat on-ramps.
2. Lack of killer applications. Even if it’s not a mass-market product, I want to see more cryptocurrency applications used by a small group of dedicated people.

More coins need to die for the market to live. Removing risk and mortality from failure causes competition to stagnate. Raising the survivability of individuals can hurt the well-being of the system.

52 percent of dot-com companies founded since 1996 perished by 2004 because they had:

• A get-big-or-get-lost mentality.
• Extremely high burn rate.

Coins are not like dot-com companies. They are too hard to kill. Most failures have been tiny projects that failed to gain traction. Once big, they don’t seem to die (with an exception for obvious Ponzi scams) because:

• Projects that have raised a successful war chest of funding during the ICO mania have an insanely long runway. They can survive off their war chest for a long time.
• Mining offloads the operational cost of keeping the project running to others.
• There is no incentive for the original team to shut down. The founder(s) can simply walk away and keep the project going on its own, e.g., Dogecoin, Litecoin.
• Blockchain is resilient to death. It has redundancy, can fork, and only needs one node to survive.
• Cryptocurrencies have access to retail investors globally.
• It’s difficult for a large group of retail investors to come to a consensus and hold a project accountable to its goals.