Meet STS Digital

Armada is a Solana based product that brings institutional strategies on-chain for anyone to participate in. DeFi is complex and participation requires a lot of time to manage. We’re allowing everyone to access institutional grade management no matter their net worth.

Armada has partnered with STS Digital, who runs one of the largest digital asset options books. They are an experienced firm that helps provide liquidity for token projects and have been growing quickly.

To shed more light on how Armada’s managed strategies operate, we decided to hold a Q&A with the trader that manages many of the concentrated liquidity strategies.

I know you started out in tradFi. What kind of role were you in? How has that experience translated to help you with digital assets?

Yes, TradFi is where I learned to trade and where most of STS Digital has its roots. I ran FX and Commodity options books for 15 years in investment banks. Making the move from currencies into digital currencies is obviously a very natural one (trading two assets’ relative price against each other) but it took a little adjustment to move from the world of low volatility into crypto. I was routinely selling JPY vols at 6% so buying SOL straddles at 150% took some getting used to.

What first got you interested in digital assets?

In 2017 I was working on a large dealing floor of about 500 traders, each specialized in a very bespoke product that we offered. During two magical weeks at the peak of the 2017 bull run there was not a single person looking at their portfolios but instead focused on buying as much Cardano as they could. I remember the CEO of the Investment Bank walking around the floor trying to source XRP OTC deals from people. I was quickly orange-pilled and made the jump to the dark side full-time in 2019.

How has it been growing STS?

My partners Gideon and Maxime started building STS three years ago with a plan to rethink convexity in digital assets and improve the client experience. Liquidity in derivatives is woefully underserved and we specialize in assets that are further out on the risk curve. We have made huge inroads attracting clients, especially over the last year, that demand hedging, liquidity, treasury management, yield products and advisory services where they didn't previously exist.

Somewhat loaded question, but what excites you about working with Armada?

I’ve known the Armada boys for years and when the opportunity came up to work together again it was a no-brainer. Armada are some of the good guys who do things the right way, operate with the highest integrity, and build fast and efficiently. Trust is often overlooked in the decentralized and permissionless world but it remains a cornerstone to our trading and partnerships.

CLPs are complex and most LPs end up losing money. So, how do you combat impermanent loss?

Three years on from DeFi summer and the market still struggles to understand LP positions. We are unique at STS in that we use pools like this to manage our principal risk and it has been a natural step to expand this part of our business out to others who want to participate. Our competitive advantage comes from how we think about, and how we price, convexity. CLPs are essentially an option and with proper risk management, an extremely effective tool. One of the last true alphas in all markets is selling insurance (or variance harvesting) and our strategies set out to do exactly that.

What are you most excited about in the world of digital assets right now?

I would have to say the growth in DeFi. A number of protocols are finally finding Product Market Fit as TVL explodes while rug rates/hacks have been on the decline. Crypto has always pushed the limits of financial engineering and this cycle is proving that on-chain trading can outshine centralized venues with a better UI/UX and equivalent liquidity.