Franklyn Wang - Size Matters: Multiply your Liquidity - TOKEN2049 Singapore 2025

Hello everyone. My name is Franklin and I'm the CEO of Liquid. There's So I'm an American and there's something we like to do at American football games. Um it's and you know it's a little bit it's a little mid it's m it's the middle of the morning. I think it'd be exciting if we did a chant.

The way this works is that I will say a word and you can repeat it. I want to get everyone excited. Okay, let's get let's get started. I say I. You repeat after me.

Okay. I I believe I believe that we I believe that we will win. I believe that we will win. I believe that we will win. Okay.

Now that hopefully you guys are a bit awake, um I will introduce myself a bit. I used to be the chief AI scientist at two sigma which is a $60 billion hedge fund and now I am the founder and CEO of liquid. This talk is called size matters. It refers to you know an internal graphic we have is this green person pulling on a tugof-war against a pink person if you will. This is like the longs fighting against the shorts.

The longs pull and then you know you'd rather be the green guy than the pink guy. Another introduction to me. I was a really strong finisher in a lot of US math contests. I went to Harvard University and I was actually their top tough score on the platinum exam, which is the premier college math contest. And then I was the chief AI scientist at Two Sigma Compass.

So, there's actually a video I like to introduce myself with um of me when I was actually only 12.

Chances are you've never met any kid like this. If 25 to the x over Franklin

six

six is the correct answer is the value of the

Franklin

50

50 is the correct answer.

So now I want to go over the talk. So I will begin with a brief outline. The highle theme of this presentation is that to live a truly exceptional life you must bet very very big. Most advice I think suggests that people should diversify their portfolios. But I think to a lot of this audience that might not really apply.

So next I will talk about when it's a good idea to bet big and there are two general cases in which it makes sense to bet big. The first is that you really really feel confident about something. And the second case is that if you have your whole life ahead of you and it makes sense to bet big at the start so it doesn't pale in comparison to bets later on. Third, I will explain why there are so many crypto millionaires in the world using this lens of analysis. And lastly, I will tell you about the biggest bet that I ever made.

So many of you here probably hold portfolios for your investments, right? They might be 6040. So you hold some stocks and you hold some bonds or you hold some stocks and then you hold some stocks in a international country because you think it lets you mitigate like home country bias. you know, you hold some countries in other you hold some stocks in other countries so that if their stock goes down, you know, your portfolio doesn't crash with it. And you know, since this is a crypto conference, I hope that some of you also hold some coins, but maybe they're very diversified.

So, who who here I think run holds a 6040 portfolio? Please raise your hand. Cool. And now I'm here to tell you I think that this advice is usually wrong. And the reason is that these portfolios are really aiming for wealth preservation for people's retirement portfolios or people who have already made it.

But it's very very unlikely that someone will ever become rich by holding a portfolio like this. In a very simple way of explaining it, if you spread your bets around, it is very very hard for any of them to to go up 10x. It is very very hard to find even one investment that can go up 10x. If you spread your bets into five investments and then you know put some money into each of them equally in order for your portfolio to go up 10x you need to find five things that go up 10x which is very very hard. There's actually a quote here that I think really captures the sentiment well.

Diversification is for people that don't know what they're doing. investors are paid to know what they're doing. So, who here knows who said this? You know, could it be CZ? Could it be Jeff?

And it turns out it's actually none of them. This is a quote from a non-crypto investor called Thrive Capital. Thrive Capital is one of the most successful funds in the world. And very famously, they apply this strategy to the max, which is to put almost all of your money into one investment. And does everyone know what they invested in?

Open AI. They put almost all of their money into OpenAI and that has turned out spectacularly well for them. Now, let me walk through, you know, a slight example. So, say that you had five investments, right? And you knew that they would have some returns.

So, maybe one would have a 30% return, one would have a negative 27% return, one would have a 42% return, and so on. The traditional advice is to diversify. So maybe this ends with you putting like, you know, 20% of your portfolio into each investment. And this would give you a total return of about plus 41%. Which is pretty good.

But my feeling is that, you know, this is not a very fun way to live. You know, just by by putting some money into every single investment, it seems to indicate you don't really believe in any particular one who do especially well. As a very trivial example, if you instead put all of your money into the best idea, right? Say you put a 100% of your money into the one that goes up 90%, your total return will be 90%. And then if you use something like leverage, you say you put 300% of your money into a portfolio, then your total return becomes like 270%.

Now, you might listen to this and think, well, Franklin, uh, you know, it's really hard to know what's going to go up. Of course, if you know what's going to go up, you should put all of your money into something. But you might not. And I want to go through some historical examples of people who I think have put money into good investments and as a result have done quite well. So here's a story about a guy named Stanley Ducken Miller.

In 1989, he realized that the British pound was in somewhat of a weak situation, right? Britain had a lot of debt. There were a lot of problems. You know, it seemed like the British pound was likely to go down. So, being a very responsible investor, he decided to go short five billion British pounds.

But then he told this to his boss, George Soros. And then George Soros replied to him by saying, "Go for the jugular." In modern terms on crypto Twitter, he might have said something like, "Your size is not size." So instead, Stanley Ducken Miller would then short 10 billion of British pounds. And in one single day, he made $1 billion, permanently putting him into the upper echelon of investors.

And furthermore, by betting so large, he actually accelerated how fast it took the pound to collapse, which made the trade less risky. His boss, George Soros, then said something very fun to him, which was, "You call that bold? Why didn't you do more? There's also a his an example in pretty recent history. Uh some of you guys who use Twitter might be familiar with a guy named Leopold Ashen Brener.

So this guy was a 24year-old who somehow burst onto the scene and managed a $1 billion fund. You know, if he managed a $1 billion fund, maybe he'd be investing in a ton of different things. But instead, he put the entire fund into Intel call options. And once that happened, Intel went up and he made $2 billion. That might be enough to retire.

And you know, there's another question here just like, okay, well obviously if you know something that is going to go up, you should invest in it. But you know what? If I don't know what's going to go up, what if I don't have a particularly strong view on the economy or the portfolio? Then I shouldn't use leverage, right? I should just, you know, talk into the 60/40 like a turtle.

And as someone who shares the name with the aonomous turtle, Franklin the turtle, I know a thing or two about that. There's another reason why you might want to use leverage. And the actual reason is if you have a very very bright future and I think that by being at this talk, you guys have some likelihood of having a very good future. Right? You guys came all the way here.

This isn't the main stage. It's somewhat early in the morning. I feel very strongly in all of you. I think you will all have very bright futures. And I think the way it works then is to think about your portfolio as not what you have right now, but rather all the income you will ever make over your lifetime.

Say that you have 50 years of life ahead of you. And in each year, you will make about $200,000. Then your true size of your portfolio is actually $10 million, not whatever you have now. And so question is, if you are trading like you have $10 million, how do you then move the needle? Now, if you had $10 million, how much would you put in the stock market?

The answer is probably not $100,000. But say that you have only $100,000 right now and you want a million dollars of exposure to the stock market. The most natural way to do that is to use leverage. And there's another question which I think is interesting that this lens might help clarify. Why are there so many crypto millionaires?

You guys have probably noticed that you know there is a lot of wealth in crypto. And you might wonder how that came to be. Uh you know you don't hear about that many people who became millionaires off of gold. You hear about some people who became millionaires off of stock and you hear a small set about people who became millionaires off of bonds. And the reason for this can be thought of if you look at how much each of these assets moves on a daily basis.

Something like gold will move about 0.5% on a daily basis. The S&P will move about 1% on a daily basis. A randomly chosen stock will move about 2% on a daily basis. And you can go up the risk curve so that Bitcoin goes up like 3%, altcoins might change 6% a day.

And with perpetual futures, you can actually move as much as you want on a day. So, you know, 50% per day actually seems pretty reasonable. Crypto, in summary, lets you bet really, really big, right? If you put all of your money into gold, it won't move very much. If you put all of your money into crypto, it will move a lot.

Crypto, in summary, makes it really, really easy to bet big. And if you think you have skill, you should choose an arena where being right really, really counts for something because you can bet big. And that happens to be crypto. And that might be why you see a lot of people who are very very young who have actually done exceptionally well in crypto because crypto is literally made to let you vet really big. And there's maybe something I want to talk about on this regard on a more personal note.

every single person you know who have who has made it whether it was say George Soros whether it was Jeff Bezos or whether it was just a hyperlquid airdrop farmer they all had one thing in common they really really believed in something and they showed absolute conviction I think that this could be anyone it's just that when you find a very good opportunity it is important to really really size into it now the biggest bet of my life I ever made was actually starting liquid. I had a pretty good job before this, but I just saw that I thought crypto there was a real opportunity to move the entire world on chain, which I think was dramatically more efficient than what traditional finance could do. And that was why I started liquid. And in my view, the biggest bet of my life is starting liquid. In just a few months, I am very, very pleased with my team's progress.

We have created zero fee access to marketleading marketmaking strategies. We have made huge leverage on every single asset class. You can get a 100x leverage on the S&P, 40x leverage on Bitcoin, and so much more. And you can also transfer money with no fees and no gas. A lot of times at these presentations, people will say something like, "Oh, crypto is coming.

Crypto is coming." We have really, really built everything that I think we ever wanted. Thank you.