Propr: Building a Crypto Prop Trading Firm

0:00 Well, welcome back to another episode of the finality podcast. And today we had the pleasure of talking to Louis from Propr and he was one of the early traders on Hyperliquid. He did a lot of purpose trading early on in the 2021 2022 crypto era and he went on to create and and run to this day some of one of the largest prop trading firms in crypto.

0:30 One of the largest cryptofocused prop trading firms. I think you said it was number two outside of the one that was acquired by Kraken. And so we get to hear all about what it's like actually scaling a prop trading firm and what some of the unit economics look like and some of the things that you actually try to optimize and some of the problems you run into if you scale too fast and things like this.

0:52 And also we got some pretty interesting insights into how AI and agents are actually affecting trading in a real way and how they can actually be used and how the best traders actually use AI today to help them understand risk and find positions and all of the good stuff on that front. but of course before we jump into the episode here today with Louis, I'm the co-founder here at Guardian.

1:20 We have been doing digital asset security for a little over half a decade at this point and we are really here to secure the future of the digital asset industry and all of finance that's able to come on chain and our vision is to empower those innovators to redefine the way that money information and assets move around the world and we are excited because it appears as if that is happening in real time.

1:47 But without further ado, let us get into this episode with Louis from Propr. But yeah, I mean honestly I love to just start off with a lot of folks just getting to know like what's your background? How do you find your way into crypto and and crypto adjacent trading like how'd you get in?

2:07 Yeah. so to me it was first like finance. so I was interested in like I guess just money understand a bit more about how the world works and then so I was looking at like what's a jacent between money and tech so I was

2:25 Basically studied financial engineering then was a qu at kis and then at this time it was like 2020 2021 and you know at the time I was like 23 or so 22

2:38 So I I think got exposed to crypto a lot more than than cuz I I got my first exposure to crypto in 2016 but I basically had no money. So I was like I was trying to like understand how can I invest and then just crypto came in the way and then I got really involved in in in crypto was contributing to some protocol like MakerDAO little known protocol.

3:05 Yeah. some more exotic stuff like CityDAO. it was like building cities on chain like vital was backing the stuff but it was like peak 2021 euphoria

3:19 And I was doing a bit of qu stuff in crypto that was mainly arbitrage between pretty liquid assets. So, I was pretty deep in the trenches on like coin chain and was doing ARB stuff, but that was just I guess the the good DeFi days or just 2021 bull run. And then yeah, got got more into trading through per.

3:42 Mhm.

3:43 Where I yeah, just really like the way to express an idea and have direct feedback from the markets on on on whether you're right or not. And then I think performed pretty well pretty well in 2024 2025 and I mean ever since I've I've touched per and then I like to build stuff. So I thought how can I leverage the strength on the trading sty trading world into you know a proper like a proper company.

4:15 And then looked at how fast real world assets were growing, how fast Hyperliquid was growing. and then looked at an industry that to me was in complete shambble which is the prop firm industry

4:28 Which just lacks complete transparency. And I thought there is room for growth for [clears throat] an actor that's based on chain that's transparent. and that's at the complete opposite of what prop trading is today.

4:43 Yeah. And what was the first per venue that you started trading on back in 2021 2022? What was around then that you were using?

4:53 Yeah, that was Bits. and then yeah, use Hyperliquid in like early, it was May 2023.

5:03 Okay.

5:04 Moreo as a I would say DeFi experiments. I had a group chat with a

5:08 A guy dropped the link to Hyperliquid. The UI was complete trash at the time.

5:12 Yeah.

5:13 And [snorts] then ironically got off Bed of Bit in May 2024. And so I was super heavy into

5:22 Into Hyperliquid. like summer 2024 got really active up until like TG time.

5:31 Yeah.

5:32 So yeah, today I mainly trade on I mean still do trade on Bits and and Hyperliquid.

5:36 Mhm. [clears throat] Mhm. And are those I know Hyperliquid is one of the venues that you guys offer through your prop trading, but how does how does one even get into setting up a prop trading firm? Like how do you how did you get the capital? How did you figure out like there's all this licensing and stuff like that?

5:57 Like how did you navigate that?

6:00 I I think one is you like from a founder perspective you do need to be either have backing from a firm or just be financially well off because

6:12 There are risks like we have exposure on the market. So to me it was like I'm

6:17 I'm comfortable putting part of my net worth into credit facilities for the company and that's exactly what I've what I've done like since day one

6:26 And that allows us to scale and I would purposefully did not want to raise capital because that

6:34 You know that was my money on the line so I was like I don't want to lose that money and so

6:39 We were lean from the very first days but I would If you're not, you know, if you're not, I guess, financially well enough or able to bootstrap, you know, seven, eight figures into the company, I think you would have to find LPS.

6:59 Definitely.

7:00 Yeah.

7:01 Yeah. And you say that the prop trading industry was kind of in shambles. Why do you think it was in in shambles before? And then why is crypto like the answer? Yeah, [clears throat] I do I do view prop trading as a as a primitive for finance and when you look at for example lending as a primitive what DeFi brought to lending is is utmost transparency on how collateralized venues are and the terms etc.

7:32 When you look at prop trading as a primitive you have absolutely no transparency. when you look at a firm, you don't know their revenue, how much they pay out, you don't know their pass rates, you don't know how much they have in reserve. So I thought, okay, if we come in with with more transparency, then for sure if a trader is given the two options between, you know, a a firm that's very opaque and and b a firm that's very transparent, they would opt in for the firm that's transparent.

8:02 So we've made that bet very early on. of like we were the first to have a transparency dashboard and to put ton of stuff on chain and now I'm very glad that some others are following like some bigger firms are now posting transparency dashboard actually won today which which ironically is like super similar to ours but I'm just really glad industry is picking up on this.

8:28 Okay. And what Oh, sorry. Go ahead.

8:31 If I can just add as well, Louis, like we found the same when it comes to transparency as well. When it comes to onchain security, like clients really appreciate how much transparency we're providing, whether it be case studies, whether it be our team, whether it be the the GitHub reports, the competitive analysis. So, that parallel is is also interesting to note.

8:54 Well, I mean, we are entering into an era where the tech is not the most anymore. And so when when clients look or like customers look at at products, they I think they want to look a bit deeper.

9:07 Yeah.

9:08 And you know, I also stream almost daily about what's like to run Propr. And I think to me it means a lot because then you're building a a special relationship to with with your customers. And then [clears throat]

9:21 I would say they become your your power users and then they go you know well and beyond to just help you grow through which which I find for consumer product to be to be key to our success.

9:33 Yeah. And and also you know with the future of finance coming on chain like we see traditional institutions very much transparent right in in their reporting in their organizational structure in everything they're doing. And this is something that onchain teams for a long time have have lacked based off concepts like anonymity you know staying anonymous and stuff like that.

9:59 But at the end of the day it's changing and that's very nice to see especially as a as a guy that comes from a classical corporate background. I really like to see this transition happening slowly but surely.

10:12 Yeah. Yeah. And I was interested who are the big players in the prop firm industry like who do you find yourself even really competing with these days?

10:21 Yeah. So prop trading is I view it as a primitive and then you have different markets that are open through prop trading. the biggest by far is the futures industry. like CME is the most traded

10:38 Well all the most traded instruments like ENQ and ES. Yeah.

10:42 And the retail community really wants to trade those instruments on on on super high leverage. and so you have those larger firms like Traify, Lucid Trading, my Fon Futures that are an order of magnitude bigger than us. and that's just by virtue of how big the market is for futures.

11:02 Oh yeah. Today in in crypto we we go like we are we're still I would say a lot smaller you know quite bigger than when we started but Breakout the firm that got acquired by by Kraken

11:20 I would say is the you know today we're number two they would be number one in crypto and that's the market that defines us today we're not we're not quite close to hitting the futures market. The issue that we have at the moment is liquidity constraints. It's like Hyperliquid is is like is not that big if you if you zoom out like

11:47 If you look at total number of traders on Hyperliquid it's not that big it's also liquidity on on the equivalent so SP 500 and and XYZ 100 is actually not so great. So when you look at CME as a benchmark, the Hyperliquid product is not on par. So there we are hitting some of the limitations of onchain products.

12:10 Mhm.

12:11 But [snorts] even structurally we're not ready to like grow an order of magnitude so we're not enter the future space insanely heavily by like end of year probably Q1 next year.

12:26 Yeah. And what is it? What's the main name of the game when it comes to prop firms? Like is it the traders? Is it the capital or is it you know some other edge? Like what is the main bottleneck on these businesses?

12:43 Yeah. [clears throat] I would say the strength of the balance sheet and how good the unit economics are.

12:53 You essentially have firms that operate on very low margin. And the issue with this is you can scale the number of traders that you have, but then if you operate on low margin, then you don't build up enough free cash flow to then hedge your exposure.

13:10 And then that that that's very tricky for you as a business. so to me, I view the strength of a prop firm as like balance sheet strength. So how much cash you have and then two is like unit economics. Obviously, you have more things that come into it like how good the product is, but in the era of AI, I don't view products as a mode anymore.

13:34 It really just comes down to me to the

13:36 To the finances. And

13:38 We do have what we do specifically at Propr is also we have a better distribution.

13:44 Mhm. like we I'm not sure when we release this podcast but we'll have like one of the largest app on top of Hyperliquid integrate us and like you know that's typically how we scale too is not just through on front end but also other people's front end

14:03 And so we gain distribution that already exists and we go where customers already are.

14:09 Yeah, that's actually really cool. So they already have their users and now you can get your offering through to their users.

14:16 Yeah, we essentially any platform that that's integrating per we can integrate with them in a matter of a few hours.

14:25 And that's we haven't spoken so much about this but that's been very much our direction. so we operating two sides of a business. One is very consumer side and one one is very business side

14:39 And we've actually seen a ton of traction on the on the business side.

14:44 And the integration you referred to there is probably going to be first week of November.

14:53 Well we actually work with a lot of per teams. Are there any that you're you've been eyeing up that you want to integrate with? [snorts] overall if if you look at the build like the leaderboard of the builders fee we are pretty much in touch with with all of them. so we are either in negotiation in process or or just about to release.

15:17 [snorts] So off of the top 10 like five are actually building on top of us. the rest is going to take more time. We're still new a new new product.

15:29 And, I'm interested. What do you think about the recent launch of paper trade? I'm sure you're watching that came up across your timeline. What What do you think about it? What do you think about the model and and how the launch went?

15:43 I think, you know, I was talking to Jez about this. Actually, I did say before the launch like what like the structure is interesting, but for anyone that's got a big amount of equity on Hyperliquid, it's fairly easy to exploit. yeah

16:01 So I do think I mean let's say today you have like 10 15 million national on ETH on Hyperliquid a pepper trade is actually a good venue to make sure you don't eat so much slippage

16:14 Like inherently if you you know depends how you execute but you'll push the price down 0.1.2% 2% and so you can edge on the other side which I find to be it's actually something I've used personally and I think is a great use case. The issue you have there is if someone really wants to go against the protocol you can easily do it

16:37 And so there they want to be fully decentralized which is very commendable. but I would I would try and reconsider the approach of the BBO pricing to Oracle.

16:51 Yeah,

16:53 They they're not big enough so that people exploit it. but you can easily

16:59 See like just like we had Jelly Jelly on on Hyperliquid. I can easily see this being exploitable. Now, as far as the product is concerned, I I think the token is interesting of like I personally, you know, farmed this quite heavily on day one and I think I'm like positive just on the yield.

17:25 But we we're actually looking at integrating this within Propr as in being able to offer prop on like a,000 average which is which is a very exotic product. like convexity of this is pretty crazy but

17:42 So yeah TLDDR to me is like we need more innovation like I've I've criticized this but I think it's the first time we see innovation on pre-ompass on Hyperliquid and we need to embrace this

17:55 And I think this is not that good for Hyperliquid though because you're building synthetic markets on top of Hyperliquid so for example Someone that wanted to hedge on Hyperliquid can now do it on paper paper trade.

18:12 Yeah.

18:14 Yeah. So it's it's not seen a lot of people say it's bullish EVM. If this really gets traction, I actually don't think it's it's good because and and I end it here, but Hyperliquid as a venue really got traction because of the retail flows.

18:34 Yeah,

18:35 So you have a lot of retail flows that are not sensitive to price and that that means then it's super good for market makers to come in because they can capture a lot of

18:45 And the issue is the like this DGEN crowd that's very valuable. You don't them to you don't want them to go over to paper trade

18:54 Because then you know liquidity be gets liquidity on on both sides. And Louis you said you need the focus should be innovation. do you already have any brainstorm that you've done on where that innovation should be focused on?

19:13 In which in the prop firm business?

19:16 Yes. yeah, I think per is like this new category and we were essentially the I mean the first is a big word but like

19:30 Within the the top two three cohorts and my view is that we can offer prop trading on top of any assets and per is just one of them. so we think the innovation should be on more markets to be offered within prop trading. in fact anything that should anything that's tradable should have a prop markets on top.

19:58 It's about how you package this. And so for example options there's only one firm that's out there and that's called Vancord.

20:07 It's one of the first options prop firm. I do think there is room for growth in this market and so prop trading is is big in futures CFD now per I think it's going to be big in options I think prediction market eventually spot markets too you can go as exotic as as memes I think maybe too too exotic there but I think this is where innovation should be

20:36 And then more maybe [clears throat] more more fundamentally is the business of prop firms today rely on evaluation fees. So concretely if you want to trade with us you have to take an evaluation.

20:50 Mhm.

20:52 And so today we earn money from evaluations and we earn about like 14% of our revenue is from the alpha of our traders. So the alpha is how how good the traders are

21:03 Which I think is is not a healthy equation. I think that

21:10 People need to innovate more on

21:12 On how do you make your business work purely on alpha and not on evolution fees and hyperlquids like the onchain world

21:20 Allows you to spot what's the best traders as you know you can query the chain and offer funding to the best traders today very few firms are doing it in fact no firm are doing it so we'll go into this too and my hope is that within a year from now most of our revenue can be derived from market alpha instead of just federation.

21:42 That's that's where I think innovation should should go to.

21:46 Yeah. And do you think that so I mean obviously the the offer of passing the evaluation and everything is that you get access to the capital but do you think there's other tools other resources that a prop firm can offer to some of these traders to like actually veritably increase their performance and and maximize that alpha? [sighs and gasps] yeah actually like when you're any trade like [clears throat] in markets anyone can can make money keeping the money is is the is the hard part and

22:21 I do think especially people that come in meet cycle in crypto they think they're rock stars and that happens to a lot of new traders

22:32 But then what I do think we can do is better risk management

22:38 Yeah,

22:41 Depending on your trading style, but I think especially around not day trading, but I do think medium like medium time frame, let's say, you know, 3 days to like one to two weeks, I do think you can teach better risk managements around fairly simple concepts and I I do think prop shooting can help here. yeah.

23:10 Louis, just a quick one. what is the who is the strongest consistent trader that you've came across? What did you see? Like how much were they just out of curiosity, you know, how much were they able to upkeep year over year consistently?

23:27 Oh. you mean outside of capturing?

23:31 Yeah. But any trader you've came across? Sure. I think that's I would measure this in sharp but like some people that I know discretionary traders run at like four to five sharp continuously in crypto

23:49 Which is you know sharp is is how much return you you you generate based on units of risks and

24:00 You know sharp of two is like good I think crypto is like respectable and five is is insanely good.

24:09 In in in Propr specifically, we see it's not it's actually not the biggest account, but we have someone that runs at a sharp of 3.5

24:20 For about like I think 6 weeks. And that's that's pretty impressive.

24:25 And is there any way to translate that into like a yearly percentage return? as someone who doesn't really know what you said sharp

24:36 Sharps or yeah I mean it depends on sizing really but someone that runs at a six and a like or like five sharp can generate you know upwards of 100% return

24:49 Or like a lot more than this

24:52 Very impressive

24:52 I bet

24:56 But I'm interested like what is the strata of so you say it was you know like 14% % of the alpha that's what the revenue actually generated as net of the business but even within those set of traders cuz I think you've got is it on the order of hundreds of traders or dozens of traders I mean obviously there are different tiers

25:18 Yeah yeah we've got like about five 5,000 of them

25:22 Okay yeah tons and I imagine even within that there's a lot of stratas of like do you see that the top 5% is producing all the alpha and then the bottom 80% is just losing it or what

25:37 Like in any platform I think if you query the P&L of Hyperliquid or FOMO I mean FOMO is not really a trading platform but

25:47 It's all don't have the top like the the numbers but the alpha that we get from our traders off of the 5,000s we get the alpha from like less than 10. Mhm.

26:00 And then we we try and scale this alpha. So we basically are levered on the alpha of our best raers.

26:08 And that's how we try and cover some of the firms firm's exposure. But it's really I would say it's really small. you know we're talking about way less than a percent of our user base.

26:21 Yeah. And so when you talk about, you know, we want to move the alpha to being a a large share of the firm's revenue, what are the moves? Like is that more strictly validating the traders that get in? Is it giving more outsized capital allocation to those who are best? Like what are the

26:41 Things?

26:42 Well, today what's cool with Hyperliquid, Lighter, and soon viral is you can you can know who's who's running at like two and a half sharp, three sharp. Mhm.

26:52 So you don't even need to evaluate them. You just know on chain they're super good.

26:57 Yeah.

26:57 And so why would I give them an evaluation? Like for example, my I think one of my Hyperliquid account is now it's been now running for like 3.5 sharp in the last 6 months. Do I need an assessment? No. Cuz you've got my credential of the last 6 months.

27:19 And and that's the power of onchain credentials is like

27:23 Really actually

27:24 I don't need to test you. And so if we want to get alpha, we basically need to get a nice enough capital structure, nice enough incentives for the guys that are really good to keep our capital.

27:39 And and so there you need yeah, you need the right incentives for them to come in. Y

27:46 And and it's not going to be an easy part because you have platforms like FOMO that now you have traders with some good sharp that on FOMO because they realize they can create a personal brand around their trading style.

28:00 Us is slightly different. It's like okay if you are sharp with like six figures we can take you seven eight figures with our capital.

28:09 Mhm.

28:10 Yeah. Yeah. And you guys give 80%. Right, which is I'm not too familiar, but that's pretty high.

28:18 Yeah. I would say in the like if we were to go full alpha, we would probably have to tune this down and then give more capital.

28:31 So today we we give just upwards of 200k. if the strategy were to base on to be based on alpha we would have to give a lot more capital let's say a million but then the profit split would be more like 3070

28:48 It's also because a trader a trader that's good also has an opportunity cost

28:53 And I don't want to be managing 200k

28:57 If you know that if a trader is good 200k is not meaningful size for him

29:03 Yeah And how does that fare Louis against other competitor of yours? Is it more or less?

29:12 Which part?

29:14 The the percentage you said 80% I believe.

29:17 Yeah, 80% is on par today. If you look at what we offer like Propr is basically a breakout that's a lot more transparent and on chain.

29:26 Yeah.

29:27 U in the model and and how we do things. We haven't reinvented the the the full concept. What will what will be new about us is this onchain evaluation. so the ability to give a lot more size to the best traders of Hyperliquid and Lighter

29:45 That makes complete sense too like it's all that's there. That's really the benefit of all this activity happening on a blockchain. It makes complete sense. are you guys going to be the first people to to do that as a crypto prop firm?

30:00 Yeah, I'm I'm sure some tried it. I think

30:05 Being able to provide

30:08 Enough size and what the the figures we have in mind is being able to provide upwards of 30 million

30:15 Of actually deployed capital I think is probably going to be a I mean is definitely going to be a first.

30:23 Where we are today is we are looking at how to make it in a way that's legal. I don't want to go into the technicalities of the legal framework but we have [clears throat] to find something that works why it's respecting privacy and yeah we we have a bunch of work to do there.

30:40 Yeah. Well I don't think the legal frameworks have they don't know how to deal with something like this either. So yeah I'm sure you guys have quite an investment on your legal bill without one. But I'm interested actually in how you see AI impact your trader cuz cuz I always see this on, you know, X there's like some people trading with AI and like having it actually make trades.

31:10 Is that real? Is that like something that actually works? Is there actually some alpha to be added there? How do people use agents in trading?

31:18 Yeah. especially prop trading. Propuling is a lot about risk management because we have two rules. One is daily draw down, one is max draw down. So the issue is people tend to take on way too much risks.

31:33 Mhm.

31:34 And they are way too emotional.

31:36 Yeah.

31:37 And they they just don't know how to manage risk. And and you know typical example is a trade is going against you and then you just move your stop down and you're like I don't want to be validated on this trade. there what's powerful for agents is to guide you on on risk management. So

31:55 Yeah,

31:57 It can help you on your entry level to define an entry level whose invalidation is is clear. maybe you don't want to be invalidated where you have most amount of liquidity and I just do find AI to be good at fighting setups around risk management. I mean let's say now you want to I don't know what BTC is at but like

32:23 Mhm.

32:26 What AI was probably going to tell you is that like ETH for example is below some moving averages. it's like below the 4 hour 200 moving average. And so for example, now you could go short on ETH and then have your stop above that that moving average and then you have defined risk. So you know you're like a few what you're like 2%.

32:52 You're within 2% of this invitation and your upside is probably

32:55 Bottom of that range. You're probably like you know three trade. and that's what I like about AI is just the ability to have no emotion on the charts and tell you, okay, this setup makes sense. and this is where your invas invadation should be. We actually have a higher pass rate for agents than humans on Propr. And what we see is just better much better risk management is

33:22 They take less risks and it's a much sharper in the execution. they don't tend to like double down on positions.

33:34 Yeah,

33:34 Or it's just, you know, it's it's in and out around a clear invidation level.

33:40 So, if I'm understanding correctly, Louis, you're saying the Aentic AIS are acting better and and more efficient as signal providers that can help you with your risk management. And they're basically it's it's not we're not in the world yet where they're able to go completely autonomously and start becoming the best trader.

34:02 Yeah, it's it's basically the traders that are aided by AI perform better than traders that perform on their own. The way we know about this is people can use Propr through ago trading

34:16 And that's

34:18 Today I agot traders are performing about 30% better than traders and we've interviewed these guys and most of what they do is they use agents to define setup and then and then they execute on the platform.

34:34 They they execute it. And when do you think if you could if you had to give a forecast on when we're approaching the moment that AI agents, you know, you can basically just run it and it's going to beat, you know, the best trader you'd know. When do you think that that time is going to be here?

34:51 I think I I define you know, we have this 6040 on like bone to start portfolio. I do think we'll view portfolio construction as one that's AIdriven and one that's human driven. I think it's going to be hard to like humans are in the market because they think they can make money and they think they can be they can essentially beat the market.

35:18 And I do think it's what makes markets today is like you you want to be it's of probably the best video game and you want to be at the the reign of this. So I I don't think it's going to take over. but I do think we'll start thinking about portfolio construction as as having an AI component that's like fully fully managed.

35:45 Just like when you on board a private bank for example, they would tell you whether you want to be managed or like discretionary. And I do think portfolio is going to be the same where you know you'll have 30% of your stack that's AI managed and then the rest is going to be discretionary. but yeah, I think that's how like agents will will per roll.

36:07 Now I don't think a a agents will will be very good on the large markets. I I do think do think they'll be good on on the smaller and you know more liquid markets but I don't think there is much edge to be found for agents on like the indexes

36:30 Just because of efficiency. those markets are rather efficient and the money to be made on those markets is either just buy and hold or

36:41 Yeah long-term

36:42 Very low latency and and and there AI agents on low latency you know you're talking about hardware and that's not really you know that's not the of of agents so I do think for example an agent could have an edge on the very liquid stuff like premarket gashi you know maybe some maybe some per you can do some some like you can have your agent for example run GPY arbitrage between Hyperliquid and u and IBKR in ter broker but that's not really something that scales

37:21 Do you think that agents are overall just going to be better for this shortterm trading and like technical analysis and you know the algorithmic stuff and maybe it's not as good as like the long-term investment strategy type stuff.

37:40 Honestly don't don't have the answer to this.

37:45 The issue you'll have is everyone's going to be now everyone's got access to lot more data. So we can

37:54 Let's say we have we have FOMC at the end of the month. everyone can now prompt AI on what's going to be the market's sentiment and reaction. I don't think I don't think there is much edge to be found there. I I think AI can be good at managing your risk and you know aiding you seek the best return based on the risk you're willing to take.

38:21 There's this new project that came in. I think they raised like 20 plus million on using AI as a way to you have a thesis and it's putting this thesis out there.

38:34 So let's say you you think that the next big trend is going to be robotics. AI is going to help you make the right bets. which can be you know Nvidia which can be you know whatever whatever is used for for robotics which I think is is then going to be going to be very interesting.

38:56 Yeah. Yeah. And I think what you're saying about the risk side makes a lot of sense cuz it is like rather an amorphous thing. Like if you tell me to think about risk, it's hard to put it into a crystalline structure to understand. And I think agents, yeah, they probably do have a better way of thinking about that less emotionally.

39:18 So, I mean with that and what you guys have seen, are you guys I know you're building like an agent SDK or you already have this released in some form. Are you planning on building anything for traders on Propr that would give them I don't know like the the UI that helps them make these setups and evaluate them with agents or like what are you guys planning on that frontier?

39:43 We [clears throat] we've been exploring to have your own companion within the app. that would basically look

39:50 That would overlay your trades and would tell you, hey, you're taking on too much risks there

39:57 Or like you're on a on a lose streaks, maybe just takes some time.

40:04 You know what kills traders is

40:06 What kills traders is like slowly tilt. so

40:11 It's more about

40:13 Yeah just managing risks but also telling you where you have potential setups being aware of markets.

40:22 For example now if you look at markets today you see that hype is weak because per the the debt

40:29 Is like below one mnaf or and that's first time in a while. So I could tell you this on like maybe if you look for short opportunity look at the assets that are weak and like hype may be a good short because of the the the per sub one mnav. and it could tell you like what's the best assets to long what's the best to short how to manage your risks.

40:53 So we've been thinking about this companion. We haven't released [clears throat] it.

40:58 We we actually have an MVP of this.

41:01 It's probably going to be for November for for this year. Yeah. And are you still actively trading? Do you dabble in trading these days?

41:10 I'm Yeah. I love markets. and I think what

41:16 What hooks me up is the ability to yeah to be right and have direct feedback on the market on your tesis.

41:28 Yeah. And I think if you seek outsiz returns then you constantly have to research and it's sort of this video game where you can do it in perpetuity.

41:40 But yeah maybe doing too much of it but for Propr I do think it's u it's healthy.

41:47 And are you using this like helper agent this assistant agent? Have you used it at all in your trading? I yeah I do have my own agents for certain tickers that I monitor. so my trading style is I do trade like medium time frame to longer time frames solely on pers.

42:13 Okay.

42:14 And I do trade momentum basically just only trade momentum in crypto. And so typically I just stay until the trend is is up and then I'm about when it's it's not up. And so it's a simple concept, but like every day I have this agent that tells me this is the overall market direction. like this is where momentum is and this is the the weakest asset and that's like the strongest asset.

42:42 So for example, when I build a short basket, I just look at the weakest alcoins or like assets and then you know take on a position and also tells me about the the risk levels. So I I use moving averages it's a simple concept but over you know 4 hour 200 it does work to manage your risk.

43:09 Mhm. and I have those agents that are plugged onto my Hyperliquid address or like different addresses and they tell me you're outside of your boundaries. and so that just keeps me from holding a position that I I should not be in. cuz that as a trader is probably it's probably my main weakness is just getting chopped to death on like

43:33 Non momentum [snorts] non momentum plays.

43:37 Yeah. And what what what agent are you using? What have you found is best? Are you using like Claude, Codeex, Rockbot?

43:45 Yeah. Yeah, I'm using Claude. Yeah.

43:48 Okay. Yeah, that makes a lot of sense.

43:50 And what's your what's your favorite model when you're using Claude?

43:55 Are you on Opus? Are you on Fable? Which one are you utilizing most?

43:59 I'm on the latest Opus, but honestly, I'm not using it.

44:05 It's not honestly that complex. It's like the the the the bot queries my Hyperliquid trades and then has like a crown job that queries the the market

44:17 And you know computes the moving averages and just

44:20 It's more like an indicator.

44:22 It's not that complex like it it's not looking at the trade frequency etc. I haven't made it fancy. It's just basically my checklist of the morning. like for example now I actually have it in front of me and I also have alerts that are sent to my phone if I you know need to wake up for like liquidation cascade stuff like this.

44:44 Yeah. Okay. So you get paged.

44:46 Yep. Liquidated 4:00 a.m. Yeah.

44:50 No, it's more it's more like this. It's it's like if you have a big flash on the market

44:55 Yeah. [clears throat] you want to be, you know, since 1010, I'm not putting any stink bids.

45:01 So, I'm like I, you know, if some stuff weeks down, I I want to be active on markets and try and take a trade.

45:08 Yeah, absolutely. Well, I mean, it also helps you stay connected to the core business of Propr. Like, it would be hard to run a prop firm and not be in the markets yourself, not understand what's going on. Yeah, like it's like we'll have products that will be I don't do prop myself. Like I don't obviously I use the platform daily, but I'm not like a big consumer of these products.

45:37 We'll have a product that's going to be a bit more tailored to me.

45:40 I just want to be tuned to like the the pro space.

45:46 I do,

45:47 You know, off of the prop firm owner. I'm probably the most active per guy out there. and I do think then I can I know the features that that traders like and

45:59 We can just [clears throat] build a a better product.

46:03 Yeah. And for you, what is like the [clears throat] the number one stat that you're looking at? What is like the the northstar metric? Is it OI? Are you trying to maximize like traders? You trying to just push alpha? Like what do you focus on?

46:20 Yeah. the what we want is to get our average sharp higher

46:29 And and that's basically what the like if you talk to any traders like sharp is is all that matters for for that trader. So you you want to you basically want to get the the best shark possible amongst

46:48 I would say the what we look at actively is the top 1% of all traders what what's their sharp and today it's nowhere near where it should be north star should be there and I don't think we'll get there and and with the current structure of Propr we do have to move to this onchain discovery like bring the the top onchain traders onto a platform change the way we incentivize people don't have them to pay but rather like actually pay them you know we could say hey just come on

47:21 I give you my capital I pay you 10k 20k a month and you'll trade with with me and and only then will we scale our or our sharp across the board

47:34 And what's stopping you hypothetically from saying like let's just either remove the bottom 50% of traders or decrease their allocation and reallocate to the top sharp traders.

47:51 Well these are people that paid for evaluations and so they rightfully got granted the capital.

47:58 So but what happens is the ones that are not good they just lose the capital. So naturally,

48:03 Okay,

48:04 Either they come back, but naturally you have churn and then you tend to keep the best traders in your platform. So naturally your sharp is meant to increase but it's it's not to us it's not sufficient to generate sufficient alpha like our sharp of the top 1% is like at 1.3 which is which is

48:31 Okay

48:32 Which is you can argue I think it's better than the other firms but it's it's as as a discretionary trader I would not I would not want to allocate my funds to a trader whose average is like 1.3 so top 1% is not enough if we go to 0.1%

48:53 Then it starts to be good but we have a see a big gap to fill

48:58 Louis is there a world where people can essentially invest into the top traders of your platform and basically it's like a fund that they're managing, you grow with them.

49:13 Yeah, that that's that's why I said like you know, North Star of Fourth is is is is the average sharp because then then you can do this type of structure. and then you can scale your capital base infinitely

49:32 Because everyone wants to back the best traders or get signal from them. You know, we're not talking about just individuals but liquid funds and every capital allocator. But the key is is creating those traders. just like you have Morpho today that's where you have creators of within vaults creators of of yields we we think we if we're sufficiently good there we can do well we can be creators of traders where you deposit just like you deposit in in in Morpho vaults the issue is still like onchain constraints

50:13 Mhm

50:14 We've seen Hyperliquid Vault was not that successful and I do think that was partly because of onchain liquidity constraints. let's say you're a good trader and you're trading with I don't know 5 million and you're given 50 million, you'll have to drastically change the way you execute. you'll not be able to trade the same assets because of liquidity

50:43 Because of line execution etc. A lot of things changes and onchain is still super small. So I do think this will have to evolve too.

50:56 But do you see it being potentially possible? As many roadblocks as it creates, it's potentially

51:02 That's that's where we want to lean towards. And when I say most of our revenue should come from alpha, that's exactly the legal routes that we want to take.

51:11 Yeah. so now for the end of the year it's our challenge to find the the best traders get them on our platform try and compete with those you know other platforms that are also going this way and [snorts] but yeah that's that's very much what we want to do. We do have a legal framework in mind but yeah it's not there yet.

51:35 Yeah. So, it seems like that's kind of the number one bottleneck for you guys is how do you get those best traders onto the platform and get them allocated?

51:47 Yeah. it was also just it was never done before in a like retail way.

51:55 Yeah.

51:56 And

51:57 Because it's hard to scale that

51:59 Unless you're doing it on chain.

52:01 Yeah. It's also like usually the the very good traders do not want to manage external capital.

52:08 Okay

52:08 If they scale their capital base of especially in crypto where you can have outsiz returns in in like a quarter like just just like we we had in

52:18 August September of this year.

52:20 Yeah. Okay. And as a last question I always like to ask folks like what keeps you up at night? What is the number one problem in your life at this moment with with Propr

52:37 I think trying to scale slowly like you you basically want to scale like we've we've we've grown really fast you know we did zero to like 5 million of revenue in in five months.

52:53 Mhm. but as I said, like you want to scale at a rate where your cash, like your free cash flow can cover your exposure.

53:02 Yeah.

53:03 And if you scale too fast, you'll hit pretty unhealthy economics.

53:09 Yeah. And that's you know so like this inherently people want to grow fast but then you have to restrict this and focus on on on like for example I can I can say beginning of October we've we purposefully slow down our sales

53:30 Because we just had to focus on other aspects of the business

53:33 And that's pretty counterintuitive we're not like VC backed

53:39 Yet, you know, some news will come soon, but that means we can prioritize integrity of the platform over growth, which for our business is is key.

53:51 Yeah. Really nailing the model and then once you have unit economics that look really well, then you can unleash the floodgates and scale to the moon.

54:00 Yeah.

54:02 Well, excellent, dude. Well, I mean, thank you, Louis, for for taking the time to to join us. And is there anything we should push folks towards? Of course on Propr they can try to get access to some of the prop capital any other offers that we should let them know about?

54:18 Yeah. No, I think people should try the platform. there is a free trial so you can actually just get to use the platform.

54:26 You'll not pay anything. you can just try out the product. you know you can check out Discord, see what's what's in there. And I think what what could be interesting is you try and run an agent on top of what we do

54:39 And then see see what happens. and yeah that that

54:44 MCP MCP server

54:47 We don't have an MCP server yet but we've got like pretty comprehensive SDK. so any anyone

54:55 Can use that just as well

54:57 Building on top of us. I I have a YouTube video. I think a a setup is like 5 minutes, so it's it's pretty easy.

55:06 Excellent. Well, yeah, thanks so much, dude. And of course, anybody will check out the the free trial and and Discord as well. We'll get that linked. but yeah, dude, thanks so much for jumping on.

55:16 Thank you, Louis.

55:17 Thanks so much.