Coinbase veteran quits to start his own hedge fund

Rage Review : Olaf Carlson-Wee is one of the earliest employees of Coinbase. He resigned from his job without any experience working in other companies, and founded his own hedge fund, which only invests in cryptocurrencies and other blockchain-based tokens. Although the rise of blockchain investment activities has gradually changed the investment model in the financial field, the instability of the market itself and certain legal issues prevent large investors from participating or profiting from it. For this reason, Polychain Capital, which he founded, will develop an actively managed asset portfolio based on blockchain, which is also a strategy to follow market trends.

Translation: Annie_Xu

Olaf Carlson-Wee was the first employee of venture capital-backed bitcoin exchange Coinbase, but resigned as a risk and product manager to join new digital currency hedge fund Polychain Capital.

Although the new company has no investors yet and doesn’t even have a website, Carlson-Wee is confident that Polychain Capital’s vision will make it a high-ROI venture; the fund plans to invest only in cryptocurrencies and other blockchain-based tokens.

Carlson-Wee asserted that the current return on investment for venture capital firms in this field is not good, and digital currencies such as Bitcoin, Ethereum, Steem and projects such as The DAO have become better options.

Olaf Carlson-Wee

Carlson-Wee said:

“Most of the hackers I know of who got 50x returns weren’t VCs. I think we’re moving into a new paradigm where the people who get the returns are the token holders. You’re supporting the protocol, not the company.”

Therefore, Carlson-Wee analyzed three reasons why large investors in the digital currency market are not active.

He noted that this is a difficult and financially fraught process because the markets they participate in are fast-moving and open 24 hours a day. Sometimes there may simply be legal considerations that prevent large investors from participating.

“If you’re a venture fund with a limited number of partners, you can’t buy crypto; it’s hard to continue on that basis because your news feed is based on forum announcements and participating in some weird pre-sale event.”

Carlson-Wee said the solution to this situation is that Polychain Capital will develop actively managed portfolios based on blockchain; these will be valuable to investors who believe in the entire blockchain industry, not just digital currencies.

"If I invest in a hedge fund, I'm entering the technology field, but the risks are more diversified. No matter what emerging technology emerges, I will seize the opportunity to make a profit."

Leaving Coinbase

Founded in 2012, Coinbase is one of the largest and earliest Bitcoin startups, raising a total of $117 million in venture capital in five rounds of financing. So why did Carlson-Wee leave Coinbase? He just said that three and a half years had passed and some changes were needed.

Carlson-Wee said he prefers a small work environment and doesn't perform best where there are "protocols, people and networking."

"I think I am more suitable for a small entrepreneurial environment."

Carlson-Wee's team will be small, he is the only employee, and legal matters will be outsourced to lawyers. What is noteworthy is that Carlson-Wee's first job was at Coinbase, and he has no experience working for other companies.

Carlson-Wee said he was not intimidated by the new environment; instead, he made up for his lack of experience with his extensive expertise.

"I have the most important core qualities, extensive knowledge of encryption protocols and the ability to predict project prospects."

Multiple blockchains will coexist in the future

But Carlson-Wee is not alone in developing crypto-based hedge funds. Large players such as Pantera Capital and Crypto Currency Fund have been offering services for years.

Carlson-Wee said Polychain Capital is unique in that it anticipates the future, allowing investors to benefit from the development of the blockchain industry.

He said this theory is consistent with industry trends, and more and more people are beginning to believe that there will be more than one blockchain in the future.

“I see it budding and I think the most interesting things are not happening on the bitcoin blockchain, but on ethereum and a lot of other blockchains.”

Carlson-Wee particularly believes that Ethereum’s digital currency, Ether, and the digital currencies corresponding to other decentralized applications that will appear on the platform in the future will be areas of great development.

“The highest returns and best investment channels will be in the tokens themselves.”