Evan Kuo 😇

Founder @2FactorFinance @AmpleforthOrg | CEO Fragments

[2FactorFinance @2FactorFinance]

For 70 years the smart money sized with Kelly.

Retail sized with vibes and 50x.

Now, retail gets 1.33x bitcoin with no liquidation price.

[Evan Kuo 😇 @evankuo]

appreciate this shout @Route2FI

this is the cycle where crypto people learn the phrase kelly-optimal 😅

[Route 2 FI @Route2FI]

Kelly-optimized leverage has arrived.

For those who don’t already know, this is leverage that’s made to be held for long periods of time.

Developed in 1956, Kelly sizing has been used by professional investors for decades to maximize long-term compounded growth.

Regular investors never had an easy way to access it. Maintaining the leverage target took work, and financing was expensive.

@2FactorFinance tackles both: it manages the leverage target and sources financing from investors who want stable yield instead of from shorts.

Financing costs about 75% less than conventional alternatives, with no liquidations. Built to be held, not traded.

They're backed by Coinbase Ventures and Pantera, and have also received support from Brian Armstrong.

Their Points Program is now live. The top 10 on the final Season 1 leaderboard split 1 BTC, and your Season 1 Marks carry over into Season 2.

Sign up through my link for a points boost: https://t.co/Ds1OIzQqSf

[jesse.base.eth @jessepollak]

great overview of why tokenized stocks matter

[2FactorFinance @2FactorFinance]

Every leverage decision is a sizing decision.

Kelly answered it in 1956.

Too little and you leave growth on the table.
Too much and volatility eats it.

For BTC-Jr, the math landed on 1.33x.

[Brian Armstrong @brian_armstrong]

When I started Coinbase, getting a bank to work with us at all was nearly impossible.
Now Citi is partnering with us to bring stablecoins to institutions.

We’ve come a long way from 2012. Thank you @Citi.

[2FactorFinance @2FactorFinance]

Traders oversize and so do products.

20x leverage is not conviction...

It's a multiple that sits outside the growth-maximizing band and then charges you to hold it.

2Factor fixes this.
We built Kelly-sized exposure on @base.

First Bitcoin. Then stocks.

[Hayden Adams 🦄 @haydenzadams]

Some bangers from the SEC today:

1) buybacks do not make a commodity token into a security

2) liquid staking tokens for commodities are not securities

https://t.co/kkRNqT3den

[Evan Kuo 😇 @evankuo]

@WorldOfMercek Thanks 🙏 🔥

[Evan Kuo 😇 @evankuo]

impressive

[Brian Armstrong @brian_armstrong]

Very early days, but good traction so far.

[Evan Kuo 😇 @evankuo]

@AxelBeastt I think it’s just growth maximizing for long term allocation — based on the assets historical drift and drag

[Evan Kuo 😇 @evankuo]

Early days, but this is what kelly-optimal BTC looks like:

- BTC +11.94%
- cbBTC-Jr + 16.31%

Note the down and sideways periods in the early part of the series. You can just hold through it.

By design it's backtested (for positive drift assets) st — the marginal benefit of holding through rallies >> marginal cost of holding it through down-swings.

@2FactorFinance @base

#notfinancialadvice

[heci.base.eth @iamheci]

feeling BULLISH!

[Evan Kuo 😇 @evankuo]

You’re right to be wary of chop. Thats generally how bad leverage gets revealed — and certainly true of LETFs.

But we have the entire history of volatility in the 11 year backtest. All sideways markets are in there. Have a look at the paper.

The chop:

A first big part of how drag is compressed is the leverage target (reduces volatility drag)

The second big part of how drag is compressed is the structural financing cost (financing drag)

[Evan Kuo 😇 @evankuo]

@Langerius Yeah longterm conviction tho. You have to take the position that it’s a positive drift asset. Here’s the 11-year backtest at 1.33x

https://t.co/QwFvGsMqQT

[2FactorFinance @2FactorFinance]

2Factor is live on @base in public beta.

Kelly-optimized leverage for buy-and-hold investors, starting with base:0xcbb7c0000ab88b473b1f5afd9ef808440eed33bf.

First Bitcoin, then stocks.

https://t.co/Vjn2paVeto

[RWA Foundation @RWAFoundation_]

1. Stocks will all be tokenized
2. Bonds will all be tokenized
3. Funds will all be tokenized
4. Real estate will be tokenized
5. Private credit will be tokenized
6. Commodities will be tokenized
7. Treasuries will be tokenized
8. Art will be tokenized
9. Collectibles will be tokenized
10. Infrastructure will be tokenized
11. Insurance will be tokenized
12. Company shares will be issued onchain
13. Stablecoins will become the default rails for moving money
14. Every major financial institution will have an onchain product
15. Every major asset manager will have tokenized products
16. Financial markets will trade 24/7
17. Settlement will move from days to seconds
18. Ownership will become programmable
19. Collateral will become composable
20. Assets will move across borders without traditional financial plumbing
21. The distinction between crypto and finance will keep disappearing
22. Tokenized assets will become normal for the average investor
23. Billions of people will eventually interact with tokenized assets without even thinking about it
24. The majority of financial assets will eventually have an onchain representation
25. Tokenization will become so normal that we stop calling it tokenization

[Activated (Ø,G) @0GEnabled]

A 3x lever sounds like a number.

It is actually a time problem.

Imagine carrying a machine that amplifies every movement you make. On a smooth road, that amplification can be useful. On a road full of sharp turns, the same machine can slowly destroy the journey even if the destination never changes.

That is the problem @2FactorFinance is studying.

Leverage does not live in isolation from volatility.

Two drags accumulate over time:

→ Volatility drag from the path an asset takes
→ Financing drag from the capital supporting the exposure

So the useful leverage range has to be engineered around the asset itself.

That is why 2factor's research does not treat BTC, gold, and equities as interchangeable.

At roughly 60% BTC volatility, the target junior exposure is about 1.33x.

At roughly 16 to 19% equity volatility, the productive band can extend beyond 3x.

Same concept. Different terrain.

I find that distinction more interesting than simply asking how much leverage a product offers.

And it explains why 2factor is building its structure around perpetual senior and junior tranches rather than relying on conventional short-side financing.

The Marks program gives me a practical way to dig into that research rather than just read the headline.

Season One ends at launch. The top 10 leaderboard accounts split 1 BTC in cbBTC, with the fixed curve ranging from 18.2% at rank 1 to 1.8% at rank 10.

Marks cannot be transferred, have no cash value, and are not a claim on any token or asset.

I am tracking my progress here:
https://t.co/jQ8VVRjTSa

If you're participating, share one asset you think needs a completely different leverage multiple from BTC, and explain why.

[aalavandhan (ஆளவந்தான்) @aalavandhan84]

Excited to transition from R&D to scaling and full-time firefighting .. 😅

[Evan Kuo 😇 @evankuo]

@aalavandhan84 🧑‍🚒