Sep 30, 2026 · 50 min
Variational bets on brokerage to reshape onchain derivatives
Is Variational the Next Hyperliquid? | CEO Lucas Schuermann and Justin Bram
Variational’s model tests whether brokered liquidity can make onchain derivatives cheaper and more accessible than exchange-centric trading.
- 1Variational takes the opposite side of trades and hedges through aggregated global liquidity rather than operating a traditional order book.
- 2Its OLP system combines user flow, hedging liquidity, settlement pools, and interest income into a distinct trading business.
- 3The team is targeting mainstream brokerage users while expanding from DeFi-native traders into broader markets and products.
Don't miss
Lucas Schuermann explains how OLP takes users’ opposite side while intelligently aggregating hedging liquidity, creating Variational’s core economic engine.
The brief
Variational co-founders Lucas Schuermann and Justin Braun argue that the platform should sit alongside exchanges such as Hyperliquid, not replicate their order books.
The central bet is principal brokerage: Variational takes the other side of user trades, then hedges against aggregated global liquidity to improve execution.
The guests frame derivatives as a more useful bridge to TradFi than simply tokenizing spot assets, with swaps designed to bring familiar linear exposure onchain.
Arbitrum handles settlement, clearing, liquidations, collateral, and profit-and-loss movements, while USDC prioritizes fund isolation, observability, and risk controls.
OLP, the Omni Liquidity Provider, turns user flow and hedging into an operating model that earns from intermediation and interest income.
The long-term ambition is a straightforward trading platform for mainstream users, combining swaps and perps across crypto, indices, equities, and broader markets.
What was said on this episode
29 statements · 26 positive · 3 neutral
Variational operates as a principal broker rather than an order-book exchange.
“we're a broker-like model, not an exchange. We don't have order books on our platform. We take the other side of the trade and hedge it against aggregated global liquidity.”
Listen at 1:09
Variational’s brokerage model enables zero-fee trading and many crypto-perpetual listings.
“This allows some really unique things like zero fee trading, like hundreds of listings and crypto perps.”
Listen at 1:17
Variational offers substantially better RWA spreads and execution costs than competing platforms.
“in RWAs, we're able to show order magnitude better spreads and execution costs than competing platforms.”
Listen at 3:04
Brokerage is the best long-term model for retail trading.
“we see ourselves more long-term competing on the brokerage side, which I actually do think is the best model for retail trading in particular.”
Listen at 5:00
Variational expects users to prefer aggregated brokerage liquidity over direct exchange trading.
“I really don't see long-term, if I keep building the product well and we keep working hard at it, why a user might want to trade on one exchange directly rather than use our platform to face aggregated liquidity simultaneously.”
Listen at 6:13
Traditional markets provide trillions of dollars in daily liquidity across many markets.
“two, three, five, even beyond trillion dollars of daily liquidity in many of these markets”
Listen at 7:09
Brokerage and liquidity routing are preferable to rebuilding liquidity on-chain.
“the right model here, just like traditional finance works, is brokerage and routing to where the liquidity is rather than trying to reinvent the wheel.”
Listen at 7:18
Variational’s swaps provide retail traders a superior perp-like instrument.
“we're opening this type of instrument, which trades very much like a perp, but better to retail traders.”
Listen at 7:46
Variational swaps are better than perpetual contracts.
“it's like a perp, but better.”
Listen at 9:57
US 100 swaps cost about one-fifth as much as the most liquid on-chain venue.
“about one fifth of the cost as your most liquid on-chain venue for getting access to a market like US 100”
Listen at 10:10
US 100 swap funding is capped below 5%.
“funding, to Lucas's point, is bounded at, I think, just sub 5% now for US 100”
Listen at 10:24
Variational aims to become a gateway to global markets.
“our vision is that, you know, variational is the gateway to global markets”
Listen at 14:18
Variational plans to offer 5,000–10,000 global markets long term.
“longer term we want. you know, 5,000, 10,000 different global markets”
Listen at 14:27
The founders previously managed a $250 billion flow book and electronic market-making system.
“we ran a $250 billion book of flow, building out their electronic market-making system”
Listen at 15:49
Variational plans to launch public mainnet and then a trading API.
“We'll be going public mainnet very shortly. We'll be launching our trading API after that.”
Listen at 24:19
A simpler mobile app could expand Variational beyond crypto-native users.
“if we could replicate that in a mobile app for our users, I think we could really expand out of this crypto cohort”
Listen at 25:03
Variational intends to compete with major retail brokers globally.
“we're competing longer term with Pua in Indonesia, with Grow in India, with Interactive Brokers, longer term, let's say, with Robinhood in the U.S.”
Listen at 26:26
Variational plans to broaden its user base beyond crypto traders.
“our goal is always to broaden that set”
Listen at 29:24
Perpetual contracts are better than options for many users.
“perps are just better. outright better than options for many reasons.”
Listen at 29:46
Variational is probably among Arbitrum’s top-five DeFi gas users.
“we're one of the largest gas spenders in Arbitrum One. I'd say we're probably in the top five, just DeFi protocols overall in terms of usage of the chain directly.”
Listen at 31:20
Variational segregates user capital rather than pooling it in one hot wallet.
“all of our capital balances are completely segregated. They're not moving into one hot wallet pool.”
Listen at 33:14
Variational expects user growth to continue through Q4.
“We expect that to continue through Q4.”
Listen at 41:07
Variational has been highly profitable over the past year to eighteen months.
“We've been immensely profitable, both as a company operating OLP and variational in the past year, year and a half”
Listen at 43:13
Variational is very well capitalized.
“we are very, very well capitalized.”
Listen at 43:25
Variational intends to launch Pro for institutional options and structured-product trading in 2027.
“in 2027, our intention is to launch Pro, which is Variational's answer to the institutional product side options, structured products, other types of multi-dealer platform trading”
Listen at 45:52
Variational expects Variational and Omni to grow to major-competitor scale.
“we'll continue growing Variational and Omni to be the size of some of our large competitors and beyond”
Listen at 46:07
Variational is exploring merging swaps and perpetuals.
“we're actually looking at how we can merge swaps and perps”
Listen at 46:43
Merging products could extend swap benefits to perpetuals.
“give the benefits of swaps to perps”
Listen at 46:59
Variational’s broker model may be especially effective for options liquidity aggregation.
“our model, which is the broker-like model of aggregating from these different liquidity sources, is actually really interesting, especially for options.”
Listen at 47:33
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.