Bloomberg interview with Su Zhu: Axie Infinity is the best investment to date, never seen a worse project than Libra

"The potential for Bitcoin to become a reserve currency is clearer now than ever before."

This article is authorized to be reprinted from BlockBeats, original article here.

Ten years ago, Su Zhu and Kyle Davies founded Three Arrows Capital, a bold move for the two derivatives traders in their early twenties at the time, but one that has paid off.

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According to information on the Three Arrows Capital website, their current investments include Bitcoin, Ethereum, AVAX, SOL, DeFi projects like Neon, investment funds like Multicoin Capital, and the P2E game Axie Infinity.

According to blockchain data analysis company Nansen, Three Arrows' blockchain asset value is approaching $10 billion. (Su Zhu only mentioned that their assets are in the "tens of billions" range and did not disclose related data on fund returns.)

Su Zhu just turned 35 this April. Born in China, he moved to the United States at the age of 6 and became a Singaporean citizen in 2016. On December 21, 2018, he tweeted that the year-long "crypto winter" was the market bottom: "We will soon break out of the bottom, leaving other traditional investors stuck in fiat." This is something Su Zhu is very proud of, as the price of Bitcoin was around $3,850 at the time and reached $47,000 by the end of March this year.

In late February, during an interview with Bloomberg Markets, Su Zhu discussed his career and investment philosophy. The interview has been condensed and edited for readability.

Bloomberg: How did you get into the financial field?

Su Zhu: I followed a very typical pre-GFC (pre-Global Financial Crisis) path. I majored in Mathematics at Columbia University, then did a summer internship at an investment bank, and later became a full-time analyst. In 2008, I started trading exotic derivatives at Credit Suisse in Tokyo, and then encountered the financial crisis, which led to my dismissal.

Fortunately, I found a junior trader position at Flow Traders, a Dutch ETF market-making firm that was expanding in Singapore at the time. After working there for a few years, I moved to an investment bank in Hong Kong for a year. Eventually, my high school and university classmate Kyle Davies and I co-founded Three Arrows Capital, focusing on emerging market forex trading.

We were only 25 at the time, and starting our own fund was very rare back then, but we saw many disruptions and changes in market structures in the forex market—electronic trading versus voice trading, on-exchange versus off-exchange trading. We felt that the risks and rewards were there.

Bloomberg: What attracted you to the Crypto field?

Su Zhu: I first got involved in Bitcoin in early 2013, primarily focusing on trading platforms in China and various arbitrage trades. By the end of 2017, it was very clear to me that the talent and energy of the young people in this field alone indicated that Crypto would follow the early cycles of creation and disruption of the internet, ultimately leading to a paradigm shift in finance, technology, and culture.

Bloomberg: What is Three Arrows Capital mainly focused on?

Su Zhu: Derivatives trading has always been our main source of income and will always be an important part of our work, closely intertwined with our venture capital investments.

Since 2018, crypto trading companies have performed well because, regardless of market conditions, they have resources to invest in top talent. We have no external investors, which allows us to make very good market timing decisions and then reinvest that into continuous reinvestment across the ecosystem. Ensuring that we generate income from market volatility to maintain investments in the team is my top priority.

Bloomberg: Which areas do you think have the most potential?

Su Zhu: I believe in Amara's Law, which states that technology is overestimated in the short term and underestimated in the long term, especially in the Crypto industry. The most promising areas today may not even be considered use cases for Crypto.

I am looking forward to seeing what scalable L1 public chains like Avalanche can bring to users and developers. When user numbers reach the millions, tens of millions, or even billions, we can't even imagine the potential network effects and behaviors that may emerge. Most of the applications that people use today, considered part of Web2, will be surpassed by lightweight, community-owned Web3 technologies.

I believe we are entering a new era where the potential for Bitcoin to become the primary reserve currency for individuals and nations is clearer than ever before. It won't be a smooth journey, but for those embarking on it, it will be an extraordinary one.

Bloomberg: What is the worst thing about Crypto?

Su Zhu: Tribalism and intense competition among the crypto community. Austrian economist Ludwig von Mises predicted open competition in private money and technology, and we are now seeing this play out in a high-risk manner. However, when people have a high proportion of their net worth in these assets, increased tension is inevitable. In a way, it also shows the resilience of the community and what people are truly willing to fight for.

Bloomberg: You often mention history and philosophy, how do these topics influence your work?

Su Zhu: To truly understand Crypto, you must understand what it is responding to and what movement it is heading towards. For me, Crypto represents several converging trends:

• Shifting from centralized control to decentralized decision-making.
• Transitioning from closed-source proprietary platforms to open-source discussions.
• Moving away from institutional ownership to individual ownership.
• Shifting from regulated assets to self-sovereign anonymous assets.
• Moving away from crony capitalism to collective capitalism.
• Transitioning from platforms that extract value from creators and fans to platforms that share value between creators and fans.

I am a libertarian but also a voluntarist. This means that I don't want everyone to agree with my way of thinking; I just want to enable a world centered around freedom. In the future, anyone can participate in this system in a way they see fit.

The emergence of the internet was the first major victory for individuals, and the second victory was the development of open-source peer-to-peer encryption technology in the 1990s. The existence of end-to-end encryption technology was so astonishing that the U.S. government tried to restrict its dissemination, viewing it as illegal export of military-grade technology.

Since then, we have come to realize that these are inalienable human rights we have always had. Technology makes it possible, just as naturally as handing someone cash or having a simple conversation in the physical world. I call the concept of Crypto "restorative technology" because it is a key step in reclaiming important areas individuals have long relinquished.

Bloomberg: What is your proudest investment, and conversely, what is it not?

Su Zhu: Investing in Deribit, the leading crypto options trading platform during the bear market. Investing in L1 during the bear market, such as Avalanche, Solana, Polkadot, especially through the OTC market. All of these felt very contrarian at the time, but it's evident that going against the grain and supporting hardworking, tech-oriented teams pays off.

I don't think there is anything I am not proud of. Even in projects that incurred losses, what matters is that they were attempted, and the founders put in effort. People often look at failed things trying to draw broader conclusions, not realizing that everything exists in a realm of probability and unknowability.

For example, our best venture investment to date is Axie Infinity, a project that had undersubscribed seed rounds to the point where people thought they were making donations. The most chaotic investment project I've seen might be Facebook's Libra, where everyone set up SPVs for it, thinking it would be the future of Crypto.

(Facebook, now Meta Platforms, planned to revolutionize global finance with a Crypto project called Libra, later renamed Diem, but it never took off. All assets were sold to Silvergate Capital earlier this year).

Bloomberg: In history or philosophy, who do you admire the most?

Su Zhu: If you look at someone like the late founding Prime Minister of Singapore, Lee Kuan Yew, who separated Singapore from Malaysia, aiming for an incredible futuristic vision. Essentially, Singapore is the first city of entrepreneurship. It had to navigate multiple challenges of nation-building in a volatile geopolitical environment: security, energy, economy, and culture. I see many similarities with the Crypto community building. You have to believe in the power of the community and collective action, as well as the importance of uninterrupted transparency and honesty, and the ability to win in ideological battles.

Bloomberg: What are your future plans? What about Three Arrows?

Su Zhu: I hope to support the development of holistic systemic thinking to the best of my ability. I believe this is crucially similar to our society's thinking about futurism—many technologies sound futuristic but are actually regressive, while many seemingly clunky technologies are powerful enablers of human innovation.

I strongly support grassroots solutions based on nature, addressing critical agricultural issues, and look forward to having a greater impact in this area. My involvement in this is an extension of the same spirit and principles I have invested in Crypto.

Nature-based food systems or regenerative agriculture decentralize our access to nutritious food and clean water sources. They free us from reliance on global supply chains. By establishing alternative farming practices at the community level, people can choose to engage in this more localized parallel food system.

Community-supported market gardens, especially in urban areas, expand our freedoms. They will be another major victory for individuals as they give us more control over our health and nutrition while regenerating the Earth.

As for Three Arrows, we will continue to do what we do best—invest in crypto assets and provide long-term support to crypto builders and communities.