In this deep-dive interview, Alex Momot, a serial crypto entrepreneur since 2013 and CEO of Peanut Trade, pulls back the curtain on the "invisible hand" of the digital asset world. Having raised over $30 million across several projects and navigated the 2018 ICO boom, Momot discusses the reality of market making, why even the most ambitious startups fail, and the emerging power of prediction markets as a hedge against global uncertainty.
The Evolution of a Serial Crypto Entrepreneur
Danylo: You’ve been in crypto since 2013. How did you first get started when most people still thought Bitcoin was a scam?
Alex Momot: My first encounter was through media articles claiming Bitcoin was for illegal activities or the dark web. I initially ignored it until the price hit $1,000 in late 2013. I realized that if something is 1,000 times more valuable than the US dollar, it’s worth researching. I eventually understood it was a purely technological innovation. My first startup was a service for refilling mobile phones with Bitcoin in Ukraine, but the banks closed my account within months. Later, I found success selling Bitcoin mining equipment globally, moving around $50 million worth of hardware between 2015 and 2017.
Danylo: You were also an early investor in the Ethereum ICO. Looking back, was it a calculated risk?
Alex Momot: I bought 400 Ether for about 0.6 Bitcoin. At the time, social media was full of people screaming that Vitalik Buterin would take the money and disappear to an island. I was afraid of a scam, so I only invested a small fraction of my holdings. It turned out to be a 1,000x investment, though I sold most of it by 2018. It taught me that initial capital is hard to build, and market timing is everything.
The $20 Million Lesson: Why Startups Fail
Danylo: In 2018, your startup Remy raised nearly $20 million. It was a huge success at the time, yet the project didn't survive long-term. What happened?
Alex Momot: We had a great idea — passwordless authentication on the blockchain. However, we faced a "perfect storm." First, the COVID crisis caused crypto prices to crash. Second, we made poor treasury management decisions by keeping our funds in Ethereum while its price dropped from $850 to $170. Third, selling cybersecurity solutions to giant corporations like Microsoft or Google takes years, and a startup's runway is usually only 18 months. Even for a giant like Microsoft, solving the password problem is worth $500 million a year, and we were trying to do it with $20 million.
Danylo: Do you feel that you let your investors down?
Alex Momot: Most investors lost money, just like in almost every asset class over the last few years except Bitcoin. But it wasn't because the idea was bad. It was the market landscape. In 2021, the market was driven by greed; everyone wanted in on the hype. My advice is to avoid the hype and focus on the ideas. Even Ethereum could be seen as a "scam" if you only look at initial promises that didn't materialize due to legal barriers, like tokenizing real estate.
The Myth of the Market Maker: Liquidator or Liquidity Provider?
Danylo: You now run Peanut Trade, a market maker. Most retail traders believe market makers exist solely to liquidate them. Is that true?
Alex Momot: That’s a common conspiracy theory. In reality, a reputable market maker provides liquidity near the spread so you can trade effectively and cheaply. We put orders on one exchange and hedge them on another. Big American firms like Jane Street or Jump Capital have strict risk departments; they aren't trying to manipulate you — they are spending billions to ensure you have the best possible service.
Danylo: Are there "shady" players in this space?
Alex Momot: Yes, particularly on smaller, unregulated Asian exchanges. Some market makers have contracts that allow them to sell tokens the moment they hit a certain price, creating a "ceiling" that prevents the community from pushing the price higher. There are also exchanges that list tokens they don't even have the supply for, which is a pure scam against their users.
The New Frontier: Prediction Markets
Danylo: Prediction markets like Polymarket are exploding. How does market making work there?
Alex Momot: It’s more complex because you need external data sources. For a sports match, you might need an AI to analyze the TV feed in real-time to adjust prices. The biggest challenge is the "outcome" rules. For example, if a team forfeits, one platform might call it a technical loss while another aborts the match entirely. If you are arbitrage trading between them, you can lose everything on a technicality.
Danylo: Are these markets just for gambling?
Alex Momot: No, they are powerful hedging tools. During the escalation in Iran, I used prediction markets as insurance. I had already spent money on a booth at a conference in Dubai; if a war started, I would lose that investment. By betting on an escalation, I hedged my potential losses. It’s an idea Vitalik introduced in 2014 that is only now becoming a reality.
MEV and the "Invisible Tax"
Danylo: What is MEV (Maximal Extractable Value), and why should a normal user care?
Alex Momot: When you swap tokens on a platform like Uniswap, you set a "slippage" tolerance. MEV bots in the "mempool" see your transaction before it's confirmed. They buy the token before you and sell it to you at a higher price. It’s essentially a front-running tax.
Danylo: How can users protect themselves?
Alex Momot: You must be very cautious with your slippage settings. Most people don't care, and that’s where the bots make their profit. At Peanut Trade, we pride ourselves on being a "fair" market maker. We don't do "sandwich attacks" (front-running users), and we offer better terms than what is often found in standard predatory contracts.
Advice for the Next Generation
Danylo: What is your advice for a 20-year-old entering crypto today with high hopes but little money?
Alex Momot: Don't try to swallow everything at once. It takes at least six months just to understand the basics. Most importantly, stay flexible. Don't be closed to new things, whether it's AI or new blockchain layers. The banking industry is getting worse and more complicated every day, which means the adoption of transparent, decentralized finance is inevitable.
FAQ
How do crypto market makers make money?
Market makers primarily earn profit through the bid-ask spread — the difference between the buying and selling price. They also capitalize on price inefficiencies by simultaneously trading across multiple exchanges; for example, they might place an order on Binance and immediately hedge that position on Coinbase to extract a small profit from the price difference.
Do crypto market makers manipulate prices?
According to Momot, large, reputable firms (especially US-regulated ones like Jane Street or Jump Capital) do not manipulate prices because they have strict legal and risk departments to prevent such activity. However, he notes that "shady" participants on unregulated exchanges may use manipulation tactics, such as using short How can users avoid MEV bots? The most effective way for a user to protect themselves is to be extremely cautious with slippage settings in their crypto wallet. Setting a high slippage (like 10% or 20%) creates a large window of profit for MEV bots, while keeping slippage low makes an attack less profitable or impossible.
What are prediction markets in crypto?
Prediction markets are platforms (such as Polymarket or Kalshi) where users trade on the outcomes of future events, including elections, wars, and sports. Momot views these as a powerful alternative to traditional news and social media for understanding the true probability of global events.
Are prediction markets considered gambling?
While they involve betting on outcomes, Momot argues they are actually sophisticated hedging and insurance tools. For instance, a business owner can bet on a conflict's escalation to offset potential business losses caused by that same event, effectively using the market as a form of financial protection
What is MEV (Maximal Extractable Value)?
MEV is a form of "invisible tax" that exists due to the design of Automated Market Makers (AMMs) like Uniswap. It is the value that bots can extract from the blockchain by identifying and exploiting the slippage created by a user's transaction.
What is a sandwich attack?
A sandwich attack occurs when a bot detects a user's transaction in the mempool (before it is confirmed on the blockchain). The bot places a transaction to buy the token before the user (driving the price up) and then immediately sells it back after the user's trade is completed, profiting from the artificial price jump.
