With a cumulative trading volume of over 50 billion yen, Arisa Toyosaki is one of the globally active Japanese Web 3.0 entrepreneurs who created "Cega Finance," a company that is driving the DeFi derivatives market. We will take a closer look at her roots, Japan from a global perspective, and her vision for the future of DeFi and Web 3.0.
TOKEN2049 is one of the largest cryptocurrency conferences in Asia. It is held in Singapore every September and is a big event that brings together crypto-related people from all over the world. On the stage, there was a Japanese person giving a presentation in fluent English. Her name is Arisa Toyosaki. She is an expert in decentralized finance and a pioneer of DeFi derivatives.
Her roots as an entrepreneur active on the world stage from Japan. We spoke to Arisa Toyosaki, focusing on her personal activities and the development of CEGA.
Nagatomo Hiroki (hereafter, Nagatomo): Did you think about becoming an entrepreneur from a young age?
Toyosaki Arisa (hereafter, Toyosaki): I didn't have any particular dreams when I was a child, but I was the type of person who wanted to try everything that interested me. In terms of starting a business, my parents had a big influence on me. Both of them were entrepreneurs who had built businesses from scratch and sold them, so I feel like I was naturally led to the path of an entrepreneur.
Nagatomo: Was CEGA your first business?
Toyosaki: No, actually, I started a graphic design company when I was in college and sold it for a small amount of money. When I was working at Google, I ran a salon for eyelash extensions and eyebrow waxing as a side job.
Nagatomo: I'm amazed at your initiative (laughs). You are currently active globally, Toyosaki. What differences do you feel when comparing overseas with Japan?
Toyosaki: In Japan, the standard of living is high and the happiness of the middle class is high, so I feel that there is a lack of motivation as a Japanese person and a hungry spirit to go overseas and succeed.
As for how to proceed with work, Japan is culturally a village society, so in many cases, decisions cannot be made without a consensus from the people around you, not top-down. Compared to other countries where decision-making is fast, it takes time to do even small things, which is inefficient and a great waste.
Nagatomo: Looking at Toyosaki's career, it is a brilliant one, but what was the thinking behind your decision to give it up to start a company?
Toyosaki: First of all, the idea of giving up your career is wrong. The expression "letting go of your career" includes the assumption that you will never come back. If you have acquired a skill set and have improved your abilities and growth, I think you can always return to a major company.
One of my bosses from my time at Google had a career in which he left Google twice, tried to start a startup, and then returned. The idea of lifetime employment is deeply rooted in Japan, but I believe that a career is flexible and not linear.
If you think based on failure, you will inevitably become conservative in your approach, so I think that you should have the mindset of "maybe I'll have a chance," and try everything you want to do, especially while you're in your 20s and 30s.
Nagatomo: Toyosaki, you also support young people in starting their own businesses. What do you tell young people who want to start their own businesses?
Toyosaki: What I often tell people who want to start a business is that you shouldn't start a business just because you want to be an entrepreneur. Starting a business is not an end in itself, it is merely a means to an end. The right time is when there is an interesting opportunity in the market or when you have an idea for a good product. I tell them that if they have an interesting idea or a business opportunity, they should start a business right away.
Nagatomo: What was your idea for starting a business?
Toyosaki: In my case, my skill set was the niche and specialized field of derivatives that I had cultivated at UBS Securities, and the branding and marketing strategies that I had learned at Google, so I was conscious of what could be created by combining those two.
I prefer to think about business strategies and start projects from scratch, so when I saw the market movements when DeFi made a big leap in 2020, I thought I could be successful in this field. I don't think it's a good option to start a business without an idea.
Nagatomo: Please tell us the story of the first time you came into contact with crypto assets.
Toyosaki: It goes back to my university days. I was majoring in computer science, so I learned about Bitcoin in school classes. In 2013, it was about $20 per BTC. Since I was a student, I didn't buy a lot, but I remember being shocked by the technology.
Nagatomo: You are currently based in Singapore. Why did you choose Singapore? Toyosaki: When I thought about what I wanted to do with CEGA, I had to choose between Singapore and Dubai. I was originally living in Hong Kong, so I was familiar with the financial situation in Asia, but Singapore has good policies and DeFi projects are gathering from all over the world, so the fact that I could feel the speed of business firsthand was a big deciding factor. The other reason was that the food is delicious (laughs).
Nagatomo: What kind of activities do you personally do, Toyosaki?
Toyosaki: Personally, I give lectures on decentralized finance technology at universities and companies to raise awareness.
I also serve as a director of the Japan Blockchain Association (JBA). DeFi is a new technology historically, so society has not yet caught up with its understanding. Through JBA, which has a pipeline to major Japanese institutions, I work to let the government and large companies know about the greatness of this technology. I also bring information about overseas projects to young Japanese people through JBA subcommittees and support entrepreneurs who are trying to go overseas from Japan.
From the perspective of promoting entrepreneurship, I also make angel investments in Web 3.0 projects.
Nagatomo: Why are you focusing on supporting the younger generation?
Toyosaki: Right now, I myself am concerned about Japan's future. This year, there was a lot of buzz about the news that for the first time, no Japanese companies were included in the top 50 market cap companies in the world, which I think is a sign of the decline of the Japanese economy.
Now is the time for some kind of cultural or policy change, and the younger generation holds the key to this. I'm thinking about how to keep Japan's younger generation hungry, and how to create a culture where the goal is not to get into a large inverted pyramid company.
Nagatomo: Why did you decide to compete in the field of DeFi derivatives? Please tell us the origin of the idea.
Toyosaki: I had wanted to create options using cryptocurrencies since I was working as a derivatives trader in 2016.
At the time, I proposed that the company I was working for could create them, but at that time there were no policies, let alone the idea of DeFi, so it had not even reached the level of an emerging market, and there were some difficulties for a large company, so it did not come to fruition.
Since then, I have been keeping a close eye on market trends and looking for an opportunity to make it a reality.
Nagatomo: When did you decide to commercialize DeFi derivatives?
Toyosaki: 2020 was the year that DeFi made a big leap forward, and seeing the success of Uniswap, I began to think, "Wouldn't it make sense to create a derivative product based on smart contracts?"
Actually, at that time, option-like products were already appearing in DeFi, but the people making those products at the time did not have any knowledge of financial engineering, so many of the interest rates and returns on the products did not generate real profits, and they ended up being Ponzi schemes, and the interest rates were not sustainable in the long term.
Because DeFi itself was a highly anonymous industry, there were many projects with poor morals, and some people were trying to undermine the credibility of the good technology.
Also, there were a lot of movements to fork protocols that had been successful as part of the DeFi culture, such as Uniswap, and I think the community lacked creativity to create something new.
Nagatomo: So it's these holes in the industry that CEGA is able to grasp the needs of its customers.
Toyosaki: Yes. In 2021, I published a white paper under my real name, stating that by creating conditional options called exotic options on smart contracts, we could create a new product that had never existed in the industry before, a product that retains creativity, and a highly secure product that would bring real benefits in the long term.
I originally wanted existing DeFi protocols to take the ideas in the white paper and create it, but before I knew it, the white paper had been distributed to various investors, and other DeFi projects also said that they did not have the specialized knowledge to create a product, so it would be difficult for them to do so, but they also received a lot of support from the industry, saying that they should definitely create one.
As a result, our cumulative trading volume exceeded 500 billion yen, making us the world's No. 1 in the DeFi exotic options industry, and we were able to reaffirm that there was a need for it from users after all.
Nagatomo: How did CEGA gather its team members?
Toyosaki: I had a long career, so I thought I knew my strengths and weaknesses, so I interviewed co-founders without being concerned about race or location, focusing only on the type of people I would get along with.
When I attended a DeFi meetup in New York, I was hungry and lined up for a taco food truck, and the person behind me at that time is actually my current co-founder (laughs). By the way, I am the only Japanese person on the team.
Nagatomo: What were the difficult and challenging parts of forming CEGA?
Toyosaki: There were three main reasons. First, in 2021, there were overwhelmingly few developers, and the market was too hot, so costs were high for everything. Gas, infrastructure, and human resources were all expensive. I was very worried about how to efficiently have a long runway there.
The second reason is finding talent. CEGA screens about 200 people to fill one position. I think it's more than Web 2.0 companies.
The reason is that when working remotely, you need to have the responsibility of taking ownership of the project and being able to drive it from start to finish, as well as the ability to do so, and we were looking for mentally strong people who could stay motivated even when they were not physically there to add to their skill set. The process was obviously difficult.
The third reason is education. Exotic options are a mathematically difficult field among derivatives. At first, I was the only person with knowledge of financial products, so I spent a lot of time educating my team about financial engineering, such as what futures are and what options are.
Nagatomo: When ordinary people hear the word derivatives, they think it's difficult, so what are the benefits?
Toyosaki: The great thing about derivatives is that they are a tool that allows you to bet on a market that you could only bet on up or down, for example, and increase your investment options. In short, derivatives can be used to create low-risk and stable investment products, as well as high-risk products.
We shouldn't just think that derivatives = scary.
Nagatomo: Please tell us the features of CEGA's products.
Toyosaki: Regarding the dual currency product that was released the other day, it is actually a very popular product among existing financial asset management. What makes it so great is that the interest rate is good.
CEGA's products currently have interest rates ranging from 22% to a maximum of 51% (as of January 17th), and the interest rate is held regardless of whether the market goes up or down. CEGA's mission is to create interest rates that maintain safety even in a market with volatile fluctuations.
Of course, compared to products such as lending and bonds, it is a product that has market risk, but compared to futures and general options trading, the Sharpe ratio, which is the ratio of risk to reward, is quite high in the DeFi derivatives world.
As of January 17, the cumulative trading volume was $306.73 million (approximately 54.2 billion yen).
Nagatomo: Please tell us CEGA's vision.
Toyosaki: Our vision is to create a new economic sphere in a new market by creating new value propositions for DeFi derivative products. As a mission, we are creating highly secure derivative products with actual real profits using crypto assets.
In the medium term, we want to create not only option products, but also lifecycle management tools for options, such as barrier event management, settlement between institutions, position management of liquidity providers, and execution of such programs all on-chain with enhanced security.
Our ultimate goal is to incorporate DeFi as infrastructure in large institutions.
Nagatomo: What is important for CEGA to advance projects?
Toyosaki: CEGA's core value is "being a good person." There are many people and projects with questionable morals in emerging markets, so trust is the most important thing.
Also, when looking at the current DeFi option protocols, there are many projects that simply jump on the trend, but as a company, we at CEGA place great importance on creating things that actually have value and that no one has done before.
Nagatomo: Finally, please tell us about the future of DeFi in your opinion.
Toyosaki: DeFi is often confused with blockchain technology, but blockchain technology has been around for 15 years, while DeFi is a fairly new field that has only been around for about three years.
I don't think DeFi will completely replace existing finance, but I think that DeFi will simplify social financial infrastructure in terms of usage and credibility, based on the commonly-mentioned concepts of permissionless, trustless, and accessibility.
◉Arisa Toyosaki
Co-founder and CEO of CEGA Born in Nagoya in 1993. After spending his childhood in Japan and China, he graduated from Northwestern University in the United States. He specializes in computer science and economics. He started his career as a derivatives trader at UBS Securities Hong Kong, and then joined Google Japan. He was in charge of marketing for search services and AR businesses, and founded CEGA, a decentralized finance project using crypto assets, in 2022. He also makes angel investments in female entrepreneurs and web3 projects originating in Japan.
◉Hiroki Nagatomo
Columnist
Born in 1988. Started a business while studying at Yokohama City University. Developed a staffing agency with major telecommunications carriers as its main clients. Traveled to over 30 countries and met wealthy people from overseas, which led him to come into contact with crypto. In 2022, he participated in the launch of BitLending, an asset formation platform for the Web 3.0 era. Leveraging his unique network, he follows the current state of crypto. His hobby is photography. As a triathlete, he challenges IRONMAN RACEs around the world.
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