Welcome to Tradegala, Arbor's official launch party. The theme of the evening is Trees. Costumes are mandatory, hedging is optional, and liquidity flows freely from the open bar to the open orders. An arboreal fantasy awaits your arrival.
As you step through the front door of Mox, SF-coworking-space by day, trading-pit-in-an-enchanted-forest by night, you enter the Arbor ecosystem and economy. Money doesn't grow on trees, but upon your arrival the Arbor team gives you some tree clippings anyway to use as currency. “Don't spend all those clips in one place,” cautions Kelly, the securities guard for the evening. “You'll want them to grow over time. Understood?” “Yes ma'am,” you say, and mentally log how much wealth you expect to accumulate over the night.
The first room you enter has a fig tree, with four gamblers playing a complicated card game beneath it. A small crowd has formed around them. One onlooker creates four markets on the final clip profits of each of the four players; soon, a dozen or so partygoers have traded. Two can play at that game, you reason, and you make a dozen markets on the final clip profits of each of the dozen gamblers. Some of those gamblers begin to trade on your markets, and you realize you've created circular dependencies that will make resolution complicated. Your graph theory class never covered how to handle those; it was trees all the way down.
You wander onward. A tree of forbidden knowledge, guarded by an infomous Basilisk, bears fruit so sweet you will forevermore find other apples unsatisfying. Shouts rise from the crowd of spectators gathered around the tree: “Twenty clips bid for a share of apple,” “Thirty clips bid!” “Forty!” “Two hundred!” but the Basilisk laughs, his best offer far out of their reach.
On your way out of the room, you pass another apple tree, this one with plenty of low hanging fruit, but you have to wonder why nobody else has plucked it yet. “I'll check back later and see if anyone else wanted it,” you decide; there's no rush.
You step onto the dance floor, where [SURPRISE MUSICAL GUEST REDACTED] has just finished performing their newest album. You've seen them in concert before, and you remember that the lead singer has a pretty cute smile. At this point in the night, you're a few drinks in, so you swagger over with an unusual level of confidence and make eye contact. “Hey handsome,” she says. “Want a random chance at getting my number?”
“Uh,” you stammer. Smooth. She grabs a box labeled RANDOM NUMBER GENERATOR GENERATOR and says “how's this: we'll use a randomly selected randomization process to determine a winner. If you win, I give you my number. If I win, you give me your remaining clips.” You break eye contact to look at her face, and notice she's winking at you.
“Rand, um, I'm not, I mean, let me think about it,” you manage, cursing your overconfident and wildly miscalibrated self of twenty seconds earlier. “I- I gotta go.” You stumble away, terrified of a confident, high-variance woman.
“Is that girl just taking coin flips for clips with anybody?” you ask a nearby member of the Arbor team, Nicholas, trying to calibrate how special you should feel. “They're non-binary,” he says uniformly. “Sorry, uh, are they just taking coin flips for clips with anybody?” you reply awkwardly. Nicholas gives you a funny look. “The RANDOM NUMBER GENERATOR GENERATOR is just a continuous flow of continuous distributions that require you to specify a cutoff threshold to determine a winner,” he says. “It doesn't have any coins in it. It's nickelless.”
Reluctant to do trades you don't understand with counterparties you don't know, you politely decline, and count your party only a partial success so far. Just as you're wondering whether you'll find any good trades to do before dawn, Ricki Heicklen bursts onto the dance floor. She has brambles in her hair, scratches on her arms, and hundreds of apples falling out of her pockets. “700 SHARES OF APPLE AT 30 CLIPS” she shouts. You check the order book; it still has a best bid of 200 clips resting on it. Nicholas elbows you to make your move.
“Don't I need a story for why I should get to do this trade? If it's so good, why is Ricki offering it?” you ask. If you've learned anything from trading bootcamp, it's that when an Arbor staff member implies you want to do a trade, you're supposed to say “but what about adverse selection?”
“700 SHARES NOW AT 18 CLIPS” Ricki yells, voice cracking as she falls off of a table. “Sure,” Nicholas says, “but a basic model of Ricki should be enough to get you there, right? I mean, listen to her: it's pretty obvious she's prioritizing volume over execution.” He sees you're skeptical. “Besides, she's trying to give you the chance to buy from her and immediately sell for higher as a key part of her trading pedagogy. That's our whole shtick here at Arbor.”
“Arbor?” you say, still nervous you don't have a good enough model of Ricki to justify trading. “But I hardly know her!”