Blockchain
WOOTRADE Dark Pool Solves Liquidity Pain Points within Crypto Ecosystem
Cryptocurrency and blockchain have been around for more than 10 years, as new technology, concepts and models continue to be developed and reconstructed. However, the most prominent, and perhaps most important application, is still in “Trading”. Because most retail customers cannot directly invest in primary markets, they turn to secondary markets, known as crypto exchanges.
For many exchanges, trading volume is a very simple performance indicator, because volume not only directly correlates to profit, but is also a marketing tactic to attract retail customers. Newer exchanges tend to fall into the trap of forging their trading volume to raise their market ranking and increase brand exposure. Many people think that an exchange with a large trading volume will attract more avid traders because they will have better market depth and liquidity, but that’s far from the truth.
If cryptocurrency aims to become a mainstream investment tool, liquidity is a key issue that needs to be addressed, aside from regulations, safety concerns and new models. Once the liquidity problem is solved, the whole digital asset ecosystem, especially exchanges, can progress rapidly.
The Problem with Depth and Liquidity in the Crypto Market
So, what is liquidity? To use an easier but maybe less accurate definition, liquidity reflects the market’s transaction scale. When you make a transaction on an exchange and open a sell order, you will notice that your pending order will be displayed on the exchange’s order book. This order book is a compilation of every customer’s order. When a bid is opened, it will be matched with an ask based on price. Of course, it’s much more complicated than this, but basically, the compilation of buy and sell orders (also referred to as depth) accurately represents the liquidity that customers care about.
The problem is, when a whale submits an ask of 100 BTC, small exchanges do not have the capacity to handle an order this size. This causes a drastic price fluctuation, such as a 5% slippage between the average strike price and market price. Versus when you submit an order on a big exchange, the slippage may only be around 1% or less. For example, in July, an ask of over 6000 BTC was opened on Binance, the market price only dropped around USD $300 after all BTC were sold. If we use the price of USD $10000/BTC to calculate, the slippage is only 3%, which shows that Binance has high liquidity. When we look at the secondary market however, there is an inconsistency with depth and liquidity among exchanges.
Another Solution: Aggregation Platforms and Dark Pools
The liquidity and market depth problem pushed forward the development of aggregation platforms, which combine the market depth of various large exchanges. When customers use these types of trading platforms, they receive the combined depth of these exchanges, which have more liquidity and a deeper order book than a single exchange has alone. However, these platforms often charge a high fee for their services.
Besides aggregated market platforms, there may be another solution, but first, we have to introduce another concept: Dark Pool. A dark pool allows large anonymous transactions to happen outside of the public market. Simply put, we can think of a dark pool as a trading platform made from a huge order book with high liquidity. Once clients connect to this dark pool, they can utilize a deeper order book, without worrying that their order will cause a big slippage. Transactions will also be made at a reasonable price, and not affected by poor liquidity.
Recently, a similar project, WOOTRADE launched during Shanghai blockchain week, held by Wanxiang Blockchain Labs. WOOTRADE, incubated by Kronos Research quantitative fund, focuses on providing a liquidity service, or more so a market depth service. WOOTRADE not only aggregates depth from larger exchanges, they also incorporate Kronos’s HFT liquidity flow, thus providing a deeper order book with a more competitive pricing.
WOOTRADE’s capability of providing such services largely correlates with the success of Kronos Research’s fund services. Kronos’s Co-Founder Mark Pimentel, graduated from CMU, started his career at Citadel Investment Group, and continued on at Knight Capital’s electronic market making group. His team operated the largest dark pool in the US and Europe during the time. Based on the solid background of their founders, Kronos effectively uses HFT and CTA strategies in their fund. Kronos’s high transaction volume and flow also acts as one of WOOTRADE dark pool’s liquidity provider. In addition, since Kronos is a quantitative fund, they are able to take more risks than traditional market makers can.
Kronos’s Co-founder Jack Tan says, “As a quant fund, Kronos has a very strong partnership with many of the largest digital asset exchanges, and our huge transaction volume is the key to our profits. From a market standpoint, exchanges, wallets, OTCs, large traders, and even other quant teams, have all expressed a need for this liquidity service. We trade over millions of BTC per month, and that volume is added into WOOTRADE, and provided for every connected exchange. We also aim to work with DEX and other decentralized projects to realize a totally fair and transparent ecosystem in the near future.”
Blockchain
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Global Supply Chain Finance Market
Blockchain
Web3 Startups Raise Nearly $1.9B in Q1 2024 Despite Overall Downtrend in Crypto VC Interest
Venture capital funding for cryptocurrency and blockchain projects has seen a notable resurgence in the first quarter of 2024, marking its first quarterly rise since 2021. Crunchbase data released today indicates that Web3 startups secured nearly $1.9 billion in funding across 346 deals during this period. This represents a substantial 58% increase from the previous quarter, offering a glimmer of hope amidst the ongoing downward trend in overall crypto VC interest.
The recent surge in funding can be attributed to investors adopting a more long-term perspective on Web3, as opposed to the hype-driven “tourist investors” predominant in recent years. Chris Metinko, the author of the report, notes that investors are shifting their focus to the AI sector, indicating a change in investment strategy. There is a growing interest in supporting the foundational infrastructure of the decentralized internet, rather than solely concentrating on crypto wallets and lending platforms, which attracted significant investments during the peak period of 2021 to 2022.
While large funding rounds were relatively uncommon in Q1, several notable investments stood out. Exohood Labs, a company integrating AI, quantum computing, and blockchain, secured a remarkable $112 million seed round at a valuation of $1.4 billion. EigenLabs, an Ether token “restaking” platform, raised $100 million in a Series B round led by a16z crypto. Additionally, Freechat, a decentralized social network leveraging blockchain technology, secured $80 million in a Series A round. These investments, among others, contributed to the increase in valuations and the emergence of four new Web3 unicorns in Q1.
Despite the recent progress, the future trajectory of Web3 remains uncertain. Metinko suggests that the next few quarters will be pivotal in determining the industry’s direction. While investors anticipate a rebound in investment as the decentralized internet evolves, it may take another year for venture capital activity to stabilize after the exuberance of 2021. Factors such as the approval of U.S. spot Bitcoin exchange-traded funds and the upcoming Bitcoin halving could also influence the market, given the rising prices of Bitcoin and Ether.
A noteworthy example of significant funding in the Web3 space is Monad Labs’ recent successful funding round, which secured $225 million led by Paradigm. Monad Labs is a layer-1 blockchain compatible with Ethereum, offering faster transaction processing. This funding round harkens back to the golden era of crypto funding in 2021-2022, when L1 solutions attracted substantial investments.
Earlier this year, Balance, a digital asset custodian based in Canada, announced that it had once again reached $2 billion in assets under custody (AUC) amidst the recent market recovery. Similarly, Korea Digital Asset (KODA), the largest institutional crypto custody service in South Korea, has experienced remarkable growth in crypto assets under its custody, expanding by nearly 248% in the second half of 2023.
Analysts at Bernstein Research project that crypto funds could reach an impressive $500 billion to $650 billion within the next five years, representing a significant leap from the current valuation of approximately $50 billion. This forecast underscores the growing optimism and potential for substantial growth within the crypto industry in the coming years.
Source: cryptonews.com
The post Web3 Startups Raise Nearly $1.9B in Q1 2024 Despite Overall Downtrend in Crypto VC Interest appeared first on HIPTHER Alerts.
Blockchain
ASIC cracks down on blockchain mining firms
Three blockchain mining companies – NGS Crypto, NGS Digital, and NGS Group – along with their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten, are facing legal action from the Australian Securities and Investments Commission (ASIC) for allegedly operating without a license, in violation of Australia’s Corporations Act. ASIC initiated legal proceedings against these entities on April 9, citing concerns about their non-compliance with financial regulations and their solicitation of Australian investors.
According to ASIC, the NGS companies promoted blockchain mining packages with fixed-rate returns to Australian investors, encouraging the transfer of funds from regulated superannuation funds to self-managed superannuation funds (SMSFs) for conversion into cryptocurrency. Approximately 450 Australians invested a total of around USD 41 million in these packages, raising concerns about potential financial losses.
The legal action filed by ASIC alleges that the companies violated section 911A of the Corporations Act, which prohibits companies from providing financial services without a valid Australian Financial Services Licence (AFSL). ASIC is seeking interim and final court orders to prohibit the NGS companies from offering financial services in Australia without an AFSL.
ASIC Chair Joe Longo emphasized the importance of investors carefully considering the risks before investing in crypto-related products through their SMSFs. Longo stated that ASIC’s actions send a message to the crypto industry about the regulator’s commitment to ensuring compliance with regulations and protecting consumers.
In a separate development, the Federal Court appointed receivers for the digital currency assets associated with the NGS companies and their directors to safeguard these assets amid concerns about the risk of dissipation. Mendham was also issued a travel restriction order, preventing him from leaving Australia.
While a court date for the proceedings has not been set, ASIC’s investigation is ongoing, with the regulator continuing to gather evidence and build its case. It is worth noting that the investigated companies share a similar name with NGS Super, a legitimate Australian pensions provider, leading to potential confusion among investors. NGS Super clarified that it is not involved in selling cryptocurrency or related products and has taken legal action to protect its trademark and members’ interests.
Source: iclg.com
The post ASIC cracks down on blockchain mining firms appeared first on HIPTHER Alerts.
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