Your new favorite stableswap protocol.
Earlier last week, we exited stealth. Axios broke the story which we followed with a twitter thread. Here is a link to the full press release. What is a darkpool and why does it matter? Time for a classic finance bedtime story:
It's the late 70s. You're an executive at McDonalds which has just developed a revolutionary new product: the chicken nugget. Test groups love it but finance fears its launch. Why? Well at the time Americans didn't eat much chicken and McDonald would needs a lot - like a lot - of chicken. Launching it would send the price of chicken to the moon! Even an announcement risks a price shock.
Conversely, chicken farmers worry that expanding production capacity through borrowing could cause chicken meat prices to plunge, potentially leading to bankruptcy. You call a man named Ray. Ray knew some chicken farmers and a thing or two about futures contracts. Ray set up a contract where McDonalds agreed to buy a fixed number of future chickens at a set price, securing a supply of chicken for McDonalds and making it safe for the farmers to expand production.
Ray's last name is Dalio. He's one of the brightest financial minds in America and runs a fund called Bridgewater. What would have happened without Ray? Possibly no chicken nugget!
What's worse, a sketchy version of Ray could have easily profited from insider knowledge. Relying on trustworthy financial geniuses doesn't scale. An even scarier question is how many innovations like "chicken nuggets" haven't happened because there was no trustworthy genius who happened to know both McDonalds and chicken farmers?
Countless opportunities are likely missed due to fear of price impact. Most markets can be viewed as a microcosm of this story—parties depend on trusted intermediaries to find credible counterparts and keep their intentions private.
Darkpools, exchanges that hide all unmatched orders, emerged in the '80s to minimize price shocks. However, they have a flaw: operators can see everything, creating the potential for unfair profit. If Ray wants, Ray can profit and no one would be the wiser. The more vital trade privacy, the more money operators can make by front running. The opaque nature of these markets makes it very hard to catch the operator misbehaving, leading to increasing regulatory scrutiny of the entire space.
When we started Tristero, we asked can we build markets that are less reliant on peoples' good behavior? Can we do for liquidity what Bitcoin did for money? Thanks to zero-knowledge cryptography, it's possible to develop a market with private transactions—even from the operator. Current decentralized exchanges lack privacy as all transactions are visible on-chain. By using cryptography to build better markets, we hope to make future innovations like the chicken nugget possible, with or without "good" Ray Dalio.
Follow our Twitter to stay up to date!
Earlier last week, we exited stealth. Axios broke the story which we followed with a twitter thread. Here is a link to the full press release. What is a darkpool and why does it matter? Time for a classic finance bedtime story:
It's the late 70s. You're an executive at McDonalds which has just developed a revolutionary new product: the chicken nugget. Test groups love it but finance fears its launch. Why? Well at the time Americans didn't eat much chicken and McDonald would needs a lot - like a lot - of chicken. Launching it would send the price of chicken to the moon! Even an announcement risks a price shock.
Conversely, chicken farmers worry that expanding production capacity through borrowing could cause chicken meat prices to plunge, potentially leading to bankruptcy. You call a man named Ray. Ray knew some chicken farmers and a thing or two about futures contracts. Ray set up a contract where McDonalds agreed to buy a fixed number of future chickens at a set price, securing a supply of chicken for McDonalds and making it safe for the farmers to expand production.
Ray's last name is Dalio. He's one of the brightest financial minds in America and runs a fund called Bridgewater. What would have happened without Ray? Possibly no chicken nugget!
What's worse, a sketchy version of Ray could have easily profited from insider knowledge. Relying on trustworthy financial geniuses doesn't scale. An even scarier question is how many innovations like "chicken nuggets" haven't happened because there was no trustworthy genius who happened to know both McDonalds and chicken farmers?
Countless opportunities are likely missed due to fear of price impact. Most markets can be viewed as a microcosm of this story—parties depend on trusted intermediaries to find credible counterparts and keep their intentions private.
Darkpools, exchanges that hide all unmatched orders, emerged in the '80s to minimize price shocks. However, they have a flaw: operators can see everything, creating the potential for unfair profit. If Ray wants, Ray can profit and no one would be the wiser. The more vital trade privacy, the more money operators can make by front running. The opaque nature of these markets makes it very hard to catch the operator misbehaving, leading to increasing regulatory scrutiny of the entire space.
When we started Tristero, we asked can we build markets that are less reliant on peoples' good behavior? Can we do for liquidity what Bitcoin did for money? Thanks to zero-knowledge cryptography, it's possible to develop a market with private transactions—even from the operator. Current decentralized exchanges lack privacy as all transactions are visible on-chain. By using cryptography to build better markets, we hope to make future innovations like the chicken nugget possible, with or without "good" Ray Dalio.
Follow our Twitter to stay up to date!
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