On March 2021, a piece of news caught the attention of everyone : the innovative liquidity dark pool BlackOcean completed a US$4.3 million institutional round of financing,with participation from 25 investment institutions including SuperChain Capital, Jackdaw Capital, NGC, FBG and LD Capital.
Combined with the current trend of digital currency transactions, and contacting the team behind BlackOcean, which is the world's top quantitative team VRM, I had to spend some thought to study this project.
1. Why does the crypto world need dark pool?
Dark pools are not a new concept, and have always existed in traditional financial markets such as stocks.Generally speaking, dark pools are used to trade large stocks (according to SEC Rule 600, a minimum transaction of 10,000 shares or $200,000 is called a large stock transaction), and the price will only be disclosed after the transaction. Of course, it has now been extended, and the dark pool is not limited to the stock market, but applies to all financial markets.
Through the concept, we know that the main service objects of the dark pool are giant whales and large households. The purpose is to hide some information, better maintain the stability of the market, and let the giant whales create a private trading place.
So why does the crypto market need a dark pool?
Blockchain and Bitcoin are one of the greatest inventions of the 21st century, but their development is relatively slow due to their innovative and disruptive nature and certain cognitive thresholds.
Before 2020, traditional companies sneered at digital currencies, and cryptocurrencies seemed to be just a game for speculators. However, as the global economy is getting colder and Covid is sweeping the world, the traditional financial market supported by entities has been greatly impacted, and traditional institutions have gradually changed their attitudes. Institutions such as Grayscale kept buying stocks and Cryptocurrencies on every day, and then many giants have also begun to deploy digital currencies, which eventually leading to the current institutional bull market.
Large institutions are becoming more and more interested in cryptocurrency. Many institutions have entered the market and many are eager to try. The transaction level of institutions is definitely not comparable to retail investors, which is the fundamental reason why the crypto world needs dark pools, and this demand will grow in the future!
2. The top quantitative team VRM incubated the dark pool project BlackOcean
It focuses on high-frequency trading based on AI algorithms in the digital asset trading market and provides market-making services for exchanges. According to relevant data, the top three global digital asset quantitative teams are Alameda (FTX), VRM (FLY), and Kronos (WOO). The exchanges served by VRM include mainstream global exchanges such as Binance, Huobi, OKEx, and BitMex.
Although VRM is already providing services for many mainstream digital exchanges, many non-mainstream exchanges or other digital asset fields are difficult to form a market with sufficient liquidity due to issues such as platform depth and user volume, so they need Liquidity providers that using their power to provide liquidity for exchanges/trading pairs.
VRM itself already has enough money-absorbing ability, but based on some obsessions and visions of digital currency, it has incubated the innovative dark pool platform BlackOcean.
Three, dark pool and liquidity pool
There are mainly two core modules of BlackOcean: dark pool and liquidity pool.
The dark pool is mainly for institutional customers, and the service object is to execute large orders of more than 300,000 U.S. dollars or 5 bitcoins. BlackOcean relies on the strong technical strength of VRM, microsecond delay and unlimited API rate limit, enough transaction depth, can easily meet the needs of high-frequency and large-value transactions, and hide transaction-related data, which can well meet the need to protect information without affecting market prices of users. In addition, depth and speed also save users' costs to a certain extent, because BlackOcean can provide more flexible and better execution prices.
For a long time, dark pools seem to be exclusive to large investors and institutions, and the product level is also independent of ordinary retail products. However, there are still many retail investors in the market, so BlackOcean also designed a liquidity pool for retail investors.
The liquidity pool has no minimum order limit, and the data is open and transparent. Like the ordinary liquidity pool, the main service objects are market makers and ordinary transaction orders, and the counterparties are other liquidity providers. In fact, in addition to providing liquidity functions with ordinary DEX, BlackOcean will also rebate commissions to liquidity providers without charging any fees, thereby saving customers the cost of using liquidity services.
BlackOcean's dark pool and liquidity pool both save costs and increase revenue for users in different ways.
Fourth, the advantages of BlackOcean
Compared with similar products on the market, BlackOcean still has its own advantages, which mainly reflect the security of funds and technology.
1. Asset security
Fund security is the prerequisite for any transaction, and BlackOcean has done a great job in this regard, which is reflected in these aspects.
First, institutional-level hosting solutions . Cooperating with the world-renowned custody product Cactus Custody . All customers' funds are always managed by guarantee, so there is no need to worry about asset security.
Secondly, the fiat currency settlement supported by Signature Bank.
Finally, the industry's fastest risk inspection mechanism can detect problems in time.
2. Technical advantages
BlackOcean's technical advantages are mainly due to the background of VRM, which is the world's top quantitative trading platform, and the team has strong technical strength, which has also created BlackOcean's excellent technology.
First, Speed
The digital market is changing rapidly, and time is money. BlackOcean also has enough technology to support this. BlackOcean is 100% perfect on each server including the matching engine, ensuring non-stop normal operation. At the same time, it can satisfy unlimited API requests/calls of less than 2 microseconds. BlackOcean's matching engine and market data transmission system have been patented.
Second, the pursuit of ultimate optimization . BlackOcean supports a wide range of order types, up to 17 orders including ICE orders, and ICE orders are the only supplier in the crypto market . The automatic correction mechanism can reduce energy consumption, hardware costs, and user intervention. Unique and special technical protocols can increase throughput and optimize risk checks.
When we analyze similar competing products in detail, we can see that BlackOcean has many innovations, such as custody scheme, fund import, unlimited API, ICE orders, etc., as well as the liquidity pool of derivatives that will be launched in the future.
Summary
BlackOcean is supported by a strong incubator VRM, with outstanding technology, amazing security, compatible with institutions and retail investors. So, there will be more and more institutions deploying digital assets, and the demand for dark pools will increase.
