Introduction:
When we talk about the liquidity of an asset, we are referring to the ease with which it can be exchanged for cash without affecting its price. There are two aspects associated with liquidity: ease (speed and effort involved) and price (slippage, or the difference between the expected price and the price executed on a large order).
The crypto market is deregulated and mainly very fragmented, with hundreds of centralized and decentralized exchanges and swap pools that the investor can use to carry out his trades. However, this fragmentation ends up bringing a liquidity problem, because even on the biggest exchanges, large orders to buy or sell assets have problems to be executed.
If the investor has a large order to be executed, he must outline strategies for the transaction to be made, in order to avoid slippages in the asset price. Traders have to wait frustratingly long times for orders to fill, unless they are willing to accept a price far from the market price. It is common for traders to report that they are waiting days until their order is fully executed. The problem is tha larger-sized trades need to be executed instantly without affecting the market price.
To mitigate these liquidity problems, investors turn to over-the-counter (OTC) trading. But as with other exchanges, OTC trading will often mean having to deal with slippage issues. In addition, you have to respect certain daily and monthly trading limits on OTC trading and probably to pass in a KYC process as well if you are using OTC services provided by exchanges.
To solve the problems of liquidity in the market and slippage in the price of assets, Wootrade emerges.
Wootrade
Wootrade was founded and incubated in 2019 by Kronos Research, one of the powers in CeFi’s trading landscape. With more than 80 team members, Kronos trades on average more than $5 Billion USD/day just in crypto volume alone. One of Wootrade’s biggest clients is Kronos.
In 2020, Wootrade completed a successful seed round, led by some of the top VCs in the blockchain space. Later, in October 2020, Wootrade conducted an ICO where its $WOO token was launched at a price of $0.03, giving retail investors a chance to participate in this promising project.
Wootrade is an intelligent order matching and routing engine that combines global liquidity and top market-makers to provide ultimate liquidity for exchanges/wallets and large traders.
In partnership with Kronos Research and other quantitative market-makers, Wootrade is allowing the creation of ‘Super Exchanges’ that will set the standard for liquidity and best execution for traders. Wootrade is a liquidity pool, through which exchanges and institutions are integrated, offering its users deep order books and the best trade execution.
Wootrade is like an exchange for exchanges, aimed at professionals, giving traders the best liquidity with zero fees. However, Wootrade is not just designed for big players, even small investors can use and enjoy the benefits of Wootrade Exchange.
Traders will be able to link to their own trading dashboards via API, use Wootrade’s customizable trading dashboard or an advanced retail platform, taking advantage of sevral professional trading tools and zero fees.
Everything Wootrade offers is free to use for the end user. That is, Wootrade is a zero-fee exchange!
But how does Wootrade not charge fees?
Wootrade uses a model called Payment for Order Flow (PFOF), which is the compensation a broker gets for directing orders to different parties for trade execution.
Market makers rebate Wootrade for order flow. These rebates are able to subsidize the regular users, making a more equal market opportunity. In a traditional exchange, the roles are reversed, where market makers are incentivized by lower fees. This is because the exchanges lack liquidity, and need liquidity to attract users. For Wootrade, liquidity is what we do best.
For instance, Kronos, one of Wootrade’s market maker, offers significant rebates to Wootrade in exchange for providing more order flows. In this way, Wootrade earns from the big market-makers and uses those revenues to incentivize other flow providers (exchanges and traders) to route orders there.
More information about it can be found here:
$Woo Use Cases
There are several use cases for $WOO. Some of them are described below:
- Zero fee trading: WOO stakers will access the platform with zero or even negative fees.
- Discounts: Users will have discounts on additional financial services when using WOO as collateral or fee payment. WOO can be used to eliminate (regular traders) or reduce fees (trading teams).
- Asset management: Institutional investors can receive reduced fees from Kronos Research on their quantitative trading strategies.
- Governance: Token holders, who have held for the right amount of time, through voting, will be able to decide core aspects of the ecosystem.
- Buying back and burning tokens: A portion of income will be used to buy back tokens from the secondhand markets in a monthly basis.
- Staking: Users can have access to highly coveted trading strategies (copy trading or direct investment) by staking WOO tokens and other cryptocurrency pairs on another top-performing trader of your choosing.
- Collateral: WOO can be used as collateral to trade derivative products on the platform with reduced fees and other incentives.
Other use cases are also being studied for possible implementation, such as:
- Creation of innovative debt or lending products using $WOO
- The WOO token could be bridged to other networks, expanding its reach in the larger DeFi ecosystem.
In addition, Wootrade is also working on other fronts and it would not be surprising if the following initiatives arrive in the near future:
- Wootrade launchpad platform for incubated projects
- Wootrade Network is concerned with liquidity and it’s not too far off to think that we can provide liquidity even for NFTs.
- Yield opportunities for liquidity providers
- DAO governance and benefits
Buy-Back and Burn Mechanism:
The revenues came from the market makers, is used to buy back $WOO tokens on the market and burn them at the end of each fiscal month.
The first buy-back and burn process was run on February 10th and 5,247,767 $WOO tokens were burned.
The second buy-back and burn process was run on March 10th and 817,564 $WOO tokens were burned.
WOO X
WOO X is Wootrade’s professional platform and is scheduled to launch in June 2021 and its main objective is to allow traders to access all the aggregated liquidity in the Wootrade network, while giving institutional clients a dashboard to manage their accounts.
Through WOO X, traders will be able to submit large orders with zero fees on spot trading.
Staking on WOO X will involve locking tokens on the platform that are accessible with a 7-day unbonding period.
Meanwhile, WOO holders can stake their tokens on BitMart exchange.
The minimum amount of $ WOO to bet on BitMart is 200. The current APR is 23,06%
WOO X is being tested by early users who give feedback to Wootrade’s team.
Woo Ventures
Woo Ventures was created to identify and invest in early-stage projects that, in the future, will benefit the Wootrade ecosystem and the blockchain market in general.
The first project to be selected by Woo Ventures was DODO, a decentralized exchange and aggregator that uses Binance Smart Chain — BSC. Two other projects have already been funded and will be revealed later.
The WOO Ventures token drop will return 50% of tokens received from the investment to $WOO holders, either through WOO X, staking, or DeFi applications.
Roadmap
In order to be an important player in the DeFi market, Wootrade has an aggressive roadmap that is divided into phases, as shown above. The goal, as always, is to find ways to bring more flow to the Wootrade network by linking bridges between the projects and platforms building on the various layers and networks in both CeFi and DeFi.
In addition, Wootrade futures and margin trading products are scheduled to go online by 2021. WOO Apps, as an AI-based wealth management product, fiat gateways and other investment tools will also be online in the future.
Conclusion
Wootrade is a platform, incubated by a heavyweight in the trading industry, Kronos Research, that provides a liquidity service, or more so a market depth service, and wants to solve the liquidity and slippage issues faced by large investors.
Wootrade’s initial goal was to achieve a daily transaction volume of $100 million in the second quarter, however, this goal was reached on February 23th, when $110 million were traded.
This is just a proof of how much Wootrade is a solution awaited by the market and with the launch of WOO X, the subsequent launch of products and the shipment of new partners and customers, Wootrade can become one of the main players in the trading market.
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