Aug 30, 2023

Transparency update: Liquidity, market makers, and our quest to build trust

WOO's flawless compliance track record sets up higher growth for the future

As of end-August, volumes on centralized exchanges remain stagnant, with total monthly volumes finishing at just around 10% of the $4.1 trillion volume recorded in May of 2021. August is known for reduced trading volumes in traditional finance, which could be amplifying the subdued activity in the cryptocurrency market. This scenario also aligns with the broader pattern of declining volumes seen in later phases of a bear market.

Spinning through iterations for an enhanced product

Amid the bear's shadow, we persist in iterating and shipping, a constant evolution that reflects the true engines of organic volumes. There’s no doubt that since the turbulence of last year, trust is an area users are unwilling to compromise on. WOO has built that into the bedrock of the organization, prioritizing transparency into everything we do.

In November of 2022, we launched an industry-first live balance sheet that was improved upon by adding Merkle Tree proofs for user assets and liabilities. We clearly defined the separation of WOO from its largest and sole liquidity provider Kronos Research, directly addressing the concerns about the previous connections. The same period also saw co-founder Mark Pimentel departing from WOO, as co-founder Jack Tan became the sole CEO, surrounding himself with a seasoned, diverse management team, and overseeing both WOO's organization and product development.

More recently, WOO launched a designated market-maker (DMM) program to diversify the liquidity on WOO, and as such reduce reliance on Kronos Research as a single liquidity provider across WOO X’s perpetual swaps.

This new iteration helps expand our potential clients, catering to institutions that prioritize venues with well-defined policies towards operational and counterparty risk. Combined with our flawless track record towards compliance, we are one of the few exchanges that are poised to onboard clients like these in future market cycles.

The DMM program also takes steps towards improving spreads and depth of liquidity. Users can trust that WOO X will be the most cost efficient venue to trade, especially once combined with our innovative staking discounts and wide suite of integrated terminals and brokers.

More cooks in the kitchen: DMMs off to a sizzling start

We formally launched our DMM program as a closed alpha on August 1st. Operating in two-week epochs, this initiative involves market making teams aiming to uphold a specific threshold (7.5%) of total trading volume in perpetual contracts. Since its inception, the program has already made solid progress, enlisting 11 market making firms and discussing potential onboarding of more. Notably, the program has completed 2 epochs, during which 4 teams met the 7.5% volume requirement. By the end of the second epoch, designated market makers contributed over 55% of the perp maker volume, marking a significant achievement that showcases the program's potential.

Above: Kronos Flow Trading was the old system of aggregating liquidity from other venues and providing in on WOO X. Since the first week of August (Epoch 1), market share has been steadily growing from other market makers.

To reinforce our commitment to transparency, WOO X will soon incorporate a maker volume leaderboard into our development plans. This feature will empower both market makers and retail users to verify the volume of counterparties in our order books, aligning with our dedication to clarity. This should chronicle the addition of even more top tier liquidity providers that WOO X is looking to add over the coming months.

For market makers who might be interested in participating, please reach out via bd@woo.network.

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