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We had some very insightful meetings with various market participants, primarily portfolio managers and protocols to get a better understanding of their product needs and issues with current market solutions -- OTC desks.
Given the events that have transpired since late 2022 (post-FTX crash), the trust in centralized entities has completely eroded.
Also, a major pain point when trading low float tokens via OTC desks is the adversarial nature of the trade, long quote time delays, and high fees charged.
TWAMMs give you the advantages of on-chain solutions like
always available, combined with the advantages of novel trade execution like
low gas fees,
low swap fees, etc.
Having all your assets on-chain and ready to deploy into a DeFi protocol is a huge advantage. Not to mention the time savings and risks avoided when moving assets from on-chain -> off-chain -> on-chain.
During our early conversations with Liquid portfolio managers, the two points that kept coming up were automation and privacy.
- Liquidity matters more than privacy. Although privacy is a concern, they are used to creating fresh wallets for purchasing assets.
- Range orders or fully automated orders are the killer feature for TWAMM. Below is an example order:
Buy 10% of float of a small cap token over the next 3 months if price is in specified range
Today, we have introduced a delegate functionality in the TWAMM that is able to monitor your order and cancel it when the price of the asset exits the preferred range. However, you still need to restart your order at a later time. In the future versions of Cron, we plan on having fully automated limit orders that work similarly to the Uniswap V3 concentrated liquidity.
The user sets a long-term order with a requirement to fill below 5% of the current price. If the price exits the threshold, the order becomes inactive until the price returns to the execution window.
Finally, the cherry on top, the pièce de résistance -- private TWAMMs. Privacy was a concern that was brought up as a potential drawback of using TWAMMs for large trades, a really useful feature of OTC desks. Although TWAMMs avoid most MEV attack vectors, the current solution to combat copy traders is canceling your long-term swap and restarting at another time.
Identity preserving trading solution leveraging Aztec ZK Rollups
With the help of Aztec Connect’s novel privacy solution, we’re able to offer the same privacy benefits as OTC desks without sacrificing the benefits of DeFi. In the above image, the user’s identity is obfuscated and the on-chain sleuths are unable to detect who’s executing the trade unless the user withdraws the trade proceeds back to the originating wallet.