Hackernoon logoZero-Fee Trading, Global Liquidity, and The Many Woos of WooTrade by@sonhng

Zero-Fee Trading, Global Liquidity, and The Many Woos of WooTrade

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sonhng Hacker Noon profile picture

@sonhngsonhng

blockchain dev

A summary of Wootrade and how it is disrupting the market of Global Liquidity.

DISCLAIMER: I'm a big believer in this project and have been hodling Woo ever since. Don't take this as actual investment advice at face value, but rather a comprehensive summary I put together based upon my own findings, research, and personal insight about the project. As always, if you do wish to invest, please DYOR beforehand and make your investments based upon your own assessment of the project. I'm trying to put the fundamentals of Woo in layman's terms as I understand.

The problem:

While cryptocurrency trading has matured quickly over the last decade, liquidity is still an underdeveloped area amongst liquidity pools, transaction costs still remain high, and toxic trading practices are seemingly everywhere. This is in contrast to other established stock and futures markets, where trading fees, spreads, volume are in a race to the bottom.

Wootrade solves the liquidity, trading fees and ensures the trade execution quality to the highest for various exchanges, institutions, API traders, and (eventually) retail traders through the use of existing practices that are proven in other matured traditional markets.

What is Wootrade?

Wootrade is a liquidity pool, a trading platform that offers significantly above-average liquidity, tighter spreads than the major exchanges, and zero (or even negative!) fees for professional API traders and trading platforms. Wootrade offer API for those institutions and professional trader to join the deep order books and the best trade execution. Wootrade Network is the only platform to offer zero trading fees AND robust liquidity for both spot & futures trading.

WooX is another version for retail traders, where any user can directly take advantage of a fully customizable and zero fees trading interface. WooX is also currently available for limited registered beta users at https://x.woo.network/spot

The best part is, unlike traditional exchanges, Wootrade/ WooX don’t charge users fees for making transactions and using the services. It’s free to use for the end-user. That’s right, zero-fees, while also maintaining the tightest spread possible and thick liquidity.

How can Wootrade provide users/traders zero-fee trading?

Similar to how stock trading platforms like WeBull and Robinhood have been doing, which offer zero commissions on trading. Wootrade monetizes this model is by Payment for Order Flow (PFOF), which is the compensation a broker gets for directing orders to different parties for trade execution.

One of Wootrade’s biggest clients is their parent company, Kronos Research. Kronos Research is one of the biggest cryptocurrency quant trading firms in the world and trades between $1 billion and $2 billion per day ($45 billion - $60 billion per month) on various exchanges that they are designated market maker (Binance, FTX, Huobi, ...). They can offer 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.

Kronos Research, casually grabbing #1 spot as a market maker for FTX:

Read more into this here

Woo tokenomics

Okay we get it, Woo brings the tightest spread and offering liquidity for various traders, from institutions, exchanges, API traders (WooTrade) and for retail traders (WooX, https://x.woo.network/spot) with zero fee. But what does this means for Woo the token?

Resource: https://woo.trade/token

Woo Token distributions

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Woo Token Use cases

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  • Zero fee trading: Clients staking WOO can access the network for zero or even negative fees. There are already 47 million WOO tokens ($1.1m dollars) staked in the institutional staking wallet, with more clients looking to onboard. WooX will also required user to stake Woo to have access to the network and also for sweet APY bonuses.
  • Discounts: Platform users will have discounts on additional financial services when using WOO as collateral or fee payment.
  • Asset management: Institutional investors can receive reduced fees from Kronos Research on their quantitative trading strategies.
  • Governance: Token holders will accrue voting points and govern increasingly core aspects of the ecosystem.
  • Buying back and burning tokens: Slated to begin in Q1 2021, the team will use a portion of income to buy back tokens from the secondhand markets.
  • You can track all bought back and burned Woo transactions here: https://etherscan.io/token/0x4691937a7508860f876c9c0a2a617e7d9e945d4b?a=0x0000000000000000000000000000000000000000
  • WooX beta test staking details: https://medium.com/wootrade/woo-x-beta-testing-and-staking-preview-fd22dca4336b
  • WooX beta staking program:
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  • First week of 31/03/2021, 14.5m $WOO got staked in WOOX BETA by approximately 200 participants, 93m/23% of circulation supply is currently stake by institutional and beta clients. Wootrade will add 200 beta clients each week until full launch June. https://twitter.com/wootraderS/status/1378733415843819521
  • Woo holders that staking their tokens in WooX will be receiving WOO Ventures token drop. 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. Example: WOO Ventures will identify a promising blockchain startup. WOO tokens will be invested into the startup, as an incentive for the project to grow and support Wootrade while providing tokens for future services. The startup will vest tokens back to Wootrade, which will be given back to WOO tokenholders. https://medium.com/wootrade/woo-ventures-to-invest-in-projects-providing-strategic-value-to-wootrade-will-share-rewards-with-45c3a03f3987

Possible other use cases ideas sourced from the community for 2021:

  • Binance Smart Chain integration - from @AllenLu and @Iamgreenpeas: Wootrade and the WOO token can start getting involved in the Binance Smart Chain and other Ethereum alternative ecosystems. The WOO token could be bridged to other networks, expanding its reach in the larger DeFi ecosystem.
  • Secondary lending market - from @Brainchest: Lending is actually a significant pain point in the digital asset space right now. A future use case for the WOO token can be based on the creation of innovative debt or lending products.
  • NFT marketplace — from @Betteror203: NFTs are an evolving ecosystem and we are currently watching it mature. We believe that NFTs will one day underpin a substantial part of the DeFi ecosystem and are finding traction in insurance and bonds. Wootrade Network is concerned with liquidity and it’s not too far off to think that we can provide liquidity even for NFTs

In short, the more volume Wootrade Network has, there will be more bought back, burned Woo. Institutions that want to source their entire order book from Wootrade at zero cost will have to stake the WOO token as a right to access the network. Retails trader will also want to stake Woo to enjoy sweet APY and also zero-fee trading, Woo Venture 50% profit sharing token drops, NFTs airdrop in the future, ...

What next for Woo?

WooFi and the Wooracle

DeFi had arrived and was changing the way people traded and interacted with cryptocurrencies. Decentralized swaps and exchanges were surpassing many Tier Two exchanges from the centralized world. Still, Uniswap/ Sushiswap or other decentralized exchanges still struggling with some of the same issues as of a CeX : lack of liquidity, high slippage, and sizable transaction fees. For DeFi to attract a more institutional audience, it was clear that some improvements would need to be made.

Wooracle price data

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Wootrade can help all the DeFi exchanges out there with Wooracle price data by improving trade execution on DEX aggregators. Wootrade brought their liquidity on-chain, using a combination of liquidity pools, oracles, hedging strategies, and market-makers. The WooFi pools are a combination of DeFi swaps but use the more accurate pricing mechanisms from the Wootrade network itself.

WooFi position in DeFi

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The goal is to be an ecosystem enabler that supports other protocols by connecting on-chain liquidity, robust pricing data, and trading-related services without charging large ‘middleman’ fees as a business model. 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.

  • Yield opportunities for liquidity providers
  • Strategic partnerships
  • Increased WOO token burn rate (from buying back)
  • DAO governance and benefits
  • First-party products and services

WooX

The first testers entered WOO X Beta with some exclusive staking opportunities. The newly designed WOO X staking program allows Beta users to earn zero fees and up to 30% APY. Currently, 0% interest is charged on 2X margin, which will last throughout Beta testing. If you haven’t been invited, please be patient. More invite codes to enter the program will be sent out each week until launch.

DODO, SUSHI, and UNI tokens were added to existing trading pairs on WOO X in March.

WooX is currently available at: https://x.woo.network/spot

WooVentures:

WOO Ventures was set up to identify early-stage projects that, as they mature, can provide value to Wootrade, the WOO token, and the blockchain space in general. In 2020, the first WOO Ventures investment was made in DODO, a decentralized exchange and aggregator that is now one of the leading DEXs by daily volume, with a fast-growing userbase on Ethereum and Binance Smart Chain (BSC). WOO Ventures has also made two other investments which will be revealed at a later date.

Parnerships:

Further Reading & Resources

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