Despite massive growth, cryptocurrency markets remain illiquid, fragmented, and open to hacking. Omega One, coming later this year, will solve these problems by providing a decentralized automated execution platform that trades across the world’s cryptocurrency exchanges, shielding members from risk and reducing the costs of trading.
Cryptocurrency markets have seen a major increase in valuations and a tenfold increase in average daily volume in the past year. This growth is stressing the crypto markets, which are still immature, and have structural liquidity and trust issues. This is the problem Omega One is designed to address.
Why liquidity is important
When a market is liquid, it is cheap to move in and out of positions, so large volumes can be traded without moving the price very much. This is not only good for traders, but good for the market as a whole, as it tends to dampen booms and busts, and encourage market maturity. However, with liquidity costs orders of magnitude higher than in traditional markets ($1m moves the market 10% in BTC/ETH, vs. 0.01% in USD/EUR), the crypto markets will need to mature extremely quickly or risk breaking under the weight of incoming capital.
How Omega One solves the problem
Fortunately, this problem can be solved, and has been solved before in traditional markets, through the intermediation of agency brokers. These entities enable clients to access liquidity more efficiently by breaking down large orders into small pieces, placing them on multiple exchanges over time, and implementing complex game theory to minimize liquidity costs.
Omega One will play this role in crypto markets, with the addition of a trust intermediation layer that protects our clients from exchange risk. The trading engine will be integrated with Ethereum and other blockchains, allowing funds to be traded trustlessly. When an Omega One member wishes to trade between, say, two Ethereum standard (“ERC20”) tokens on the Ethereum blockchain, they will lock some of token A in our smart contract and send us an order to trade to token B, within certain constraints of time and price. Omega One will then take on a token B position in the market using our own exchange accounts and funds, then trade directly with the member as an atomic (simultaneous) swap of tokens in the smart contract. This will combine the trading benefit of harvesting liquidity using Omega One’s algorithms with the trust benefit of leaving our member’s funds on the blockchain, protecting them from the counterparty risk of the exchanges.
The Omega Token
The Omega One trading protocol is mediated through a crypto token, the Omega Token. Members will use tokens to pay fees, get fee discounts, and trade on preferred terms in our private dark pool. Fees will be reinvested into increasing liquidity access, upgrading trading intelligence, and increasing decentralization. Omega One will be a utility for the crypto markets, making trading cheaper, increasing overall liquidity and enabling further market evolution.
The Omega Token will launch later in 2017.
The Omega One mission
A secure, efficient, decentralized and digitally native global financial system is being born on the blockchain. It will restructure global power dynamics and fundamentally impact tomorrow’s world. The Omega One mission is to facilitate the birth of this new financial system and to shape it for the common good.
As an initial step in that direction, Omega one is pledging a portion of their upcoming token sale for impact investing projects, focusing initially on Ethereum ecosystem projects that either help markets mature or have other clear social and environmental benefits.
The Omega One team
The Omega One founders have launched multiple startups, traded one of the largest private crypto funds in the world, and designed multi-trillion-dollar trading systems in the traditional currency markets. Omega One is a ConsenSys Mesh company, benefiting from the world’s leading blockchain talent and technology.
The forthcoming white paper will explain Omega One’s trust design, liquidity aggregation, investment logic and token model in more detail. If you would like more information, please subscribe to our mailing list at http://omega.one.