GoDark, an institutional dark pool built specifically for digital assets and backed by cryptocurrency trading and custody specialists like Copper and GSR, is introducing a new service designed to execute large orders without tipping the market.
In addition to GSR and Copper, the offering comes with strong support in the form of users such as: FRNT Financial (FRNT), Stillman Digital, a company owned by DeFi Technologies Inc. (DEFT), Fasanara Capital, Capital Union Bank, Tyr Capital, Hercle, Valos and Trillion Digital.
More than half of US stock trading volume is done in dark pools for one simple reason: if large institutions want to acquire or liquidate a volume of a certain asset that can potentially move the price, they don’t want to tip their hand and scare the market. That’s where dark pools come in, balancing the liquidity available on centralized exchanges (CEX) with the privacy inherent in over-the-counter (OTC) transactions.
As it currently stands, that type of infrastructure is an order of magnitude more sophisticated than what exists in crypto, said Denis Dariotis, founder and CEO of GoQuant, the company that created the GoDark service.
“There is no real institutional dark pool in crypto,” Dariotis said in an interview. “There are DEX [decentralized exchanges]“There are centralized exchanges, there are OTC desks, but there is no real platform where you can trade off-chain and at the same time get the benefits of trading the actual underlying spot asset.”
The advantage of using a CEX, which is completely transparent and could move the market without realizing it, is the large amount of liquidity. Meanwhile, an OTC desk is opaque, but limiting liquidity means high spreads and high fees. In between are dark pools that offer the best of both worlds.
Applying the dark pool concept to cryptocurrencies is particularly relevant due to the high volatility of digital assets and the nature of liquidity distributed across different cryptocurrency trading venues, Dariotis added.
GoQuant started as a market data provider for mid to high frequency crypto native funds. From there, Dariotis and his team created an end-to-end trading system that included market data and trade execution, with latency as the top priority.
In addition to the GoDark service, Dariotis recently introduced GoCredit, a lending/borrowing platform featuring a centralized reconciliation interface, designed to serve banks, TradFi hedge funds and similar companies.
GoDark said it will offer cryptocurrency spot trading at launch and plans to expand into perpetual futures, conventional futures, options and other instruments.
In addition to ultra-low latency matching and non-custodial settlement, GoDark promises execution protections, including minimum fill sizes and the option to require orders to be executed only if they match the best available price in multiple “lit” locations, similar to honoring the National Best Bid and Offer (NBBO) on US stocks.
