Market making on chain trades is mysterious and important and lucrative as well. The problem is, according to Pseudonymous Trader Grum, that crypto -protocols with valuable order flow leave money on the table.
Grug’s company Warlock Labs just raised $ 8 million in venture funding to what he thinks is the solution: a proprietary trading company that uses data on the chain to prove that it processes order responsible.
The two-year-old company is set to enter the complex blockchain tubes that facilitate trading in Ethereum. Here, an army of knowledgeable operators offers setbacks to protocols in exchange for the chance to process their order current, which they can push for tens of thousands of millions of dollars a year.
But there is no guarantee that these players will not give protocols a raw deal, says Grum. The world of maximum extractable value (MEV) creates countless opportunities to manipulate yet to lead trades in ways that are harmful to the protocol and its dealers.
“We build order flow tool and a builder with some zero-knowledge guarantees where we can essentially prove after the fact that none of the order stream being sent to us, whether through users or seekers, has ever been manipulated,” GruG said.
Warlock Labs starts with a focus on activity on the chain, but Grum says he sees opportunities to scale the company to market Cexes also. He pointed to the recent controversy in Binance about a market producer who made illegal profits from Move Tokens – at the accounts of the dealer.
“We are going to live in a future where the order flow is alpha and to prove that you did not abuse that it is as valuable as actually receiving it,” Grum said. “If you can prove that you will never manipulate order flow, it is more and more likely that more and more people will submit their order flow to you.”
He called Warlock Labs a “Venture Scale Business” whose most important competitor was Wintermute, the market to make giant. Venture companies are aware: Polychain Capital led the round with the participation of Greenfield Capital, Mutual Ventures, Symbolic Capital, Bakhold Capital and TRGC.
