GoDark, an institutional dark pool designed for digital assets and backed by crypto custody and trading specialists such as Copper and GSR, unveils a new service designed to execute large orders without tipping the market.
In addition to GSR and Copper, the offering comes out of the gates with heavy backing 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.
Over half of US equity trading volume takes place in dark pools for one simple reason: If large institutions want to acquire or liquidate a potentially price-moving amount of a particular asset, they don’t want to tip their hand and spook the market. This is where dark pools come into play, balancing the liquidity available on centralized exchanges (CEX) with the privacy inherent in over-the-counter (OTC) transactions.
As it currently stands, that kind of infrastructure is an order of magnitude more sophisticated than that found in crypto, said Denis Dariotis, founder and CEO of GoQuant, the company that built the GoDark service.
“There is no real institutional dark pool in crypto,” Dariotis said in an interview. “There are DEXs [decentralized exchanges]there are centralized exchanges, there are OTC desks, but there is no real platform where you can trade off-chain while getting the benefits of trading the actual underlying spot asset.”
The advantage of using a CEX, which is completely transparent and can inadvertently move the market, is the large amount of liquidity. An OTC desk, meanwhile, is opaque, but limiting liquidity translates into marked spreads and high fees. Dark pools sit in between, offering the best of both worlds.
Applying the dark pool concept to crypto is particularly relevant due to the high volatility of digital assets and the nature of distributed liquidity across different crypto trading venues, Dariotis added.
GoQuant started as a provider of market data for mid-to-high frequency cryptonative funds. From there, Dariotis and the team created an end-to-end trading system that included market data and trade execution, with latency as a main priority.
In addition to the GoDark service, Dariotis recently introduced GoCredit, a lending/lending platform with a centralized matching interface designed to cater to banks, TradFi hedge funds and similar businesses.
GoDark said it will offer spot cryptocurrency 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 ability to require orders to be executed only if they match the best price available at various “lit” venues, something akin to honoring the National Best Bid and Offer (NBBO) in US stocks.
