Gate Institutional AMA series with Wintermute
This is the fifth episode of the Gate Institutional AMA series with “Wintermute”, a proprietary trading firm that is one of the largest liquidity providers in the world. In this episode, our special guest Moshe Shen, Director of BD and Partnerships at Wintermute, discusses Wintermute’s positioning in the market, what is “liquidity provisioning” and how they stay informed and educated about the cryptocurrency market and its developments. The AMA series aims to explore new opportunities and challenges that arise in the rapidly evolving crypto market, and this episode provides valuable insights from a leading liquidity provider.
Introduction
Gokay (Host): Hello everybody! Welcome back to the fifth episode of our Gate Institutional Ask-Me-Anything series. This is Gokay from Gate.io Institutional services. Our team manages a wide range of institutional clients, including hedge funds, institutional traders, high-net-worth individuals, and family offices.
In our previous sessions, we discussed various topics related to the crypto market, including market making, digital assets, risk management and regulatory compliance. And in today’s episode, we will be focusing on “liquidity provisioning”.
So welcome to our stream a liquidity provider “Wintermute”. Today we have a special guest: Moshe Shen, Director of BD and Partnerships at Wintermute. Thank you for joining our stream. Nice to see you, Moshe! How are you? How do you feel?
Moshe Shen: Very good, thank you, Gokay! Good to see you as well.
Gokay: As the crypto market continues to evolve rapidly, it’s important for us to stay ahead of the curve and explore new opportunities and challenges that arise. We’re excited to dive deeper into this topic and hear from Moshe Shen about his insights and experiences in navigating the world of centralized and decentralized liquidity.
So, let’s get started!
Q1: Moshe, tell us a little about yourself. Who is Moshe Shen? And what’s your background?
Moshe Shen: Thank you for the question. I’m Moshe Shen, currently serving as Director of BD and Partnerships in Asia at Wintermute, a crypto-native trading firm. Previously, I worked in traditional finance for over 10 years. I was educated in the UK and started working there before moving to Hong Kong. Now, I am based in Singapore.
Q2: How did Wintermute come to life and how is it positioned in the market?
Moshe Shen: Sure. Wintermute started in 2017. It was founded by our CEO and co-founder, both from Optiver Trading. Our CEO, Evgeny, was previously the Head of ETF trading at Optiver. He saw inefficiencies in the traditional financial market and recognized the potential of applying the know-how of traditional finance trading firms, along with technology and compliance, to crypto and help with further development of the markets and the industry.
Fast forward 5 years and we’re now one of the biggest crypto-native trading firms and one of the largest liquidity providers in the world. We’re connected to over 30-40 centralized and decentralized venues, trading billions a day across both spot and derivatives. We offer a wide selection of 200+ tokens for clients to trade.
One of the ways we differentiate ourselves in the market is by being strong supporters of DeFi. We invest in DeFi protocols, partner with major blockchain projects and participate in governance. We really want to push for a more decentralized and efficient world. And our vision is that the world of digital assets is decentralized, it is transparent, and we hope we can play a role in this movement.
Q3: What is Wintermute’s current focus?
Moshe Shen: So our current focus, especially after what happened in the industry last year, is on a couple of aspects. Number one, we continue to provide liquidity in the market. We want to provide liquidity on trustworthy venues across both majors and alts. It is very important to have price transparency, real trading volumes and deep liquidity across any of the tokens to restore confidence. That’s number one.
Number two, our focus is to continue to partner with reputable counterparties in OTC or block trading space, to help provide liquidity directly to large trade sizes or less liquid tokens that may be difficult to trade on the market. We can definitely help minimize slippage and trade risk when it comes to large or liquid order.
Number three, we continue to support DeFi and will continue to build on DeFi. We’re excited to share that there will be quite a lot of new chains launching, as well as new trading activities as new initiatives. We already have a leading presence across all the chains in DeFi. We’re trading on many of the chains out there ourselves and we also provide liquidity to many of the most prominent projects in the blockchain space.
Finally, on the DeFi side, we’re also actively participating in the governance of several DAOs. Our DeFi envoy’s job is to look at governance proposals and help some of the DAOs to push ahead with some of the initiatives that can really help them. So we’re pretty excited about that as well.
Q4: Okay, now that we have heard about Wintermute’s business, I assume the viewers would like to know more about the people who are standing behind the firm. So can you tell us more about the team?
Moshe Shen: Sure. Globally we are about 90 individuals. In our headquarters in London, we have about 80 people and we also have an office in Singapore where I’m based with about 10 to 15 people. Our background across the firm is both crypto native and TradFi. One key difference between us and other trading firms is our DNA as a firm, going all the way to our CEO Evgeny and to all of us. We’re more like builders than pure traders. An analogy is to compare us to Google — we are not just a trading firm, but a technology firm that likes to build products and happens to trade very well. So internally, we built technology that can trade very well but we also like to incubate new projects. For example, last year we incubated a RFQ-based DEX. We like to build products that we think the market needs and hope to move the market forward.
Q5: How do you stay informed and educated about the cryptocurrency market and its development?
Moshe Shen: That’s a great question. We’ve both been in the crypto market for a while, and there is definitely a lot of information flowing. Due to our unique position in the market, Wintermute can speak to a lot of different players in space. We can engage with a number of market participants from exchanges like Gate.io, projects, founders/operators, and both crypto-native and TradFi institutional players.
We’re at this cross-section of information Flow, regulatory Flow, and institutional Flow, which gives us a unique perspective on what’s happening in the market, especially on the DeFi side. We speak about many of the new projects launching and it’s really quite interesting to see the innovation.
That’s how we stay informed and educated about the market. We also have an in-house research team and our DeFi envoy is actively involved in various DAOs’ governance, which often involves conducting research and staying up-to-date on the latest developments.
Q6: Can you explain the role of a liquidity provider and how it is different from an exchange?
Moshe Shen: Sure, definitely. Let me explain our role as a liquidity provider and how it differs from others. We’re here to provide liquidity in the market when buyers or sellers want to trade. We constantly balance orders on the bid and ask to ensure that when someone wants to trade, there is enough liquidity to prevent large market movements. Our service offers two main features: Firstly, we provide a fair and transparent market price. Secondly, we help with market stability by dampening large price moves and making it possible to execute large orders without causing significant price fluctuations. This is crucial for any token or exchange that wants to build credibility and reduce volatility. The third benefit is that we generate trust among the community, especially for new tokens with limited liquidity. Whereas exchange is really a venue for us to provide that liquidity, connecting buyers and sellers to each other. So it’s the whole ecosystem that we work together in.
Q7: How do you make sure that you can offer liquidity in any market conditions, and more specifically, what is your plan of action during a market crash? Walk us through the steps that you take when there is a major market shift.
Moshe Shen: That’s a great question. Ultimately, it comes down to the technology that we have. We have a very robust system that allows us to continue trading no matter the volatility in the market. The parameters that determine how much we put on the bid-ask are adjusted according to market conditions and a lot of the reaction to the market is automated. That means we can continue to provide liquidity in any market conditions. We also ensure that our inventory is managed correctly across various exchanges to keep providing liquidity at all times. The efficiency of inventory is very high when we trade, so that means we can provide a lot of liquidity across all the exchanges.
Q8: How does Wintermute differentiate itself from other liquidity providers in the market, and what unique advantages do you offer to your clients?
Moshe Shen: We differentiate ourselves from other liquidity providers in a few different ways. Firstly, we are one of the largest liquidity providers in the digital asset space. We are connected to CeFi venues, DeFi venues and have an extensive OTC and off-exchange block Flow. So a lot of volume flows through our trading desk. Our core expertise is in infrastructure, algorithms, and technology, which allows us to provide liquidity directly from the source when you trade with us. There are no additional service fees or intermediary fees.
Another difference is our ability to price a lot of different tokens both on exchanges, and bilaterally. We can trade over 200 tokens on a bilateral basis, including smaller and more illiquid altcoins, where there may not be enough liquidity on certain centralized venues. We can also provide direct risk blocks for these tokens to counterparties.
Finally, we have the ability to take much larger size blocks as well, not just in the millions, but in hundreds of millions. We have a balance sheet that can really facilitate that type of block trade and reduce the market impact and slippage. We definitely can move a lot of liquidity around.
Q9: How do you interact with exchanges and other market participants? How has Wintermute’s experience been so far working with Gate.io?
Moshe Shen: Thanks for that question. As I mentioned earlier, exchanges help to facilitate this marketplace. We’re there to provide liquidity but if there are no market participants trading, then there will be no trading volumes. It is really a close partnership between the exchanges. Assets are provided but also all the market dispense that wants to buy and sell the tokens.
We have been trading on Gate for a long time and Gate has always been reliable and responsive. We have an open dialogue with Gate and you are always open to receiving feedback, which we really appreciate. So we’re very happy with the relationship.
Gokay: That’s great to hear. Wintermute is a great partner and has been working with us for a long time. As you say, we are interested in partners’ feedback, because this is how we develop in the market and how we move further. So, I also want to say thank you to your team and everybody who works with us.
Q10: We are almost at the end of our main section about “Wintermute”, so before we wrap things up, I would like to ask what are your expectations for 2023?
Moshe Shen: I think there are a few things we hope for 2023. Firstly, we hope for more regulatory clarity, especially after last year. More regulatory clarity would help us understand what people are allowed, what kind of institutions can come in, which investors can participate, and what type of tokens can they trade. We keep a close eye on what’s happening in the US, Europe, and Asia. There are many countries in Asia that are in different stages of regulatory evolution. So having a close eye on all of this is very important for us.
Secondly, we hope to continue growth across both CeFi and DeFi. CeFi continues with transparency, good price action and liquidity. In DeFi, we hope to see more innovation in the market, more DAOs, building on various blockchains, having more usage and generally promoting the market in a positive way.
Q11: And finally, what would you like our audience to take away from today’s AMA session?
Moshe Shen: We hope the industry will continue to grow and mature, and Wintermute will continue to promote the market. We are here for the long game and aim to keep it in a better place than it is now.
Do follow up on the firm’s Twitter, or our CEO’s Twitter for the latest updates, and feel free to reach out directly too.
Ending
Gokay: Moshe, thank you very much for all your time. Your insights have been truly informative, and I’m confident that our audience, who always watch us, now have a better understanding of liquidity providing, You and Wintermute. It was a pleasure to talk with you and learn all the details. Now I am more interested in Wintermute itself. Get in touch with Wintermute, visit their website, read more information, follow their reports and analysis.
Before we end our session, Moshe, would you like to add anything else?
Moshe Shen: I think the market will mature and develop more. So, I have high hopes for this year.
Gokay: Definitely. I think it will be okay, because we see the traditional market also entering crypto space. And I think there will be great results in the future.
Thanks to everyone who joined to watch our AMA series. Follow us on social media, for more information, and write to our key account managers.
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