Tristero – a company working toward developing decentralized dark pool technology to create a fairer trading environment – announced the launch of their company supported by a $4.8M Seed round co-led by General Catalyst and Steel Perlot. And the company will be using the funding to build markets designed to minimize the price impact of trades, an invisible cost to all market participants.
Large trades are known for moving markets and this can be a major problem. Dark pools are known as exchanges with hidden order books rose to prominence as a way for pairing buyers and sellers who want to conduct trades privately to avoid moving the market. And because of the limitations of existing technology, dark pools have had to rely on trusted third parties such as investment banks to run the order book. But through this model, market participants must trust the dark pool operator to not look inside the dark pool and front-run the trades.
There is no way to prove whether or not an operator is honest, which also casts a shadow over the entire space. And this has limited the growth of the sector and led to increasing regulatory scrutiny.
Utilizing advances in cryptography, Tristero is building what they believe is the first truly dark, dark pool. And their technology – which is using zero-knowledge proofs – enables markets where no one can see inside including Tristero. Essentially by hiding trade details from all market participants, Tristero is aiming to create more transparent markets, redistributing wealth from the middlemen back to the people building companies and investing for the long haul.
In order to validate design decisions, Tristero is planning to launch a stablecoin clearinghouse in Q2 2023 that seeks to lower costs for cross-chain stablecoin transactions. Built for whales and funds, this product aims to enable the trustless conversion of any stablecoin into any other stablecoin on any other chain. And at the time of launch, the fees are intended to be 1 bp (0.01%) and will offer greater security than pool-based systems.
KEY QUOTES:
“Not all markets are equal. When someone wants to buy or sell a large piece of a company, it has a major price impact and this acts as an invisible cost to the buyer or seller. However, markets can be designed to help reduce this. Tristero is designing these markets. We believe that people building companies and long-term investors drive economic growth and we want to put money back in their pockets.”
— CEO and founder of Tristero Sam Trautwein
“As a deeply thoughtful founder with previous operating experience, Sam Trautwein has assembled what we believe is an ambitious and technical team to build a truly ‘dark’ dark pool exchange by employing zero-knowledge cryptography. By creating a secure and private environment for trading that is also resistant to censorship and manipulation, Tristero seeks to enable fairness and lower costs for market participants. We are excited to partner with the team to build towards a less centralized future that fosters globally inclusive financial market accessibility.”
— Nick van Eck, Partner at General Catalyst
