Tristero is a company that is building stronger and safer crypto markets with new decentralized dark pool technology. Pulse 2.0 interviewed Tristero founder Sam Trautwein to learn more.
Sam Trautwein’s Background
What is Sam Trautwein’s background? “I studied computer science at Stanford and was one of the first engineers at Plenty.ag, an AI hydroponics unicorn. I then co-founded Carbon in 2017, a YC-backed algorithmic stablecoin project. I ran a fixed income fund before moving to venture where I was a partner at Steel Perlot,” said Trautwein. “While many people think of stock markets as being stodgy, modern financial markets are deceptively new, with modern market architecture being about 20 years old. It is quite likely that markets will continue to evolve in unpredictable ways in response to advances in technology. Right now, markets work because people refrain from doing bad things. We want to build markets that are ‘people proof.’”
Formation Of Tristero
How did the idea for Tristero come together? “There aren’t that many problems out there that are both interesting to work on and end up measurably improving people’s lives. Most high-impact problems are boring and most interesting problems (i.e. the Collatz conjecture) are low-impact outside their fields. Building better markets is technically fascinating and, if we succeed, helps distribute abundance,” Trautwein shared. “A small group of us started reexamining how markets were designed, calling into question every assumption and rigorously assessing the impact of each adjustment. Over time, we’d start calling up subject matter experts for specific questions we’d run into. Our founding team is composed entirely of people from these early calls. The main way markets can be improved is replacing trust with math as usually the entire market bears the cost of anyone’s bad actions.”
Favorite Memory
What has been your favorite memory working for Tristero so far? “We built the first version of the product over weekends in my third-floor Mission apartment in San Francisco during Carnival, a large street festival where the streets are closed and noise ordinances are suspended. One of our engineers is semi-nocturnal and a friendly rivalry developed over which architecture to use for part of the order book,” Trautwein revealed. “I’d wake up with a new version w/ performance stats in my inbox and then attempt to write something better before he woke up. Eventually, I couldn’t beat his design so we went with it, all while Mariachi music wafted up from the streets below.”
Challenges Faced
What are some of the challenges Trautwein faced in building the company? “Engineering management can be challenging because you’re relying on components fitting together perfectly and being finished at the same time. Every team ends up developing its own processes to manage this. We’re getting better at treating things as marathons and not sprints. It’s often better to do things right than to do things quickly,” Trautwein acknowledged.
Core Products
What are Tristero’s core products and features? “Tristero’s goal is to deliver a cryptographical dark darkpool. Today most trades are getting front-run in some form or another. We think that cryptography can solve this,” Trautwein explained. “We’re focused on crypto initially as it’s a very new market and one where the exchange space is highly fragmented. Most people expect more volume to move toward decentralized exchanges over time. FTX will not be the last centralized exchange to fail. All decentralized exchanges today have high slippage and expose more information than even traditional exchanges about users’ positions and trades. If the decentralized exchanges of today were banks, anyone would be able to read anyone else’s account balances and use this information in whatever way they see fit.”
Evolution Of Tristero’s Technology
How has Tristero’s technology evolved since launching? “We’ve been moving closer and closer to the frontiers in several fields. Early on, much of what we built was our own internal tooling and prototypes. Now, we’re working more on risk models and applied cryptography,” Trautwein pointed out. “Our next round of hires will focus on people who are the best in their respective fields. We’ve maintained a high bar for hiring due to the dimensionality of the problem space.”
Significant Milestones
What have been some of Tristero’s most significant milestones? “Launching the Hourglass testnet was a major step for us in terms of validating our engineering. Going live in the coming months will be the next checkpoint. We’d like to be judged on what we deliver rather than what we promise,” Trautwein replied. “So far, we’re still in a closed beta. Many customers will be able to save tens of thousands a month by switching to our services when live. We are taking the cost of moving assets cross hain from 8+ bps to 1 bp.”
Funding
The company has raised $4.8 million to date. And the network will take a small fee on each trade.
Total Addressable Market
What total addressable market (TAM) size is Tristero pursuing? “There has been $1.3 trillion of DeFi volume to date with likely over a billion collected in fees. One of the neat characteristics of exchanges is that lower cost actually dramatically increases volume! In many ways, the TAM will depend completely on how much value our product creates as this will determine which markets we can scale into,” Trautwein calculated.
Differentiation From The Competition
What differentiates Tristero from its competition? “No one has yet launched a truly dark darkpool. Our team is very focused on delivering value to all market participants on day one. It’s very tempting to view adoption as someone else’s problem which we think is a very dangerous mindset,” Trautwein pointed out. “If we are unable to offer better liquidity on launch, there will be no reason to use our product. We are very focused on making sure that, as a service, our platform is competitive.”
Future Company Goals
What are some of Tristero’s future company goals? “If we’re successful, we will apply our technology and approach to larger markets. While we’re initially focused on niche, inefficient markets, cryptography displacing trust over time is inevitable,” Trautwein concluded. “Most of the interesting unsolved problems are hidden in plain sight! These are the problems that also likely have the highest impact. The sexier a space is, the more attention it attracts and the less likely it is that you will find interesting work or meaningful impact.”
