Swarm Markets will be launching a peer-to-peer contract for high value transactions in Q1 2022 to empower institutions and professional investors to use the regulated crypto block-trade smart contract in place of traditional over-the-counter (OTC) trading.
Safely execute orders directly with other platforms in minutes
Going by the name of dOTC, the contract can be used for a wide range of digital assets, from ERC20 to ERC721/1155, enabling participants to buy high value NFTs and to facilitate smoother liquidation of crypto positions. Swarm Markets’ dOTC service also allows contract-based block trades for upcoming regulated digital securities.
Open to all users who have onboarded to the platform, Swarm Markets’ dOTC smart contract eliminates the need for intermediaries and has designed the process in a trust-less way.
There, users can safely execute a buy or sell order directly with other platform users in minutes instead of days or weeks—and for a tiny fraction of the price, the firm claims.
The Berlin-based regulated decentralised financial infrastructure will communicate the list of assets eligible for dOTC trading in the coming weeks.
High volume swap activity increased dramatically
Timo Lehes, co-founder of Swarm Markets, said: “Because Swarm Markets is regulated to the same degree as any other German financial institutions, dOTC users can trust our infrastructure to carry out block trades with verified counterparties only. For the first time, institutions with a fiduciary responsibility now have a compliant trading tool they can use to minimize or remove crypto slippage. Crucially, our trading infrastructure preserves the architecture and innovation of DeFi with the reassurance of regulation. dOTC preserves elements like self-custody, so participants have control over their assets at all times.”
Phlipp Pieper, co-founder of Swarm Markets, commented: “The timing of this announcement is crucial as institutions have very few, if any, viable and trusted trading tools in DeFi to help ride out crypto volatility. We tend to see more volatility in crypto markets in the months of December and January, resulting in high slippage for larger trades. Swarm Markets is in a unique position to offer decentralized trading infrastructure in both crypto and traditional financial products. This contract will become a key feature for institutions to support bulk selling and buying of securities on chain, using Swarm Markets DeFi infrastructure, launching in Q1 2022.”
OTC trades are complex and require costly intermediaries who participants need to trust. The trading industry is yet to adopt block-trade P2P smart contracts for institutions that are able to remove counterparty risks.
According to a report by Messari Hub, the number of unique traders executing trades over $500k has increased by 140% from March to September 2021.
This poses an opportunity for Swarm Markets and companies alike. A significant increase in high volume swap activity may lead market participants to decentralized platforms for OTC trading.