Proposal: Market Making Proposal from Wintermute Trading

Proposal: Market Making Proposal from Wintermute Trading

Summary/Abstract:

This proposal is published for presenting the terms of $INDEX market-making services to the Indexcoop community and approving it:

  • Authorize Wintermute Trading as an official $INDEX market-maker
  • Lend 1% of $INDEX supply (100,000 $INDEX) for market-making purposes as a loan to Wintermute Trading. Wintermute Trading will have to return either the full loan amount or 5 million USDC in 1 year
  • In return, Wintermute will commit to maintain inventory in Indices upon them being listed on any Tier 1 Cefi exchange. The amount invested will be 10% of AuM up to a total of $20 mln. In addition, Wintermute will and continue market-making on KuCoin and across DeFi aggregators.

Wintermute basic background

Wintermute was founded in July 2017 by three Optiver veterans. Evgeny Gaevoy, founder and CEO, was previously head of ETFs (screen and OTC) at Optiver Europe, one of the largest ETF market making desks.

Wintermute’s trading volume in 2H 2020 surpassed $70B and their average daily trading volumes in 2021 are over $2B

Wintermute is backed by Lightspeed Venture Partners, Pantera, Blockchain.com Ventures and others.

Wintermute Trading is registered with FCA for our OTC business.

Wintermute Index Coop specific background

Wintermute believes index products will be one of the key themes in 2021 and as a result is looking to back several teams in the space with an ultimate goal of:

  • Listing the index products on key cefi exchanges and facilitating liquid markets on these products and their derivatives (starting with perpetuals, following with options)
  • Combined total AuM of index products exceeding $25B by end of 2021

Wintermute believes the key issue with these products not being adopted outside of defi is lack of market making support as market makers and exchanges are not looking to support/list them because of low AuM, while the AuM stays low because there is not enough adoption/interest outside of defi. Wintermute wants to lead that adoption by committing a significant part of it’s resources and at the same time getting exposure to leading teams by becoming the official MM in protocol tokens and direct investment. Wintermute expects to be active in governance matters.

Wintermute is already a supporter of the Coop:

  • Makes markets for DPI on KuCoin and across DeFi aggregators
  • Go-to provider for OTC institutional flow in coordination with IC Institutional Business team
  • Invested directly in the Coop in the recent OTC sale

Specifically for Indexcoop community Wintermute commits to:

  • Provide liquid markets across all tier 1 cefi exchanges* (and a handful of 2nd tier as well). We already make markets across aggregators on defi (1inch, paraswap, matcha etc) and on KuCoin
  • Proactively support listing of $INDEX on key western exchanges in coordination with BD Index Coop members
  • Support new Index Coop product launches towards cefi and defi listings
  • In particular, once Indices are launched on tier 1 exchange*, Wintermute commits to hold 10% of the AuM for market making purposes with a minimum of $0.5 mln per INDEX, up to $20 mln in total for all listed Indices
  • Wintermute also commits to be the go-to Market Maker for any OTC institutional flow, providing competitive prices for tickets starting from 100K USD and beyond

*Tier 1 comprising of: Binance, Huobi, OKEX, Coinbase, Kraken and Gemini

Ask :

We would like to request the Index Coop community to pass a proposal to approve the transfer of up to 1% of the total token supply of $INDEX for Market Making services of $INDEX on key centralized exchanges.

We propose to Index Coop Community appointing a third party agent (Wintermute Trading) to act as the Index Coop Community Agent to market-make $INDEX across cefi, defi and OTC

To facilitate the work of the Community Agent on the community’s behalf, we propose to authorize operational actions required to effectuate the market making, including release of up to 100K $INDEX to the Community Agent from the Indexcoop Token Supply for liquidity provisioning.

After discussion and finalization of terms, a forum vote will be proposed first to check sentiment and then there will be an IIP given the amount involved.

13 Likes

Thanks @wishful_cynic! First, I’d like to say that I’m broadly in favor of this proposal and appreciate all of Wintermute’s support for the Coop to date.

I expect a significant amount of feedback from the community and think people should sound off on any concerns they have here. Evgeny has also offered to do a community call on the topic if we feel it’s necessary, but I’d wait until we’ve had some questions and answers here. I’m looking forward to a productive conversation here, and also welcome anyone reaching out to me on Discord if they have questions or want to just generally talk about why I think this would be a boon for the Coop.

5 Likes

Looking forward! Governance is fun:)

2 Likes