Crypto Society Ama Recap with Deepwaters — 9 February 2023.
Deepwaters provides the trustlessness and custody protection of decentralized exchanges with the speed, efficiency, and low fees of centralized exchanges.
Zero front-running. Zero gas trades. Zero slippage. Zero PFOF. Zero internalization. Zero fine print.
Bilo | Crypto Society
It’s our pleasure to have you with us today. I would like to welcome you here on behalf of our entire community.
Carlton Hoyt |deepwaters
Hi everyone! Thanks for having us!
So we have myself, SVP of Operations
@mscallahan, VP of Marketing
@zscape0, our CEO
and @gregkbarnes, CTO
Bilo | Crypto Society
So we shall now begin with the first question. How did the idea for Deepwaters come about and how did you start?
Zorrik Voldman| deepwaters
I was initially inspired by IEX, which rolled up a few miles of fiber in the closet in an attempt to protect customers from being front-run. I ran 25 traders as a quant for my own hedge fund after trading for myself for a while. I quit my trading career 3 times in disgust at how things are done in tradfi. There is a lot of outrage over how FTX and Alameda treated the order flow and custody but crypto did not invent any of this, tradfi did. Essentially, Deepwaters is an effort to build an ultimate trading platform for traders. It’s a cliche but “by traders for traders” does apply here.
Bilo | Crypto Society
That’s a great intro and insight into the raison d’être. So you’re a quant huh? Are you any good at math?🤭
Zorrik Voldman| deepwaters
A bit…
Bilo | Crypto Society
Lol
Zorrik Voldman| deepwaters
Our CTO and myself have created over 200 pages of white papers… lots of exiting math in there.
@gregkbarnes
Bilo | Crypto Society
How did the Deepwaters team first get into blockchain and more specifically, the DeFi space? Do you all share a similar experience or did you have vastly different stories?
Zorrik Voldman| deepwaters
Most of what I know about blockchain I learned from our CTO @gregkbarnes
Carlton Hoyt |deepwaters
Definitely vastly different. I have a PhD in neuroscience. 🧠
Greg Barnes|deepwaters
Everyone’s story is a bit different… For me: I actually discovered Bitcoin in a past life, when I played poker professionally. From there, it led me into starting a mining operation in Washington State (cheap hydro power) and then into Ethereum, defi and beyond.
Zorrik Voldman| deepwaters
Greg and I actually managed to reinvent quite a few DeFi protocols while trying to solve for the best Deepwaters design.
Bilo | Crypto Society
That’s awesome.
Carlton Hoyt |deepwaters
I was an OG IOTA fanboy. We’re pretty much all here through a mutual connection (Mihai Dinulescu).
I actually started my career as an engineer (my team likes me to say I worked for NASA and the JPL, so I’m the official deepwaters rocket scientist :p). Got into data science after my degree, which eventually led me to Product Marketing. Been in the industry for about 6–7yrs, and worked all around for companies like OKX, the Transform Group, and OpenZeppelin/Forta. DW needed someone with technical marketing experience, focused on transparency and consumer blockchain, so here I am.
Zorrik Voldman| deepwaters
At some point we may publish some of the internal white papers. We worked out a superior concentrated liquidity solution.
Greg Barnes|deepwaters
He’s also funny.
Zorrik Voldman| deepwaters
Actually had a cowswap like design committed to paper before it went live.
Bilo | Crypto Society
Ok I am a quantom mecanoelectric phd’ologist for a secret organisation. Can’t say more😐
Zorrik Voldman| deepwaters
Actually hilarious. My stomach still hurts after traveling with him for a week
Michael Callahan | deepwaters
At the highest level, Deepwaters is working to build the most fair and transparent exchange in history, providing protected order flow, secure custody, and provable market integrity.
I also cook. These things are unrelated.
Zorrik Voldman| deepwaters
Allegedly…..
Bilo | Crypto Society
What would be your elevator pitch for Deepwater to get someone excited?
Michael Callahan | deepwaters
Deepwaters will be the first exchange in any asset class where the fraud, failures, and corruption that led to the collapse of FTX, Voyager, 3 Arrows Capital, Celsius, and others, are quite literally impossible.
Zorrik Voldman| deepwaters
It’s the first major paradigm shift for marketplaces, since the internet stepped on the mat. The biggest danger to customers of any marketplace are the privileged insiders, mostly people who created and run it. Deepwaters removes any possibility of such privileges.
Bilo | Crypto Society
Very impressive stuff. Can’t wait to learn more. When do you plan on launching the platform?
Michael Callahan | deepwaters
2022 was red
Deepwaters are blue
We’re launching on Valentine’s day
To make trading fair for you.
Bilo | Crypto Society
Oooooooo; thats so romantic.
What is your take on where DeFi stands today? What concept that has evolved within DeFi would you like the traditional financial markets to apply?
Zorrik Voldman| deepwaters
DeFi has matured through trial and error. We mostly know what does not work and what does and why. We believe Deepwaters paves the future for tradfi adoption of the best of DeFi concepts and technologies. In particular, blockchain allows us to improve and expand the protection that the SEC gives traders (we saw this work out well for FTX.US users who did not lose a penny). We call this compartmentalized compliance. Blockchain can execute real time compliance and rule enforcement, something that is not currently available in tradfi.
Carlton Hoyt |deepwaters
We really want to take the concept of trustlessness and bring that to traditional / centralized finance. We’re the first project to be doing that.
Bilo | Crypto Society
Side question: aside from using non-custodial wallets and oversight, how do you propose to protect users and their funds?
Carlton Hoyt |deepwaters
You pretty much answered your own question! 😄
Greg Barnes|deepwaters
The secret sauce is creating a system where we don’t have to ask users to ‘trust us.’
Using confidential computing and something called ‘remote attestation,’ customers can see for themselves ‘how the sausage is made.’
Zorrik Voldman| deepwaters
just that is a huge leap for marketplace. But please don’t forget that we also protect the order flow. For me this is even more important. Users don’t have to keep the assets on the exchange, but they have to trade on the exchange for it to be useful. Making sure they don’t get ripped off in the process is the main theme of Deepwaters
Bilo | Crypto Society
I would love to discuss this very matter further but for the sake of the AMA, will continue with other questions. Perhaps we can setup a spaces one day and dive deeper. This is indeed very interesting,
Do you consider Deepwaters a natural evolution or simply a different interpretation of current DeCentralized exchanges?
Zorrik Voldman| deepwaters
This will help explain.
Zorrik Voldman| deepwaters
I would say, it’s an evolution of Centralized Exchanges toward the type of transparency, fairness and protection that Decentralized Exchanges promised but ultimately did not deliver.
Michael Callahan | deepwaters
Retail traders are starting to gain a lot more understanding about how they, as traders, are the LAST to make money on their trades. Every time you see something like “Zero Fee Trading” (and no, I’m not going to call out the exchange you’re thinking of by name :p ), you can bet that you’re losing a lot more than you would be on fees. PFOF, internal netting, and adverse selection are quite honestly standard practice across almost all exchanges, and we can confidently say we are the most fair and honest exchange out there — as these things are literally impossible on deepwaters.
Carlton Hoyt |deepwaters
In fairness, we’re more similar to centralized exchanges than decentralized exchanges. We’re more trying to take the concepts and best ideas from decentralized exchanges and bring them to CeFi.
Trustlessness, decentralized validation, etc.
Bilo | Crypto Society
That’s great as in my opinion, there will always be a need for CEX due to the simplicity (while ofc there is a greater need for security and means to ensure no one loses their funds) and their role in onboarding users into web3. So a DEX that has the simplicity plug and play aspects of a CEX is greatly needed
Zorrik Voldman| deepwaters
Also speed, cost and price discovery which are all superior, at the moment.
There are use cases for both.
Bilo | Crypto Society
How did you feel when Deepwaters had that Eureka moment of figuring out how the system is going to work? What hardships led to that point and how many revisions have you thrown in the bin along the way?
Zorrik Voldman| deepwaters
This is the third iteration of Deepwaters thought. You might be surprised but we have started as a completely decentralised solution. As I said, our CTO Greg Barnes reinvented quite a few DeFi solutions. However, in the end we realized that a centralized order book has the best potential to be the fastest, cheapest and most fair price discovery mechanism. Pivoting was hard psychologically and logistically. Still we started to centralize. Of course, the more you centralize the more you have to think how to protect the system from yourself. The most dramatic plot twist was coming back to blockchain technology to make our marketplace even more fair and protected. So here we are.
Bilo | Crypto Society
It is a complex problem to solve. Good on you and your team for tackling this
During the internal and public testing, what were you expecting to break and did it exactly as you expected? Conversely, what happened that you didn’t anticipate and made you rethink your approach?
Greg Barnes|deepwaters
We were concerned about scalability. The initial design was too conservative and it showed in the poor performance. That we expected and fixed. For V2 we are expecting to run 15–20x faster than Binance. We did not anticipate the sophistication of our traders to be so high. They were actually hungry for good API coverage. Someone actually created a github project. To accommodate the broadest adoption, we added Rest API (in addition to GraphQL),
Zorrik Voldman| deepwaters
Our dev team is amazing… testnet held up really well overall!
Bilo | Crypto Society
Deepwaters team quote: “For V2 we are expecting to run 15–20x faster than Binance” 🔥
Zorrik Voldman| deepwaters
We were actually running this fast in testnet even in debug build, but for Beta we are disabling some optimization for safety.
we publish our performance stats.
Bilo | Crypto Society
Deepwaters is chain agnostic. How easy is it to implement a new blockchain? How rapidly do you expect to expand?
Zorrik Voldman| deepwaters
Best we got were about 16ms trades and 5ms orders… can get much faster than that.
Bilo | Crypto Society
Will start calling you ZV and forget about CZ
Greg Barnes|deepwaters
Not very difficult. The order book is off-chain and a couple of months after launch we are actually integrating with a best in class third party compliant custody solution. This will make it even easier.
Zorrik Voldman| deepwaters
They call me Zoracle and Zeinstein😂
Bilo | Crypto Society
Hahaha — ZV has a zing to it…
I imagine there’s still a hefty amount of dev work tho?
How would adding a new token to Deepwaters work? Can anyone just create a liquidity pool like on a DEX?
Greg Barnes|deepwaters
No, to protect our users we need to vet the projects that are going to be listed.
Bilo | Crypto Society
Understandable.
Carlton Hoyt |deepwaters
We also can’t list anything and everything for legal / compliance reasons.
Bilo | Crypto Society
I’m guessing a centralized order book also was a factor.
You’ve been partnering with very strong structural parties such as Edgeless Systems, Polygon, Avalanche and Wormhole. What are your views on the existing DeFi space? Are you looking to partner with existing projects or take on individuals as advisors?
Zorrik Voldman| deepwaters
We are always looking for collaboration and exchange of ideas. We are also looking to list exciting projects, so please do send us suggestions!
Bilo | Crypto Society
The WTR token will be used for both governance and the maker or taker fees when trading. Will there be an option to automatically convert part of the trade to cover that fee or will users be required to hold a small stash of WTR?
Zorrik Voldman| deepwaters
Only users that have WTR in their accounts will receive the benefit of WTR redemption for fees. It will be actually possible to have negative maker fees (get paid to make the market), if WTR is present in the account. How exciting is that?
Bilo | Crypto Society
Very exciting and a great use case for WTR.
Carlton Hoyt |deepwaters
You can literally get paid to trade.
Bilo | Crypto Society
Have you already done or are you planning on having code audits? Will you be making the code open-sourced at some point?
Greg Barnes|deepwaters
We have gone through an audit with FYEO prior to launch. In addition, we have a generous bug bounty program ;)
Bilo | Crypto Society
Which part of the roadmap for this year are you most excited about? Or conversely, which challenges keeps you awake at night?
Greg Barnes|deepwaters
Leverage! Everyone wants it. Also, listing new exciting projects. Of course, derivatives are always exciting. We are actually looking at implementing old school options. Deepwaters is uniquely well suited for thinly traded instruments due to order flow protections. Anyone who has traded options and was frustrated by the jungle rules of tradfi, with its front running and price fade, will understand me.
Bilo | Crypto Society
Big learning curve with options
Carlton Hoyt |deepwaters
For me, it’s the v1.0 launch with the decentralized auditing. That’s when we’ll effectively be trustless. IMO, that’s just such a huge step towards changing finance broadly.
Zorrik Voldman| deepwaters
Complexity creates flexibility and power. I used to trade volatility quite a bit.
Bilo | Crypto Society
Side question: are there plans for some educational components to the platform?
Carlton Hoyt |deepwaters
We’ve been routinely posting about relevant industry developments on our blog pretty much the whole time we were developing. We’re definitely going to continue doing that and trying to make more sense of various events.
As someone with a strong content marketing background, I would love to see those efforts expanded and become more structured over time. A la Coinmarketcap’s Alexandria or things of its ilk.
Zorrik Voldman| deepwaters
Absolutely. Before FTX happened, many considered us conspiracy theorists. Part of the service that we provide to the community is educating them on all the exciting ways of being ripped off , which crypto imported from tradfi.
To fully utilize DW, traders must understand all the benefits it provides. For instance, market orders become viable, 100% price improvement on limit orders. This allows you to trade with more versatility
Bilo | Crypto Society
Do you wish to let us know anything else that was not covered in the questions above?
Michael Callahan | deepwaters
Absolutely! We’re launching on Tuesday, so we’re running an early bird promo! Register and begin the KYC process by 23:59 UTC on Feb 14 and lock yourself in to the HIGHEST VIP TIER for both maker and taker fees for 12 months!
Also, we LOVE feedback and questions from the trading community, so please join us in Telegram/Discord. We take this feedback VERY seriously, so can’t wait to hear from you all!
Bilo | Crypto Society
Thank you for your time in answering our questions here today. We are all very appreciative of your time and the answers you have provided
Also: Please register for our WTR token sale here!
A small batch of WTR tokens are being sold at 12c and redeemable on Deepwaters for 70c
With this, we will open up the chat for those who wish to personally thank you for your time with us here today.
Miau (IKXSS)
Is there any plans to expand beyond DeFi?
Greg Barnes | deepwaters
This kind of technology can be protect users in ALL markets. We want to eventually go after tradfi as well.
Miau
How do you plan on getting attention of DeFi space?
Carlton Hoyt |deepwaters
People are into DeFi for different reasons, right? Some are into it because they like being anonymous. Some are kind of anarchist and believe things should exist independently of what any government says. Some just don’t want to have to trust a counterparty. We’re really addressing that third thing while offering better performance and without some of the problems of DEXes (front-running, MEV, high fees, etc.)
Julius
Will there also be perps tradable on deepwaters?
Carlton Hoyt |deepwaters
Definitely in time, but not in beta. Probably in Q4.
puzzle123
Could you elaborate how you will evaluate new token listings on deepwaters?
@CarltonHoyt
Zorrik Voldman| deepwaters
the main priority is to make sure our clients do not get rekt. We look at tokenomics, use cases, etc. This is of course subjective.
Carlton Hoyt |deepwaters
We’re still finalizing that procedure, but it will be based on:
Team
Project
Tokenomics
Legal compliance
We definitely want to give our users access to a broad range of tokens, but we also want to ensure we’re acting as good custodians to our user base. DYOR is always a great rule, of course, but when you’re the ones providing access you need to take that responsibility seriously.
One thing we’ve learned ourselves as a new project is just how s***y a lot of exchanges are when it comes to vetting projects. It’s a complete money grab most of the time. A lot of them don’t have a meaningful DD process at all, a lot of others fake it (they’ll collect the information to play make believe, but not even look at it) and others do the DD but then are terrible with projects and ask them for crazy amounts of cash. We want to be good stewards to our user base while also being fair to projects. We actually don’t plan on charging listing fees at all. At least not in the foreseeable future.
DJTown
@CarltonHoyt will deepwaters also be looking at how to make the ui / experience easier for none crypto native users. As the 350 worded seed phrase scares muggles.
Very much like using a normal app on a phone that is linked to biometrics.
Not knowing you are using crypto is when crypto is mainstream.
Carlton Hoyt |deepwaters
Yeah, in time. Right now the requirement to connect to a wallet is integral for both security and, believe it or not, compliance reasons. As we further develop our architecture on both of those fronts we’ll have more flexibility and will allow people to use a normal web2-style login while retaining industry-best levels of custodial security.
Thanks for having us, Crypto Society community! A bunch of us have to head to other meetings, but we’ll be in the group if anyone has questions. Feel free to @ us. :)
Much love, everyone!
LINKS
⚜️Deepwaters Website http://deepwaters.xyz/
⚜️Deepwaters Telegram https://t.me/deepwaters_dex
⚜️Deepwaters Blog https://deepwaters.xyz/blog/
⚜️Deepwaters Discord https://discord.gg/Deepwaters
⚜️Deepwaters Twitter https://twitter.com/deepwatersxyz
⚜️Crypto Society Chat https://t.me/cryptosocietyy
⚜️Crypto Society Announcements https://t.me/CryptoSocietyyy
⚜️Crypto Society Twitter https://twitter.com/cryptosocietytg
