As global algorithmic trading evolved over the past two decades, it has come to represent the bulk of trading in traditional financial markets, significantly improving liquidity and efficiency. However, the digital asset market has lagged, lacking the necessary infrastructure for institutional-level algorithmic trading. High fees, complex integrations, and privacy concerns have led to inefficiencies and hampered growth. While traditional algorithmic trading systems, managed by investment banks, execute trades at optimal prices and volumes, translating this efficiency to digital assets has proven challenging.

In traditional finance, institutions such as hedge funds and pension funds rely on sophisticated algorithmic trading systems managed by sell-side firms, mainly investment banks. These systems execute trades at optimal prices and volumes, enhancing market liquidity. However, digital asset trading platforms often suffer from high fees and prolonged setup times, making it difficult for institutions to adopt them. Additionally, privacy concerns arise as centralized authorities typically manage these platforms, leading to trust issues. Platforms like Tread.fi are stepping in to fill this gap.

With the increasing demand for institutional adoption of digital assets, especially following the approval of Bitcoin and Ethereum ETFs, having an institutional infrastructure is crucial for large institutions. Varys Capital is excited to partner with Tread.fi to build the most secure, efficient, and scalable digital asset trading platform. Tread.fi is designed to meet the needs of institutional clients by offering superior pricing and execution tools. Additionally, it enables retail investors to have access to the same tools with institutions by providing access to powerful trading tools historically available only to hedge funds. This democratization of access ensures that both institutional and retail clients can maximize their participation in the digital asset market, benefiting from enhanced liquidity management, optimized trade execution, and a user-friendly interface.

What does Tread.fi do?

Tread.fi provides institutional clients with a comprehensive suite of tools for efficient digital asset trading and liquidity management. The platform’s flagship products are Trading as a Service and Directed Cyclical Exchange, providing seamless integration, minimized market impact, and strong privacy features.

Trading as a Service (TaaS)

Tread.fi’s TaaS combines execution, settlement, and reporting into a single service, allowing clients to deploy their algorithms with ease and precision. This distributed trading execution engine facilitates quick integration with existing systems, enabling institutional clients to deploy complex trading strategies while reducing market impact and ensuring optimal pricing. The platform supports various asset types, including spot, futures, and options, catering to the diverse needs of institutional traders.

The TaaS managed service simplifies trading infrastructure for clients by splitting the operation into two distinct services. First, the Trading Engine, where Tread Labs manages the core trading engine and Order Execution Management System (OEMS) in private instances per client. This setup allows clients to offload the complexities of infrastructure management and focus solely on trading strategies. Additionally, the Client Proxy Service acts as an intermediary between the managed TaaS instance and the exchanges. It establishes secure connections and low-latency to exchange APIs, handles order routing, and provides data feeds to the client's trading algorithms, ensuring secure communication and reducing the risk of data breaches.

By managing these services, TaaS enhances reliability with minimal downtime, scales effortlessly with the client's strategies, and ensures the security of exchange API keys. Clients benefit from reduced operational overhead, as they no longer need to set up and maintain complex trading infrastructure, and can scale their trading strategies without worrying about infrastructure limitations.

Directed Cyclical Exchange (DiCy)

DiCy operates as a dark pool, providing a confidential trading environment. It enables communication among TaaS instances to identify netting opportunities and avoid exchange fees and spreads. This ensures full privacy and reduced market impact, making it ideal for executing large trades. DiCy enhances the efficiency of trading operations by supporting liquidity diversification and reducing dependency on traditional OTC/RFQ methods.

DiCy can reduce market access by internally crossing counterparties when trading multiple orders within or across entities using TaaS. This internal crossing mechanism offers savings on exchange fees, reduced market impact, and minimized alpha leakage. It is particularly beneficial for clients with multiple trading strategies running in parallel or pod-structured funds with multiple portfolios.

In the future, TaaS instances will securely and discreetly access a multi-party DiCy exchange to find verified institutional counterparties. This will further reduce market access fees and impact, fostering a more efficient and private trading environment for all participants.

About Tread.fi

Tread.fi enables institutional and retail investors with the most advanced trading and liquidity management tools. By democratizing access to trading products such as TaaS and DiCy, Tread.fi enables both retail and institutional users to optimize their trading strategies and maximize market participation. For more information, visit: Tread.fi

About Varys Capital

Varys Capital is a global, multi-strategy digital asset fund and market-maker that invests in and supports early-stage and growth-stage companies building blockchain-enabled businesses. We are a highly differentiated capital partner with a deep understanding of the digital asset ecosystem and a proven track record of success as investors and operators. We provide our portfolio companies with access to capital, expertise, and a network of relationships to help them scale and succeed. Varys Capital was established in 2018 and is headquartered in Abu Dhabi, UAE and Bangkok, Thailand. Twitter | Linkedin For more information, visit: https://varys.capital