Polychain Capital, founded by renowned cryptocurrency investor Olaf Carlson-Wee, has taken the lead on a $7 million investment round in Altonomy, a trading desk and market maker for digital assets, as per a press release, July 15, 2019. Polychain is a specialist VC and hedge fund that has attracted investment from the likes of Pantera Capital.
Building Financial Infrastructure
Investment firms have begun sinking money into financial infrastructure for cryptocurrency markets again. This is not just a sign that the current sentiment is bullish, but that companies and individuals are starting to believe in the bigger picture and the emergence of cryptocurrencies as a new asset class.
CEO and founder of Polychain, Olaf Carlson-Wee, stated that they have been using Altonomy’s services for a long time and it was a fairly easy decision to invest in them. He believes Altonomy provides intelligent trade execution as well as highly specialized services that are institutional grade for a wide variety of verticals.
As a market maker, their primary role is to provide liquidity for their clients, exchanges, and token projects across a variety of platforms on a global basis. They function as a block liquidity provider for CME Bitcoin futures, which have been booming for a good part of 2019. Other clients include Huobi and spot derivatives exchanges. They are a primary market maker for stablecoins like USDC, TrueUSD, Tether, and Paxos.
With over 60 partners and 250 cryptocurrencies, Altonomy is helping to drive a more efficiency cryptocurrency market. Additionally, the company launched AltMiner, a cloud mining product designed especially for institutions who want large scale exposure to mining.
Infrastructure will without a doubt be the most important part of driving institutions into crypto markets. Many new startups are being launched to serve the underlying market of key management and market-making.
Without the necessary base layers, there is no way to accommodate the sheer size and rapid order matching of institutions. As a liquidity provider, their role in the system is all the more important in trade management and price discovery.
The spread in BTC on platforms like BitMex is negligible, and this is likely to change as more companies set up market-making services.
Trade-offs will always exist and for the market to mature and become efficient in terms of price discovery, traders will have to give up their narrow spreads and start planning their trades more carefully.