Wootrade is a new breed of CeFi (Centralized Finance) crypto platform. Being a one-trick pony just isn’t enough these days, so Wootrade combines several elements. They’re a digital asset liquidity pool for their institutional clients, an exchange with zero fees for trading teams, and a token that’s set to skyrocket for retail investors. The clever part is how these features interact with each other.
Wootrade is still near the beginning of its rise to success so it makes an interesting case study. Let’s take a look and see what’s in it for you.
Who Are Wootrade?
Founders Jack Tan and Mark Pimentel both have illustrious careers in digital finance as co-founders of Kronos Research. Starting as two quants with a shared vision back in 2018, Wootrade has grown to around 60 staff members over the last 3 years. The entire team is focused on technical innovation. Their qualifications and experience are geared towards the mathematical analysis of markets and trading. They’re easily the smartest guys in the room.
Other indications of potential success are their investors and partners. Funding has come from serious names like Three Arrows Capital, QCP Capital, IOSG Ventures, and Defi Capital. These guys consistently pick winners, for example, they were early funders of AAVE, 1inch, and Synthetix. Being a project from the Kronos Research stable, You would expect Wootrade to attract this level of interest. Both sides know a good deal when they see one.
There are too many to mention, but some of the partners are significant players in the burgeoning crypto and DeFi space. Bitmart, Coinex, Winkrypto, and Chainlink are a few standout names, but that roster is likely to grow in the coming months as the project achieves its milestones. As I mentioned, Wootrade is in the early stages of its project implementation. As more partnerships are formed, expect the Woo token price to reflect this growth in the Network.
The three main facets of Wootrade are the liquidity pool, the trading, and the staking. All the elements work together to offer what should become a stable platform for market makers and traders alike. The innovation is applying well-understood models for traditional exchanges to digital currencies.
This is the fundamental element of Wootrade. It’s liquidity as a service. Lower market cap tokens often have the issue of limited liquidity. Many individuals might be trading an asset but on a number of different exchanges. This fragments the liquidity which causes spreads to be unprofitably large, and long wait times for orders to be filled. By aggregating liquidity, Wootrade hopes to fix this perennial problem.
Enterprise clients holding larger amounts of WOO tokens in the liquidity pool can share in the exchange’s profits. The hope is that enough institutions will invest in the liquidity pool to take make a decent yield and take advantage of Wootrade’s zero-fees trading. This further increases the liquidity, making it even more attractive for other institutions to get involved.
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Wootrade offers spot trading and will add a futures market later this year. Their WooX trading platform is currently in the Beta version. It’s a standard trading page, but it seems as good as any other I’ve tried. It’s also very flexible, allowing you to configure multiple windows to view all your trading pairs with ease.
There are 40 tokens to trade at the moment, but only against USDT. This needs to grow over time and inter-token pairs need to be added. Futures trading is yet to be launched, but this is scheduled for the end of Q2, 2021. They need to get a move on!
WOO staking is coming soon to the Wootrade platform once the exchange is up and running. Until then you can stake your WOO tokens on SushiSwap, UniSwap, Bancor, or AscendeX. Read the small print as each platform is different. You can swap your ETH for WOO on all the platforms, but for ETH, the gas fees are still high. You need to weigh up whether to stake your WOO or simply HODL. I see enough short-term upside in the WOO token just to buy and hold, for now.
The big feature for traders is the absence of fees. Whenever I see “Zero Fees” being advertised, I quickly look at the spread (the gap between the buy and sell price) which is invariably massive. No fees perhaps, but there’s always an outrageous profit margin on each trade. Not Wootrade, though. Wootrade is different.
They offer genuine zero-fee trading with a really tight spread. This is very attractive for high-volume traders who can save thousands of dollars per day on fees. But how does Wootrade achieve this?
The whole enterprise is held together by their proprietary Woo token. Yes, if you invest hundreds of thousands of dollars in WOO tokens, you are charged zero fees, and can even be awarded a healthy rebate. The rest of us still pay some trading fees in WOO, a portion of which is burned each month.
These fees plus the order flow payments from market makers are Wootrade’s operating profit. The deflationary pressure of burning a portion of these WOO tokens will (in theory) increase its value.
Remember 25% of the total supply of WOO was allocated to the founders and advisors, and this 750 million WOO is what they hope will make them all billionaires. For this to happen the price of WOO needs to rise, so the interests of the “WOO whales” are well aligned with those of lesser WOO token holders.
WOO’s Total Market Cap is $2 Billion based on a current price of $0.65. There are around 376 million WOO in circulation, which is only 12.5% of the total 3 billion coins minted. The original distribution was as follows –
- 50% Ecosystem
- 20% Team
- 20% Token Sale
- 5% Advisors
- 5% Liquidity Management
Whenever a significant proportion of a project’s tokens are awarded to the founders, an alarm bell sounds. However, the schedule for vested interests becoming eligible for sale is quite restrained. Hundreds of millions of coins will not be dumped on the market all at once. This adds stability to the WOO token and builds confidence in the project as a whole.
The future is looking very bright, assuming the network continues to grow. OK, but will the network grow? Once traders and institutions catch on to the combination of first-class liquidity and fee-free trading with super-tight spreads, then yes, for sure. Kronos itself is preparing to use Wootrade as a liquidity provider, and they have billions of daily trade volume to bring to the party.
The more crypto platforms and trading teams Wootrade can attract, the deeper the liquidity, and the more demand there’ll be for WOO tokens to pay exchange fees. The increasing trade volume will mean more WOO tokens are burnt. It all looks very well thought out, as you’d expect from a team of math guys.
Wootrade Road Map
It’s still a work in progress at this stage, but the Wootrade roadmap’s milestones have been achieved more or less on time. We need to see far more tokens on the exchange, plus trading pairs other than against USDT. Futures trading should be available from Q3, 2021 with WOO apps to follow later in the year.
It’ll be interesting to see what else is on offer a year from now. Projects in the pipeline include an AI-driven wealth management application and several regional expansions. They aim to onboard 50 institutional clients, which will boost their trading volume to that of a major crypto exchange.
This is a great opportunity for institutions and large trading teams, but perhaps less so for average retail traders. The amounts of investment and trade volumes required to qualify for zero fees are staggering. I don’t know any independent traders with a volume of over $1 million per day, but that’s where you need to be to take full advantage of Wootrade. If you run an exchange or a well-backed trading team, your volume will be enough to justify the investment.
The concept of zero fees with super-deep liquidity sounds simple but it’s not easy to achieve. Wootrade’s Payment for Order Flow (PFOF) model where a market maker pays a broker for directing trades through them, is not new. It’s the approach that Robinhood uses, but I do not expect Wootrade to sell real-time customer trading information to their investors so that they can illegally front-run these retail traders. People will be watching closely to see if this develops.
There are a lot of centralized crypto exchanges popping up these days, but I sense that Wootrade is one of the better ones. Looking at the people involved and their unique selling points, I see no reason why Wootrade shouldn’t become another Binance in the future.
Also, check out our other reviews on centralized crypto exchanges that can be good alternatives:
- Binance Review – Is Binance still safe?
- Kraken Review – Is the Kraken trustworthy?
- Bitfinex Review – Is Bitfinex a regulated exchange?
- Coinbase Pro Review – Is Coinbase pro good for beginners?
- Bitstamp Review – Can I use Bitstamp in the US?
- FTX Review – Why is FTX the best exchange?
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com