Introducing Zorrik Voldman, Founder and CEO of deepwaters.xyz – an innovative order flow and custody protection trading infrastructure company. With years of experience in the industry, Voldman played a crucial role in the design and implementation of the company’s product, and continues to provide guidance and expertise to the product, technical and business teams. In addition, Voldman is a respected thought leader in the field, having authored multiple research and white papers on the subject. His leadership and expertise have made deepwaters.xyz a leading player in the trading infrastructure space.
Zorrik Voldman was invited by Casper Labs to speak about the future of DeFi at the Blockchain Hub at Davos 2023.
Que:1 Can you tell us about your personal interests and hobbies outside of your role as CEO of Deepwaters? Specifically, can you speak to your experience creating and managing a YouTube channel and your love for travelling? How do you balance these interests with your responsibilities leading the company?
Ans:I am an avid surfer, which is where the name Deepwaters came from. In our company we say: “whales need deep waters to swim in.” I have also been very interested in martial arts and have been a serious practitioner since the age of 6.. I have travelled to China, Tibet, India looking to learn more about various arts. I do enjoy travelling in general and have been known to get lost in Europe, South America and parts of US. I believe in collecting experiences, rather than things. Sometimes I share these experiences with others through videos. Deepwaters is one experience that has been dominating my life, lately. The company’s mission is my mission. This mission has to do with serving others and I consider it a good way to find meaning to one’s life.
Que:2 Can you explain how the Deepwaters exchange plans to ensure the security and transparency of its platform, given the recent hack and security breaches on other centralized and decentralized exchanges?
Ans: I believe that humans are very good at creating rules and laws, but are very problematic when it comes to interpreting and executing them. Deepwaters is our solution to this quandary within the arena of market places. Deepwaters publishes the complete fair order and custody business rules as open source. It then uses hardware cryptography to ensure that the published rules are the ones that are being used, and the order flow is completely hidden until it hits a public order book.Furthermore, it utilises the unique attestation functionality of the above technology to provide real time proof of the above to any party, including blockchain based validators.
Que:3 How does Deepwaters plan to navigate the constantly evolving regulatory landscape for cryptocurrency and ensure compliance with laws and regulations?
Ans: We have created a design that uses completely compartmentalised oversight. We are more transparent than any centralised exchange since we actually publish our trading and custody rules. We also use technology that removes any possibility of a discretionary human action, as far as trading and custody goes. The blockchain based validation is completely separate and takes the shape of an advisory-only function. From a regulatory point of view, this does not complicate the oversight on their end. We are as simple, if not simpler, to regulate, as any centralised exchange
Que:4 Can you speak to the steps the team has taken to address and prevent any negative industry practices, such as wash trading and insider trading, on the exchange?
Ans: That is a very interesting question. Because of the way the exchange works, if Deepwaters employees want to participate in the trading, they have to go through the same interface as everyone else. This means that wash trading is much more dangerous. We can’t make sure that we trade against ourselves, so instead we would end up being just another market maker, actually benefiting our users, in the process.. Obviously, we also cannot have any insider information, considering that the trading data is encrypted with keys that we have no access to.
Que:5 How does Deepwaters plan to attract and retain users, especially in a crowded and competitive crypto exchange market?
Ans: In a way, FTX has done much of the heavy lifting for us. We have been warning about the type of orderflow and custody abuse for quite a while. I even gave an interview calling out FTX, about 1 month before the FTX collapse. Since FTX happened, our Twitter went from 18k to 48k+ and our Discord from 30k to 86k+. The number of registered addresses sky-rocketed from 20k to 140k+. We have gained the moniker “FTX antidote”.Over 101,000+ Tweets in the last month contained @deepwaters with weekly engagement ranging from 30-60% (which is insane). We just launched our first trading competition and received over 4,000+ pending KYC within 48 hours. These registrations will carry over to our mainnet. However, we cannot rest on our laurels. We will actively pursue trader education, market maker outreach and a relationship with institutional traders. Non-social media marketing paths will gain strength in the coming months.
Most of all, we will leverage our simple and effective message: “you don’t have to trust us – see for yourself.”
Que:6 How does Deepwaters ensure user fund safety and prevent mismanagement in light of FTX’s crisis and industry concerns?
Ans:That question has been answered in part in the description of how Deepwaters functions. I would like to add that we are using best in class custody trusts to hold user assets. Our API can access those funds, but the API code is made public and protected by our technology from any sort of rehypothecation. We will be introducing third parties with authority to only return the funds to users, should anything happen to Deepwaters. Of course, we will also be utilising third party audits, just like any compliant exchange.
Que:7 How does the Deepwaters team plan to approach liquidity for the exchange and attract trading volumes in a bear market?
Ans: We have contracts with market makers to do that. However, you can see from our traction that we will have retail to pick up quite a bit of slack. Of course, if there is retail trading, institutional traders will not be far behind, except on Deepwaters, you can be sure that you are transacting against other traders on equal basis – no internalisation or wholesale activity of any kind.
Que:8 Can you speak to the progress and status of integrating Circle’s multi-chain USDC for cross-chain redemption and issuance on the Deepwaters exchange?
Ans: Circle is our close partner and we are in the final stages of Circle services integration.
Ans: Superficially, the user experience and functionality is very familiar. Of course, if you participated in our testnet, you know the user interface is also gorgeous and very functional. If you dig deeper, however, several things stand out as unique:
- Market orders are actually viable for the first time since creation of market orders. This is because market orders land directly on the public order book without anyone being able to see them or act on them, first.
- Limit orders get 100% price improvement, if they cross the market.
- We expect a much better fill rate with limit orders being filled faster.
- We expect much lower adverse selection (filled order losing money on fill). We like to say that in Deepwaters adverse selection is replaced with natural selection. Everyone gets to see how good of a trader they really are.
Que:9 Can you explain how the public testnet has been developed and what kind of user engagement it has generated so far?
Ans:The testnet started about 4 months ago and has been a success. We have over 140k registered addresses, more than 24k users provided feedback in over 100k messages. We are seeing between 800 and 6,000 users every day on the platform with as much as 100k trades in 24 hours. 6M orders and 2m trades have been made in the last 3 months. Over 1.5m people visited our web site (non-testnet).
Our Discord now has 86k+ followers and Twitter – 48k+. We are poised to be one of the most successful web3 launches in recent memory and according to sources including DappRadar and ICODrops, we were the fastest growing unreleased project in the entirety of web3 in November.
Que:10 Can you speak to the process of raising funds for the company and the current state of its finances, especially in light of the current market conditions?
Ans: We have raised just over 5 million from some great funds, who have become our closest allies. We should have sufficient funds to get to cash positive, given even the most conservative of projections.