The Vision

The RWA market is projected to reach $16 trillion by 2030. However, the current on-chain trading landscape is primarily limited to native cryptocurrency assets, causing traders to miss out on opportunities arising from macroeconomic movements.

We aim to provide an easy way for traders to access global markets and put control back in their hands.

In traditional finance, commodities futures, such as gold futures, are heavily traded. However, managing expiration dates and accurately pricing these contracts is complex, often restricting participation to institutional players. To solve this problem and simplify the process for traders, we popularize an innovative solution: commodities perpetual futures. Perpetuals remove the need for managing expiry dates while also providing flexible leverage, making it a much easier option for traders to gain exposure to web2 assets.

RWA perpetuals offer additional benefits beyond simplifying the trading process. Consider another scenario: as a trader, you want to gain exposure to US Treasury bills, but it's difficult due to geographical and legal constraints. What if we offered you a simple and elegant solution by providing perpetuals on Treasury bills? The market would be open 24/7, allowing you to gain exposure whenever and wherever you want. You could easily exit the position and profit from short-term movements, rather than holding the position for an extended period, as with many bond vaults.

Finally, offering RWA perpetuals is important for hedging positions and managing risks effectively. Given the strong correlation among most crypto assets, it is beneficial for traders to diversify their portfolios by holding a basket of uncorrelated assets. This diversification can help protect against market volatility and provide more balanced investment opportunities.

In summary, here are the offerings we would like to provide to our customers:

Global Market Access

Discover all available products worldwide on a single unified platform. We are committed to offering an extensive variety of markets, including perpetuals on FX and commodities like gold and oil, indices on interest rates and US T-bills, as well as exotics such as carbon credits.

Seamless Trading Experience

Silver Koi is committed to delivering a seamless, CEX-like trading experience on-chain to lead the evolution of trading. To achieve this vision, Silver Koi will build a specialized blockchain designed to handle high order-book volumes for RWA derivatives.

We are focusing on enhancements in several key areas: deeper liquidity, tighter spreads, advanced trading tools, and safe liquidation mechanisms that remove the risk of scam wicks.

More details about our features can be found in the overview section of the exchange backend.

Transparency

We understand that transparency is of high priority. Our order book and matching processes are fully encoded on-chain, ensuring maximum robustness and transparency. We've optimized our technology stack to enhance performance and reduce costs, all while maintaining complete transparency.

Long Term Vision

We believe the greatest opportunities lie in improving inefficiencies in centralized exchanges by bringing them on-chain. There are significant areas for improvement in CEX operations, such as reducing elevated counterparty default risks caused by non-transparent practices. Numerous examples exist of major institutions collapsing within a few months. Research indicates that the annual default rate for major crypto exchanges is a whopping 14%. This issue is not limited to crypto exchanges; it is also a concern in traditional financial markets. For instance, MF Global, a brokerage firm, went bankrupt in 2011 after making risky bets on European sovereign debt, resulting in significant losses and the improper use of customer funds. Counterparty default risk is particularly high in the OTC derivatives market due to the lack of transparency between brokers, inter-broker pricing discrepancies, and other factors.

Another significant area for improvement lies in the multiple layers of intermediaries in centralized exchanges. Even electronic trading exchanges, which are among the most efficient today, still involve layers of intermediaries, including brokers, dealers, routers, clearing houses, custodians, depositories, and transfer agents. The complexity increases further in the context of OTC trading, where consulting multiple brokers and even inter-dealer brokers are often necessary. This leads to higher costs, as each layer can charge 1% to 2% of the total asset value. For instance, in the case of the London Whale at JP Morgan in 2012, they had to pay $600 million to close just one-third of their positions.

Beyond cost, non-transparent pricing is another major issue. A study found that the pricing difference between major institutional players and smaller participants can be as wide as 30 pips. Moreover, not all trades in OTC markets are confirmed by brokers. In trades between dealers, both parties typically issue a confirmation, while end-users review confirmations prepared by dealers. Some counterparties, especially end-users, are often slow to respond to confirmations, and these confirmations frequently do not match. Most firms reported discrepancies in 5% to 10% of confirmations received, with some reporting rates as high as 30% or even 50%. Consequently, the most active dealers have backlogs of hundreds of unconfirmed trades, with a small but significant share outstanding for 90 days or more.

Our vision is to provide an on-chain solution to address these inefficiencies and attract institutional volume. The transparent nature of blockchain reduces counterparty risk and enables fair and efficient markets. Automating and eliding intermediaries reduces transaction costs for traders and minimizes risks caused by human errors. Instant settlement and 24/7 boundary-less trading opens new opportunities for traders.

This is an ambitious vision, but we are committed to making it a reality. We begin with an on-chain order book for RWA perpetuals. In parallel, we will develop a customized blockchain to support institutional volumes.