Hashflow, a hybrid approach to decentralized finance (DeFi) trading, is launching its private alpha with $3.2 million in funding from Electric Capital, Dragonfly Capital and Alameda Research.
The project looks to take on automated market makers (AMMs) like Uniswap and SushiSwap with a novel approach that relies on their real-world counterparts: the professional market makers paid to make sure various crypto assets have baseline liquidity.
“We’re kind of like an un-automated market maker,” Hashflow founder Varun Vruddhula quipped in an interview.
Ethereum AMMs work without the need for such firms, relying on smart contracts to do the work of finding a market for any given token pair. Hashflow’s approach combines a headless front end with professional trading shops working behind the scenes.
“With Hashflow,” Vruddhula explained, “you have someone who specializes in market making do the market making. Now, they have the choice to accept funds from lazy LPs, and they all get to split the yield based on the equity ownership of the pool.”
Alameda Research, Galaxy Digital, Genesis Block and Ledger Prime are the trading desks involved at launch. Other backers include angel investors Balaji Srinivasan, Alex Pack and Kain Warwick.
By bringing professional firms (and their off-chain pricing decisions) into the equation, Hashflow is able to reduce the gas fees associated with each trade – a key selling point as it looks to compete with DeFi’s top platforms among ever-price-conscious traders.
"Hashflow connects DeFi users with a network of CeFi market makers running liquidity pools,” Electric Capital’s Avichal Garg told CoinDesk via Telegram. “By routing orders across highly liquid pools run by the world's biggest market makers, Hashflow can permissionlessly offer the best prices with far lower gas fees than traditional AMMs.”
The product going live today will only feature private pools, Vruddhula said, but general DeFi investors can start adding money to the pools within the next three to four weeks.