ConsenSys, a blockchain software technology company has announced the Omega One project, which is being designed as a cheaper and safer way to trade cryptocurrencies and tokens. Despite massive growth, some problems of cryptocurrency markets remain its illiquidity, fragmentation, and susceptibility to security lapses.
Omega One, which is supposed to go live later this year aims to solve these problems by providing a decentralized automated execution platform that trades across the world’s cryptocurrency exchanges, protecting members from risk and reducing the costs of trading.
How Omega One solves the problem
Fortunately, the problem noted can be solved and has been solved before in traditional markets, through the intermediation of agency brokers. These entities enable clients to access liquidity more efficiently by breaking down large orders into small pieces, placing them on multiple exchanges over time, and implementing complex game theory to minimize liquidity costs.
Omega One will play this role in crypto markets, with the addition of a trust intermediation layer that protects clients from exchange risk. The trading engine will be integrated with Ethereum and other blockchains, allowing funds to be traded in a trustless manner.
When an Omega One member wishes to trade between, say, two Ethereum standard (ERC20) tokens on the Ethereum blockchain, they will lock some of token A in a smart contract and send an order to trade to token B, within certain constraints of time and price.
Omega One will then take on a token B position in the market using its own exchange accounts and funds, then trade directly with the member as an atomic (simultaneous) swap of tokens in the smart contract. This will combine the trading benefit of harvesting liquidity using Omega One’s algorithms with the trust benefit of leaving member’s funds on the blockchain, protecting them from the counterparty risk of the exchanges.
The Omega Token plans to launch
The Omega One trading protocol is mediated through a crypto token, the Omega Token. Members will use tokens to pay fees, get fee discounts, and trade on preferred terms in a private dark pool.
Fees will be reinvested into increasing liquidity access, upgrading trading intelligence, and increasing decentralization. Omega One will be a utility for the crypto markets, making trading cheaper, increasing overall liquidity and enabling further market evolution.
Omega One has a forthcoming white paper that will explain Omega One’s trust design, liquidity aggregation, investment logic and token model in more detail.