Hashflow: A Decentralized Crypto Brokerage

Automated market makers (AMMs) have catalyzed the explosion of DeFi over the past year. Uniswap handles over a billion dollars in transaction volume a day, cementing itself as one of the 10 largest spot exchanges in the world. Sushiswap and Curve are not far behind, each trading hundreds of millions of dollars daily.

But AMMs are far from ideal. We see a constant parade of new AMM designs precisely because these AMMs have so many problems. Uniswap V3 is the latest attempt to shore up the weaknesses behind AMMs (namely, the constant-product slippage and capital inefficiency). But we’re still left with the scourge of high fees (~30 bps per trade), frontrunning, sandwich attacks, gas inefficiency, and frequent failed transactions. It’s unclear if V3 or any other AMM will be able to fundamentally solve these problems.

DeFi is supposed to remove barriers and inefficiencies. So why is it so much more expensive to trade on DeFi than on centralized exchanges?

I’ve argued that when professional market makers find their way to DeFi, they will eventually bridge CeFi prices with DeFi. They can do this in a way that’s just as trustless and easy to use for end users as Uniswap. But because these market makers won’t be constrained by the simple pricing of AMM curves, they’ll be able to price things on-chain the same as they do off-chain. In other words, you’ll get the same pricing on DeFi that you see on Binance.

The only question is when. With the runaway success of Uniswap, you have to wonder: why hasn’t this happened already? Where the hell are all the market makers?

The answer is simple. Market makers are attracted by volumes, and those volumes only recently materialized in DeFi. Centralized exchanges still dominate DeFi volumes by over 10:1 in spot markets, to say nothing of derivatives.

But after the last year, every market maker in crypto now gets it. DeFi is the future. They’re ready to join the fray, but they’re not going to just be passive Uniswap LPs. What market makers needed was a platform to let them efficiently serve DeFi order flow.

That platform is Hashflow.

Hashflow is a protocol that connects users on-chain to the top crypto market makers. It simplifies this flow to its absolute essentials — extremely gas-efficient pricing (~50% cheaper than Uniswap), a lineup of the top global crypto market makers (from day one!), and maximal capital efficiency.

Because this is DeFi, you don’t need to trust these market makers to trade against them. They’ll offer you a quote, and if you don’t like it, don’t take it! It’s the same permissionless Uniswap experience, but with better pricing. Hashflow also comes in with a built-in order router — if Uniswap offers a better price, it’ll one-click serve your order through Uniswap instead.

You can think of Hashflow as a decentralized shadow brokerage — by connecting you with the world’s most elite market makers, Hashflow creates a portal to all of the liquidity in CeFi. You can trade in size, at Binance rates, all directly settled on-chain. You can also do this cheaper than any other platform around — and you’ll save on gas costs as well!

The gas is so cheap because Hashflow doesn’t need to do anything else. Unlike 0x or Uniswap, everything has been ripped out but the bare essentials. Just verify a signature and mint the trade—no curves, no on-chain routing, no nothing.

It’s also completely MEV (miner-extractable value) resistant. Signature-based pricing also means no more frontrunning, no more sandwich attacks, no more BS or games of any kind.

Eventually, Hashflow will support permissionless market making pools. This will mean anyone can allocate capital to these market making strategies (with some built-in guardrails to mitigate bad actors). The best market making strategies can be paired with capital, and all of this can be done with much more capital-efficiency than any AMM.

In the long run, all markets tend toward efficiency. DeFi, too, will become more efficient over time. And I believe Hashflow is the next step in that progression.

You can sign up to start trading on Hashflow.com today. Give it a try! (Big things will be happening soon, so you’ll want to start transitioning over your trading sooner than later.)

Dragonfly co-led Hashflow’s seed round alongside Electric Capital, joined by Alameda Research, Metastable Capital, Galaxy Digital, IDEO Ventures, Gumi Cryptos, Morningstar Ventures, LedgerPrime, and angels including Balaji Srinivasan, Kain Warwick, and Ryan Sean Adams. We’re incredibly excited to support Hashflow’s vision of bringing market efficiency to DeFi.

If you’re interested in building out this vision as well, the Hashflow team is hiring.