An interview with a leading 0x market maker
If you’ve been following our project, you would probably recognize at least a few of the many relayers who have built their businesses on the 0x protocol. Unless you’ve been staking, however, you would not likely recognize any of our 0x market makers. Market makers are critical players in the ecosystem. They supply a significant portion of the network’s liquidity, allowing 0x integrators and end-users to enjoy a vast selection of tokens, at the best prices. Their collective efforts have fueled the ecosystem’s growth, and our revised v3 network economics ensure that they are appropriately rewarded for their contributions. Despite the importance of their role in the ecosystem, 0x market makers remain somewhat of a mystery — both in terms of who they and what they do. With this spotlight, we look forward to shedding some light on our hard-working community of market makers. We hope you enjoy the interview below!
Please share a little bit about yourself and your background.
I’m a software engineer who loves building things. I got started in automation by building IoT (Internet of Things) automation platforms, video game bots, and online poker bots. VolleyFire has been my most successful automation venture by far. I followed Bitcoin during the early days and took the career plunge a few years after Ethereum went live. My fascination with the concept of decentralized trade stems back to the 2014 Mt. Gox incident. Witnessing those events play out demonstrated to me the value of trustless exchange.
What inspired you to build VolleyFire, and where did the name come from?
My first experience with decentralized exchanges came when I stumbled upon EtherDelta in 2017. The UI/UX was lacking, but the fundamentals were there. Anyone with an internet connection and an Ethereum wallet could trade without being exposed to 3rd party risk. It was brilliant for its time, but it suffered from a major flaw → a lack of liquidity. The order books were barren wastelands. ERC20 tokens were exploding with popularity, but it was impossible to find a trading partner. I quickly switched my focus to trading and market making on Ethereum to fill the liquidity gap and provide users with an automated trading partner.
The name VolleyFire comes from my approach to trading. I start by repeatedly firing volleys of trades and strategies at the market. Then, I observe to see what works and what doesn’t. Finally, I optimize, adjust, upgrade, and fire another volley.
Why did you decide to market make on 0x?
Early on, I chose 0x because it addressed all of the issues with EtherDelta. 0x was launched by a core of smart people with heads in the right places. I was impressed by the team’s focus on the protocol, UI/UX, scalability, and especially how they embraced the variety of users in the space by enabling both open order book and off-chain order matching. Today, I’m excited about how 0x Labs supports market makers with staking pools and how they embrace decentralized governance.
We recently announced a new RFQ (request-for-quote) trading system that enables market makers to bring centralized exchange liquidity directly to DEX and DeFi traders. What are your thoughts on it?
It’s fantastic both from a user’s perspective and from a market maker’s perspective. The user interface is incredibly easy and convenient to use. It responds with quotes much quicker than other order book aggregators, and the liquidity behind it is massive. The 0x team wants to push 0x market makers to be the best, but they don’t hesitate to route your trade through other protocols if they’re offering better trade prices. When you’re trading over the 0x RFQ, you’ll get immediate access to not only VolleyFire’s liquidity but also Curve, Uniswap, Balancer, Kyber, etc.
Not only does the 0x Labs team provide an extremely simple and easy-to-integrate API, but they also provide a suite of visually interactive web tools to help market makers maintain a high-quality RFQ experience. These tools enable you to test your RFQ server, view response times, compare prices, view failed fill attempts, and even see where your fills are coming from and across which markets. The 0x team is dedicating themselves to making the best RFQ liquidity aggregator in the DeFi space.
What trading strategies do you regularly employ, and which tokens do you find most profitable to trade?
Over the years, I’ve implemented a wide variety of trading strategies, both on-chain and off. The majority of them provide liquidity to on-chain protocols like 0x. Some of my trading strategies exist purely for generating profit, while others serve a purpose based on the protocol’s functionality. Some of them are arbitrage based, while others are a bit more complex and typically volatility based.
I try to trade tokens that are in high demand. During 2017 and 2018, the market couldn’t get enough token variety. Then around 2018–2019, the market shifted heavily in favor of USD stable coins. Today, USD stable coins and DeFi-related tokens are all the rage. Any project involving yield generation is hot right now.
Your staking pool currently shares the highest % of staking rewards. What drove your decision to increase the %?
I value everyone who makes up the crypto community for two primary reasons.
1) I was the average crypto/DeFi community member for years before building on Ethereum and becoming a DeFi contributor.
2) All projects will fail without a thriving community.