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Start-up of the Week: Keyrock, innovating digital asset liquidity in tokenized economies

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KeyRock's crypto market-making act involves developing sophisticated algorithms to adequately manage liquidity in a liquidity disparity environment

In today’s episode of the “Start-up of the Week,” International Finance will talk about a Belgian start-up called Keyrock, which since its establishment in 2017, has strengthened its expertise in buying and selling digital assets to free up liquidity in both centralised and decentralised marketplaces.

Keyrock takes pride in having a meritocratic and value-driven team, where members are passionate about digital financial markets.

“Our visionary ideas materialise through data-driven approaches and thoughtfully designed technology. In 2016, we saw the impact of tokenization on capital markets and realised the critical need for liquidity. While others sought short-term gains in the crypto market, we focused on a long-term vision. Since our creation, we’ve successfully provided liquidity solutions to several trading venues, helping them to operate on tokenized markets more efficiently,” it stated further.

Knowing The Company In Detail

The venture’s vision is simple: enabling the adoption of tokenized economies. One of the brains behind the start-up’s formation is Kevin de Patoul, Keyrock’s co-founder and Chief Executive Officer, who previously worked with the Munich-based international management consultancy firm Roland Berger. Pursuing his deep passion about decentralised financial technologies, Patoul, from 2014 onwards, started leading numerous projects facilitating the adoption of digital assets, thereby becoming a strong advocate for tokenized economies in the process.

In 2017, the company created the beta version of its algorithm trading software, followed by the completion of its seed round funding in 2018 (led by Volta Ventures). In 2019, the venture released volume one of its enterprise-level market-making system. In 2021, it completed its Round A financing and in the following year, completed the milestone of being operationally active in 80 exchanges across 200 financial markets. In 2022, it secured its Series B financing. As of 2024, it is operating in 85 exchanges across 400 financial markets and this tally is likely to go higher.

In 2023, KeyRock received Swiss regulatory clearance from a government-approved standards body named VQF. Patoul back then remarked, “Securing the VQF membership reinforces Keyrock’s stance on upholding rigorous regulatory standards within the crypto space. Our focus remains steadfast on ensuring both compliance and trust in our services.”

Another achievement of KeyRock was the success in raising USD 72 million, during the 2022-23 crypto winter, a phase during which all the major crypto companies were financially bleeding, due to the crisis brought on by the downfall of FTX.

What Services KeyRock Offer?

As a crypto market maker, the start-up offers its partners efficient liquidity solutions backed by robust financial technology. KeyRock’s trading tools are proprietary, market-neutral, highly scalable and are deployed across all the major (de)centralised exchanges.

We have said KeyRock acts as a crypto market maker. Now what does the concept mean? It denotes an entity which supplies the markets with liquidity by buying assets from sellers who want to sell and selling assets for buyers who wish to acquire them. The whole affair ensures more liquidity in the market, which helps reduce price volatility and create a more efficient and fairer market.

KeyRock provides liquidity on (de)centralised exchanges by buying and selling digital assets to traders, investors, and other market participants at all times. This increased liquidity creates a fair marketplace for tokens on exchanges as it reduces price volatility and buyers and sellers are assured to have their orders completed.

KeyRock’s crypto market-making act involves developing sophisticated algorithms to adequately manage liquidity in a liquidity disparity environment.

“Encountering price discrepancies between different markets (CEX and DEX) can hinder token adoption. Adjusting liquidity is therefore essential, as it is a key parameter in creating a seamless experience for users who want to acquire assets. Ultimately, market-making solutions help to build trust between buyers and sellers for a specific asset, thus tightening spreads and improving trading conditions,” the venture remarked further.

Next is OTC (Over-the-counter Trading). KeyRock helps its clients get access to the majority of vetted cryptocurrency spot markets through its crypto-to-crypto OTC desk. KeyRock’s OTC method enables the clients to have a more tailored approach towards crypto trading, as the parties involved interact directly with each other. This service is perfect for executing larger trades that may not be feasible on traditional exchanges due to liquidity constraints. OTC trading also offers better security, mitigates potential fear-driven market movements, and reduces counter-party risk as transactions take place between two KYC-compliant entities.

KeyRock’s OTC deals for crypto-to-crypto trades with over 20 assets available, that too at highly competitive prices by having access to the venture’s deep liquidity.

Plethora Of Opportunities

KeyRock also provides trading of crypto options through its options desk.

“Our wide coverage grants investors and institutions exposure to an inclusive list of digital assets, from 20+ standardised tokens to exotics on demand. Our dedicated options desk provides our partners with flexible solutions for precise outcomes, such as hedging, treasury management, yield enhancement, payoff diversification, and leveraged speculation,” it stated further.

Crypto options are financial derivatives that give the buyer the right, but not the obligation, to buy/sell a specific cryptocurrency at a predetermined price on or before a certain date.

Using KeyRock’s expertise, the start-up’s customers can use crypto options as per their investment strategies and risk tolerance. When hedging, crypto holders can use options to protect against price drops in cryptocurrencies they own. Holders can even use options to bet on the future price movement of a cryptocurrency without actually owning it. This approach can potentially lead to high returns with a lower initial investment compared to buying the cryptocurrency outright.

Next in line is the venture’s “Trade Execution,” which helps KeyRock’s customers get the most out of their digital assets with the venture’s bespoke algorithmic trade executions. By leveraging its in-house trading technology, the start-up offers its partners maximum value for their orders with minimum market impact. Due to its partnerships with major crypto exchanges and other trading desks, KeyRock achieves some of the most competitive pricing in the market. KeyRock’s algorithmic trade execution makes sure the client’s trades are programmed to take into consideration a wide range of data, including market patterns, market conditions, and past asset volatility.

The approach ensures higher profits and lower risks as algorithms can make trades based on data and logic, leading to informed decisions and faster identification of trends, apart from reducing the risk of emotion-driven decision-making.

KeyRock also helps its clients grow their crypto projects through the start-up’s investor network and funding opportunities.

Keyrock’s purpose is simple here: to create an ecosystem that brings together tech builders and daring crypto projects to empower worldwide tokenized economies while constantly pushing the boundaries of technology.

To achieve the above goal, KeyRock has focussed its investment philosophy on two main verticals. First is building products and systems that unlock new asset classes/financial products to be traded as digital assets. The second one is about building products that bring value to managing, engaging, and providing liquidity in digital asset markets.

KeyRock In News

In January 2024, Keyrock announced the integration of the Radix public ledger into its market-making technology stack. By 2025, Keyrock will deploy USD 10 million-plus of token capital into the Radix DeFi ecosystem to support a more stable trading environment for its users.

“Keyrock’s innovative market-making solutions are set to increase liquidity availability by providing a fertile ground for traders, token holders, and dApps within the Radix ecosystem. This means expanded support for the number of dApps including CaviarNine, Ociswap, and DeFi Plaza, amongst many others, which stand to benefit significantly from improved market liquidity,” Radix informed the media.

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