Crypto broker Hidden Road partners with confidential exchange Enclave Markets.
Crypto broker Hidden Road partners with confidential exchange Enclave Markets.
Blockchain Industry Partnership: Hidden Road and Enclave Markets
The blockchain industry is constantly evolving, bringing forth innovative solutions to address the unique challenges faced by participants in the world of cryptocurrencies. Hidden Road, a cryptocurrency brokerage and credit network for institutions, recently forged a partnership with Enclave Markets, a fully encrypted exchange. This collaboration aims to provide an anonymous and secure trading environment for institutional traders operating in the blockchain space.
The Challenge of Front-Running and Information Leakage
Front-running of trades is a persistent problem in the crypto market. This issue is compounded by the concept of maximal extracted value (MEV), where blockchain miners and verifiers have the potential to profit from pending transactions. Additionally, traders at competing firms may shy away from trading with each other to prevent information leakage. These factors highlight the need for an anonymous trading environment that safeguards users’ identities and prevents data breaches.
Enclave Markets: The Solution in a Secure Enclave
Enclave Markets, an idea originally proposed and incubated by the Ava Labs team, has developed an innovative solution to address the challenges mentioned above. The company has created an exchange matching engine and account management system within an Intel Software Guard Extensions (SGX) secure enclave. An SGX secure enclave is a type of hardware that significantly minimizes cyber security threats.
The Fully Encrypted Exchange (FEX) Concept
Enclave’s Fully Encrypted Exchange, known as FEX, offers a confidential trading environment similar to the concept of dark pools in traditional markets. This model involves the creation of a crossing network that utilizes a pricing oracle to determine a midpoint price for an asset based on averages across various trading venues.
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When a user logs onto FEX, they only need to specify the size and direction of the proposed trade; they do not need to input the price. This is because all trades on FEX are matched at the midpoint price whenever liquidity is available on the other side. Enclave Markets CEO David Wells explains, “We then match that order and report that trade back to Hidden Road, who do all the settlement and clearing on their side, netting those trades out against other trades done that day in different venues.”
The Benefits of the Hidden Road and Enclave Partnership
The partnership between Hidden Road and Enclave Markets offers several advantages, particularly for institutional traders. By facilitating trading and settlement directly from custody, institutions can mitigate counterparty risk. Traditional institutions are often hesitant to integrate directly with exchanges due to concerns about fund security. However, through an API call, users can submit their orders to the Enclave marketplace liquidity pool, with Hidden Road handling the settlement and clearing on their behalf.
Enclave is also collaborating with custody platforms such as BitGo, further enhancing the security and accessibility of their services. This integration provides users with a comprehensive trading ecosystem that ensures the safe handling of digital assets.
Industry Recognition and Forward Momentum
Hidden Road, having raised $50 million last year from notable players like Citadel Securities and Coinbase, is committed to building a mature crypto trading infrastructure. Michael Higgins, Global Head of Business Development at Hidden Road, acknowledges the significance of Enclave’s approach, stating, “Enclave’s novel, albeit familiar, approach offers Hidden Road counterparties a secure, anonymous, and streamlined option for trading digital assets.”
This partnership between Hidden Road and Enclave Markets marks an important step in the evolution of the blockchain industry. By addressing key challenges such as front-running and information leakage, institutions can confidently navigate the crypto market with increased security and anonymity. As the industry continues to advance, collaborations like these pave the way for a more robust and secure trading environment.
