Avalanche Community Grants Quadratic Funding: [Round #1] Hourglass

Application Questions

Please provide an overview of the project:

Hourglass is a liquidity protocol built around our EVM compatible orderbook and pool-less liquidity model. Hourglass’s combination of oracle based pricing and post trade settlement for makers makes it uniquely suited for cross-chain swaps, stablecoins, and RWAs. Our first product - live now on our website - is our bridge that provides best-in-class fees and security for cross-chain stableswaps. For most of our stablecoin pairs, Hourglass is 90%+ cheaper than other solutions.

Our long term vision for Hourglass is to expand beyond stablecoin swaps and provide a modular layer for liquidity and settlement for any application that requires cross-chain value transfer. We believe a cheap, secure, and fast liquidity solution is essential for the next phase of DeFi growth, and our live bridge is our first step towards that vision.

Please explain how your project meets the round eligibility criteria:

Our bridge is live now on Avalanche, allowing users to bridge stablecoins between Avalanche and 5 other chains.

How does your project benefit the Avalanche Ecosystem? Please mention any existing or upcoming partnerships:

In short: We seek to increase TVL and innovation on Avalanche by providing best-in-class bridging fees and security, and providing an optimal, highly efficient liquidity solution for stablecoin and RWA projects.

Most of today’s leading bridge protocols are pool based: >90% of monthly bridging volume on Avalanche comes from pool-based bridges. However, we believe that DeFi is moving beyond pool based solutions and Hourglass’s on-chain order-books will prove to be an important step in that direction. Pools work well for trustless price discovery but have a number of limitations: they are increasingly capital inefficient as trade sizes approach the total amount of the assets in the pool, cannot fulfill trades larger than the total pool size, and pose a serious security risk as on-chain pools are a honeypot for hacks. This means 1) expensive fees, 2) limited trade sizes, and 3) critical security concerns.

Thanks to our on-chain order books and pool-less liquidity model, we are able to drastically improve on all three of these limitations. Allowing DeFi projects to save on fees, focus on innovating in their area of expertise, and pass savings onto their users can encourage DeFi projects to build and grow on Avalanche. On the other side of the coin, cheaper and easier bridging will also increase the rate of users migrating onto Avalanche, increasing Avalanche’s TVL.

We would also like to highlight more specific distinguishing characteristics that make Hourglass a highly efficient solution for RWA and stablecoin projects, which we consider among the most promising areas for innovation in DeFi.

Firstly, Hourglass provides batched post-trade settlement, which is the norm in most mature markets for reasons of 1) liquidity and 2) counterparty risk. This allows for efficient arbitrage between any off-chain liquidity source and DeFi. Market makers are able to lock in a price for a quantity of an asset and then have a fixed amount of time to secure the other side of the trade. Smart contracts handle escrow risk, making the trades trustless for takers.

Secondly, Hourglass is able to bridge off-chain liquidity into DeFi very efficiently, with trade sizes theoretically capped only by the depth of off-chain liquidity. This is why we believe Hourglass is the best solution to date for projects such as RWA and stablecoin projects with very deep off chain liquidity and no need for on-chain price discovery. By providing a liquidity and settlement onramp - some of the most fundamental and challenging needs of such projects - we hope to encourage these projects to build on Avalanche. Imagine customers using eth on AVAX to purchase and receive a RWA (like Ondo) through Hourglass: market makers would mint and disburse the RWA on demand with Hourglass handling matching and escrow, protecting both parties from counterparty (i.e. rug) risk. This provides a significantly safer + more capital efficient solution to pool based systems, as RWA/stablecoin projects tend to have very deep off-chain liquidity and derive almost no value from on-chain price discovery (a core feature of pool based systems that comes with distinct capital efficiency and security tradeoffs).

We have been admitted to Stanford Blockchain Accelerator, and have a partnership + upcoming comarketing plans with Espresso Systems. We have RWA partnerships underway as well, but those unfortunately still must remain private.

How old is the project?

Our bridge has been live on Avalanche Mainnet since early January.

Please outline any prior funding sources:

We raised $4.8 million in seed funding from General Catalyst and Steel Perlot. Press release: https://www.globenewswire.com/news-release/2023/05/03/2660086/0/en/Tristero-Launches-Company-to-Build-Stronger-and-Safer-Crypto-Markets-Raises-4-8M-Seed.html

Please provide a link to your public group chat (Discord or Telegram) if applicable:

Is there anything else you’d like to share about your project, previous work, or other affiliations?

Our CEO and co-founder, Sam Trautwein, was previously a cofounder of Carbon, an early stage stablecoin startup.

We would also like to emphasize that while Hourglass does function as a bridge, our protocol design is fundamentally different thanks to our on-chain order books and a pool-less liquidity solution. Different design, of course, comes with different benefits and ideal use cases. A prime example of this is Hourglass’ function as a highly efficient on-ramp for RWA’s.

Telegram Handle:

@dylan_tristero

Profiles or socials of other main team members publicly associated with the project: Sam Trautwein (CEO and cofounder): https://twitter.com/futurenomics (telegram @coastalism)

Trevor Morgan, cofounder: Telegram @trevor_tristero

Email Address(es): dylan@tristero.xyz, sam@tristero.xyz

Payout Wallet Address: 0xBEa2a8C8797b8943412E1E8CCD65812d33Bc80d3