A former Virtu trader is shaking up an opaque corner of the cryptocurrency market with a new decentralized OTC product

AirSwap, the decentralized crypto exchange, is breaking into over-the-counter trading with a new decentralized platform aimed at shaking up a massive market.

In crypto, large trades are typically conducted over-the-counter, resembling in some cases the way old school brokers would get on the phones with clients to bring together buyers and sellers. In the token world this can pan out differently, with traders sometimes arranging six-figure bitcoin trades over Skype or Telegram group chats. AirSwap's decentralized platform, dubbed "Spaces," blends together the feel of how bitcoin trades outside of public exchanges with technology aimed at simplifying the process and providing counterparties with more assurance. It is set to launch on Wednesday.

Large trading firms or other entities can open up their own "Space" on the platform, and then set the parameters for trading. Similarly to how a new Telegram group's administrator might set some terms of engagement for a given community. 

"A space can be opened or closed, you could designate specific tokens to be traded in it," Don Mosites, cofounder of AirSwap, said in an interview with The Block. "One space might trade a handful of ERC tokens, for example."

The firm announced its intention to dive into OTC trading in August, as per CoinDesk. "Spaces" is a different iteration of the original product AirSwap was developing. To start, the firm will launch with a group of selected firms. If AirSwap can successfully attract more users to the platform, then it would open up a massive market to the firm, which was founded by former Virtu Financial trader Michael Oved.

Tabb Group, the capital markets consultancy, found the OTC market could be three times larger than the exchange market, processing as much as $12 billion daily. 

OTC trades, which are not reported, allow traders to move large amounts of crypto without impacting the price on public venues. But they carry certain kinds of counterparty risk. A person making an OTC trade, for instance, has to trust the broker sitting in the middle won't match them up with someone trying to launder funds. And sometimes it takes days for a deal to close. The decentralized nature of the platform could remedy some of those concerns, Mosites said. 

"With existing OTC, you have that counterparty risk," Mosites said. "And the on boarding process can take weeks via normal methods."

AirSwap's platform onboards clients in seconds and buyers and sellers can trade with each other via an automatic swap. Similarly to AirSwap's decentralized exchange, trading occurs peer to peer. AirSwap, unlike exchanges Coinbase and Kraken, does not automatically match buyers and sellers, nor does it maintain an order book of who wants to buy or sell at a given price. Instead, traders on the platform express an intention to buy or sell and transactions are closed via smart contracts.

Decentralized exchanges have been launching at an eye-popping rate, with more than 250 projects attempting to build so-called DEXs, at last check. [related id="1"] To be sure, many have failed to attract significant volumes. AirSwap sees a paltry $7,000 trade on its platform a day, according to data provider CoinMarketCap. A spokesperson for AirSwap contested those numbers. 

As for "Spaces," the launch Wednesday will include a number of partners, including large trading firms. Over the next couple of months, the firm will roll out more tools for the platform and open it up to more users. 

It may also facilitate trading of security tokens, a spokesman for the firm said. It's not clear, at this point, how the firm will monetize the product. 

"Initially speaking though, we're focusing on just getting this stuff out there and building a user base, then determining most appropriate pricing models while reducing friction to onboard new users and spaces," a spokesman said.