DWF Labs and Wintermute in a war of words? An overview of the market-making projects of the two major market makers

Author: FYJ, Noc, 0x711, BlockBeats

Looking back at the recent market, Bitcoin has returned to $30,000, leading the market upward, with a series of popular altcoins taking turns to perform. Among the popular tokens, OP, BLUR, and ARB are being market-made by Wintermute, while CFX, MASK, and ACH have the backing of DWF Labs. There are even rumors that DWF Labs is the largest player behind the Hong Kong concept leader Conflux (CFX). The two institutions are making waves in the market, and their prominence is indeed unparalleled.

In addition to the visible competition in the secondary market projects, the two mainstream market makers are not very harmonious behind the scenes.

Since March, DWF Labs has been sweeping the secondary market at an average rate of about 5 projects per month. Such frequent actions have sparked heated discussions in the community, with some saying that DWF is not truly investing but is merely holding tokens for market-making purposes. In response to this, DWF Labs partner Andrei Grachev addressed the doubts two days ago, stating, "In addition to investing, we usually bring additional support," which can be seen as an acknowledgment of this "investment + market-making" hybrid operation model.

Interestingly, Andrei Grachev subsequently retweeted a Thread on social media, which first shared The Block's tracking report on DWF Labs that included doubts, and then shifted the focus to review The Block's "acceptance of secret investments from FTX," "former CEO received money from SBF to buy a villa in the Bahamas," "was confirmed by CZ for previously misreporting police raids on Binance," and "deleted its own old press releases," ultimately throwing out the key information: On March 31, The Block appointed Wintermute CEO Evgeny as a board member, while Evgeny stated "there will never be any financial transactions involved."

Two weeks later, The Block proactively disclosed that Evgeny "holds equity."

The author then concluded that it was Wintermute instructing The Block to smear DWF Labs.

The article subsequently accused Wintermute of poor market-making for ARB and mentioned that last year Wintermute lost $160 million in a DeFi attack due to using a flashy address that was hacked. Whether intentional or not, Andrei Grachev, while responding to doubts about DWF Labs, explained their security philosophy, repeatedly emphasizing, "We never store too much capital in on-chain wallets—there are too many cases of market makers and funds being hacked, and we don't want to become victims."

The existence of black and white papers lacks solid evidence, but the tension between Wintermute and DWF Labs is indeed real. Previously, on April 10, Wintermute CEO Evgeny retweeted a post exposing Andrei Grachev, which delved into his extensive past experiences, pointing out that he was the head of Huobi in the Russian region and was even believed to be involved with the notorious OneCoin, the largest scam in crypto history. However, Evgeny mainly commented on the article's summary of DWF Labs' poor investment performance, calling it "the wrong market maker."

In the following two days, Andrei Grachev elaborated on DWF Labs' business philosophy on social media and disclosed market-making details to respond to doubts, while Evgeny's sarcastic remarks continued unabated.

Such frequent exchanges make it hard not to believe that there are substantial interests at stake. BlockBeats summarized the tokens market-made by the two market makers and found significant stylistic differences, with Wintermute focusing on fundamentally sound blue-chip projects from Europe and the U.S., while DWF Labs emerged with a focus on East Asian projects and various new and old sentiment-themed targets, representing two distinctly different styles of profit-making effects in the market.

However, both sides have essentially divided the current market's alpha, with OP, ARB, CFX, and MASK being the focal points among the hot topics. The stylistic discourse behind this division of market funds makes their mutual targeting unsurprising.

Wintermute's Market-Making Projects

APE

On-chain data shows that on March 4 and 18, 2022, a total of 3.5 million APE tokens were transferred in two batches to Wintermute's market-making address.

The day before APE's launch, on March 16, 2022, APE in Wintermute's multi-signature address was transferred to an address marked as Wintermute 1, and then sent to various centralized exchanges (Binance, Coinbase, KuCoin, etc.) through an intermediary address.

Based on the K-line, it can be roughly inferred that APE opened on March 17, 2022, with a peak price of $28 on the same day. Wintermute sold APE at the high opening price on centralized exchanges and then bought back the previously sold tokens at a relatively low price from Uniswap, while also absorbing the selling pressure from APE's airdrop to stabilize the price.

After a period of repeated market-making accumulation on centralized exchanges, on April 28, 2022, APE's price was pulled back to near its previous high, reaching a peak of $27.602 that day. Wintermute again transferred APE to Binance through multiple intermediary addresses to complete the sale, gaining substantial profits.

After that, Wintermute began the process of gradually reducing its holdings of APE until it completely exited the APE market in June 2022. As of the time of writing, APE is reported at $4.601.

OP

In June 2022, the Optimism Foundation invited cryptocurrency market maker Wintermute to provide liquidity supply services to facilitate a smoother experience for users participating in the governance of OP. To carry out this cooperation, the foundation's "partner fund" allocated a temporary grant of 20 million OP tokens to Wintermute.

Although there was a theft incident involving OP due to communication and technical errors between the two parties, which affected OP's price performance in the early stages of its listing, after properly resolving the hacker incident and experiencing over a month of decline and token exchange, OP suddenly surged against the trend in mid-July, rising from around $0.4 to above $2.2 within 20 days.

BLUR

On-chain information shows that Wintermute's market-making address received a total of 15 million BLUR in two transactions on February 14 and 15, 2023, and subsequently transferred the tokens to various exchanges for market-making.

In terms of price performance, BLUR has been underwhelming, experiencing a brief surge to a high of $1.4 shortly after its listing, but then began to decline, oscillating in the $0.4-$0.5 range. Notably, its performance has recently improved, rising from $0.56 to $0.66, an increase of nearly 20%.

ARB

According to public information, on March 23, 2023, the Arbitrum Foundation transferred 50 million ARB to Wintermute's address, of which 40 million were for market-making.

With the aura of being the largest Layer 2, ARB's price in the early stages of listing was basically in line with expectations, fluctuating around $1.3. Subsequently, the community revealed negative news, such as the Arbitrum Foundation transferring and allocating ARB tokens before the AIP-1 proposal was passed, and transferring 750 million ARB to the "administrative budget wallet," which caused ARB to drop to around $1.1.

Currently, ARB's trend seems to be replicating OP's script, as after experiencing negative events that suppressed its price, ARB has been continuously rising since April 13, having increased over 30% from a low of $1.15.

It is currently known that Wintermute's market-making address still holds 34.59 million ARB, and whether Wintermute will replicate the previous OP's pump strategy is worth watching.

DWF Labs' Investment or Market-Making Projects

MXC

On September 1, 2022, MXC recently launched on Coinbase Pro and announced that it had received tens of millions of dollars in investment from the world's top quantitative fund DWF. MXC was established in Berlin, Germany, in 2018 and has spent four years helping communities in 177 countries establish a leading global Web3 IoT network, currently collaborating with companies such as Deutsche Bahn and GIN 1689 in IoT and NFT on-chain applications.

It is worth noting that this year, MXC's price performance has been quite sluggish, having dropped from around $0.033 at the beginning of the year to $0.019.

Conflux

On September 16, 2022, according to official news, Conflux received a strategic investment from Web3 venture capital firm DWF Labs, with the specific financing amount undisclosed.

CFX has performed exceptionally well this year, rising from $0.03 at the beginning of the year to $0.4 now, making it a solid 10x token.

TON

On November 17, 2022, DWF Labs announced a commitment of $10 million to support the TON ecosystem. In the next 12 months, DWF Labs also plans to conduct a total of 50 seed round investments aimed at accelerating the growth of TON and its projects.

Mask

On January 19, 2023, DWF Labs announced a strategic investment and partnership with Mask Network by purchasing $5 million worth of MASK tokens. This investment will support the ongoing development of decentralized social networks and the entire Mask Network ecosystem, making Web3 more accessible.

Similar to CFX, MASK has also ranked high in terms of market gains this year, rising from last year's Twitter concept token to the current Hong Kong concept, with its price climbing from $0.965 last October to $5.76 now, an increase of nearly 6 times.

YGG

On February 17, 2023, the blockchain gaming guild Yield Guild Games (YGG) raised $13.8 million through a token sale, led by DWF Labs and a16z. YGG co-founder Gabby Dizon revealed that YGG will use this new funding to further develop its soulbound reputation token.

YGG's price has not shown remarkable performance this year, currently oscillating between $0.2 and $0.3.

Orbs

On March 14, 2023, crypto infrastructure developer Orbs planned to raise $10 million from DWF Labs. Orbs stated that DWF Labs would purchase up to $10 million worth of Orbs tokens. Orbs CEO Nadav Shemesh stated that the first part of the total investment was settled today. He added that the remaining investment would be "calculated at an average price."

SNX

On March 17, 2023, DWF Labs reached an agreement with the Synthetix Treasury Council to provide liquidity and market-making services for SNX on both centralized and decentralized trading platforms. DWF Labs committed to becoming a member of the Synthetix protocol in various ways, including integrating and trading Synthetix perpetual contracts, participating in SNX governance during Epoch elections, and engaging in community and product communication.

Radix

On March 23, 2023, Layer 1 public chain Radix announced the completion of a $10 million financing round, fully supported by DWF Labs, with a post-investment valuation of $400 million. Radix CEO Piers Ridyard stated that DWF has already provided $8 million in funding, with the remaining $2 million to be provided shortly. It is reported that Radix has its own consensus system and execution environment, expected to launch its mainnet named Babylon in the second quarter of this year.

SO-COL

On March 28, 2023, according to The Block, the Web3 social platform SO-COL, founded by Irene Zhao, completed a new round of financing of $4.5 million, fully supported by DWF Labs.

apM Coin

On March 30, 2023, the blockchain customer rewards platform apM Coin announced that it had received $5 million in investment and a $1.5 million optional cooperation contract from DWF Labs. apM Coin stated that through the investment and cooperation with DWF Labs, they will jointly develop and expand the cross-chain payment solutions for the apM Coin Project.

ACH

On April 3, 2023, Singapore-based crypto payment service provider Alchemy Pay announced the completion of a $10 million financing round at a valuation of $400 million, led by DWF Labs, with the funds intended to expand its business in South Korea.

With the dual overlap of Hong Kong and payment concepts, the price has risen from $0.0072 at the beginning of the year to $0.041 now, marking an increase of nearly 5 times this year.

TOPGOAL

On April 4, 2023, the football metaverse project TOPGOAL announced that it had received millions of dollars in investment from DWF Labs. The announcement stated that this investment would enable TOPGOAL to build an AI and blockchain-driven football metaverse, further realizing its vision of bringing sports into Web3 and creating new digital and virtual experiences.

RACA

On April 6, 2023, the blockchain game RACA (formerly Radio Caca) received a $16 million investment from DWF Labs, which included the purchase of several RACA tokens. The funds raised will help RACA advance its Web3 gaming ecosystem goals.

RACA was established in 2021, initially as the NFT manager for Elon Musk's mother, Maye Musk. It has since launched the R3 gaming infrastructure, the SimCity-style sandbox game USM.WORLD, the social party game Looki Looki Jazzi, the cross-game DID wallet JAZ, and an NFT marketplace.

After the financing news was released, RACA surged over 20%, currently slightly retreating and oscillating.

LABEL

On April 10, 2023, the NFT infrastructure protocol LABEL announced that it had received $1 million in venture capital from DWF Labs. LABEL aims to establish a fair profit-sharing ecosystem supported by LBL utility and governance tokens. Additionally, LABEL has introduced a decentralized P2P incubation platform that invests in entertainment education content through a DAO voting system, providing content creators in the MOOC industry with a convenient way to promote and distribute their intellectual property.

RSS3

On April 11, 2023, DWF announced another $10 million investment, this time for the acquisition of RSS3 tokens worth $10 million. Previously, RSS3 announced the launch of the AI open platform AIOP, providing Web3 information sources for AI models like GPT. RSS3 aims to become an innovative protocol that organically combines Web3 with AI, search engines, and social media.

EOS

On April 13, 2023, EOS Network received a $60 million investment from DWF Labs. The two parties have signed a $45 million EOS token purchase agreement and a $15 million investment commitment.