Why Build Variational

In 2021, Lucas and Edward (the two co-founders of Variational) left one of the largest market making desks in crypto to start their own proprietary trading firm. Over the next two years, they integrated and provided liquidity on nearly every leading CEX and DEX in crypto. They realized there were still major gaps in the market, specifically:

1. Existing platforms leaked significant value to external market makers, leading to a constant flow of funds from retail traders to market makers.

2. Existing platforms were limited in the markets they can support, and overly reliant on external market makers for new listings.

3. Institutions still traded manually; most OTC and customized derivatives trading happened through Telegram groups with manual settlement off-chain.

In 2023, Lucas and Edward decided to use their years of experience integrating with trading platforms and running market making strategies to build the Variational Protocol. Initial development of the Variational Protocol was funded by quantitative trading profits accumulated from 2021-2023. The Variational Protocol is designed to support a variety of different applications, including Omni (a closed-loop perps trading platform for retail traders with no external market makers) and Pro (a platform to bring institutional OTC derivatives trading on-chain).