Yes, you heard it right! We made a private OTC desk on Aztec, let’s get into the whys and hows of it :)

Why make a private OTC desk?

OTC is a very standard practice in the crypto industry. It enables better price negotiations than those available in public markets, facilitates trading of assets with very low liquidity or a low presence on public markets, and provides the ability to offer liquidity for locked tokens at discounted rates.

The issue with the current way OTC happens is that all transactions leave a trace on public ledgers. For instance, if a seller wants to sell BTC on Bitcoin for some USDC on Base. Then, everyone can see the seller paying to some address on Bitcoin, while the buyer pays to some address on Base. Hence, the exchange isn't totally private, you are leaking information about your trade.

The fact that the Seller paid someone on Bitcoin, and the Buyer did on Base, is something which should be private to both parties, they shouldn’t be forced to reveal this to the whole world.

One classic real-world example of this is of Michael Egorov, the founder of Curve, where in 2023, he participated in OTC deals of the Curve token at discounted rates to avoid getting liquidated on his positions on Aave. This piece of information was exposed for everyone to track on the block explorer, causing a dump on the price of CRV, along with a lot of community outrage.