Doug Colkitt

Doug Colkitt is an ex-high frequency trader, ex-MEV bot searcher, and founder of the decentralized exchange CrocSwap. In this episode, we talk about all three.  We begin with high frequency trading, where Doug walks us through the differences between maker and taker strategies, why queue position is so critical for makers, and why volatility is a high frequency trader’s best friend. We then discuss Ethereum-based MEV strategies.  Doug explains what MEV is, how the architecture of the Ethereum block chain allows it to exist, and a high level topology of the different types of MEV strategies that exist.  He also explains how the game theory behind MEV changed dramatically with the launch of Flashbots. Finally, we talk about his new decentralized exchange CrocSwap and its primary innovations, including dynamic fee levels, identification of toxic flow, and vaults that enable KYC. I hope you enjoy my conversation with Doug Colkitt.

Doug Colkitt, a quantitative trader and DeFi expert with a background at Citadel, dives deep into crypto market mechanics. He discusses the dark side of leverage and why traders still get caught in liquidation cascades. Colkitt shares insights on the complexities of perpetual futures and the importance of transparent market structures. He also explores the risks of liquidity providing and why trusting decentralized exchanges is crucial. Tune in for an engaging look at how market dynamics can spiral in times of stress.

Doug Colkitt is a seasoned trader who transitioned from Citadel’s high-frequency trading to building CrocSwap, a decentralized exchange. He delves into the evolution of trading infrastructure and the role of decentralized finance (DeFi). The conversation covers market making, the mechanics of automated market makers, and risks involved in liquidity pools. Colkitt also discusses the importance of stable coins in DeFi and the integration of traditional financial assets on blockchain, envisioning a future where these technologies coexist harmoniously.