A CEX-like DEX: an Interview with Polkadex CEO Gautham J

DeFi is rife with nice concepts able to rebalancing monetary energy dynamics. Nonetheless, thus far, these concepts have confirmed onerous to implement in sustainable and handy methods.

Take the DEX, or decentralized alternate — this can be a cornerstone of DeFi and a spot the place customers are in a position to commerce with one another with out sacrificing management over their funds or having to pay exorbitant charges. On paper, it sounds ultimate. However whenever you take a look at the most important DEXes, they don’t seem to be handy. DEXes have turn into synonymous with excessive transaction charges, lengthy wait occasions, low community interoperability and manipulation points.

Enter Polkadex. Polkadex is launching the Polkadex Orderbook aiming to present customers the most effective of each DEXes and CEXes, or centralized exchanges. The premise is comparatively easy: Orderbook customers can benefit from the pace, safety and comfort of a CEX with out having at hand over management of their property. However, as with all options to advanced issues, the creation of the Polkadex Orderbook was not easy. We talked with Polkadex CEO Gautham J to get the within scoop on the nascent platform and the way it’s poised to raise your entire DeFi trade.

When did you understand that you simply wanted to launch the Orderbook?

For some time, we have now identified that each CEXes and DEXes of their present state are imperfect options. CEXes have at all times had the higher hand in the case of buying and selling. Nonetheless, they maintain custody over their very own person’s funds. Centralized management over funds exposes customers’ property to threat as a consequence of potential safety threats and even defaults.

Whereas DEXes solved the custody subject, they created an entire new set of issues for crypto merchants with decrease performance, ridiculous community charges, vital manipulation points like front-running, and restricted liquidity and entry to tokens.

The latest FTX fiasco and the dangers it revealed to each retail and institutional merchants additional solidifies the necessity for a non-custodial orderbook DEX.

What issues does this platform clear up?

We’ve solved the issue of centralized alternate operators needing to carry custody of funds. To take action, we’ve constructed a non-custodial alternate that appears, performs, and seems like a CEX.

In different phrases, we like to consider Polkadex as combining the most effective of CEXes and DEXes whereas eliminating the problems of each. The result’s an interoperable, easy-to-use, order book-based DEX able to scaling to high-frequency buying and selling.

One of many points that you’ve got harassed is the platform’s interoperability. Why is that such a problem amongst different DEXes and what would be the full scope of Polkadex’s interoperability?

As of proper now, DEXes are principally siloed. They’re roughly certain by the networks they run on. For instance, Ethereum-based DEXes are restricted to buying and selling Ethereum tokens.

CEXes, however, can assist a variety of networks and tokens as a consequence of their centralized, off-chain nature.

To make sure excessive liquidity and cross-chain interoperability, we have now invested in growing our personal in-house resolution: the THEA protocol. THEA is a cutting-edge interoperability resolution that can enable Polkadex to assist token trades throughout separate blockchain networks, beginning with Ethereum.

The THEA bridge will mix with the Polkadex parachain. to assist tokens from the Polkadot community and its parachains and entry ecosystems like Polygon and Ripple. This makes Polkadex Orderbook the primary non-custodial, cross-chain, order-book primarily based buying and selling platform.

Somewhat than taking the AMM (automated market maker) strategy popularized by DEXes, you might have constructed your alternate by itself devoted blockchain. Why and what pushed you to make use of Polkadot?

Automated market makers had been a compromise and never an answer. Builders couldn’t determine methods to implement Orderbook-based DEXes in a restricted setting such because the blockchain.

Should you take a look at the core of this downside, it’s the truth that centralized operators maintain custody of person property, and we simply want to resolve that. If we are able to construct an alternate that works like a CEX in all points however the operator doesn’t have custody, bingo! That’s the answer and we did that with Polkadex.

As to why, Polkadot’s parachain-based structure permits Polkadex to faucet into liquidity from throughout the entire ecosystem. Furthermore, the Substrate framework, because of its extremely customizable nature and its forkless upgrades, is the one blockchain framework that makes Polkadex Orderbook doable because it permits us to tailor the parameters of the Polkadex community to the Layer 2 TEE.

What sort of KYC necessities will customers of your alternate have?

As of proper now, there aren’t any KYC necessities to make use of the Polkadex Orderbook. As soon as we introduce fiat assist, customers will have to be verified to make use of sure Orderbook options like fiat deposits and withdrawals. We’re additionally working with decentralized id administration blockchains to develop an answer that’s not centralized for traceability and monitoring.

What, in your opinion, are the best challenges at present dealing with the DeFi trade as an entire?

There are quite a lot of tasks in DeFi which are merely Analysis and Growth groups, they don’t seem to be specializing in fixing actual issues with good enterprise use instances. The DeFi trade will transfer ahead in a extra environment friendly means if tasks begin specializing in actual options and cease creating clones of present tech.