Decentralised Exchanges: The Future Of Crypto Trading? - Panel @ TOKEN2049

[Music] thank you very much thank you very much to token 20:49 for arranging this conference great venue at the hotel here and thanks for my co-panelists for joining us and it's our hope today to give you an introduction into different approaches to decentralize exchange in the space where most of the trading is dominated by centralized exchanges which require trust and its central party to organize trades and the back-end security trade confirmation and all the aspects of a full trade cycle we now have the ability to move some of those parts of the trading stack off of a centralized exchange and onto a decentralized exchange each of the projects here today have a slightly different approach to what decentralization means some are completely trustless some are non custodial but I'd like to tell you that I'd like to say that we're now having routine days where decentralized exchange is doing multi-million dollars of the trading volume so today we'll explore five different approaches and what I'd like to do now is introduce the co-panelists just down the row and allow them each to just introduce themselves what their project is and then we'll come back and give them each an opportunity to discuss their project in a little bit more detail and I always find that the best part of these conferences is the ability to ask and answer questions at the end so we do have some of the staff with microphones at the end if you have a question just raise your hand and someone will get a microphone to you so let me introduce Louis to you and you each just go down the line introduce yourselves and your project so good morning everyone my name is laurie i'm a CEO and co-founder of cabo network so what we do is we want we build a you know fully on chain decentralized change so we run entirely on the blockchain on the interim blockchain you know a chain is powered by smart contract so there are several reason for us to be a fully owned chain decentralized chains so first of all we so our securities is you know protected by the you know interim blockchain and so you know as long as the interim blockchain is secure then our chain is secure there's the second reason is that we want to provide a you know fully integration with other unchain entities because we realize that the one of the use of the central chain is you know order on chain entities like you know all the smart contracts and orderly central applications and they also have the need to you know convert and a chain other tokens so that's why we want like to run everything on the smart contract so other you know application they can just easily integrate with khyber network so Wizards launched our public without yesterday you can just go to Kyoto Network and see how easy it is to and you know trade with khyber and maximum four waves yeah hey guys my name is max responsible for global operation strategy waves little bird word were doing like waves it just not about this realized exchange is complete blockchain ecosystem and like many main idea just mess adoption to be in the market right here right now and the main idea just can ensure talking it's like free clicks it's very easy and straightaway the talking is tried to follow knowledge it's realized exchange then we our decks we have like own approach we're trying to combine like the best of two worlds so like speed of descent centralization there like mentioned mechanism and centralized but like a very transferring can take place on a blockchain it's verified by consent so logarithms we think of courses like not it's like semi decentralized system we think like now it's just the best way to be very fast and market and we are working trying to get as which we're trying to try to be on the market right here right now I need to work with Fiat a fiat currency in this way we working with some gateways it's usually trusted one and which really superb right out the quiddity from the fiat currency air swap Michael Evette I'm with the air swap team so I started my career in the financial services industry I think like a lot of people in this room I was on I was a high-frequency traders and I started on the FX desk and I think you know one of the things I experienced very early on is counterparty risk so we at virtue financial we used to clear our trades through AIG and this was in 2008 and the a IJ was our prime broker right so AIG basically allowed us to access the financial market without AIG we couldn't access the financial market and then when Lehman Brothers went bankrupt likewise AIG went bankrupt and so I firsthand got to experience what counterparty risk was and I think that a lot of the people here on the stage are basically really trying to remove these centralized components from the ecosystem because there is this systemic risk that you were introduced by having these centralized components air swap itself is is modeled after the FX markets we are taking a strict peer-to-peer approach which doesn't have an order book and it it follows the OTC markets and balázs introduced to us here dias everyone i'm balázs from berlin baser dias and pretty much our approach is to these centralized exchanges is when I pretty much looked at how can we create a different kind of decks was to solve everything on a private key level so essentially what we do is something we call the distributed virtual wallet network meaning that we interconnect all the block chains and on the private key level to this wallet system and obviously the main use case of it is the centralized exchange so that's pretty much the best way to explain it because if you interconnect everything on the block or the private key level you automatically interconnect all the chains and you don't have to worry about if they use smart contracts or how you implement it inside your network great and the project that I represent today is called paradox I owe paradox is built on top of the 0x protocol it's meant to look and feel very much like a centralized exchange except that it's non-custodial so users trade in a very familiar fashion but the assets of each customer remain in their own control up until the moment that a trade is transacted and when it settles on the blockchain the funds or assets are transacted instantly using the public blockchain for security and verification so five different approaches to decentralize exchange each has a different text ACK paradox for example is built on a protocol called 0x the other projects are built on proprietary text acts to different extents but importantly each of them uses a different approach to transacting orders to price discovery and to liquidity so what I'd like to do next is give each of the panelists an opportunity to explain a little bit more about their approach to decentralization and we're going to start with Kaiba right so at Kaiba Network our motto is a little bit different we are totally different from no declaration of centralized changes so what we do is we remove the order book entirely so that means user 1c like order you buy and sell orders so what they will see is you know just you know the best price on the you know what is a buy price for some token and what is the sale price for some token and these prices are offered by other market makers or what we call as reserve in our platform so we bring all the reserve on share that we have a lot of coins and token that are you know ready to be to be traded with the users so when the user talked to Kaiba network we would talk to all the market makers and get the prices returned to their users if the user are happy that we sent a generation to do the trade so this approach make it really easy for the user to trade because you know for most of them you know non-technical user or mainstream users they would you know understand the order book and secondly we are really address the liquidity problem in the central changes so if you look at you know a few other decentralizing this probably because of the poor adoption there's not much liquidity over there and so your target use case customer is what type of trader right so we target you know the mainstream and non-technical users and we also a target like all the unchain entities like you know order the central application or the derivative exchange you know fund management platform running entirely on chain because we can currently liquidity right every time you want the trip with us we can talk to some other reserve or market makers to provide their liquidity and execute the trade for you so without the integration with other platforms makes it really easy so you focused on user experience and ease of understanding how to interact exactly okay all right the next project is air swap sure so we're taking a fully integrated approach to our tech so we basically have an approach that is gonna appeal we believe to market makers and to retail traders so the fully integrated approach basically takes everything from beginning to end including our regulatory strategy so we have the ability for market makers to write to our api's and and serve orders to retail customers and this this we believe will be very similar to how the foreign exchange markets work it's kind of something somebody talked about earlier and why the foreign exchange market as opposed to stocks or other types of execution models so the FX markets are the most decentralized classic asset class in the world they generally trade it generally traits peer-to-peer and we think it's a we think it's a good model to approach for crypto assets which are global assets and do you have launch dates in mind yet or beta dates that you can share with us at this time yeah so we are in our beta with market makers actually serving orders so it's very exciting for us that's something that worked very hard to get to this point and we will launch within the next couple of months I don't want to set a date yet but within the next couple of months and these will be the first 24 tokens that we support in our liquidity partner network 24 tokens to start correct great all right the next project to introduce in a little bit more details her dias yeah so pretty much as I previously mentioned we are blockchain agnostic decentralized exchange due to the fact that we solve everything on a private key level so it doesn't matter if something is is using graphs or it's a regular blockchain let's call it and you can say it forward in the future that every new blockchain technology be superior or inferior to what we have today they're still going to use public key cryptography to some essence and that's why we have this distributed wallet network which slices up the key of each user into different parts and spread it spreads it across the network to different nodes so that this key only has to be reassembled when transactions leave out chain and the good thing about this is you can soul trading inside your wallet at the same time so from the user experience perspective it's not something like ether Delta which really complicated processes or horrendous user experience it's rather that you press trade in your wallet and you get your funds inside your wallet straight away and that's pretty much our approach to X but balázs how does price discovery occur on her dias yep so this goes back to the previous question of decentralization and price discovery pretty much we have an on chain order book and even with her tears I tried to position myself to be a neutral player because we don't do not make any freeze from our markets so it might be the case that everyone from this table will work together with so that would create or my vision is that we create this global order book or trade pool and actually create also an intro text settlement system because that's I think a big misconception in this space and we'll be welcome to Europe opinions but to work together with centralized exchanges works to some extent but at the end of the day there is I think a list on github with 200 taxes and none of us are really working on a solution to work together and create a global liquidity pool but yes we have an ant in order book okay let's talk about waves platform in fact we just as we talk we just lunch maybe warnig or we were one of the first I guess exchange system size exchange which is something now this the first on the first stage channel and according to liquidity we just as we building up the complete ecosystem in this case we just have we would like to support all the tokens good-good tokens which were launched on our dense realize exchange will have a liquidity fund you'll help us learn what a good token is when we start to have some discussion yeah so and we are we have our liquidity funds it's just the like entity which can collect contacts market-making with their with the projects and so in this case the guys which is which can support a second money market in this case we are as we can just again need mention I told her right about treyton confessional platform that's now we are working with gateways it's very important parts the cause is like our partners from the world for example digital it's like Turkish gateways they are good guys or in fact you know they provide us some liquidity oath or a fiat currency in this case and in our platform can trade fiat currency against talking which features like currency gains if you added everything stuff like that yeah how does the fiat currency kind of get close to the aspect of decentralized you know it just like we need to need to speak about a little bit about you get to is how it works usually we have like several approach first well how we can integrate fiat currency on the blockchain first of all you can work with some kind of gateways which like have incoming Fiats as a way of blockchain tokens and the second one is kind of you can have like market pack which just creates stable coins tied to real world or world currency so we we support first approach for the first time and but we're just thinking about stable coin outlet for the future stable coins are starting to be more prevalent they're being used now and different approaches as well some are faith based and some are actually backed by reserve interesting so paradox is our project as I mentioned it's built on top of the 0x protocol the 0x protocol is basically an open protocol with very highly tested tools for exchange focused on the trade matching and submission to the public blockchain for verification some of the benefits that we get from using 0x is that we are able to replicate a real order book with order matching cancellations are free fast that's very important to attract professional market makers who need to have some situational awareness about their risk without having to wait for block time to expire to know whether or not they transacted with the trade and for very important reasons about trust and fairness we prevent front-running by using the matching model for 0x and it respects price time priority which is a trading tenant for hundreds of years coming soon for para decks would be mobile and localizations for different countries territories and even content sets you can see from the screenshot it's a very traditional looking exchange so a couple of aspects that I think each of us have different approaches to perhaps the most important is to talk about liquidity how do you solve that chicken versus the egg problem you need to get liquidity to get more users you need more users to get liquidity so take it away so liquidity is a main concern when we design fiber network so that's why we have a you know we just remove the order book entirely and and in our model we onboard like all the market makers or you know what we call as reserve in our platform to bring them on chain and provide the liquidity in the first place so even if there's no users right we still you know have you know full liquidity over there ready to to you know execute a trade is that an automated algorithm that provides liquidity exactly so what we do is we talk to like all the people who have IDs set right because if they just keep their coins and tokens one coin today is still like one call tomorrow but what we can do with us is they can you know be a liquidity provider or reserve in our platform and they can earn profit from all the trading spread in our platform so we talk to a lot of people who have you know substantial amount of coins and we evenly talk to the coin easier to ask them to introduce their own reserve on our platform and they contribute to the reserve provides the liquidity for the interactions that may come when there's not a lot of other participants well I mean so that is you know after we oppressed and liquid lead the thing is you know if there is no easier right there is hardly any cost for the liquidity providers so they do not lose anything right so our next task is to bring a lot of user on chain re on to our platform so that's why we we need Lee to work with a lot of like wallets providers platforms so that they can integrate with our exchange which is extremely easy because we run everything on chain so this is neatly to say no generation to our smart contract now let's give the trip and how does that kind of differentiate or maybe it's a little bit similar to air swap in terms of liquidity when you show up to trade yeah so hmm I used to I used to be a market maker and I think I designed air swap with market makers and mines and also I've had very good conversations with market makers we currently have three probably getting to four or five pretty soon early market makers on board I think that by removing the order book entirely you basically allow market makers to have reward without as much risk because when you're publishing your order to a public location you have risk and the risk meaning that they've stuck their neck out by providing a price that others can hit correct so aggressive liquidity providers a second that's off value they will come and try to hit your order and then it's a race as to who can cancel or place the order faster on the matching engine and so by removing the order book entirely I think that we basically allowed market makers to succeed in our platform and actually have had no concerns about liquidity just yet and waves is a different approach and of course hurt us is different than than all these approaches but what is the order book approach and why do you favor that as opposed to the no water book approach yes until that accordingly liquidity we just started working that normally and we have this this liquid I found which is connect all the market make this one place and this is like next step we just really collect collect all the guests together and provide this write rules just to succeed in this market and disconnect tokens I will talking assure issuer with liquidity in this case of course it's difficult now and it really is a big question especially we've closed blockchain key system Ellis waves but now what we can do as we held like it's like we're very connected with developing sterile because we just now we just launched our smart contracts and we have the opportunities to make atomic swap story or situate to its FC Twente talking to to betrayed it in our digitalize exchange in this case I can think that really can help us just to be like build up this look at it in this case yeah and courteous talk about liquidity on on the exchange in the sense that you focused on private key for security but the point is to be able to do centrally exchange yep so my vision for her dias as well as to create this network or a hub of users that when a news user wants to answer this place and they're looking for a wallet to store their fun set for a desktop or mobile they're going to use a wallet that's compatible with the hardiest network and a compatibility with our heartiest network all it means is that a current wallet provider has to implement our distributed key generation system so it's a very minimal effort for them to do so and once you have that in place you're kind of a hub of many users who can obviously trade straight from their wallets so that's my vision as well as I already mentioned this intro text element system or global order book but something else we're trying to do is kind of subsidize centralized exchanges coming onboard our system and match orders with our network because since we use this virtual wallet network once again if a centralized exchange uses it for their hard wallets the nicking seamless didn't match transact and do orders create orders with our order book just like any user would and for those transactions we would subsidize it so that we take a fee cut as a network rather than the centralized exchange taking a fee cut and the incentive for the centralized exchange is to interact that way is what yeah so it's the same aspect of having the private key so one thing we're working on and that's for our first bait at the end of the years to implement ethereum and bitcoin it's any kind of interim asset and we would create a special bridge so that the smart contract that everyone uses as their base it could be linked up with our side chain so that if a user buys air--so of tokens for example they just send their tokens to that address and they can use the air swap infrastructure just like any other is their music was agnostic to each individual approach at this time yeah so in a sense we are not building our own decks we are just creating the infrastructure that powers everything and if you or air swap or Kiger has a better infrastructure or user interface that users would prefer I'm all for it if the transactions are routed through our network and we help everyone in the system scale or provide when easier user experience great just a few more minutes and I wanted to save some time for questions but can we talk a little bit about how we are each approaching regulation and some of the processes that we think about in terms of which tokens are good tokens that we talked about Mike yeah so so so at birthday we got air dropped into into Asia at one point and it was five of us and we had to figure out how to expanse not only our business model but also regulatory wise into Australia Singapore Hong Kong Japan Thailand China you get the point so at 24 years old I basically became an honorary lawyer there are generally three things I would say that regulators care about they care about things they care about the most about it's about execution it's about settlement and it's about custody and if you think about decentralized exchanges blockchain based exchanges they essentially collapse the first two so execution and settlement become one transaction and so that vastly simplifies the amount of work you have to do and also there's no custody so I think from a from a decentralized trading perspective I think we're all gonna be in in good light as long as we do the work and communicate to the regulators and actually teach them because this is a new technology they don't understand that they might be you know a little bit scared of new technology but I think it's up to us to really go out and and have conversations with regulators is the non-custodial aspect enough I think well if you think about it the regulator's a lot of the times they just don't want headlines right like what happened in Japan with coin check that was just a massive headline and it was kind of embarrassing for the Japanese government because they went in they came in and they made crypto trading legal right and then six months later or less than a year later they had a massive hack and so I think all the other regulators are looking at them and and and trying to avoid these type of headlines and so if you remove the custody situation you remove those big hacks a big opportunity for headlines I think regulators are gonna like that very much and Lloyd the tokens that you have for your bed how did you arrive at that selection so I mean we are still in beta mode right so that's why we just see like for now we are working with like 15 tokens that we determine based on the volume on other changes because we wanted to you know get some good volume too so that we can instant incentivize small market makers to to join our platform but later on we just welcome all the tokens that are not security and and you know if the token is you can also like be one of the reserve in our platform then then we just like welcome all of them and paradox has a similar approach we are a US based exchange this standard in the u.s. for tokens to not be considered securities as the Howey test so the limited offering on para decks now are things that are not likely to be considered securities that's really all the time we have except for a few minutes for questions so if there's any questions could you raise your hand and we'll find a microphone all right great so this is an opportunity to get a little bit back on schedule thanks very much for all of the panelists for decentralized exchange really appreciate your participation and the different approaches thank you thank you around [Applause] [Music]