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Decentralized exchanges (DEXs) have rapidly become a hot topic in the ongoing crypto bear market. NewsBTC took some time to sit down with Alex Wearn, the chief executive of AuroraDAO, the company by the popular IDEX exchange, to talk about this crypto subsector, mainstream Bitcoin adoption, and this innovation’s long-term prospects when pitted against the U.S. dollar. A Tell-All With Alex Wearn About Decentralized Crypto Exchanges
NewsBTC: How has the crypto winter affected your team? Has it been hard to innovate?
Alex Wearn: Our vision at Aurora is unchanged by the movements of the crypto market. We see a future where custody is managed by a variety of parties from individuals up to institutions. And in order to trade with one another, they don’t need to give up control of the funds. They are able to control their funds throughout the entire process, from trade execution to settlement through the blockchain. We are trying to develop out our products to meet this need.
In terms of growth, however, this has obviously slowed with the market. We have seen peak volumes in April/May of 2018, and it’s fluctuated in-line with the general market. All things considered, we’re pretty happy about our performance in that we’ve been able to maintain our market share and maintain our presence across the broader industry, despite the crash in Bitcoin.
NewsBTC: There’s been a huge hubbub about DEXs from bigger companies in the space, like Binance . Have you guys been affected by that at all?
Alex: 100%. We are going to compete against centralized exchanges and eventually traditional financial exchanges. The end vision of crypto is to take all these financial assets, turn them into blockchain-based assets, and allow people to trade them. Our plan is to do that through a non-custodial approach. If you want to take Binance Chain/DEX, it looks like a tool of support of Binance Chain for issuance. We see some flaws in the design, I won’t get into those in-depth.
But, there are some things about the design that can ultimately limit adoption and usability. And so we are going to take a bit of a different approach. It would be worth clarifying that we see ourselves not as a DEX. For one, because “DEX” has a broad range of connotations and implications. Ex. it could be redundant, censorship-resistant, or it could be non-custodial. We’ve got less focus on censorship-resistance and instead want to build the best non-custodial UX possible. So in some ways, we aren’t competing directly with these other DEXs, as they have different values, goals, and things they want to achieve, which is reflected in their technical designs and what products they’re bringing to the market.
NewsBTC: Many of the DEXs in existence are only somewhat decentralized. Is that an issue that can be solved moving forward?
Alex: The term “fully decentralized” is a bit of a misnomer. What does that even mean? To be fully decentralized, you have to be something like Bitcoin — launched by an anonymous individual, it is fundamentally just a protocol with rules baked in, and any changes to it are done by a broader consensus of decentralized individuals. But even Bitcoin has elements of centralization, in terms of different orgs that have influence over the roadmap, mining groups that have influence over forks or what direction the protocol should take. So I believe there is no such thing as full decentralization. That gets back to my previous comment about the goals of decentralization and of decentralized exchange. Related Reading: 2019 in Crypto is Year of the DEX: NEO’s Nash to Launch, Main Competitor of Binance?
We look at the fundamental benefit of DEXs compared to centralized exchanges being on the non-custodial property. This means non-custodial for both individuals and institutions, meaning these entities can trade with each other with only private keys. That’s the vision we want to achieve. To do that, however, you need to give up some aspects of decentralization. If you want to use a decentralized network to execute trades and transactions, you will never have the speed, UX performance that is necessary to get the broader adoption of a DEX. And that’s something that is reflected in our design.
NewsBTC: Aurora (IDEX) currently has its product centered on Ethereum? Are you considering going cross-chain/multi-chain in the future?
Alex: Absolutely. We look at a number of reasons to go multi-chain. First, the improvement upside of the underlying chain. So we are actually working on our own internal scaling solution that means that those components/attributes of a blockchain make it so it isn’t compelling to move from chain-to-chain. At that point, we can scale regardless of the underlying chain. Then, questions ar...