The race to save Sam Bankman-Fried’s other crypto exchange

Decentralized exchanges differ from their centralized counterparts (such as FTX, Binance, Coinbase, etc.) in some important ways. Most notably, rather than relying on a broker to match buyers with sellers, DEXs allow users to transact on a peer-to-peer basis – and keep their own money.

This arrangement is one example of what is known as decentralized finance, or DeFi, an initiative to develop a range of financial services on top of blockchain technology. in Twitter topic Published in July 2020 and now reading as a grim prophecy, Bankman-Fried described DeFi as “full of potential” because it does not involve “relying on trust.”

Community members see the collapse of FTX as a key moment for DeFi, which, they say, is a remedy to the problems that have haunted the crypto sector over the past year, following the collapse of large centralized institutions such as crypto lender Celsius and hedge fund. Three shares of capital.

According to Hayden Adams, founder of UniSwap, the world’s largest DEX, this is a “good learning moment for the industry.” Although the DEX model suffers from a steeper learning curve for new users, he says, it eliminates the need to store coins on an exchange, which is what gave FTX the opportunity to funnel client funds to its sister company, Alameda Research, in the first place.

Andrew Trudel, a shareholder in Kwenta, another DEX, says customers can never be completely sure what happens to their assets within a centralized exchange. But with DEX, “how the funds are used is completely transparent” because everything is hosted on the public blockchain, he argues. Trudel and Adams both predict that the movement to decentralized exchanges will eventually overtake traditional exchanges for these reasons.

With FTX in ruins and the integrity of powerful and centralized crypto companies questioned, DeFi is having a moment. But now that Open Book is up and running, volunteers face a series of dilemmas. The initial goal was to prevent Serum’s collapse from spilling over into the broader Solana ecosystem, but the group must now reckon with continued administration of DEX, which is another proposition entirely.

Among the first questions for discussion is what to do with SRM, the token created by FTX for Serum, $2.2 billion of which is listed on the company’s balance sheet. The token, which offers its holders a discount on trading fees, is still backed by Open Book at the time of writing.

Some Open Book volunteers, including Long, would rather see the back of an FTX, period. Long says supporting SRM offers no material benefit to open-book users and only serves to put money into FTX’s pockets because the value of SRM is actually tied to the revenue generated by the exchange.

The new DEX management structure also raised eyebrows. in thread Published November 18, the open book volunteers explained, “power to upgrade” is now held by a small group of “reputable personalities” from the Solana development community. Although the new model succeeded in doing away with FTX, merchants They ask if one overly centralized paradigm has simply been replaced by another. To this question, the volunteer group has yet to come up with an answer.