1. How IDEX is different from every other DEX?
IDEX is the first high-performance exchange to provide both real-time trading and on-chain settlement. IDEX achieves this through the use of a hybrid architecture that uses a smart contract to solve the biggest problem in crypto trading, custody. Users must approve every transaction with their private keys, ensuring they are always in control of their funds, while the exchange handles broadcasting transactions to the blockchain. This allows IDEX to update account balances and order books in real time, giving users the experience of a centralized exchange without sacrificing the security and user control of a decentralized exchange.
Additionally, IDEX runs a unique trading rewards program that automatically distributes our utility token, AURA, to those who trade on IDEX. 20% of all AURA (200M of the 1B total supply) is allocated toward this program, which is aimed at incentivizing early adoption and trading activity.
Furthermore, the AURA token will be used to differentiate IDEX as we transition into a new decentralized architecture supported by our community through AURA staking. When launched, users will be able to run specialized AURA staking nodes that decentralize specific exchange functions, and in return they will be rewarded with fees collected by the exchange. This transition will not only increase the transparency and security of IDEX, but it will also get the community more involved in the operations and growth of the exchange.
2. Why will the above differences will position better Aurora and IDEX in the long term?
We are humbled with our early success, but this is really just the beginning for IDEX. We designed our platform to adapt and grow with the latest blockchain technology and ensure that we not only provide the best user experience in terms of speed and functionality, but that we also offer trading of assets outside the ERC20 utility tokens we are limited to at the time of this post.
Our modular design also allows us to easily engage in strategic third-party partnerships and integrations that help increase IDEX exposure to both retail and institutional traders and boost liquidity — a common challenge for non-centralized exchanges.
The AURA staking network described above will also set us apart from our competitors as it will allow our community to directly support and benefit from our long term growth.
3. What integration/partnerships Aurora has or is on the works?
We are excited to launch Bitcoin trading on IDEX via the WBTC initiative which will go live in January 2019. Wrapped Bitcoin (WBTC) is the first ERC20 token backed 1:1 with Bitcoin by the industry’s leading custodian, BitGo. WBTC will use a transparent, 100% verifiable custodial, issuance and governance system to bring Bitcoin liquidity to the broader Ethereum-based decentralized ecosystem.
You can find a comprehensive summary of additional partnerships/integrations in our Q3 update. Some of the highlights include our CCXT integration initiative Aenigma Capital and Liquid Solutions Malta. CCXT is quickly becoming the industry standard for algorithmic traders to connect with exchanges. Once IDEX is integrated it will be seamless for those utilizing CCXT to trade on the IDEX platform. We also completed the first-ever “Deep Data Integration” with Nomics.com. This brings current and historical gapless raw trade data to investors via Nomics’ cryptocurrency and market data API as well as their website.
On the retail side, we have integrated with CoinSwitch — one of the one of the world’s largest cryptocurrency exchange aggregators. This will increase exposure to their users and provide an easy interface for them to buy/sell tokens directly from IDEX through the CoinSwitch platform. We also just recently completed a similar integration with Arbitraj.
Another exciting partnership is with Sirin Labs, who recently unveiled the FINNEY™ Blockchain Smartphone, which will come preloaded with IDEX in their dCENTER. With a built in cold-storage wallet and other unique features, the smartphone will bring IDEX trading to a new market of mobile traders.
4. How will Aurora simplify the usage of cryptocurrencies for mass adoption?
Most traders feel comfortable on centralized trading platforms and are willing to forego both security and self-custody (some of the main benefits of cryptocurrencies and blockchain in general) because of this familiarity. Our goal is to make IDEX feel like a traditional centralized exchange in terms of speed and functionality — but with the added benefits of self custody and security afforded by decentralization. Given the rise of exchange hacks and exit scams, we anticipate the adoption of non-custodial trading platforms to be swift once they offer the functionality currently limited to centralized platforms. We are making rapid progress in being first-to-market with such a solution.
Additionally, there is no doubt that phishing scams are rampant and hurting cryptocurrency adoption. We have taken an active approach to combating this by teaming up with PhishFort — an anti-phishing company specializing in the blockchain industry. They use a combination of cutting-edge techniques to detect, blacklist, and ultimately take down offenders across the web. This has been immensely helpful in keeping new traders who are unfamiliar with private key management safe on our platform.
From a higher-level perspective, we believe that education and transparency is vital for digital asset adoption. We recently joined Messari’s open-source token registry which is aimed at setting industry standards for transparency on crypto asset information. We believe initiatives like these are crucial in mitigating the opaque and inconsistent practices that are turning many people off to crypto today.
5. How truly decentralized is Aurora, or how decentralization will be achieved?
We recently published a detailed article on this subject that partially addresses the widespread confusion around what makes an exchange a “DEX.” We cover the many aspects of decentralization, along with their benefits, regulatory considerations etc. and how these aspects apply to IDEX (which we believe is more accurate to describe as a non-custodial exchange).
From the beginning, we adopted the ethos of “pragmatic decentralization” — incorporating blockchain technology where it benefits the customer (custody and settlement), and using traditional technologies where it does not (order books and trade dispatch). By decentralizing a select group of features, we were able to build the world’s first exchange that not only provided the security of blockchain custody, but also allowed for the real-time, continuous trading that was only ever available on traditional centralized exchanges. We believe this great user experience is what has allowed IDEX to consistently hold the position as the #1 Ethereum Dapp in terms of daily users, transactions and volume.
As mentioned before, AURA staking will further decentralize the system as we slowly pass off certain exchange functionalities to node operators who will, in turn, be rewarded with a percentage of fees we collect.
6. There has been reports of backdoor vulnerabilities detected specifically in Bancor, and also interference of CryptoBridge team doing rollbacks of transaction from and to users. What Aurora is currently doing, and in long term to avoid this sort of threats?
All critical operations go through the IDEX smart contract which is open source and verified by two independent auditing firms. We have also invited additional independent security experts to test for any vulnerabilities.
Like blockchains themselves there can never be 100% certainty that every line of code is flawless, and the only proof is time. We have operated the most active Ethereum contract for over a year now without any hacks or incidences of that nature. However, we are not resting on our laurels. As we grow so will the complexity as well as the incentive to find and expose any vulnerabilities. Therefore, any updates made to our system will go through the same rigorous auditing processes.
7. How the Aurora network will benefit from implementing staking node? What impacts will they have on the network?
One of the things that resonated with me during my time at Amazon was the identification of the “Flywheel” that drives company growth. While IDEX’s business model is quite different from Amazon’s, the idea of a positive feedback loop is still applicable.
With Amazon, their flywheel revolves around the continuous improvement of the customer experience. Growth of the platform and number of customers allows them to attract more sellers, which increases the selection and makes it more attractive to customers (who in turn lead to more sellers/selection, etc.). However, this growth also allows them to gain economies of scale and lower their cost structure in pricing, and additional driver for customer acquisition. Through this model Amazon created a dual-edged approach to continual improvement of the customer experience that contributed to their massive success.
IDEX’s flywheel is also dual-edged. The primary driver is the classic self-reinforcing growth mechanism of an exchange, liquidity. Trading leads to higher liquidity, which creates a better experience, which encourages even more trading, etc. However, IDEX is uniquely able to accelerate this cycle via AURA rewards and staking. By allowing users to directly benefit from the platform’s growth, users are encouraged to recruit more people to the platform, as well as conduct a higher percentage of their own trades on IDEX. Using a token with cryptoeconomic incentives allows us to coordinate everyone towards the same goal, greater liquidity and success on IDEX.
Thankful to Forrest Whaling, and Aurora for their time, honored to share a tiny bit of their project.
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DISCLAIMER: THIS WAS AN UNPAID Q&A.