Today, the team at CryptoAnalyst has secured an exclusive interview with the brains behind the promising new platform Ethfinex.
First off, though, let’s bring you up to speed on what this exciting project is all about.
What is Ethfinex?
Ethfinex is a platform that was created specifically for developers, enthusiasts and traders to discuss anything related to decentralization and the blockchain and around Ethereum. On the platform, these high-stake profiles are able to trade and discuss ERC20 tokens and ethereum-based ICOs and crowd sales. According to the website “Ethfinex is the home of digital tokens trading & discussion. Built for the Ethereum community, using Ethereum.” Ethfinex is going to launch a beta of the platform soon and is looking for community members to contribute to its debut. The platform has a wide variety of features that really make it stand out amongst all the cryptocurrency exchanges that currently exist.
One of the core strengths of Ethfinex will lie in the strong community that it will build. Ethfinex won’t be just about the Ethereum blockchain and Ethereum based tokens trading, it will be about community and discussion. The aim of the service is to foster people around these projects, encourage collaboration, discussion and more. Members will be able to review and analyze upcoming ICOs and crowd sales, as well as talk about currently traded tokens. In addition to the members forming a tight-knit community, the platform will provide readily available information for its traders. Whitepaper reviews, sentiment analysis, developer guides, and FAQs will all be easily accessible on Ethfinex. Moreover, the exchange will have a user reputation system in place to ensure the highest quality content and trust from member to member. No other platform provides that much information, paired with trading, reviews and the ability to discuss and collaborate between members.
Why is it Ethfinex the best at what it does, and different from other platforms?
Coins and tokens have a lot of value and bring many different assets, but one of its strongest one is the community around them. There is currently no way to bring those communities together, in one place, with readily available information, open discussion, and analysis, trading and tracking systems. Ethfinex changes that, and makes it possible for the first time since cryptocurrency exists! This is very well explained on the platform’s pre-launch website: “Ethfinex offers a new community and information hub for these tokens and Ethereum-based projects. It will facilitate learning, discussion, and analysis, whilst simultaneously offering access to the most highly liquid and advanced trading platform for ERC20 tokens.”
As a reward for its users, Ethfinex issued tokens called Nectar tokens. These tokens are obtained when users get involved on the platform, participate in discussions, perform trades, leave reviews on ICOs and more. By holding Nectar coins, members obtain many advantages on the platform, such as having access to pre-sales, getting a percentage of the exchange’s trading fees, bonuses, and even have a say in updates and improvements that Ethfinex will make in the future.
TLDR: Ethfinex is a new learning, discussion, and trading platform for digital tokens. It will be for Ethereum based tokens and ERC20 tokens. More than just a trading platform, the aim of Ethfinex is to build a community of developers, enthusiasts, and traders to share and discuss everything Ethereum.
Here at Cryptoanalyst, we are proud to bring you an exclusive interview with Ethfinex’s Will Harborne.
1) Can you tell us a little bit more about Ethfinex? How would you introduce it to someone who is completely new to it?
Ethfinex is a cryptocurrency exchange with a twist – by trading on Ethfinex you earn a stake in it. We want to lead the way in innovating with exchange technology and governance. However we recognise that with the current state of blockchain it is too early to provide an amazing, high-performance trading experience on a fully decentralised platform running on top of a public blockchain.
Ethfinex is therefore taking a ‘hybrid’ approach – starting off centralised, but gradually decentralising both our governance through the Ethfinex Nectar token, and decentralising the technology behind the platform. The first stages of this will be to allow users to place non-custodial orders settled by smart-contracts. This allows users to keep full control of their funds until the trade is executed, rather than having to deposit and withdraw.
2) How do you plan to stand out amongst all your crypto exchange competitors like Binance, Kucoin and others?
I think we are going to see the market becoming saturated by competition in the space during 2018. For the moment being able to deliver on the technical front (and build scalable, reliable and secure infrastructure) is enough to have a place in the market. However Ethfinex is part of a new wave of exchanges which will need to innovate both technically and with our business models in order to succeed. When we first announced our vision for Ethfinex, including our own token in mid 2017 it was groundbreaking enough, but already since then the market has moved on (with the likes of Binance and Kucoin which hardly existed then taking dominant roles with their own tokens). Ethfinex vision has also become more ambitious during that period, and we have strengthened our strategy for standing out amongst impressive rivals.
We believe that underneath the technology it is the community and social aspects of blockchain which fundamentally underpin its value, and social consensus can be seen as the final consensus layer of a blockchain. For example if the majority of a community agrees to fork a protocol and change it, this will be successful, even if the blockchain itself is theoretically immutable.
Ethfinex’s differentiation compared with both centralised and ‘decentralised’ exchange competitors is the focus we will place on building a community and making them the stakeholders and ultimate decision makers. The holders of the Ethfinex Nectar token (NEC) will be able to decide which tokens are listed, and eventually be part of a governance process to critical strategic decisions which are in their best interests rather than those of a centralised management team.
3) Why rely completely on Ethereum and the Ethereum blockchain? Do you see it as the future of crypto?
I do see Ethereum as far and away the front-runner in blockchain technology – most importantly because of the developer ecosystem it has around it. This is something no other blockchain can currently match, and the number of projects growing on it is what creates the value for an exchange like us. We are positioning ourselves to be able to serve and provide liquidity to many thousands of decentralised applications. For example, if I want to use a decentralised application with it’s own utility token, Ethfinex will be able to seamlessly and trustlessly allow you to buy this and use it.
Even if there were faster and more scalable blockchains which were now as production ready as Ethereum, without this ecosystem those solutions would be unattractive for an exchange, and in the past we have seen the importance of this with projects such as Bitshares and the NXT Asset Exchange failing to gain any traction.
That being said, it is important to recognise that Ethereum has many problems too, with scalability being one of the major concerns of all who are developing applications on it. We aim always to stay as agnostic as possible of protocols and technologies, and proposed vertical or horizontal scaling solutions such as Plasma or Cosmos are likely to be key to achieving our final vision.
4) You just launched a new token called Nectar, could you elaborate a little bit more about this particular project?
The Nectar token (NEC) is crucial to decentralising Ethfinex and represents the transition we will take from an initially centralised management team and technology platform, to become a community governed, decentralised platform.
Initially 1 billion tokens were created, and each month new tokens are created and distributed to the customers of the exchange, based on their trading volume. The most valuable customers are those who create ‘liquidity’ – those who had orders to the order book which other traders can see and then take. These types of customers are called market makers, and the more active they are the more spreads can be reduced, giving a better price on the markets to other customers.
Since new tokens are created every 30 days, the total supply will gradually grow. The rate at which tokens are created compared with trading volume reduces each period, making it harder to earn tokens, and rewarding the early market makers, attracting them, and giving them a stake in the platform.
50% of all fees earned on Ethfinex are contributed to a pool which belongs to the NEC holders, and holders can redeem the tokens, destroying them, in return for their share from the pool.
Besides transitioning Ethfinex’s governance slowly to NEC holders, we have many other plans for NEC during 2018. Eventually we see the NEC token as likely becoming a native staking token for an Ethfinex fully decentralised exchange running on it’s own child-chain of Ethereum.
5) What element of Ethfinex excites you the most?
For me that would be the Ethfinex Trust-Less Portal and API, which will be our first major step towards decentralisation. The Portal will be a single page interface which users can access using MetaMask or their hardware wallets, in order to conduct non-custodial trading on Ethfinex.
This can be thought of as having all the benefits of a decentralised exchange interface, with user maintaining complete control of their tokens at all times, but still placing orders onto a centralised exchange order book and therefore having access to much higher liquidity.
Alongside this will be a new API gateway into Ethfinex, allowing anyone to programatically send these non-custodial orders from any applications. The initial design is using the 0x protocol format, but the design means that we will be able to use the same API to accept non-custodial orders in many other formats in the future.