Web 3.0 + DEX: Why DEXs will win the race against CEXs

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Ichan Pandey

Crypto veteran. Tokenization, DeFi and Security Tokens – Blockchain.

Ichan Pandey: Hello Manfredi, welcome to our “Behind the Startup” series. Can you tell us about yourself and the history of HyperDex?

Manfredi Magris: Hello Ishan, I’m Italian like most of the Hyperdex team. I studied commerce in Southern California and gained my early financial experience with European banks. After a few years in the standard financial system, I started developing proprietary algorithms to trade the Forex markets independently. I set up a first team in 2005 and coded our proprietary statistical strategies using different languages, mainly CC+ and Basic.

With the new era of digital assets, especially cryptos and their major pairs, we have noticed that our forex trading strategies work for these markets as well. While coding these new digital assets, new opportunities arose and we launched an Ether mining farm in Europe and Hong Kong. After a short period, we expanded our mining activities in Canada in order to mine at a lower cost with green energy (with Hydro Quebec). Mining management required a group of machines controlled with digital panels to fully develop, primarily using Solidity and Python. As a result, we got used to these new languages ​​and started to have new ideas on how to expand and share our business and software development knowledge. After a while, it was clear that the crypto market, especially DeFi, needed a new product: an asset management service.

This service would include three main aspects of the DeFi world that are not yet very developed: a fixed income service (on stablecoin assets), a fully managed algorithmic trading service, and a simplified futures trading service with easy presets. (comparable to a sports bet) within everyone’s reach. Eventually, we decided to start building the platform with our own resources. Currently, we have written all the necessary smart contracts in Solidity (on the BSC channel) and have a working platform. We are undergoing the audit process with Certik and we will complete it any day now. Then we plan to launch our IDO by the end of February.

Ichan Pandey: Who do you think will be the final winner? CEX or DEX?

Manfredi Magris: The ultimate winner will definitely be the DEX! Many pairs are not available on DEXs, and when they are, they often have limited volume/liquidity. But as more and more people use DEXs, a scenario becomes more and more likely where protocols like for example, Hyperdex effectively onboard even inexperienced users into DeFi. Eventually, the simplest approach will completely replace CEXs. Currently, CEXs are cheaper in fees when executing trades or swaps compared to fees on DEXs. Ethereum mainnet via Uniswap and Sushiswap. However, new optimized DEX chains are ready, such as Avax, Fantom, Bsc, etc. and with their use, the user incurs much lower costs, even compared to a CEX.

Ichan Pandey: What do you see as the future of decentralized financial asset management?

Manfredi Magris: The future is a transition from the standard financial world, where currently 99% of all money is still under management, to the new DeFi sector. Once this happens, most protocols probably won’t have the pump and dump effect anymore, as “real/old money” usually tends to stay longer in whatever project they choose. With this in mind, we could see many DeFi crypto projects fall to zero if they fail to meet the real expectations of the financial/governmental world in terms of regulation. However, at the same time, we could see an unprecedented rise in DeFi tokens that add real value and utility for the new era of digital finance.

Ichan Pandey: Could you share your thoughts on the current state of crypto security? What needs to be done to dispel the widespread belief that investing in or holding digital assets is a security risk?

Manfredi Magris: Crypto assets stored on cold wallets (nano, ledge, trezor, etc.) or direct wallet services (ex. metamask) are very secure, as are passwords and the systems created around them. A 24-word passphrase about an ex. a Nano ledger would need all the BTC mining computing power for 35 consecutive years to find the right combination. That would be for a single passphrase – virtually impossible. The problem is, as always, people’s lack of precaution. They can lose their password by writing it down somewhere and then forgetting it or worse on a piece of paper that is wet, damaged or disappears over time. These are just a few of the issues, others include poor communication or poor management. This can take the form, for example, of telling your friend, your son or your mother the password, and suddenly 10 people know about it and if one finally becomes dishonest or makes a security mistake, the assets are lost.

In our opinion, blockchain’s robust security protocols are not hackable in the sense that many believe. Often, when someone is “hacked”, the password has been stolen by the “hacker” through a procedure such that the user is the victim of a phishing program. So a “hacked” wallet is usually never a direct blockchain security issue. One rule is to never share your seed phrase online with anyone unless you are 100% sure it is the correct cold wallet or online wallet service/address.

Another problem is with exchanges, where some users lose their funds due to mismanagement or bad faith management by exchange owners. As an additional rule, one should never leave their crypto on an exchange for an extended period, but always transfer it to an external cold wallet or at least to a wallet service such as Metamask to protect their digital assets from exchange mismanagement. . Some exchanges are more reliable than others, like Kraken, Coinbase or Binance, however, no one should keep a significant amount of assets on them.

Ichan Pandey: How can retail investors mitigate the inherent risks in DeFi that a single passive investor cannot handle?

Manfredi Magris: Retail investors can mitigate their risk by knowing exactly how a DeFi protocol that uses smart contracts works and what exactly is happening with staked tokens. Everything that happens with their funds is described in the protocol’s smart contract, which should be publicly available on the channel for review. Any functions other than those described in the particular smart contracts cannot be executed, as the code is immutable. This is good for an end user to know, because the expected execution of a smart contract will always occur. The risk they may have is the depreciation of the value of the assets held, but the risk of mismanagement is extremely low, since no one can modify the smart contract functions once published on the associated blockchain. In an emergency, most DeFi protocols offer an early withdrawal feature, so in this case a passive user can exit their DeFi investment at any time they wish (usually for a fee).

Ichan Pandey: There are currently very few DeFi companies that comply with the legislation around the world and this needs to be rectified if these companies are to realize their full potential. What do you think of the regulation of DeFi protocols/platforms?

Manfredi Magris: My entire team believes that we must immediately comply with the impending regulations that will soon apply to the world of digital assets. That’s why we plan to allocate a large part of our funds to gather all necessary licenses to stay up to date with current and future legislations/regulations. It is critical to us, especially as DEXs continue to grow, that our services are licensed worldwide, including the United States.

Ichan Pandey: What new trends do you think we will see in the blockchain industry?

Manfredi Magris: This year, we believe, is the year that utility tokens will lead the blockchain. Even an NFT protocol having some utility (eg used as a reference for a shipping item) could become of great interest. Therefore, protocols that create new utility, like bringing asset management to DeFi, will be sustainable and gain surprising value. While many protocols that have a specific function will gain in value, coins or even tokens that simply exist because of a community support the price without any particular function, or even worse, just a copy of other protocols, can slowly disappear (or at least significantly decline in value over time).

Warning: The purpose of this article is to remove the informational asymmetry that exists in our digital markets today by performing due diligence, asking the right questions, and giving readers better opinions to make informed decisions.

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