Welcome to Protocol Weekly: CDx
CDx is building a decentralized protocol for credit default swaps on Ethereum, which can be a bit confusing to understand. It’s easier to think of CDx as a way for cryptocurrency investors and traders to insure against exchange hacks. We’re creating a new asset class by building essential infrastructure for a decentralized financial system.
What problem does it solve?
To date, $12.6B (that we know of) has been stolen by hackers. This poses a massive credit risk problem for investors and traders. Credit risk is the risk that an exchange is unable to give your money back, because the exchange was hacked or shut down by regulators.
CDx allows investors to insure deposits held on crypto exchanges and trade with confidence.
How does this help the community?
CDx allows cryptocurrency investors to insure against exchange hacks and protect their assets from credit risk. CDx can also be used to reduce the credit risk associated with tokenized debt, staking pools, and stablecoins. In an effort to accelerate mainstream adoption, CDx aims to make crypto safer for everyone.
Protocol Weekly is a newsletter to exclusively showcase the progress of Ethereum layer-2 protocols.