Bithumb Chain: Interconnecting the Bithumb Family

Bithumb Global
Nov 7 · 5 min read

Preamble

Digitization and globalization are major trends defining contemporary society, and blockchain technology can provide crucial technological support for these processes. Due to the unceasing development and evolution of technology, infrastructure of popular public blockchains are progressively moving towards delivering an impeccable level of security, transactional capability, scalability and more. Many national governments and private organizations have identified the potential of blockchain technology and continue to to ramp up their level of support and assistance. The prevailing belief is that in the near future, the blockchain value network will become universalized and normalized, assisting in the digitization of every industry and sector and facilitating global development.

Bithumb Family & Bithumb Chain

Bithumb Family is Bithumb’s global digital financial ecosystem. Bithumb Chain is an important member of the Bithumb Family, providing its infrastructure and technological foundation, and ensuring the security, stability and efficiency of the technical services available across the Bithumb Family ecology, capturing and scaling additional value upstream and downstream of its cryptocurrency trading platform.

Bithumb Chain marks the shift of Bithumb Family resources onto on-chain infrastructure — a breakthrough that will greatly facilitate the flow of value, information and commerce throughout its ecology. Bithumb Chain ushers in a new generation of trading protocol characterized by reduced costs of collaboration and expanded channels for the inflow and circulation of value. The new degree of interconnectedness within the Bithumb Family will forge the next generation of the value ecosystem.

In order to achieve this goal, Bithumb Chain first proposed the PSP transaction protocol, and built the EaaS service on top of the PSP transaction protocol, which can help users construct the transaction-like applications that meet their needs more conveniently and at low cost.

Current status of the exchange

In the world of blockchain, cryptocurrency exchanges exist as platforms facilitating digital asset circulation, exchange, and trusteeship. Cryptocurrency exchanges can be divided into two groups based on structural differences: CEX (Centralized Exchange) and DEX (Decentralized Exchange).

Current trends in the online market have popularized the CEX model, resulting in a large number of users across various CEXs. However, the uniquely decentralized nature of blockchain technology is restricted when crypto assets are stored on CEXs, as the result is centralized trusteeship.

DEXs are more in line with the decentralized spirit of blockchain: DEXs return asset ownership and management rights to its users; maintain distributed ledgers recording all transactional data — reducing transactional security risks and associated costs, and ensuring transparency and lower barriers to trust. Granted, the development and widespread adoption of the DEX model faces certain challenges including liquidity depth, speed and transparency, as well as user experience optimization issues. But with continued technological advancements and ongoing improvements in infrastructure, DEX is steadily increasing its market share. CEX and DEX have their respective advantages and disadvantages, and competition between the two models will likely continue in the foreseeable future.

Exchange-as-a-Service (EaaS, facilitating cryptocurrency trading)

Bithumb Chain is an attempt to return to the essence of commerce, achieved through a synthesis of the advantages of both CEX and DEX — forming an innovative new technology called PSP (Profit Sharing Protocol). By creating a trading platform based on this unique protocol technology, Bithumb is able to offer users EaaS to facilitate fluid cryptocurrency trading. Users are able to function as “channels” by building their applications based on the PSP protocol.

For instance, if a user named Bob wishes to operate as a channel, he will need to create a PSP-based application. After integrating the PSP transaction protocol, Bob is able to access the EaaS page. There, he sets the relevant parameters (such as transactional fees, payable accounts, supported cryptocurrency pairs, etc.) and is able to deploy his completed, personalized trading application.

Bithumb Chain contains the technology that makes it possible for Bob to have such a fluid and convenient user experience. First, the PSP transaction protocol is subjected to a strict security audit, which greatly reduces transactional risks. Second, the transactional accounting algorithms implemented by the Bithumb Chain node significantly reduces operating and maintenance costs for Bob. Third, most of the transactional data is handled by the blockchain network, decreasing the computing load for local devices and minimizing Bob’s dependence on local servers. Finally, the shared liquidity depth enabled by Bithumb CEX will maximize the asset potential of Bob’s application. Bithumb Chain will allow all users to easily and conveniently deploy transactional blockchain applications with lower cost, higher security, and greater simplicity.

Bithumb Chain will charge Bob a fee of 0.03% to support its daily operations, systems maintenance, and other service costs. The EaaS service provided by Bithumb Chain not only greatly reduces the set-up time and operating costs of Bob’s previous trading options, but also allows Bob to determine how much he will charge other users for their use of his transactional application. All revenue generated through his channel — exclusive of the 0.03% fee — is completely owned by Bob.

PSP (Profit Sharing Protocol) Trading Contract

As the transaction protocol underlying the Bithumb EaaS service, PSP provides users with various supplementary functions including algorithmic transaction matching as well as automatic settlements and accounting services.

With PSP, only verified users holding a secure, private key can operate digital assets and accounts. According to the design of Bithumb Chain, users store assets in the trading contract. The contract controls the order throughout the transaction process and ensures that all parties have fulfilled the conditions specified in the match. The blockchain only records the transaction information and such relevant data and does not store order information. This significantly improves transaction efficiency.

The trading process is as follows:

In order to start a transaction, the initiator submits an order — this order information is added to the order pool and is analyzed by the system to find a relevant match. This aspect of system behavior and API is similar to the processes currently used in CEX, so the user experience and expected wait times are similar to that of a standard CEX. When an order is successful, the data of the particular transaction is recorded in the ledger and the settlement is completed on the chain, including any fees that may apply, and the resulting sum is returned to the user’s wallet. This way, the trading efficiency is greatly improved; this method is known as Off-Chain relay, On-Chain settlement.

By leveraging the Bitmumb Family ecology, the PSP trading contract will connect users to the liquidity depth present in the Bithumb CEX and provide an integrated API identical with the existing CEX user experience — thereby greatly increasing the liquidity depth and trading options for all Bithumb users.


Bithumb Global

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Worldwide Distributed Digital Asset Exchange

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