January 28, 2019
Boston blockchain company Arwen (formerly Commonwealth Crypto) is teaming up with cryptocurrency exchange KuCoin to offer customers the ability to buy and sell cryptocurrency without exposing coins to the security risks inherent at centralized exchanges.
The new service, announced Monday by Arwen, provides traders the most secure method for trading cryptocurrencies on centralized exchanges available on the market today. Centralized exchanges are often targeted by hackers as many traders store funds within the exchange and poor security levels of some exchanges can and have lead to massive losses for investors. Bitcoin security expert Hartej Sawhney, co-founder of Hosho, told CNBC that an estimated $2.5M is stolen on average per day on exchanges. Additionally, Coindesk estimates $1.5B cumulatively has been syphoned off by bad actors. Arwen seeks to solve this problem, so that exchanges can focus on user adoption, experience and liquidity.
Arwen’s CEO Sharon Goldberg notes, “centralized exchanges are valuable pools of liquidity for traders. The problem is that trading on centralized exchanges without an advanced security system is inherently risky for traders. If an exchange is compromised during a trade, customer funds are at risk. With Arwen, customer funds are secure even if an exchange is hacked.”
Current market solutions for custody involve a range of products and services that all rely upon trusting a third-party to manage customer coins. Decentralized exchanges, or DEXs, offer a non-custodial answer to the trust problem, but open the door to new problems around liquidity. Arwen, on the other hand, has spent over 12 months developing a non-custodial, trustless solution that leverage cross-chain atomic swaps. Instead of trusting a third-party authority to custody and protect your coins, Arwen uses the blockchain itself as an escrow agent. This enabling trades on the centralized exchange to execute in a truly trustless manner.
According to KuCoin President and Co-Founder, Eric Don, “KuCoin has been working hard to ensure the security of the exchange itself, and we are one of the few exchanges that are rated A in terms of security by ICORating, but we are also exploring other ways to satisfy users who have extreme security requirements and do not trust any third party. [Arwen’s] escrow mechanism enables users who have extreme security requirements to have a higher sense of security in transactions.”
Currently, Arwen is in talks with other exchanges, in addition to KuCoin, that view enhanced security as paramount for customers. Goldberg explained, “If you do not hold the keys, you do not own your coins.” She further stated, “The ethos behind cryptocurrency is built upon a trustless, non-custodial technology. Centralized exchanges are needed for liquidity; however, the exchange of customer coins should be executed in a trustless way. We have solved for that problem. That is why we built Arwen.”
Find out more about Arwen here, arwen.io