Announcing C3: A Next Generation Self-Custodial Exchange
Today we are announcing C3, a decentralized layer for cross-margin trading across derivatives and spot markets.
There is a wide gap between the DeFi and CeFi trading experience. Even though there is a wide variety of successful derivatives, lending and trading protocols across various blockchains, DeFi trading remains orders of magnitude smaller than centralized alternatives.
We think this gap exists because liquidity is split between blockchains and protocols within each blockchain. This fragmentation of liquidity and financial products is hampering capital efficiency, creating a clunky user experience and limiting DeFi’s potential growth.
Solving intra-blockchain fragmentation: Rebuilding the stack on a single protocol
C3 will eliminate the gap between DeFi and traditional finance by offering a single decentralized layer where users have access to:
- Cross-collateralization: Use any supported asset as collateral
- Derivatives trading: Perpetuals and Options
- Spot trading: Spot market with leverage
- Cross-margining: margin requirements calculated globally across positions
C3 can therefore offer a single global account and all-in-one capital market that improves the cross-chain trading experience, streamlines collateral management and unlocks siloed capital.
In our view, the only way of achieving this is by rebuilding the entire financial stack from scratch on a single layer. This is how C3 dramatically improves capital efficiency. Market makers can write options by hedging them with perpetual positions, while traders could arbitrage funding rates by hedging perpetuals with leveraged trades in the spot market — all without segregating capital across venues.
All of this can live in one interoperable universe of trading — C3.
Solving multi-blockchain fragmentation: Cross-chain technology
The future is multi-chain and C3 aims to access liquidity across all blockchains. C3 will launch on Algorand and use a novel cross-chain messaging technology native to Algorand to interact with other blockchains through cryptographic proofs that enable decentralized bridging.
In parallel with this novel approach to decentralized interoperability, C3 will explore existing cross-chain communication technologies to achieve multi-chain support early on. At its core, C3 design will allow the central limit order book to be natively interoperable: a global CLOB that can connect to as many chains as possible. Our goal is to give users the comfort and freedom to collateralize any asset from a wallet of their choice.
C3 Design: CeFi performance with L1 assurances
C3 will have a hybrid design. An off-chain CLOB will match derivatives and spot trades while settlement will happen on Algorand’s blockchain — at every block. This design will allow C3 to be as performant as a centralized exchange — with high trade throughput and negligible latency — while remaining decentralized and non-custodial, leveraging the security and decentralization properties of Algorand’s L1.
We envision a world where users can trade freely across blockchains and enjoy the benefits of native cross-margining without giving up sovereignty to custodial venues. C3 will make DeFi more capital efficient, but more importantly provide an experience that resembles CeFi without sacrificing DeFi’s self-sovereign and non-custodial nature. We have a similar thesis to Algorand itself: today’s market is pushing users to accept tradeoffs that don’t have to exist. Instead, we believe that trading will someday resemble the speed of traditional finance and CeFi, but simultaneously preserve the security and decentralization of L1 ideals.
Realizing C3’s vision as an integral DeFi primitive for multi-chain trading will require several important phases. Our development roadmap will be released soon and provide more details on priority products and markets. If you are a talented engineer looking to build and shape the future of finance, reach out at join@c3.io.
