The Protocol for Tokenized Credit Default Swaps on Ethereum
Today, we’re proud to introduce something we’ve been working on for the past six months: the CDx protocol. CDx is a set of Ethereum smart contracts that enables anyone to issue, trade, and resolve tokenized credit default swaps (CDS) in a completely trustless and peer-to-peer environment.
Learn more at CDxProject.com, read our whitepaper, and join our Telegram channel. We plan to open source the contracts and launch a reference decentralized exchange application to trade CDx swaps in the upcoming months. We will also be releasing a detailed roadmap in the coming weeks.
CDx came to life as the three co-founders were trading crypto assets. We wanted to keep our assets on exchanges to trade, but we were worried about the risk that the exchanges would default on us if they were compromised by hackers, shut down by regulators, etc. Talking to other investors, traders, and market makers confirmed that a liquid market for insuring crypto exchanges and other crypto credit risks would be a valuable addition to the ecosystem.
CDx is an open protocol for creating tokenized credit default swaps that utilizes the Ethereum blockchain as its custodian, clearinghouse, and enforcement mechanism rather than centralized financial intermediaries and the legal system. For the first time, crypto investors can trade the credit risks inherent in the ecosystem in a fully trustless and peer-to-peer environment.
We’re starting with crypto exchanges, but our long-term vision is the tokenization of the $10 trillion traditional CDS market. To achieve this, CDx has built-in compatibility with the Dharma protocol so that anyone can buy a CDx swap on their tokenized debt assets to protect themselves from debtor default.