Introducing Crypdex
To begin 2019, I would like to introduce Crypdex — a company that started informally a couple of years back to manage our own cryptoassets and has since evolved into something that scratches an itch we and others have had. I am happy to be working with colleagues that I met while studying Evolutionary and Adaptive Systems (EASy) at the University of Sussex who share my obsession with autonomous systems and now cryptoassets.
Promises of Programmable Money
We are a full decade into an era of decentralization ushered in by Bitcoin. What once was primarily a peer-to-peer electronic cash system is now a tremendously diverse ecosystem of technologies that to varying degrees collect under this rubric. There are a great many threads of this tech we find absolutely fascinating, but as a group we often come back to the now old-school idea of “programmable money” and the decentralized finance of today that these ideas facilitate.
While we recognize that existing capital markets will absorb these technologies to some extent, the world of decentralized finance is brimming with projects that are creating the protocol primitives of what could be a new kind of independent financial system (or even a system of systems). From trading and exchanges to loans and derivatives, there has been a democratization of financial technologies that is theoretically completely open to participation. The technologies that these new systems are built on are flexible enough to allow for general experimentation in finance and the creation of entirely new types of instruments¹. Cool.
It’s not (yet) all unicorns and rainbows. The consequences of this rapid innovation are that markets are highly fragmented for both coins and other instruments, liquidity is comparatively low, and each protocol (and sometimes each market) requires specific programmatic implementation. While a great deal of development in decentralized finance has been focused on Ethereum, there are dozens of other chains making substantial progress. Connecting these chains in a protocol of protocols is itself a very active area of development.
All of this puts a tremendous burden on the end-user to understand, keep up with, and develop for the basket of technologies that make up decentralized finance. The dream of course is that participation in these networks is completely unmediated by third parties. At Crypdex we are building bridges to this future of finance that business and individuals can use today.
Programming the decentralized financial system
When our world was just Bitcoin, programmable money was simple. Today with hundreds of coins, dozens of technologies, and a mix of centralized exchanges and decentralized protocols, programming money has become very, very complicated.
Take for example a mining² business that generates six different assets as they opportunistically mine blocks to secure various networks. Certainly some of the assets will be kept for speculation, but some portion will need to be used for working capital. This means trading each of the six assets independently for stablecoins (or fiat) on some schedule. Today this is largely done manually. Now what if they would also like to allocate some portion of those assets for payroll as well. Another manual process. And now what if they want to add a mechanism for taking out a (decentralized) loan against their assets. Yet another manual process.
But wait! This is all “programmable money”, right? Why is it that this business would need so much manual intervention in the management of their cryptoasset flows? It is because today there are not mature protocols or platforms for programmatically connecting all the disparate technologies. You see where this setup is headed, right?
Crypdex is a platform for programming the decentralized financial system. We bridge technologies for our users so that they can focus on their business use cases. As such, Crypdex is a bit like ShapeShift meets IFTTT. Users configure rules into small applications called “flows” that Crypdex executes on their behalf. Flows are just JSON and are managed via Crypdex’s API.
With our system, specifying the working capital model above is relatively painless. But working capital is only one possible application. Imagine creating an LTC investment drawdown and distribution as GUSD to grandchildren. Or taking out a Dharma loan (in Ethereum) with assets mined on BlockNet.
Crypdex is currently under heavy development right now and we look forward to introducing the platform and its features in the coming weeks.
I want to close out this section with a recognition that Crypdex is a centralized service. We think this is a good thing. It allows our customers to really program their money without necessarily worrying whether trades are done on a centralized exchange or a Plasma side-chain. It also allows us to aggregate and route trades to where liquidity and pricing is best and offer decentralized innovations as soon as they are available.
Since some aspect of the service is custodial, we can move to offer additional value to the customer such as industry-standard security protocols, tax liability forms and reporting, and perhaps even insurance on assets in custody. There is no reason we could not begin offering masternode or staking for customers that will take the complexity out of dividend bearing assets.
All of this means our customers will need to trust Crypdex. We hope we can earn that trust in the coming months and years.
Footnotes
- Let’s keep this inspirational for now. This is a little like the issue of cloning humans — we know it’s possible, but perhaps not a thing we should be doing without a TON of debate.
- Mining here is generically referring to activities that folks with computational power dedicate to network participation. They go by many names on many networks including Relayers, Validators, Block Producers, Nodes, and more.
