Demex: A Platform for Fully Decentralized Markets
How did we get here?
The Switcheo founders started their journey with the vision of a highly decentralized future. In recent times, we have seen a gradual increase in interest and adoption in decentralized e-money via cryptocurrencies. Switcheo has also been playing its part in pushing this boundary over the past years with its beloved multi-chain DEX — Switcheo Exchange. In light of the current upheaval in governments’ monetary policies, we strongly believe the trend towards cryptographic scarcity will continue.
What we think now.
However, as the market expands, we have observed an increasing re-centralization of e-money in hubs such as exchanges, and other platforms that facilitate financial activity such as lending and staking.
Furthermore, most of these centralized platforms remain heavily restricted in many countries, and we can expect this to continue or extend to more states and jurisdictions. This shift shows that we are gradually losing free access to cryptocurrencies and derivatives, bringing us back to the status quo of traditional money.
Today, decentralized alternatives consistently play as the second fiddle, and there are poignant reasons for this.
While decentralized money such as Bitcoin et al, has served us well in terms of allowing the decentralization of a store-of-value, it was not built in mind to directly serve more complex financial transactions, nor to mediate interactions with the non-virtual world. This led to the initial proliferation of centralized Bitcoin exchanges, which had huge counterparty risks.
Decentralized smart contract platforms like Ethereum which enabled more complex transactions were therefore created. However, they too, remain mostly unsuitable for more sophisticated financial constructs due to speed and scalability constraints. Such financial instruments like futures, swaps, options, and warrants are invaluable to the physical world as they allow market participants to hedge risks, exploit opportunities, and improve financial and operational efficiency. Without viable decentralized outlets, we have now also seen trading venues for cryptocurrency derivatives quickly consolidated onto centralized platforms.
All or Nothing?
Our stance for a truly democratized world stems from our belief that it is not possible to merely replace centralized electronic money with a decentralized system like Bitcoin, without having a fully decentralized financial infrastructure. Put another way, it is pointless to have a settlement currency in a decentralized currency like Bitcoin if the bulk of useful financial transactions still have to go through centralized third-parties.
What is lacking is a decentralized system that is all-inclusive and easy to construct financial markets, open in terms of participation and access, while being scalable and secure.
This was the primary thrust for the creation of Switcheo Foundation.
Demex could be the Solution.
Demex is set to run on the Switcheo TradeHub decentralized trading protocol. It is the natural step in our vision to support a competitive, yet fully decentralized exchange, bringing us to an equal footing with our centralized counterparts.
We’re building it in a radically decentralized manner that should be able to effectively create a global financial market that is truly open and all-inclusive for everyone. Furthermore, the platform is constructed in a manner that is able to handle any sort of financial structure. Its ultimate goal is to be resilient enough to allow any individual or entity to hedge or undertake any sort of financial risk without undue restrictions.
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