The Ocean: Building the Bridge to a Truly Decentralized Digital World
What’s so compelling about blockchain? There are countless reasons, but we at The Ocean believe it represents a movement towards a decentralized world that revolutionizes how we transact and interact with each other. Satoshi reinvented finance with bitcoin, and Vitalik reconstructed computing with Ethereum. And now, some of the greatest minds and technologists across the globe are building web 3.0, a decentralized digital world where identity, value, and governance no longer lie in the hands of a few.
Cryptocurrency exchanges are the gatekeepers to this world, allowing people around the world to experiment and play around with these decentralized protocols. But there’s a catch: to access this new world, you need to enter through an old world construct — a centralized exchange. Centralized crypto exchanges like Binance and GDAX pose many of the same shortfalls of traditional centralized financial exchanges — you need to trust the exchange with your (and everyone else’s) money, and any time you deposit your money with the exchange, you’re taking a risk. As we redraw the world in a decentralized way, why are we making the same mistakes we did in the centralized world?
Centralized exchanges, systemic risk
When you trade on a centralized crypto exchange like Binance, you’re not trading peer-to-peer with someone else. Instead, you’re trading with Binance, who then trades with the other party on your behalf. For some amount of time, your funds are Binance’s funds — as is everyone else’s funds on the exchange. Centralized exchanges keep your coins and tokens in hot wallets and your private keys in off-chain databases until you withdraw to your own wallet. This centralized infrastructure makes them prime targets for hackers. Just look at the cumulative value lost by centralized exchanges:
- Coincheck lost $530m in 2018 when hackers gained access to their hot wallet and lifted more than 500 million NEM coins
- Mt. Gox lost $460m in 2014 when almost 1 million bitcoins were stolen straight out of their servers
- Bitgrail lost $170m in early 2018 when 17 million NANO were supposedly stolen due to poor security measures
- Bitfinex lost $72m worth of bitcoins in 2016 when their multi-sig authentication process was compromised
And that’s just the headliners! Centralized exchanges have lost billions in customers’ crypto assets, as hackers have breached their ‘security’ systems time and again. But you shouldn’t be surprised — these centralized crypto exchanges are repeating the same mistakes of the traditional financial world. Centralized counterparties represent single points of potential failure that can spread risk throughout the system. Just ask anyone who deposited money with Bear Stearns and Lehman Brothers in 2008. Centralized counterparties — whether crypto or not — are prone to security breaches, costly overhead, slow settlement, and misaligned interests. These are the old world consequences of the traditional financial system. If the crypto community truly wants to reduce the risk and cost for people to move value around the world, the default exchange model needs to change.
Decentralized exchanges for decentralized world
Decentralized protocols create a world where we don’t need to trust third parties who have their own incentives and objectives different from ours. So why are most of the access points to decentralized protocols centralized? This is where decentralized exchanges (DEXs) add value. Unlike its centralized counterparts, DEXs never take custody of assets when facilitating trades. Users always keep control — both of their private keys and tokens. The DEX never holds your tokens.
This means that DEXs allow you to easily move tokens wallet-to-wallet using a digital identity forged on the blockchain. DEXs eliminate the middleman, making it cheaper, faster, and safer for you to trade. So you transact right on the blockchain — and access the decentralized world in a decentralized way.
The Ocean: Building the right bridge
The ‘first generation’ of decentralized exchanges — Radar Relay, Paradex, AirSwap, and others — have been instrumental in getting crypto consumers to think about the benefits of decentralization. But to be actually useable for traders of all stripes, there’s still a long way to go. While DEXs have solved some of the risk issues in cryptocurrency trading, user adoption remains low.
That’s what the Ocean is focused on: how do we provide the best trading experience to all types of consumers — retail traders, professional investors, and institutions — and bring DEXs to the mainstream? Our team is uniquely positioned at the intersection of financial services, crypto trading, and consumer technology to solve this problem. And our unique perspective allows us to ask the right questions to build the right infrastructure solution for the crypto world.
Questions like:
- How do we make it as easy as possible to access crypto?
How can we create the best in class UI/UX? How do we make wallet integration easy and painless? What’s next in wallet and custody solutions? And how do we make the conversion of fiat to crypto smoother? - How do we maximize execution efficiency?
How can we bring trade execution on a DEX up to institutional-grade standards? How do ensure sufficient liquidity? How do solve blockchain-specific settlement challenges, like collisions and miner front-running? And how do we balance performance and transparency? - How do we make the crypto market a safe place to transact?
What kind of regulatory regime makes sense for DEXs and the blockchain world? How do we police user behavior without sacrificing user experience? How do we scale responsibly? And how can we be thought leaders for self-regulation in the crypto community? - How do we build the right bridge between the crypto and traditional financial worlds?
How do we build an enterprise-grade experience on the Ethereum blockchain? How do we solve legal and custody roadblocks to asset tokenization? How do we deepen our relationships with financial institutions and financial systems around the world? And who do we partner with to bring a decentralized financial system to reality?
Over the coming weeks, we’ll be releasing our first answers to these questions. Emphasis on ‘first’ — just like the blockchain world, we want to constantly improve and evolve too. That’s part of what makes this space so exciting, and why we decided to build that next generation infrastructure solution that can make so much of this decentralized world go. And our goal isn’t to just build the right infrastructure solution for trading — it’s to build a bridge to a decentralized financial future. And we’re excited to work with you to make that future a reality.
Consider this the start of our countdown to launch.
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Want to get a head start integrating with The Ocean? Play around with our API here or read up on the finer, technical details of our platform.
