Sam Bankman-Fried’s Race to Save Another Crypto Exchange


Decentralized exchanges differ from centralized exchanges (such as FTX, Binance, Coinbase and others) in several important points. Most notably, instead of relying on an intermediary to connect buyers with sellers, DEXs allow users to trade on a peer-to-peer basis—and keep custody of their own funds.

This arrangement is an example of what is known as decentralized finance, or DeFi, an initiative to develop a suite of financial services based on blockchain technology. in one Twitter theme published in July 2020 that now sounds like a grim prophecy, Bankman-Fried described DeFi as “full of potential” because it doesn’t involve “relying on trust.”

Members of the community see the demise of FTX as a pivotal moment for DeFi, which, they say, is a remedy for the problems that have haunted the crypto sector over the past year, following the collapse. of large centralized institutions such as crypto lender Celsius and hedge fund Three Arrows Capital.

According to Hayden Adams, founder of UniSwap, the world’s largest DEX, this is “a good learning time for the industry”. He said that while the DEX model has a more difficult learning curve for new users, it removes the need to store funds with an exchange, which is what created the opportunity for FTX. customer money transfer for its sister company, Alameda Research, from the start.

Andrew Trudel, a contributor to Kwenta, another DEX, said customers can never be completely sure what is going on with their assets inside a centralized exchange. But with DEXs, “the way money is used is completely transparent” because everything is stored on a public blockchain, he argues. Both Trudel and Adams predict traffic to decentralized exchanges will eventually overtake traditional exchanges for these reasons.

With FTX in ruins and the integrity of centralized, powerful crypto companies in question, DeFi is having a moment. But now that Open Book is live, volunteers are faced with a series of dilemmas. The original goal was to prevent the demise of Serum from spreading to the broader Solana ecosystem, but now the team has to take into account the ongoing DEX management, which is a different proposition altogether.

Among the first questions raised for debate was what to do with SRM, the FTX-generated token for Serum, $2.2 billion of which was listed on the company’s balance sheet. The token, which offers holders a discount on transaction fees, is still supported by Open Book at the time of writing.

Some of the Open Book volunteers, including Long, wanted to see the back of the FTX more. Long said supporting SRM brings no material benefit to Open Book users and is only meant to put money in FTX’s pocket because the value of SRM is tied to the revenue generated by the exchange.

The management structure of the new DEX also surprised many people. in one topic published November 18, Open Book volunteers explain that the “rights to upgrade” are now held by a small group of “reputable figures” from the Solana development community. Although the new model has successfully eliminated FTX, businessman is questioning whether one over-centralized model will be replaced by another. Before this question, the group of volunteers has not yet come up with an answer.

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