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HomeNewsThe Race To Save Sam Bankman-Fried’s Other Crypto Exchange

The Race To Save Sam Bankman-Fried’s Other Crypto Exchange

There are a few key differences between decentralized exchanges and their centralized counterparts like FTX or Binance. Most notably, instead of relying on an intermediary to match buyers with sellers, DEXs let users transact on a peer-to-peer basis—and keep custody of their own funds.

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

Members of the community see FTX’s collapse as a key moment for DeFi, which, they argue, is a remedy to the problems that have haunted the crypto sector over the past year, following the collapse of large centralized organizations like 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 moment for the industry.” Although the DEX model suffers from a steeper learning curve for new users, he says, it eliminates the need to store coins with an exchange, which is what gave FTX the opportunity to divert customer funds to its sister company, Alameda Research, in the first place.

Andrew Trudel, a contributor to Kwenta, another DEX, says customers can never be completely sure what’s happening to their assets inside a centralized exchange. But with a DEX, “how funds are being used is fully transparent” because everything is hosted on a public blockchain, he argues. Adams and Trudel predict decentralized exchanges’ traffic will soon surpass that of traditional exchanges.

DeFi has a moment, with FTX in ruins, and the integrity powerful central crypto companies being questioned. Open Book now has a host of problems for volunteers. Although the initial goal was to keep Serum from collapsing into the Solana ecosystem’s wider ecosystem, now the volunteers must also deal with managing the DEX.

Among the first questions up for debate is what to do with SRM, the token created by FTX for Serum, $2.2 billion of which was listed on the company’s balance sheet. Open Book continues to support the token which gives holders a discount on trading fees.

Long is one of many Open Book volunteers. Long claims that supporting SRM does not provide any material benefits to Open Book users. Instead, it serves to make money for FTX. SRM’s value is directly tied to revenue from the exchange. 

Remarkables were also made about the management structure for the DEX. A thread published on November 18, the Open Book volunteers explained that “upgrade authority” is now held by a small consortium of “reputable figures” from the Solana development community. Although the new model effectively eliminates FTX traders They are wondering if one centrally managed model was simply being replaced by another. This question is still unanswered by the volunteers.

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