A lot of funds has been transferred from centralized exchanges to on-chain for more benefits because of the development of decentralized finance (DeFi). As an important part of DeFi, decentralized exchanges (DEX) play an indispensable role. And it poses a threat to many small and medium-sized centralized exchanges.
After a period of development, we see that Uniswap and SushiSwap has become a duopoly in the current DEX industry. Uniswap v3 has added a new 'aggregated liquidity' function, enhanced the efficiency of LP fund usage, provided traders with better liquidity, and reduced trading slippage. SushiSwap actively expanded the multi-chain ecosystem and successively deployed contracts to Polygon, Fantom, xDai Chain, BSC and other blockchains to further consolidate its position in DEX.
How can other emerging DEXs compete with existing DEXs? On April 1, PANews invited Polkadex co-founder and executive director Vivek Prasannan to discuss 'How can Polkadex build an orderbook decentralized exchange in the Polkadot ecosystem?'
Below are the details of the conversation.
PANews：Could you please give a brief introduction of yourself? Why did you decide to launch Polkadex?
Vivek Prasannan：I am Vivek, Executive Director and co-founder. I take care of mentorship, technical discussions, legal and regulatory aspects of the project.
We have Gautham J, CEO of Polkadex, I also oversee the technical development and work hand in hand the engineers and the business development teams at Polkadex.
Also, we have Deepansh; he handles Investor relations, partnership & collaboration, and responsible for the day-to-day operations.
Polkadex Orderbook is made for the traders who trade in centralized exchanges by giving up control of their assets and trusting a centralized operator. We believe Polkadex Orderbook can improve the situation of those traders by decentralizing the custody of assets and at the same time providing the same comforts and convenience of a normal centralized exchange.
Therefore, We envision a world of financial inclusion, creating bridges that transfer value from traditional money markets to a decentralized store of value and trust,
thereby preparing the world for a tokenized future.
PANews：Many of the current popular Decentralized exchanges (DEXs) are based on Ethereum, why would Polkadex choose to be built on Polkadot? What are the obvious benefits Polkadot could offer Polkadex over Ethereum?
Vivek Prasannan：We chose Polkadot for two main reasons.
Substrate: This is the backbone that powers Polkadot, a next-generation, heterogeneous, multi-chain network. Most of the blockchains in the Polkadot ecosystem are also built on Substrate. It allows you to customize a blockchain by modifying the parameters in the runtime algorithm. This allows you to clearly define the parameters that should be within the 'trustless' environment and which ones should be outside it for building a product that is market-ready. Polkadex wanted to build an application-specific blockchain by defining a set of parameters that makes an exchange trustless but at the same time user-friendly. It was only possible due to the modular framework that substrate is. For more details, visit www.substrate.io.
Ecosystem: An exchange is a marketplace where traders come together to negotiate prices on the assets they hold. All market places need to be well connected to secondary markets for better price discovery and participation. There is no point in building an exchange with a handful of users or community because the adoption curve will be very slow. We found the Polkadot ecosystem to be a perfect fit for such a product because of the scaling issues we have in Ethereum. The technology that we are making use of will eventually help the industry to distribute some of the load which the primary networks are handling. Since the founders of Polkadot are also within the web3 ecosystem, that became the right fit for us not only to innovate but also to get access to a bludgeoning community that is eager to participate.
PANews：In the track of DEX, Uniswap and others brought the Automated Market Maker (AMM) model to the forefront, and also brought the DEX to the forefront. Many believe that AMM is largely responsible for Uniswap. So why did Polkadex adopt the order book model?
Vivek Prasannan：Polkadex Orderbook is an improvement on top of CEXes to provide High-Frequency Trading, Institutional Liquidity, Fiat Support, Decentralized KYC, and all the sweet and fun features of CEXes, at the same time funds are secured by native blockchain and the custody of funds is not handed over to Polkadex or any other third parties.
We believe Polkadex is the next generation of Orderbook based DEXes in the industry.
PANews：What are the competitive advantages of Polkadex compared to DEX such as Uniswap and Sushiswap?
Vivek Prasannan：Some Killer features.
1) The unique selling feature of Polkapool are
Feeless Swaps,
No Frontrunning,
Perpetual Liquidity.
2) Polkadex Orderbook has the following features:
No custody of funds by third party,
high frequency trading,
algorithmic trading,
decentralized KYC,
Institutional liquidity.
PANews：Polkadex liquidity Pool（Polkapool）was inspired by Uniswap V2. What improvements (such as Impermanent Loss) did Polkapool make compared to Uniswap V2? What are its advantages?
Vivek Prasannan：Polkapool is focused on those traders who want to trade quickly, without KYC without incurring high gas fees like in Ethereum. We intend to improve upon Uniswap by providing feeless swaps, no-front running, and perpetual liquidity mining. Uniswap currently suffers from high swap fees, and new projects cannot do their IDO in uniswap due to front-running bots.
PANews：Polkadex will launch its ERC20 token PDEX through IDO in April. Can you give us some details? What role will these tokens play in the Polkadex ecosystem?
Vivek Prasannan：Sure, let us make it official now, we are doing our IDO on Polkastarter on 16th April. We hope to get full support from Chinese community! We are soon going to share more details on our social media platforms.
Regarding Token, Polkadex token is used to pay fees in Polkadex order book, traders can have lower fees if they are paying in Polkadex tokens, it is also used for On-chain governance that determines which token needs to be listed in Polkapool.
Tokens can also be used by traders for nominating Polkadex validators and earns block rewards. Tokens can be staked by Validators for getting 10% APY.
PANews：Recently, the NFT market is very hot. We have noticed that Polkadex also has plans in this field. Can you tell us something about it? What do you think of the development of NFT?
Vivek Prasannan：Polkadex will be launching NFT collectibles that can be earned by early backers of the project involving in the polkadex exchange. There will be specific milestones like largest volume trader, etc. Polkadex Tokens are involved in getting Polkadex NFT which provides special status for traders in Polkadex network like zero trading fees if they have that NFT.
More news will be shared soon!
PANews：At the same time as the DEX fire, there were many fake projects. What filtering mechanism did Polkadex have to prevent this phenomenon?
Vivek Prasannan：Polkadex was conceptualized from its early stage to be an application that will solve the pain points of traders in decentralized exchanges.
Our testnet versions helped us gain community support; the founders themselves have been the supporter of the Web3 vision. We are captivated by Dr. Gavin’s idea of Polkadot, a modular way to hot-swap consensus and finality in a blockchain
Direct interaction with like minder communities and the project is at a stage where seasoned crypto enthusiasts best serve it than regular traders. We prefer to have feedback from communities before the final product is ready.
PANews：How does Polkadex deal with security issues?
Vivek Prasannan：Polkadex is a non-custodial exchange and hence the users are the ultimate owners of their assets. That being said the team has partnered with respectable audit firms like Omnisia & Halborn for auditing their ERC 20 smart contract and SR Labs for auditing their exchange.
PANews：What resources will they bring to Polkadex as the 7th batch of Web3 Foundation grants winner? In the meantime, what's next for Polkadex after it raised $3 million in seed and private funding?When will you start IDO？
Vivek Prasannan：The IDO is planned to be on Polkastarter by Mid-April. The team has made dedicate efforts to bring exchange possible by collaborating with with KILT for its decentralized KYC solution in the orderbook exchange, specifically aimed at bridging institutional market makers to the space. We have also partnered with, SCS (Super Computing Systems) for substratee joint development, openware.com for HFT joint development. There are many things in pipeline, don’t forget to follow us on social medias to get the latest updates.
Do check out our roadmap here: https://www.polkadex.trade/#roadmap
