Meet The Man Who’s Building a Commission-Free ‘BitMEX’ [Interview]
Bitcoinist spoke with Adam Todd, CEO of Digitex Futures, a trading platform that aims to become a commission-free, non-custodial ‘BitMEX’ for cryptocurrencies built on Ethereum.
Bitcoinist: What is Digitex Futures? What are you doing that’s different/new? Can you give us your elevator pitch?
Adam Todd: Digitex Futures is a commission-free, non-custodial futures exchange. Traders can speculate on the price of Bitcoin whilst paying zero transaction fees on their trades and without having to trust the exchange with their money. The exchange has its own native cryptocurrency, called the DGTX token, in which all account balances and trading profits and losses are denominated.
Traders must, therefore, own the DGTX token 00 to participate, so a busy exchange that attracts thousands of traders will create high demand for the DGTX token. The exchange covers its costs by creating a small number of new tokens each year and selling them in scheduled, public, transparent token sales.
This token issuance system is governed democratically by all DGTX token owners. As a hybrid exchange, Digitex combines the speed and reliability of a centralized order matching engine with the trustless security of decentralized account balances. For the first time, traders can enjoy real-time, on-chain futures trading in a zero-fee, trustless environment.
Bitcoinist: Can you give us the numbers? What’s your token allocation, market cap, etc?
Adam Todd: There is a total circulation of one billion DGTX tokens. Last month we broke into the top 100 cryptocurrencies list on Coin Market Cap when the price of DGTX reached a new ATH of $0.16 from an ICO launch price of $0.01 earlier this year.
In the most brutal bear market on record for the overall crypto market, our market cap went from zero at the start of this year to $160 million in October, producing over 100x returns against ETH for our original ICO buyers.
Bitcoinist: Your Beta launch is slated for a few weeks away. How do you anticipate establishing network effect fast and ensuring a liquid exchange for traders?
Adam Todd: We’ve already built the network effect with the world’s busiest Telegram group and over half a million people signed up to our official waitlist. The problem we have with our launch is how to handle the sheer volume of traders who want to participate.
Bitcoinist: What type of trader are you designed for? Who will use your exchange?
Adam Todd: The Digitex Futures exchange will be attractive to different types of traders for varying different reasons. For instance, zero trading fees and a one-click ladder trading interface will be very attractive to short-term scalpers who will be able to place hundreds of trades per hour and still make a profit.
The liquidity created by these short-term, highly active traders will, in turn, attract longer-term momentum traders who will be able to place large trades with little to no slippage.
Other traders will be attracted to being able to trade on the exchange without having to trust us with holding their money, secure in the knowledge they can instantly withdraw their funds at any time for any reason.
Bitcoinist: You are working on being a hybrid and non-custodial exchange. Can you tell us more about that and how it works?
Adam Todd: Digitex will be a hybrid exchange that combines the best parts of centralized and decentralized technologies. It combines the speed and reliability of a centralized order matching engine with the trustless security of decentralized account balances that are not under the control of the exchange.
Traders send their funds to an independent smart contract on the Ethereum blockchain, not to the exchange. This smart contract communicates with the exchange in real time, informing the exchange how much credit the trader is good for, but at no point does the exchange actually have possession of your private keys.
Traders can withdraw their funds at any time and for any reason and there is nothing the exchange can do to prevent such withdrawals.
A built-in fraud checking smart contract monitors the exchange for any fraudulent transactions and automatically returns all traders’ funds if any are found.
This combination of real-time, verifiable, on-chain trading without the exchange needing to hold any traders private keys has only just become possible with recent advances in blockchain scaling technology from the Plasma core development team, who are now applying their cutting-edge technology to the Digitex exchange.
For the first time ever, traders will be able to trade in real time whilst still having all their trades recorded onto a fully verifiable blockchain and eliminating the need for traders to trust the exchange with their money.
Bitcoinist: And what about the partnership with Matter Inc? You mentioned that you were integrating the Plasma Protocol into your exchange, but that’s still some time away, why is that important for Digitex, when can we expect it, and what can we expect in the meantime?
Adam Todd: Matter Inc are members of the core Plasma development team that works closely with Vitalik Buterin and Joseph Poon to solve Ethereum’s current scaling issues. They are at the forefront of developing cutting-edge blockchain scaling technology that will finally allow cryptocurrency use to gain mass adoption in the real world, high volume applications.
We were delighted when Matter informed us they had just achieved 25,000 transactions per second with no errors on a fully verifiable side-chain of the Ethereum main chain (expected to be ~65,000 tps very soon) and that they were ready to adopt this cutting-edge technology to build out the Digitex system of non-custodial account balances.
By increasing the speed and scalability of the Ethereum blockchain, transactions can now be inserted into the flow of real-time trades, meaning the exchange can verify if the trader has enough money to place the trade without needing to have physical possession of that trader’s funds.
The implications of this technology to mass adoption of cryptocurrencies are massive and we are happy to announce that we will be making the code for our non-custodial account balance system open source to do what we can to advance blockchain usage. Matter expect the initial Beta version of our non-custodial account balances to be ready in March 2019 with an expected production release in Summer 2019.
Until then we will launch the Digitex Futures Exchange with custodial account balances, aiming to replace them with non-custodial account balances in Summer of 2019.
Bitcoinist: You were at the Malta Blockchain Summit. Is Digitex looking to locate to Malta? What would be the main advantages of this?
Adam Todd: We’ve not made a final decision yet but yes Digitex is considering relocating to Malta. Malta has developed friendly legislation regarding blockchain technology and there are many advantages to becoming a fully regulated European futures and spot exchange. The added credibility of being a licensed EU exchange would provide obvious benefits and we are currently looking into the next steps to making this happen.
Bitcoinist: You’re looking to go after BitMEX customers. How do you plan to do this? Why will traders want to move over to Digitex?
Adam Todd: Digitex is mentioned often in various online trading groups and we are already known as a potential competitor amongst many current BitMEX users. We have a highly engaged community that is active on many of the platforms where BitMEX traders can be found.
We’ve built an early access waitlist of over half a million people and momentum and excitement are building as we get nearer to launch time. Our marketing campaigns have been highly effective and we expect the biggest problem to be onboarding the high volume of traders rather than whether or not we will attract the traders.
Currently, BitMEX traders must send their trading funds to BitMEX for safe keeping and must pay transactions fees on trades. On Digitex, those same traders can buy and sell with no transaction fees and they will not have to trust the exchange with their money.
Bitcoinist: You also mentioned that you are looking to include spot trading. Can you elaborate on that? What will this mean for Digitex?
Adam Todd: Digitex will be introducing spot markets in the Summer of 2019 when we go fully non-custodial. Traders will be able to buy and sell tokens with zero trading fees and without having to trust the exchange with their money. Instead of paying commissions on spot trades, traders must stake a small number of DGTX tokens in order to buy and sell tokens.
Traders can withdraw these staked DGTX at any time. This creates demand for DGTX tokens which enhances the performance of the token issuance system and allows the spot markets to be operated without charging any trading fees.
Our spot markets will include the better parts of futures trading, such as our one-click ladder trading interface and a standardized larger tick size and standardized quantities, making spot trading a much more pleasurable experience for many traders than it currently is on most clunky, hard to use exchange interfaces.
We believe that spot markets will bring large numbers of traders into contact with our highly liquid, zero-fee futures markets and the two sides of the exchange will compliment each other well.
Bitcoinist: So, you have the upcoming launch next and after that, what’s next on the roadmap? Are you looking to get listed on more exchanges?
Adam Todd: There’s a lot planned for this coming year, such as the switch over to fully non-custodial account balances, the introduction of spot markets, more futures pairs, a mobile app and much more.
We are focused on getting large numbers of traders using the exchange and believe we can become a top 10 exchange by volume and by user numbers very quickly. We will soon be listing on Changelly and a couple of other exchanges and will continue to make it easier for people to buy DGTX tokens.
Bitcoinist: And can you speak briefly about the current market slump and selloffs? Obviously, that’s affected the DGTX, what’s your take on it and what do you see in the upcoming future for crypto as a whole?
Adam Todd: 2018 has been a bear market of unprecedented proportions, it’s been brutal from start to finish. The pain of owning cryptocurrency this year has been unrelenting and it’s had a very negative effect on the price of DGTX. Every time our price popped up the overall crypto market would have another nasty crash and we’d get dragged down again.
However, the price of DGTX has still risen by 500%+ this year, even after the recent crashes that saw ETH drop over 90% in value in the same period. In normal market conditions the price of DGTX would be much higher but despite this, we are still going strong and we are still on track to release a great product to a very large waiting list of users.
Crypto isn’t going anywhere, it just has to have these violent purges to get rid of the uncommitted.
Digitex is very committed to a world where blockchain and cryptocurrency adoption equals internet adoption and usage today, we just need to get through times like this to get to that promised land.
Is this the dawn of non-custodial exchanges? What do you think of zero-fee trading? Share your thoughts below!
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