Dec 26th, 2019
Host Tom Shaughnessy of Delphi Digital is joined by Alex Wearn, the co-founder and CEO of IDEX, a decentralized exchange built on Ethereum, to discuss the next version of the exchange and using optimized optimistic rollups to scale the exchange.
- IDEX tries to combine the design of a centralized exchange and the security of a decentralized exchange.
- The “optimized optimistic rollup” takes the most scalable aspects of different transaction settlement methods.
- There is a huge potential to bring other applications into the IDEX network to use the O2 rollup design.
- IDEX 2.0 - UI improvements (faster and more performant) and a more efficient settlement process with rollups instead of settling each transaction one by one (IDEX users paid $5M in gas fees in 2018).
- IDEX differs from competitors (Uniswap etc) by having a high performant order book. An on-chain order book is great for integrations, but hard to use when replicating complex trading strategies.
- In competing with 0x, IDEX disagrees that trying to have a high performant order book may be too difficult if its decentralized.
- How the different types of rollups work to drive scale for Ethereum, and the differences from normal rollups to IDEX's version called optimized optimistic rollups.
- Optimized Optimistic rollups can drive much higher throughput vs using traditional rollups.
- How IDEX grew to been the most successful DEX and dapp to date, with over 300k users executing five million trades worth over $2 billion.
- The use of optimized optimistic rollups beyond IDEX, such as in gaming.
- Alex's thoughts on the battle between centralized exchanges (Coinbase, Binance, Bitmex, Delta) vs Decentralized exchanges (IDEX, Uniswap, 0x, etc).
- IDEX aims to build a highly performant, yet safe and secure decentralized exchange; they want to create a centralized experience on a decentralized platform.
- Improvements in IDEX 2.0 include overall performance improvements from UX and UI developments over the past few years, and back-end improvements to how transactions are settled.
- The Merkle root takes data off-chain, hashes it together into a single data point, which is then submitted on-chain.
- IDEX is looking at different design proposals including Zero-Knowledge Proofs and the Optimistic rollup.
- They could not run IDEX on Optimistic rollups because their transactions were too complex to see a substantial increase in their transaction throughput.
- IDEX’s data is only ever published to an off-chain ledger.
- They have validators who work to verify that the transactions published off-chain hash up to the same Merkle root that is published on-chain.
- O2 rollups are scalable to eventually be available to other applications, but IDEX doesn’t see this as a way to monetize but as a way to give back to the community.
- Alex believes customers care more about application performance and fund security than they do about anonymity.
- The O2 rollup demo is currently live and can be tested, and they aim to make it fully live during Q1 of 2020.
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