Put a “Spotlight” on Polkadex — The Trading Engine for Web3 and DeFi
Dear KuCoin Users,
Time: April 15, 2021, 10:00-11:25 (UTC)
KuCoin hosted an AMA (Ask-Me-Anything) session with Polkadex (PDEX), the ninth project on KuCoin Spotlight token sale platform, in the KuCoin Exchange Group.
Project Introduction
Polkadex exchange solves such issues of traditional DEXes as high transaction fees and frontrunning. Polkadex users will benefit from feeless transactions with verifiability, high-frequency trading opportunities, trading bots, and other unique features. It is one of a kind product for the cryptocurrency industry now.
Official Website: https://www.polkadex.trade
White Paper: https://docs.polkadex.trade
Follow Polkadex on Twitter and Telegram.
Guests:
Vivek Prasannan — Executive Director and Co-Founder of Polkadex
Vivek takes care of mentorship, technical discussions, legal and regulatory aspects of Polkadex.
Gautham oversees the technical development and works with the engineers and the business development teams at Polkadex.
Q&A from KuCoin
Q: The current testnet transaction throughput is 300 TPS. You plan to improve this speed to 20,000 TPS. How do you plan to achieve this and how long will it take?
Gautham: Polkadex had some recent leaps in technological development in February that enabled us to reach the scalability level of a centralized exchange, while at the same time providing a more secure environment where users have full custody over their funds.
When Polkadex launches the Mainnet version it will be able to support 500K trades per second in the Orderbook and 2K feeless swaps per second in the Polkapool. The Polkadex Orderbook works on a special technology called Software Guard Extension.
Q: Is your development going according to the roadmap now? Are there any technical barriers that you think could pose limitations for mass adoption and expansion of Polkadex?
Vivek: So far everything is going exactly following the original roadmap. The only delay we had was the token launch that was moved to mid-April because we had to go through two independent security audits with Omniscia.io and halborn.com. We wanted to double-check that Polkadex product’s security can’t be compromised. It is the most important at all times, especially, now as some projects had recently experienced hacks on their smart contracts.
We also had a breakthrough in our R&D that made us pivot and include some architectural changes. Due to this reason, our Mainnet launch will be slightly extended but the development path is very clear now and should be smooth sailing from here. We included all the updates in our documentation now, too.
As we see it, our biggest challenge will be attracting users who are comfortable within the Ethereum ecosystem. However, Polkadex will offer full support of Ethereum based tokens and additionally introduce other useful features like feeless transactions and eliminated frontrunning, which will make our product hard to resist for any user who actively trades in swap protocols. The fungible tokens will be useful for new projects looking to launch on the Polkadot network and move back to the Ethereum network.
Q: The majority of new protocols only seek to be another fork of Uniswap, even knowing the multiple issues that the product faces. You say that Polkadex’s vision is to create a perfect decentralised exchange. What obstacles do you see on the way forward?
Gautham: We aim not only to solve the issues of Uniswap DEX but also to extend its functionality an orderbook DEX supporting high-frequency trading yet allowing a non-custodial exchange of assets. All transactions on Polkadex are going through a Trusted Execution Environment (TEE) first. In this way, we make sure that no operator in the Layer 2 solution can tamper with user balances. This in turn ensures a non-custodial interactive interface with excellent response time in the sub 50ms. Thus, we merge great features of the Uniswap protocol with an orderbook-based decentralized exchange. Polkadex is essentially a centralized exchange with all the benefits of decentralized blockchain and governance!
Q: Can you please explain the model behind Polkadex feeless transactions? What is the technology that you use here?
Vivek: Polkadex will decouple the order of confirming swap transactions from gas fees, which essentially means nobody can pay higher gas fees to make changes to the execution order. This will also help to avoid the frontrunning of orders. Polkadex will thus be the first bonding curve DEX to allow feeless swaps.
This gives equal opportunity for all traders and democratizes the entire process. The technological principle behind it derives its logic from Substrate's governance pallet.
Q: Currently the Ethereum network suffers from high gas fees for transactions on the network, will polkadex solve this issue?
Vivek: Polkadex will be a self-sufficient network when from the moment of our Mainnet launch in August 2021. Polkadex will become a parachain in the Polkadot network later this year giving additional security and support from its ecosystem. In this way, we can provide feeless swaps, hence solving the issue of high gas fees on Ethereum.
It is basically a blockchain upgrade that can be done once our parachain slot is ready to go live. We will be running the network with available consensus until then. Functionalities may be limited until we fully leverage Polkadot's relay chains for confirmation.
Q: You mentioned that your current testnet transaction throughput is 300 TPS. Can you really increase it to 20K TPS just by using the Pebble internal consensus algorithm code? Is it so effective and fast?
Vivek: Yes, we claimed 300 TPS for our orderbook-based DEX that runs on-chain with the introduction of Fluid Switch Protocol V1.0 that we initially proposed. Since then, we have come up with a V2.0 protocol that implements a Layer 2 solution and enables us to scale even more than 500K trades per second.
All this is achieved without compromising the security of funds in Layer 2. If Layer 2 is compromised the on-chain governance can restore the balances for traders in Polkadex Orderbook. It solves all the issues with the current orderbook DEXes on the market. Pebble is likely to be deployed for larger network consensus requirements. We will look into it after we fully launch our DEX. It might be released separately for other use cases as well. At the moment, throughput and latency issues are solved with SGX and Substrate. We have just updated the information on our website to include these changes.
Q: Surviving in the current crypto reality is a tough task. Competition is high, yet many projects don’t deliver what they promised their users. Do you have a strategy to thrive in this blockchain marathon?
Gautham: At the moment, the project is fully funded and we see no blockers that can stop us from delivering exactly the product that we promised in the roadmap. We are determined to launch and keep developing the product of the highest quality regardless of the market conditions. However, we think that it is very important to keep track of the industry and new technologies in order to illiterate the final product. We see many innovative approaches that are being applied to the Trusted Execution Environment. Our R&D team is constantly working to improve throughput and efficiency to the level of current centralized exchanges.
We are also actively looking at new features that will help us build an engaged community and circle of brand ambassadors of Polkadex. We really value the ideas and suggestions of our community participants, because at the end of the day we are building a product for people.
Q: Polkadex is 100% decentralized. Can you explain how the governance system works for PDEX token holders? How do users benefit from being part of the Polkadex ecosystem?
Gautham: This is absolutely true, Polkadex is fully decentralised. Polkadex Orderbook is maintained off-chain with on-chain settlement. If the off-chain operator gets compromised the governance will vote for the proposals to help release the funds locked for trading in the Orderbook. The treasury funds are also managed by the Polkadex token holders via on-chain governance proposals.
We built a system that will be beneficial for our token holders in many ways. PDEX will be used for transaction fees in transfers and other operations and to nominate validators of Polkadex Network or collators in the case of Parachain. Additionally, PDEX will be used by the network validators for staking and earning block rewards. 50% of PDEX will be staked by the validators for maintaining the network.
Q: There is a big group of fans of bot trading. Tell us about the unique architecture that allows bot trading on Polkadex. What algorithm do you use? Will it support features like the use of custom settings based on the MACD, MA, RSI and others? Will copy-trading be possible? What fees can users expect?
Vivek: Yes, all of the mentioned features will be added to Polkadex Orderbook exchange, which can be compared to more like a Layer 2 solution that allows high-frequency trading. All data needed for trading can be handled off-chain which means there will be no fees to execute a trade. We will enable copy-trading and all forms of algorithmic trading, too.
All of the above is possible because of Layer 2 with balance transfers settled on-chain using a TEE environment. We are partnering with Substratee (another Web3 funded project) to jointly develop a balance transfer system that will act as a gateway for incoming transactions. This essentially means that direct throughput can be handled by the hardware without going on-chain. Hence, there will be no latency issues.
Our technology stack will have the capacity to accommodate all types of traders and algorithms that rely on faster execution and confirmation times.
Q: There are two ways of bringing liquidity on Polkadex: Polkadot parachain and snowfork. Can you explain the difference between them? Do the users benefit from both Polkadot parachain and snowfork?
Vivek: We are building Polkadex as an interoperable exchange. This means tokens from the Ethereum Mainnet and Polkadot should be able to interact seamlessly allowing cross over via various bridges.
Right now, we are using Chainsafe. Once parachains become available, we will move to a more trustless environment. Users will certainly benefit here because these bridges help to create fungible tokens that work on both networks.
Q: As far as I know every DEX will use price oracles to gather the precise data. What oracles does Polkadex use? How will the Polkadex system deal with any inaccurate data?
Gautham: Polkadex systems work without the need for a price oracle. Polkadex is an orderbook exchange so the price is managed by market makers and takers in the system and hence oracle is not required.
Q: As Polkadex’s mission is "to build the perfect decentralized exchange" interoperability and high level of security are very important factors. How is Polkadex taking care of this subject?
Gautham: Polkadex was conceptualized from its early stage to be an application that will eliminate the pains of traders in existing decentralized exchanges.
Polkadex is a non-custodial exchange and hence the users are the ultimate owners of their assets. That being said, we have partnered with respectable audit firms like Omnisia and Holborn for auditing ERC20 smart contracts and SR Labs for auditing the exchange.
We are building an application-specific blockchain by defining a set of parameters that makes Polkadex exchange trustless but user-friendly at the same time. It is possible thanks to the modular framework of Substrate that allowed us to clearly define the parameters within and outside the "trustless" environment for building a market-ready product.
Q: Polkadex announced its partnership with Fractal to jointly create a decentralized KYC system for exchange users. Companies will use the KILT Protocol as the underlying infrastructure for managing the KYC credentials required by Polkadex. Does it mean that Polkadex customers still need to pass KYC with the help of Fractal and KILT?
Gautham: Ok, so in order to allow fiat bridges and to bring liquidity to the system beyond a specific trading limit we need to have a proof of identity in place for the Orderbook. KILT and Fractal are helping us to facilitate decentralized KYC, so that the Polkadex network remains trustless. We don't store any customer data and interact with a zero knowledge proof of identity to verify the user. You can read about KILT for more details on this topic. However, this will be applicable only to the Orderbook. The swap pool will remain open to all.
Q: What are your plans for educating and raising awareness for mass adoption of Polkadex products?
Gautham: We will be participating in various events such as buildathons, bootcamps and brand ambassador programs to create awareness about Polkadex and the tools we used to build our products. We invite everyone to join these programs when we announce the start of the programs. We hope to educate everyone on how to trade safely in the crypto space.
We have a new version of our website www.polkadex.trade where we try to explain in simple terms what Polkadex does. Moreover, we keep growing and educating our community via social media channels. As we aim to bring DeFi to masses, it is very important for us to speak the same language with users of various levels.
Free-Ask from KuCoin Community
Q: When will Spotlight tokens be distributed and what will be the total supply of tokens?
Vivek: The date for tokens release is set to be on the 19th of April. Total circulating supply on day 1 will be 1.9 M out of 20M Tokens, less than 10%.
Q: Can you see NFT collaboration in the near future?
Gautham: Yes, we are working on our NFTs to gamify the Polkadex trading platform.
Q: Who are your potential customers and what markets are you targeting?
Vivek: We want to make Polkadex easy to use for everyone. Whether you are new to crypto or an experienced trader, you should be comfortable using Polkadex exchange once it goes live. That’s the end goal we have in mind.
Q: Currently DeFi projects are on fire. But contract security is still a big issue in DeFi. Has your smart contract been audited? How do you guarantee the protection of users' funds?
Gautham: Yes, our ERC-20 smart contract was audited by two teams and our mainnet will be audited before release.
Q: What makes Polkadex stand out among other DeFi projects? What influence do you have in the crypto industry? And why should we invest in your project?
Vivek: Above all, Polkadex is a decentralized application specific network. Polkadex crypto exchange sits on top of this and solves the following problems:
1. Zero counterparty risk as Polkadex is non-custodial.
2. All transactions are verified on-chain and scaled in Layer 2. We offer peer-to-peer signature driven settlements. There are zero gas fees, aka network fees, to transfer and settle funds.
3. Great UI/UX with less than 20ms latency needed for bots and market makers.
4. Free and open source with Apache 2.0 license. No proprietary code anywhere. Fully verifiable. Similar to Telegram.
5. Fully decentralised and governance driven. No central authority is needed to take critical decisions! Indestructible, just like Bitcoin. You can read about DAO.
Q: I've seen a lot of DeFi projects pop up recently and die from a lack of liquidity and confidence in the development. How do you convince investors you can overcome these issues?
Vivek: Polkadex maintains a nice balance here. It is not only a network, but also a product on top of it. Our revenue will be derived from our product, hence, giving us the opportunity to take the product on the next-level and provide the kind of experience we originally imagined while building. If there is any DeFi project with a sustainable model to keep building and improving, it is ours.
Q: How to enable the HFT with Polkadex trading bots and what are the advantages of HFT for retail and institutional investors? How are the zero cancellation fees and dynamic entry and exit theory according to the market situation provided?
Gautham: Polkadex supports HFT and will support all common trading bots that are used by traders in the centralized exchanges. It allows people to use strategies to enter and exit markets via hard wallet.
Q: What is the biggest challenge you are facing now on the way to become a successful project?
Vivek: We see it differently. Our biggest challenges are our biggest opportunities. We are solving the hardest problems of modern DeFi but we really enjoy the process itself. That is already a great strategy for success!
Q: How many wallets can support your token now? And do you have any plans to build your own wallet?
Gautham: PDEX is an ERC-20 token for now and is supported by Metamask and other wallets.
Q: How can I know more about your team? Or do you prefer to be anonymous?
Vivek: We are not an anonymous project at all. Polkadex is not just a network. We are building a product, interacting with and connecting to existing social systems. So it is just impossible to remain anonymous and lead from the front.
Q: Is PDEX from India?
Vivek: PDEX is multiverse. Our team is as decentralised, as our product.
Q: What is the economic model for PDEX?
Vivek: You can see tokenomics explained on our website: https://docs.polkadex.trade/tokenEconomics
Giveaway Section
KuCoin and Polkadex have prepared a total of 1,000 USDC to give away to AMA participants.
1. Red envelope giveaways: 470 USDC
2. Free-ask section: 30 USDC
3. Post-AMA quiz: 500 USDC
. . .
If you haven’t got a KuCoin account yet, you can sign up here!
Follow us on Twitter, Telegram, Facebook, Instagram and Reddit.