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Polkadex AMA Session With BeInCrypto

12 mins
Updated by Shilpa Lama
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BeInCrypto held an AMA with Polkadex in our public Telegram channel on July 14.

Polkadex is a fully decentralized peer-to-peer trading engine for Web3 and DeFi built on Substrate. The only platform combining benefits of centralized and decentralized exchanges in one product.

Full details on the project can be found here.

(This AMA has been edited for clarity.)

BeInCrypto (BIC): Hi Everyone! Welcome to another Be In Crypto AMA.

Today we have Vivek who’s from the Polkadex team. 

Here is how things will work. we’ll ask them 10 questions, after answering all of them, they will then pick 5 out of the questions you guys dropped here before the AMA. These ones will be the winners and will equally share the reward pool set by the Polkadex team.

BIC: I would like to ask you something general to kick things off. Please provide a brief project history as well as some references your team looked at before launching Polkadex.

Vivek: The team met in 2019 during the discussion of a “consensus algorithm” that we believed could change the way distributed networks achieved consensus. We shared similar aspirations and approaches and decided to meet again in early 2020 to take the idea further.

This is when Polkadex was born –  applying our seed consensus algorithm idea on a decentralized exchange to improve the user experience. 

At the time Uniswap started to attract mainstream attention and it was becoming more and more obvious that the DEX space was flawed and would struggle to attract non-natives users to cryptocurrency due to various factors. There was and still is a gap in functionality between centralized and decentralized exchanges.

By that time IDEX had already decided to move away from its on-chain order book model. There was a tough problem to be solved, we approached it as a challenge and decided to work on a solution for it. 

All 3 co-founders of Polkadex are engineers with some good knowledge and expertise in development. Moreover, I had personal experience trading on several decentralized exchanges in the past, both out of academic interest and from an investment perspective. Combining both trading experience and our technical knowledge of Substrate and Polkadot, we decided to use them as tools to achieve the goals we had in mind. 

We created a Proof of Capacity (PoC) which was later accepted by the Web3 Open Grants program. Such backing kickstarted the whole attention around Polkadex that led to its funding round and building the team we have today.

Our CEO and co-founder, Gautham J, gave an interview to Hackernoon some time ago sharing some more details about how Polkadex came together

BIC: Blockchain world is eager to embrace new inspiring ideas and solutions and I’m sure you expect Polkadex to be a game-changer in the cryptocurrency scenario. Thus, what’s the reason for its creation? Could you please shortly describe what Polkadex is?

Vivek: Personally, I am a big believer in decentralization and the core mission of DeFi. Thus I always preferred using decentralized exchanges even though I never enjoyed the experience. Nowadays, we are so used to modern technology but trading on a DEX still feels like the late 90s when you fiddled around with Linux OS. Don’t get me wrong – if you know your stuff, it is an exciting playground.

Moreover, DEXes even solve the custody problems of traders. The insurance cost can also be brought down if the counterparty risk is distributed to participants. 

However, there are some prominent issues. First of all, DeFi needs to attract numbers and the majority of retail traders are not able to use decentralized exchanges due to bad user experience, slow and expensive trading process,es and network specific issues. 

Professional traders sway from DEXes because the choice of trading features is limited to simple swaps, while money is made on more sophisticated trades. The ‘A game’ of native traders simply doesn’t work on DEXes. They make profits in the CEXes because they don’t have a choice. 

Working on Polkadex we simply dared to ask the question: Can we change the current status quo? And the answer was: We’ll go and try.

As the result of our work, Polkadex merges the benefits of centralized and decentralized exchanges in one platform thanks to the unique tech architecture of the product. Think of it as the best features that users enjoy in CEXes + the best features of DEXes – and removing any disadvantages of both.

Polkadex is a platform with 3 core products: Polkapool which is a DEX with swap functionality. The Orderbook which is a fully decentralized exchange where users can set market buy and sell orders and do advanced trading, and an IDO platform that is based fully on the blockchain. Each of these products brings something very unique to the market. 

Let’s start with the Orderbook because it is the heart of Polkadex. We see it as a cutting-edge decentralized exchange that overcomes major issues of traditional DEXes like front-running, arbitraging, price slippage, and high transaction fees.

Polkapool’s swap functionality is more common for DEX users. However, as we are building on the Polkadot network and Substrate, users don’t have to pay any network fees, absolutely gasless trading! The trading fees will be set to be very low and can even be brought to zero for users who hold Polkadex native token, PDEX.

At the same time, we keep the highest level of security for all the operations on the platform and lightning-fast speed of up to 500K transactions per second.

Our IDO platform is also unique by design. As it is fully on-chain, both investors and blockchain teams conducting IDOs save money, time, and effort while interacting with the platform.

BIC: Thanks for providing this intro. So you describe yourselves as a ‘Cutting edge order book based DEX built on Substrate’. Why did you decide to build it on Substrate? Please name some advantages.

Vivek: During the PoC stage, when I was closely working with Gautham, We realized that Substrate is a robust framework that offers many benefits for a project like ours. 

In short, it allows developers to focus on building their blockchain logic rather than dedicating resources and time to figure out the security or the economics of it.

We plan to be an end-to-end solution for DeFi users with our three products. The Substrate will allow us to add new features and constantly develop the Polkadex platform without going through complicated and lengthy processes, including hard forks. In this way, we can always stay on top of the game.

Rather than being a tool to build generic blockchains, Substrate has allowed projects to build custom blockchains to execute specific logic, optimizing the network and delivering performance.

BIC: I’d like to share an image to show a comparison between Polkadex and other known DEXes. What would you add to that? How do you see Polkadex being different from other ‘competitors’?

Vivek: Technically we do not have a direct competitor because we mix different features from various fields and add some innovative things. However, this question comes up very often in our community, too. Obviously, users and investors want to differentiate in the sea of DEXes in the modern market. Here are some of the things that make Polkadex stand out in the DEX space:

  • High-Frequency Trading and trading bots allow Polkadex users to take full advantage of delegating their assets to third parties and profit from it.
  • Polkadex IDO pallet fully on the blockchain that will be beneficial both for investors and blockchain project teams. With the Polkadex IDO pallet, token projects can create ERC-20 like tokens that feature built-in support for parachain transfers, as well as do one-click listing in the Polkadex Orderbook.
  • We add a fiat on-ramp function, so users can buy cryptocurrency with fiat currencies directly via the Polkadex Orderbook. In this way, Polkadex becomes easier to kickstart for cryptocurrency newbies.
  • Polkadex created a decentralized KYC process where users can store verification data in their wallets, never on the Polkadex platform. Polkadex takes user privacy very seriously. Decentralized KYC will allow us to add fiat on-ramp, keep exchange safe for users and attract institutional liquidity.
  • Polkadex will gamify trading through NFTs on the platform to make the whole process more engaging. This feature will be live after the Mainnet launch. 
  • New Token Generation: Any tokens generated in Polkadex will feature native support for cross-chain transfers to other parachains, as well as other networks connected to the Polkadex ecosystem.
  • High liquidity: Polkadex will deliver the institutional level of liquidity with the help of a decentralized KYC system that makes DEX trading competitive with CEX liquidity.
  • Forkless Upgrades: Polkadex upgrades for new features bridges with new blockchains bug fixes so hard forks are a thing of the past!

As you see we bring a lot of unique things to the market and plan to lead the race on many fronts. Some time ago we published an article comparing Polkadex Orderbook exchange with other DEXes that are now top in trading volume and number of users. It will be helpful for a deeper dive into Polkadex vs other DEXes.

BIC: How do you merge the best of centralized and decentralized exchanges in one DEX? What tools/resources would you describe as being key ones for Polkadex?

Vivek: I described the key tools and resources that make Polkadex a unique product in the previous question. But if I had to choose only a couple of features, I’d go for: 

  • High-Frequency Trading and trading bots
  • Delegating assets to third parties for trading
  • Feeless swaps
  • Native Interoperability with other blockchains.

BIC: Got you. I’ve heard of something really interesting about you which is the ‘decentralized KYC’. Is that right? Could you please share some more info with us on how Polkadex will make that possible as well as the benefits for the users?

Vivek: Decentralized KYC can help create a bridge that transfers value from traditional money markets to a decentralized store of value and trust.

I can’t even remember how many times I have done KYC. It’s a redundant process & trusting centralized exchanges to store KYC data and not exploit it at all is quite naive. It’s only a matter of time before one centralized exchange is hacked and your personal data is compromised.

No KYC seems to be tempting, but it comes at a cost – institutional players can’t enter DeFi trading on DEXes. There are also other benefits such as keeping the community safe and not letting illegal trades, for example.

We partnered with KILT Protocol and Fractal on a decentralized KYC to solve the stated problems and create a ‘best of both worlds’ decentralized exchange.

Also, this solution allows us to support fiat on-ramp, which again reduces the entry barriers for users of traditional finance who want to switch to DeFi.

Decentralized KYC allows Polkadex users to verify their identity while keeping their data and documents completely private. This means that Polkadex as an exchange will never have access to your personal details as they always remain stored in your wallet. It also means that you only go through the KYC process once and then can use your wallet for automatic verification on multiple Web3 platforms that also use KILT Protocol.

We had a joint Crowcast event with KILT & Fractal a few weeks back discussing the topic of Decentralized KYC. You can watch it here.

BIC: All know the importance of Trustless cross-chain transfers. That said, why do you believe Polkadex is built for the future? Will it be possible to integrate it with other liquidity providers by using forkless upgrades? 

Vivek: Polkadex is built for the future due to its positioning in the market. We are investing heavily in interoperability solutions and are not only relying on parachains to bridge liquidity from other chains. We are heavily investing in cross-chain native interoperable solutions with bitcoin derivatives. Since liquidity is the bread and butter for an exchange, having these bridges will give Polkadex an edge over other solutions and make us self-reliant.

BIC: It’s time for us to discuss a little bit more about the PDEX token. What benefits does it bring to your platform user/holders? Is there a staking mechanism available? Feel free to share any tokenomics-related data by the way.

Vivek: Yes, you can become a validator by staking PDEX. We will keep the community posted on further details regarding staking.

In addition, Polkadex native token will be used to:

  • Pay transaction and trading fees to get discounts on them
  • Participate in Polkadex IDOs
  • Participate in on-chain governance of the network
  • Nominate validators and collators of the network

Do check our detailed tokenomics here for more info.

BIC: It was a month full of activities for you and lots of deployments are in the pipeline throughout July too (as the IDO platform, mobile app, and your trading bot). What would you like to tell our community about these achievements? Maybe sharing some updates or sneak peeks of any news? 

Vivek: Yes, indeed, the team is working around the clock to deliver the best product.

Also, we appreciate the community feedback on our mobile application, we are working on the integration, and soon it will be available for our beta testers! We showed a demo here

Currently, the Polkapool and IDO platforms are going under audit as we speak.

The trading bot APIs will be ready by the end of this month for our partners to test it out! Also, we have many partnerships in the pipeline for the July-September period. Expect to hear some exciting news coming up soon.

BIC: Thank you so much, Vivek! I’m sure our community has appreciated your answers so far. Could you please drop below all the relevant links to the Polkadex Social Media channels? 

Vivek: Sure! We are very active on social media and have a great community across various platforms. You are welcome to follow our social media channels; Twitter, TG Ann, TG Chat, Medium, YouTube, Linkedin, Reddit, Discord

BIC: It’s time for us to proceed with the second part of the session now. Vivek please feel free to choose 5 questions out of the ones dropped here before the session. You can pick any of the questions there. 

Community: #AMABICPDEX a lot of projects disappear in these difficult market conditions. How can you ensure the sustainability of your token what is the receipt of success?

Vivek: We did not bet on market conditions to start Polkadex. The idea was conceived at the peak of bear market and started at the end of it.

We have seen worse, so we knew it was coming and we are prepared for the long haul. Therefore, we are fully funded and happy to say we are one of the few projects still staying afloat and building very actively even after new investors have moved out and money is running dry.

If you go to our Twitter, you can see some of the funding about our toke release, etc. A few months ago, the situation was different, so if you are a cryptocurrency investor, if you are not ready to study the code, support the project, and understand the future of what teams are building, they are the ones who get burned.

Community: On most of the AMM the main problem is Impermanent loss. How PolkaDEX addressing this issues and how will PolkaDEX prevent this? #AMABICPDEX

Vivek: This is exactly the reason why we introduced the order book. To remove impermanent loss. When you can trade like a boss in the order book, why do you worry about impermanent loss?

BeInCrypto (BIC), COMMUNITY #3:The Polkadex platform was deployed on Subtracte, so are only capable to work with this chain? Or will are compatible with other chains like the popular Ethereum, BSC, or Tron? #AMABICPDEX

Vivek: Yes, Ethereum will be supported right from the beginning. The rest will be compatible once we build out our interoperability solution. We are working on native interoperability solution, but if they become available through parachains we will use them first through that link.  We are trying to bring in native bitcoins and Trons into Polkadex without wrapping them without multi-party collateral solutions.

Community: #AMABICPDEX IF THE BEAR MARKET COMES will your token PROBABLY DUMP? Do you have any plans to prepared for this bear market? How will you handle the panic selling?

Vivek: We do not depend on our token’s price to fund the project. Our community round was only less than 5% of our total funds raised. So, we are fully funded by institutional investors in fiat.

Community: The killer feature of Polkadex is the zero gas fees, but can you explain to us how do you generate your own profits? #AMABICPDEX

Vivek: Polkadex will make a profit with its orderbook and keep paying for feeless swap from the opportunity cost paid by the stakers for enabling it to happen.

Community: That’s it, Vivek. It’s clear who are the winners for this session. Thanks again for being with us over the last hour! Would you like to leave a final message to our community?

Vivek: Thanks for having me sir, it was a pleasure talking to you. During this time of the pandemic, take care of your health first after that of course, support the teams who are building useful stuff for the community. Try to build value long-term and don’t get lost in the hype of fud. Stay safe. Cheers!

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