Decentralized Exchange on the Ethereum Blockchain
The decentralized exchange is the holy grail of any blockchain system, and are sorely needed in the ecosystem.
This was demonstrated most recently by the recent Bitfinex hack. These attacks can be avoided using a decentralized exchange. One group of developers taking up the challenge is EtherDelta. This is a decentralized exchange operating on the Ethereum network.
We sat down with lead developer Zack Coburn to talk about their project and what motivates them.
Q1. Zack, decentralized markets are important. What was your inspiration and motivation to build one?
“From Mt. Gox to Bitfinex, it's almost a fact of life now that a centralized exchange will get hacked. Or a rogue insider will steal the money (ShapeShift). Or the founder himself will run away (Cryptsy). Or regulators will force a [shutdown] (Colbitex, Coinflip, and others). Given all this, a decentralized exchange is almost a necessity….This is the inspiration and motivation behind EtherDelta.”
Q2. Zach, why did you choose to use Ethereum? Have you built any other projects with the Ethereum technology?
“When I tried tinkering with Bitcoin in 2014, I realized its scripting language was severely limiting. I saw Vitalik Buterin's Ethereum project and realized how powerful its Turing-complete smart contract language was going to be...Etherboost hit the ground running in March...This was followed by EtherDelta and PredictionToken (formerly known as OutcomeCoin) in July and August. EtherDelta is a decentralized exchange for Ether and Ethereum tokens.”
Q3. Explain the technical process of building a decentralized exchange with Ethereum.
“My process has three stages: plan/write the smart contract, design a complete set of tests for the smart contract, and finally create the user interface. Writing the smart contract is the most technical part of the process. There are a lot of important design decisions to make at this stage...it's important to be prepared to explain the differences to new users.”
Q4. Who is in your team and what experience / expertise do they bring?
“I graduated from Olin College with a degree in Electrical and Computer Engineering in 2010 and started working as an options trader at a trading firm in Chicago. I quit my job as an options trader in June 2015 and started working on startups full-time...I started focusing exclusively on Ethereum projects at the beginning of 2016...Besides Etherboost, I'm also the chief architect for FirstBlood, a decentralized eSports rewards platform built on Ethereum.
Recently Etherboost's development team has started to expand as we've brought on Yadi Miao as a full time intern. Yadi has programming experience...He will be working on a complete decentralized application that will be released under the Etherboost umbrella.”
Q5. What is the roadmap for the project? What are the short/medium term goals?
“The short term goals are all about marketing, onboarding users, and increasing liquidity. There are still plenty of people who don't know about EtherDelta...With Mist Browser and MetaMask coming out recently, it's gotten a lot easier to use Ethereum dapps. We need to show people how easy it is to install MetaMask, buy some Ether through MetaMask, and immediately start trading on EtherDelta.
The medium term goals involve pushing our own new and innovative tokens, PredictionToken and EthereumDollar.
The long term goals involve new and innovative trading technologies...The sky is the limit, but we expect EtherDelta will be the bread and butter business, so we're going to focus on it first.”
Q6. How is the project financed?
“Etherboost is completely self-funded at this point. It will probably remain so for the time being.”
Almost ten years into blockchain technology and centralized operators are still the primary means of exchange. This has obviously been a major pain point for the ecosystem. However, projects like EtherDelta hold great promise for delivering this truly important piece of infrastructure to the crypto-economy.