The Open ANX Foundation, based in Hong Kong, announced openANX on Thursday, a new trading platform that combines centralized and decentralized exchange features on the Ethereum blockchain. The open-so
The Open ANX Foundation, based in Hong Kong, announced openANX on Thursday, a new trading platform that combines centralized and decentralized exchange features on the Ethereum blockchain. The open-source platform aims to solve a core problem in crypto markets: how to match the liquidity that centralized exchanges provide with the security guarantees that decentralized alternatives offer.
Centralized exchanges have become the primary gateways for moving money into and out of cryptocurrency networks. Yet these platforms represent concentrated risks. Hackers have stolen close to 925,000 BTC from major exchanges over the years, representing about $2.1 billion in losses.
Hugh Madden, who leads technical development at openANX and serves as co-founder and CTO at ANX International, said the current situation leaves users vulnerable. "Up until now, the cryptocurrency trading space has been dominated by centralized exchanges," Madden said. "Customers aren't adequately protected in the current environment."
Madden saw the answer in restructuring. Crypto markets need centralized exchanges to function. The key is changing what they do and how they operate.
"Centralized exchanges need to be pure asset gateways," Madden said. "All the matching engine software and blockchain software should actually be developed in the open source world."
Under the openANX model, centralized exchanges would accept deposits of real currency and hold customer funds. They would then issue digital tokens representing those deposits onto the Ethereum blockchain, where a decentralized exchange would handle the actual trading. Traders would use these tokens to exchange against existing tokens on the platform. To participate as an asset gateway, exchanges must stake ether, the native cryptocurrency of the Ethereum network, as collateral in a smart contract. This collateral would ensure they have funds available for dispute resolution.
The platform would let customers evaluate the creditworthiness of each asset gateway by checking their collateral levels, past dispute history, and total assets under management. Madden noted that crypto markets have no mechanism for trading credit risk, a basic feature in traditional finance.
"In traditional financial markets, the ability to trade credit risk is taken for granted," Madden said. "In the cryptocurrency space, no one has figured out a way to address these issues, much to the detriment of the community."
The Open ANX Foundation, a nonprofit, would establish openANX's governance through a decentralized autonomous organization, or DAO, that operates via smart contracts. ANX International, the Hong Kong startup behind the project, will contribute its exchange technology, operational experience, and user base to launch the platform.
"ANX firmly believes decentralized exchanges will dominate the cryptocurrency market," Madden said. "We plan to lead the march toward this future through openANX, which will be fully open sourced, transparently governed, and kickstarted by ANX's technology, experience in operating an exchange, infrastructure, and wide network of users."
