Will Harborne, told us backstory of building Ethfinex including recent rebranding it into DeversiFi, and shared his thoughts on the future of DeFi.
Hello! What’s your background, and what are you working on?
Hi, I’m Will Harborne, the Founder, and CEO of DeversiFi - formerly known as Ethfinex.
Prior to developing the concept for Ethfinex in 2017, I worked on technology consulting projects, first at Cambridge Consultants and then at IBM after completing my Masters of Engineering at the University of Cambridge. I discovered cryptocurrencies in 2013 and began to learn about use cases for the Ethereum blockchain.
I was intrigued by the potential for blockchains to revolutionise business models and impact societal structure and governance. It was then that I decided to work full time in the public blockchain space by joining Bitfinex - one of the largest cryptocurrency exchanges at the time - where I lead the launch of Ethfinex Trustless: the only high-speed decentralised exchange where traders can execute orders of any size directly from the security of their private wallet.
In two years, Ethfinex Trustless successfully scaled to the point where users could expect the same performance as a centralised exchange, which is when we evolved to DeversiFi in August 2019. DeversiFi is the first decentralised exchange which offers traders high-liquidity, speed and choice without compromising control. It is the only exchange where traders can execute large orders directly from the security of their private wallet.
What’s DeversiFi’s backstory?
DeversiFi was launched in August 2019 after being successfully incubated by Bitfinex for two years, as Ethfinex Trustless. In late 2017, we saw exchanges as the gateway between the traditional financial world and the cryptocurrency world.
Ethfinex itself was launched as a community-driven exchange with a focus on developing decentralised technology as well as a platform for incentivised learning, trading, and analysis of ‘Blockchain’s most innovative projects. One of our strongest driving values is to empower community members and put control of their funds back into their hands. This lead us to design the first decentralised trading solution, Ethfinex Trustless, which launched in September 2018.
With Ethfinex Trustless, there was no deposit or withdrawal delays and no sacrificing custody of your tokens. We had the added benefit of being able to tap into one of the most liquid order books in the crypto space, which solved the problematic liquidity issue and let us focus on developing key features that enabled us to evolve into DeversiFi.
Over the past few months, my team has been building out this value proposition in preparation for the ultimate phase of the Ethfinex roadmap - the evolution to DeversiFi which represents full decentralisation with a new, fully independent exchange that meets the needs of professional traders, without compromising on speed, security or choice. We see DeversiFi as a necessary next step forward towards our goal of empowering traders through fast, convenient, and self-managed decentralised financial technology.
DeversiFi will be launching new products and features over the next few months, including a purpose-built DAO and a revamped governance token, Nectar (NEC). We also have plans to invest in decentralised exchange technology, to better serve the needs of the rapidly growing DeFi community.
What went into building DeversiFi?
Building DeversiFi has been a journey of iterations, taking onboard user-feedback to fine-tune the experience, adding select new tokens to satisfy traders and upgrading the underlying technology with the aim of making it a smooth and feature-rich, but above all, secure trading experience.
We initially launched on top of the 0x protocol, later migrating over to version 2 which brought with it tighter security and a faster experience in certain functions such as streamlined order-data formatting, a new signature type bringing with it more human-readable data shown in Metamask when signing orders for example, ERC721 compatibility as well as making it easier for us to integrate with other exciting projects in the Ethereum ecosystem.
0x serves to power the matching engine of the exchange, which allows us to securely and reliably match DeversiFi orders with those of highly liquid centralised exchanges. Since establishing this key function, we have harnessed the Ethereum blockchain to introduce features including decentralised OTC trading, whereby anybody, anywhere, can post an OTC trade through the exchange and have it matched by a corresponding buyer or seller.
With the goal of ensuring DeversiFi became the best it could be, we undertook an extensive, cyclical feedback initiative. We invited our users to share their opinions on how user-friendly the exchange is and ultimately, what needed improvement. This turned out to be an eye-opener for us; although it’s well known that decentralised technology must have high usability to gain mass adoption, by hearing exactly which areas are key friction points, we were able to polish up the user journey on DeversiFi, and make it the exchange that it is today.
Some key changes to come out of those feedback sessions were: a complete overhaul of our home page and on-boarding process (including the addition of a step-by-step user tutorial), helpful videos built into the UI, the addition of the Portis wallet for an easy create-and-trade option, 123 style on-boarding, and generally making the UI resemble that of centralised exchanges, so that serious traders feel more in their comfort zone and able to trade as they would anywhere else.
We also listed an array of stablecoins. Since launching, the space has naturally gone through many chapters. One development was the blossoming of stablecoins whereby we saw USDC, TUSD, DAI, and others starting to appear and grow in popularity. At the time, DeversiFi only had USDT pairs, so in line with our goal of being agnostic and catering to a wide range of traders who want flexibility and choice when it comes to trading, we took the lateral decision to list each of these stable coins with the innovative DAI being a quote pair. We chose DAI as a quote pair due to its sophisticated, and of course, decentralised stability mechanism, as well as its popularity within the Ethereum and wider DeFi ecosystem - which reflects our values at DeversiFi.
This leads me to another important factor - the listing of tokens. On centralised Ethfinex, we experimented with industry-first governance solutions that gave traders the say on which tokens they want to see added using the Kleros dispute resolution layer.
This approach to governance, where we develop systems that hand over power to the trader, is definitely something that defines DeversiFi. The Kleros process proved to be a success and is something that we want to refine and bring back in the future. So far, however, we have carefully hand-picked which tokens get listed on DeversiFi itself, selecting only high-quality tokens such as WBTC, DAI, ZRX, OMG, and MKR, amongst others, that represent a Devers (see what I did there) range for traders.
What’s your business model?
Our goal is ultimately to build products that appeal to the entire DeFi ecosystem - those who are simply passionate about building out this technology and bringing it to the wider world as well as sophisticated crypto traders.
As we become an integral part of the DeFi infrastructure, we are aiming to monetise on the value that our service brings traders in a way that is most beneficial for the community as a whole. An historic example of this is the fee-sharing feature of the NEC token, where we sent 50% of fees earned through ethfinex.com to the Nectar smart-contract which is then retrievable for NEC. This is an example now as details around the revamping of NEC will soon be released, but we do plan to keep this community-oriented approach at the forefront of what we do.
For now, we employ a simple model of charging traders a small fee (0.25%) on each trade that gets executed. Charging a fee for each trade is important not only for revenue generation for the exchange but also to prevent fake trading volume from taking place. If there is no cost to trading, a user can trade with themselves back and forth and generate false market information.
Whilst we were developing and perfecting our product with our early adopters, we employed a simple fee structure of a single fee for all users. As our user-base has grown, we are soon launching a more sophisticated fee schedule that rewards our most loyal users with significantly lower fees.
What are your goals for the future?
We believe that cryptocurrency trading is approaching a flipping point, where decentralised trading will overtake centralised, and where the underlying technology will start to become more relevant and revolutionise not only the cryptocurrency trading industry but the entire financial sector and traditional exchange infrastructures. DeversiFi plans to be at the forefront of this evolution by investing in and developing new technologies to provide optimised, secure trading experiences.
For now, we are integrating more closely with the rest of the DeFi community by launching cross-chain products to enable trading outside the Ethereum ecosystem. For example, we are in the process of integrating the bZx protocol to provide high-speed decentralised margin trading and lending within the exchange.
We are also overhauling our Nectar Token, which will also include, among many exciting changes, the world’s biggest DAO to date.
We are aiming to increase our daily trading volume to $10 million by educating traders about the benefits of decentralised trading in general, and the DeversiFi platform more specifically. One of the challenges we’ve had is around user-experience, particularly on-boarding and connecting private wallets – which is where we’ve been focusing on building improvements.
What are your future thoughts for the DeFi market?
Every product in the burgeoning Decentralised Finance ecosystem, from lending to decentralised exchanges, becomes a building block for an entire economic system, with each component amplifying the effect of the other products they interact with.
We have seen our most advanced customers take a loan in Dai by depositing Ethereum in MakerDAO, in order to purchase Kleros tokens using DeversiFi, staking them into a decentralised court to earn a permissionless income by arbitrating disputes as a juror, whilst hedging their exposure to price movements using decentralised leverage protocols.
For the moment these building blocks can still be clunky and expensive to use, but to us, the potential is already clear, and unlike equivalents in the old financial world, as these products become more advanced they remain fair, transparent and open to everyone. We believe that through DeversiFi we are building the infrastructure to facilitate this transition into an open and decentralised financial world.
Where can we go to learn more?
We post a lot on our blog as well as on twitter. We’ve also recently unveiled our new website www.deversifi.com which has a lot of useful information and links. To stay updated with us check out our blog here, our twitter here and for a diverse range of thought pieces, industry news and other interesting updates from us and others in the space then make sure to sign up to our newsletter here. It’s been on a temporary hold over the last two weeks as we redesign its structure to cater to and focus entirely on the blossoming DeFi ecosystem but will be back up and running very soon, so sign-up and get ready!