xSigma - Decentralized Stablecoin Exchange

Nick Sawinyh on 06 Jan 2021

Alex talks about R&D lab building novel stablecoin exchange xSigma DEX, and how they are going to create a unified DeFi ecosystem with their own stablecoin.

Disclosure: This article was sponsored by xSigma.

Hello! What’s your background, and what are you working on?

My name is Alex Lebed, CTO of xSigma, a new DeFi protocol that was founded in 2018 by ZK International. I’ve been involved in the cryptocurrency world for the past 4 years. Before joining xSigma I served as a software engineer for some of the world’s biggest tech companies, including Facebook, Amazon and 1inch. I’m also the founder of stableunit.org and won three Ethereum hackathons over the years.

I now lead blockchain development at xSigma. We’re a full-cycle R&D lab that’s going to launch a new decentralized exchange in 2021. Our exchange is essentially a stablecoin DEX that connects liquidity providers with traders. We have a strong focus on liquidity to enhance the user experience. More liquidity equals more stability and a greater ability to facilitate bigger trades. It also means lower commissions for smaller trades.

Our users are traders who want to exchange one stablecoin for another and liquidity providers who want to earn a small fee for the capital they provide. By incentivizing traders and liquidity providers, our goal is to boost adoption and to ensure that DeFi goes to the next level, so to speak.

What’s xSigma backstory?

XSigma was founded in 2018 as a blockchain R&D lab exploring various use cases for distributed ledger technology. One of the biggest use cases for blockchain is, of course, decentralized finance. We spent a long time evaluating the DeFi space and uncovered a lot of problems with existing DEXES. We thought, who better to address these problems than us? Our company has recruited some of the brightest minds in blockchain to spearhead the new xSigma DEX. My colleagues include engineers formerly of Ripple, Google and others.

One of our biggest advantages is that we’re backed by a Nasdaq-listed company that’s registered with the U.S. Securities and Exchange Commission. I see xSigma as a stepping stone into crypto by those who are intrigued with the new ecosystem but still can’t trust the players. Because xSigma is backed by a publicly-traded company, I think we bring a lot of transparency and credibility to DeFi.

What went into building the xSigma?

xSigma launched in 2018, so we’ve undergone extensive research and product development. After conducting many pre-arrangements, we started actively working on the DEX around two months ago. Our focus wasn’t to build an MVP just for the sake of it, but rather to get all of the technical specs right. We don’t want to release a raw product, especially when the whole Nasdaq is looking over our shoulder! We’d rather get it right the first time, especially with such an ambitious roadmap.

What’s your business model?

That’s an interesting question. It bears mentioning that we were established by a multinational manufacturing and technology company that has a completely separate business outside of blockchain or DeFi. ZK International generates tens of millions in annual revenue from its core business.

As for xSigma Labs, we retain 30% of the token supply. This is not an ICO, this is allocated for xSigma. The tokens are released gradually. The DEX also operates as a separate entity that generates revenues via fees charged on each trade. Our cash flow forecasts are complex because they account for various business models once the unified DeFi ecosystem is launched. The DEX is only one piece of a much larger pie (more on that in the future!)

What’s your position on the regulatory landscape today?

The regulatory landscape surrounding digital assets and DeFi is constantly evolving. I expect the evolution to continue in the coming years. It seems like regulators are beginning to realize that the revolution sparked by Bitcoin is here to stay and that cryptocurrencies are a new asset class. Ultimately, I think regulation will still be favorable in the long run as regulators wrap their heads around crypto. We’re already seeing governments research central bank digital currencies, or CBDCs. This is nothing like DeFi, but it’s a proxy for where I think we are going.

What are your goals for the future?

The xSigma DEX is only the first step in a much bigger vision to create a unified DeFi ecosystem. Our goal is to bridge the blockchain and DeFi spaces, becoming a central point that connects capital providers with capital allocators.

Our vision of a unified DeFi ecosystem includes a DEX, a custodial regulated exchange, a derivatives trading platform, a non-custodial digital wallet, a lending pool and, finally, the launch of a stablecoin. This ambitious roadmap will take several years to complete, but we will get there.

What are your future thoughts for the DeFi market?

DeFi is removing intermediaries from the financial system. It has huge potential, especially in emerging markets where financial services are highly centralized and restricted to certain segments of society. But to reach its potential, DeFi still needs to evolve leaps and bounds from where it is today. And I think that’s where we come in.

We haven’t even scratched the surface of the open finance movement. As digital assets become more ubiquitous, I see DeFi playing a prominent role. Decentralized exchanges will be the key to helping DeFi reach its full potential.

We are still in the early stages of the crypto revolution (think Internet in 1999). The next 5-10 years are going to be very exciting.

Where can we go to learn more?

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About the author
Nick Sawinyh
Nick Sawinyh is an LA-based crypto entrepreneur. After having spent over four years in the blockchain industry, Nick founded DeFiprime in 2019, with the idea to provide information about emerging DeFi ecosystem. He owns modest amounts of various cryptocurrencies.

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