DeversiFi exchange review and guide: Best DEX for DeFi trading?

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DeversiFi, formerly Ethfinex Trustless was launched in 2017 as a decentralised Ethereum exchange. Up until August 2019 it was incubated by Bitfinex Exchange until it became fully independent. Today the Exchange offers spot trading in 8 coins and 13 trading pairs, and has close to $1mil USD trading volume per day. This Exchange has garnered a lot of attention as they had recently launched its newest iteration- DeversiFi 2.0. The key upgrade being its integration of StarkWare’s zkStark layer-2 scaling technology which allows them to process over 9,000 transactions per second without compromising on privacy, liquidity and competitive fees in a non-custodial solution. DeversiFi is definitely one to keep an eye out for in terms of Decentralised Finance (DeFi) token trading. In this review we look at its key features, upgrades and how it keeps users’ funds secure.

Key Features

Self-custodial

DeversiFi allows users to maintain full control of their private keys when trading. Traders can execute orders directly from their private cryptocurrency wallet.

Competitive trading fees

DeversiFi’s fees range from 0% to 0.2%. They are able to keep fees low by batching individual transactions for settlement, thereby reducing the blockchain fees per trade. Their fees are on par with large centralised exchanges yet significantly lower when compared to self-custodial trading venues.

Fast speeds and instant execution

DeversiFi allows users to benefit from fast moving order books and instant execution because their order-books are off-chain, whilst settlement of trades occur on the Ethereum blockchain. This 2 layer system also means that users can maintain control of their assets at all times. Also, at over 9,000 transactions per second the Exchange is much faster than most centralised cryptocurrency exchanges. For reference, DeversiFi’s transaction speed is already substantially faster than say VISA, which only handles around 1,500-2000 transactions per second. They are able to be on the cutting edge in terms of speed because they are the world’s first platform to use StarkWare’s batching technology (see below).

trading interface
Trading interface

StarkWare batching technology: What is it and what are its benefits?

StarkWare aims to solve the inherent problems of scalability and privacy in blockchains. They did this by developing a full proof-stack using their STARK technology to generate and verify proofs of computational integrity. These cryptographic proofs are zero-knowledge, transparent and succinct. In its applications in DeversiFi, it increases the Exchange’s trade settlement capacity from a few transactions to over 9000 transactions per second. At the same time, rooting the asset security layer of the Exchange to the underlying Ethereum blockchain. Zero-Knowledge Rollups also means that the Exchange can offer higher throughput, instant finality (i.e. there will be no danger of trade rollbacks) and privacy.

What is $NEC?

Nectar Token ($NEC) is DeversiFi’s native token. DeversiFi describes NEC as a deflationary, utility and incentive token. The token itself gives several great benefits for its hodlers such as:

  • membership/voting rights in Nectar DAO, which is one of the largest DAOs with 17,000 ETH pledged
  • perpetual weekly burning. 50% of all DeversiFi trading fees are used to burn NEC; and
  • 20% discounts on trading fees (coming soon).

Currently, NEC is ranked no. 203 in terms of market capitalisation according to Coingecko. Prices for NEC have been going on an upward trend in the past 30 days, having gone from $0.11 in late June 2020 to $0.21 as at the time of writing.

What is NecDAO?

NecDAO itself continues to grow, and on 12th August 2020 the Exchange announced that cryptocurrency funds ParaFi Capital and D1 Ventures both purchased $450k worth of $NEC and staked it into necDAO. This allows them both to take a lead in participating in the governance of NEC.

ParaFi Capital is a DeFi focused fund and actively participates in various DeFi projects such as Aave, Compound, Curve, MakerDAO, Kyber and Synthetix. Their particular speciality is in tokenomics and playing an active role in governance of these projects. For example, they had put forward proposals to expand MakerDao’s collateral types, and to change the monetary policies relating to the DAI peg, Aave’s Aavenomics and Kyber’s Katalyst.

D1 Ventures provides strategic advisory services to its portfolio companies. They focus on organic market growth and spread awareness of DeFi through community outreach and education.

DeversiFi: How to get started

DeversiFi does not require any signup or KYC process, users simply connect their wallets to the Exchange. DeversiFi currently supports MetaMask, Ledger and Keystore for trading via the UI. Alternatively, traders can interact with DeversiFi via API by using libraries that contain signing functions and wrappers. These libraries can be found at DeversiFi’s API Documentation portal and is available in Python, Javascript and C++.

To get started, all you need to do is to click “get started” in the drop down menu on the top right hand corner, select your cryptocurrency wallet and follow the steps to connect it to the Exchange.

DeversiFi-getting started
DeversiFi- getting started

Security: is DeversiFi safe?

As seen above DeversiFi does not require any signup or KYC process. Users can connect their wallet directly to the Exchange and get started right away.

Funds traded on DeversiFi are secured by heavily audited smart-contracts which are transparent and cryptographically secure. In the rare event that DeversiFi goes offline, users can still retrieve their assets. DeversiFi is able to do this because of their Data Availability Committee. This Committee is a group of trusted entities who hold users’ balance data off-chain and participate in signing the commitments which update the state of the blockchain. The Committee is also a necessary part of the StarkWare technology V1 system utilised by the Exchange because it ensures that users’ trading history is not published online, thereby protecting their privacy.

DeversiFi also maintains an insurance fund, giving users can extra layer of security and confidence. The Exchange maintains a smart contract insurance with Nexus Mutual of 1001 ETH fo any unforeseen losses of smart-contract funds.

DeversiFi also mentions on their website they are likely to expand the amount of insurance coverage in the future. They are also constantly working on researching other ways of ensuring that users can trade privately without compromising speed or trust. The results of their research is expected to be rolled out in later updates to the Exchange.

Conclusion

DeversiFi is admittedly relatively smaller in terms of trade volume compared to other exchanges, and has less functions since it only offers spot trading. However they are working very hard to capitalise on this DeFi fever, with tutorials teaching users how to earn a 0.359% bonus by using their Exchange. The Exchange has solid attributes, it has a fast transaction speed, competitive fees and most importantly, good security. The Exchange has a record of no hacks so far and an insurance fund to protect users. All in all DeversiFi is an Exchange worthy of your attention, and it would be interesting to see if it can emerge from the competition as a winner in this DeFi race.

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