We’re double dipping into interviews this week, today sharing an exchange that The Daily Bit had with David Bleznak, CEO of Totle.
We first covered Totle in Around the Horn following the release their public beta. Because decentralized exchanges are expected to serve an existential role in the future custody and exchange of digital assets, we thought it would be worthwhile for David to present the tradeoffs of CEXs and DEXs, bottlenecks currently faced by DEX products, and where he thinks the industry is headed.
Big thanks to David for taking the time to bring our readers this conversation!
Can you tell us about your background?
My background is in business development. The Bleznak Family Office has a history in real estate management and redevelopment of new projects across the country with a focus on southeast Michigan. Given this experience, fundraising and investment management were not new concepts to me when I began exploring ICOs and crypto assets. The complete lack of portfolio tools and administration softwares for the asset class spurred my interest in filling that void. To be first-to-market as a DEX aggregator is certainly an incredible accomplishment.
IDEX, Bancor, ForkDelta, and Waves DEX are several of the top DEXs whose daily trading volumes still pale in comparison to CEXs like Binance, Bittrex, Huobi, etc. In your opinion, even considering the security advantages of trading on a DEX, why do CEXs still attract such a significant amount of trading volume?
The biggest hurdle for DEXs to overcome is a lack of liquidity, or the ability to exchange assets quickly. In an exchange, liquidity means that there is a near match between the price a buyer offers and the price the seller is willing to accept. The closer the match, the faster an asset can be bought and sold without drastically impacting the price.
Liquidity increases when there is a large pool of users, which is simply not yet the case on DEXs. The reason for this can likely be attributed to learning curve, general lack of usability, and a lack of fiat to crypto on-ramp. Many DEXs require an in-depth knowledge of cryptocurrency before a user can begin trading. In contrast, centralized exchanges like Binance, Bittrex, and Huobi attract users more easily because their interfaces are just easier to understand.
DEX trading should not just be for traders who are extremely knowledgeable in crypto, but for everyone. The average person may not understand the security concerns of CEXs but finds the login process and transition from fiat on CEXs more familiar and so never explores DEX trading. One of our aims is to educate people about the differences between exchanges while also offering a DEX trading option that does not sacrifice usability and eventually will facilitate fiat to crypto on-ramp.
Once people understand that they are sacrificing their privacy and control over their assets by trading on CEXs and trading on DEXs becomes just as easy, we believe that the volume of trading on DEXs will exceed the trading volume on CEXs.
With so many infrastructure projects maturing to the MainNet stage, each with their own native tokens, how will that impact the DEX landscape?
As more blockchain-based platforms, ecosystems, and correlated native tokens launch, DEXs will become even more essential to the longevity of the crypto economy as a whole. People need to feel secure in their ability to exchange and trade tokens easily in order to be comfortable participating in novel ecosystems and investing in ICOs. If users have no mechanism for exchanging native tokens, then the risk of participation in new projects becomes too high, leading to a drop in investment and stagnation of the entire crypto economy.
We predict that as DEXs become more relevant and education around the differences between DEXs and CEXs continues, interest will expand and users will increase.
Does Totle plan to integrate other token standards such as NEP5, and/or any others that may rise in prominence in the future?
We continue to monitor other blockchains and token standards, so that when DEX volume picks up, we’ll be there to support. For now we are only supporting ERC-20 tokens on the Ethereum ecosystem though we intend to support ERC-721 tokens in the near future. Down the road we aim to add a cross-chain solution, and we have our eye on NEO and EOS as well for potential integration.
Where do you see the industry in the short-term (1–2 years)? Long-term (5–10 years)?
Given the pace of change in the blockchain and crypto sphere, I’ll focus on the next 1–2 years. We’re still in the early stages of blockchain technology, where infrastructure, protocols, and standards are being developed and tested, and very few consumer-facing platforms and dApps exist. As infrastructure matures, I believe we’ll see a proliferation of consumer-facing dApps and platforms.
Eventually the fact that a product is integrated with blockchain technology will cease to be a novel occurrence and the end user will not even be aware of the role it plays behind the scenes. The industry will continue to be bolstered by greater numbers of users, feedback, support, and investment capital.
What are your thoughts on the running narrative that institutional investors are on the brink of entering the space, but they are awaiting the implementation of proper custody solutions?
There actually are plenty of institutional investors involved in blockchain/crypto. Mike Novogratz, a Galaxy Investment Partners founder, has discussed investing in cryptocurrency, not just because he started making pretty good money, but also because he sees crypto as a cultural revolutionrevolving around decentralization. Goldman Sachs, Morgan Stanley, and other big financial players are getting into crypto, but when it comes to pension funds, endowments, and other funds that control trillions of dollars, there is still a latency in adoption. The lack of participation can likely be attributed to numerous factors, the biggest being a lack of understanding.
What’s the item in the pipeline on Totle’s roadmap?
Not only do we aim to provide an easy-to-use interface through which traders can access multiple DEXs and execute trades quickly without sacrificing control over their assets and private keys, but we are also researching new order matching protocols and off-chain solutions for party introductions and negotiations. Totle will continue to develop as a leader in the DEX space and provide users with the best possible experience for decentralized trading.
Where can people learn more about Totle and their services?
People can learn more about Totle by visiting our website, www.totle.com, reading more about DEXs and upcoming announcements on our Medium and Twitter, and by joining our telegram group, https://t.me/totleinc.