Financial applications for the digital asset world should be on-chain, permissionless, open-source, auditable, and transparent. Unfortunately, today's exchanges fall short.
The counterparty risk associated with centralized exchanges is huge and not priced in. At best, they’re one hack away from losing billions, and at worst, the team treats client money as their own and gambles it away. Spot DEXs have captured 12-15% of all spot volume depending on the day, with market share increasing over time. However, perp DEXs account for under 5% of all perps volume today.
Today’s perp DEXs attempt to offer a passable service but fall short on functionality and ease of use. Even the best DEXs often serve merely as an attractive opportunity for token farmers, while providing a substandard user experience in every other aspect.
Defx’s goal is to create a robust, fair, accessible, and transparent market for all assets that are and will be on-chain as the digital assets ecosystem grows.
Defx is built to offer an exceptional experience for trading all your favorite assets, whether it’s the majors, meme coins, or pre-launch markets, while abstracting away the complexities of using a DEX. Users bring their own wallet by connecting any wallet of their choice, be it a software wallet, a third-party wallet, or a custodian of their choice. Defx aims to be the premier L1 where assets are traded on-chain.
What is Defx?
Defx (pronounced “De-FX,” meaning Decentralized Financial Exchange) aims to redefine what a DEX can be by building trading and liquidity infrastructure worthy of the crypto world in 2024 and beyond.
Defx is an EVM-compatible Layer 1 built using Tendermint's consensus. Its first app is a perp DEX with bridging contracts currently live on Arbitrum, with more in development for Solana, EVM, and non-EVM chains. Defx’s L1 will host applications native to the blockchain, with certain privileges built in. Expanding the L1’s native applications will be possible and controlled by the Defx DAO, with all changes governed through DAO voting mechanisms and proposals called Defx Improvement Proposals (DIPs).
Defx L1’s first native application is an orderbook perpetual futures DEX (commonly referred to as a perps DEX), with funding through a bridge on Arbitrum.
What’s Unique About Defx’s Perp DEX?
CEX-like experience without centralization trade-offs.
No compromise full-fledged orderbook, with the fallback liquidity of AMMs in the background.
Just-in-time funding to ensure your capital is only in a contract when necessary.
Other Native Apps Will Include:
AMM contracts for spot markets.
AMM contracts for perp markets.
Permissionless solutions for middle-of-the-orderbook and top-of-the-orderbook liquidity.
The Team:
The Defx team is a group of builders who have been in the space for 7 years, working across engineering, product, and marketing for different CEXs, DEXs, HFT firms, and prop trading shops. The team came together because we noticed how CEXs weren’t transparent enough, and DEXs weren’t good enough to capture market share from CEXs. We believe we can close the gap and bring people on-chain without many of the complexities.
Why Now?
Since Q4 2023, points and token reward campaigns have worked to some extent. They validated that financial incentives can get people on-chain and to the new and shiny perp DEX, but not retain trading activity. The reward season is over, most of the volume has disappeared, and people farmed points, only to sell when they received an airdrop and move to the next venue. We saw that people are unwilling to use a substandard product, even if it's non-custodial/decentralized, leading to most perp DEXs executing under 5% of their peak volume today.
We think the space needs a fresh start with a trader-first mindset. Defx is building an experience worthy of long-term retention that can win market share from the best CEXs.
We’ve been in testnet since May 2024, working through bugs with market makers and early testers to incorporate their feedback before launching. We’ve been building for ~12 months, and today is the day we’re opening up to mainnet for everyone to use.
Defx’s Funding:
Defx has raised an undisclosed amount from prominent crypto VCs and angel investors to ensure that we have a sufficient runway for the foreseeable future. We will announce the specifics of the round at a later date.
Defx’s Roadmap:
Defx’s development is guided by community-driven improvement proposals (DIPs), allowing our users to actively participate in shaping the future of the platform. Here’s a glimpse of what’s ahead:
Launch with 3 trading pairs to onboard early customers and gather feedback.
Introduce tier-based fees, alongside referral and affiliate programs to align financial interests with Defx's growth.
Expand to 10 trading pairs, while enhancing performance by factoring in captured feedback.
Roll out Actively Managed Portfolios (AMPs), starting with Defx's Liquidator AMP.
Launch funding and bridging support for more chains, starting with Base.
Deploy V1 of Defx’s Layer 1 block explorer and RPC link, with the ability to add more validators to the L1.
Enable permissionless listings across perpetual markets.
Launch spot markets to ensure customers can use a simpler product, one without leverage.
Implement cross-margin capabilities.
Expand support for multiple types of collateral.
Start onboarding independent builders to offer perps on their venue, benefiting from Defx’s infrastructure and liquidity.
Why Launch with an Arbitrum Bridge?
Arbitrum is currently home to the majority of perp DEX activity, making it a strategic starting point for Defx. However, we are not limited to Arbitrum and plan to expand to other chains (EVM and non-EVM), offering multi-chain funding contracts to enhance liquidity and accessibility.
Why is Defx Vertically Integrated from Day 1?
To close the gap between CEXs and DEXs, Defx must control its UX as much as possible, particularly in delivering easy-to-use optimizations only possible with vertical integration. This ensures a seamless and optimized user experience, free from the constraints and limitations of third-party platforms and their strategic goals.
Our roadmap shows that independent builders creating new and exciting applications over Defx’s infrastructure and liquidity will soon be a reality too.
Why Build a L1?
Scalability and Throughput: This allows us to put our orderbook fully on-chain and ensure it scales to the levels of the largest CeFi companies in terms of operations per second and latency.
Customizability: Customized and novel fee models tied to trading activity can be native, permissionless, and on-chain. Additionally, customers choose which assets they pay fees in.
Prioritization: With a custom L1, the DAO has control to ensure upgrades, chain optimizations, and UX improvements can be built into the infrastructure layer, not just on each application.
Dark Pool Primitives: Privacy-preserving bids and asks are built into the chain so that large positions are not broadcasted until executed.
Consensus Layer and Virtual Machine Stack: These can be chosen based on application needs, while ensuring that the best dApps can effortlessly migrate to Defx.
Who Should Use Defx?
Defx is designed for anyone looking to trade assets in a permissionless, efficient, and transparent environment. Whether you're a retail trader, an institutional trader, or a developer building new financial products, Defx offers the tools and infrastructure you’d expect from a best-in-class trading venue.
Where to Start:
App: https://app.defx.com/
Join our Discord and tell us how we’re doing: https://discord.gg/6HJWZzQje7
Send us a DM on X: https://x.com/DefxOfficial
Our docs: https://docs.defx.com/docs/