Decentralized Trading & Networked Liquidity: Q&A with Radar Relay
Tuesday, October 10, 2017
One of the biggest questions that comes to mind in the token sale boom is how and where new tokens will be traded. Decentralized trading protocols and exchanges such as 0x and Kyber are being developed as an alternative and complement to centralized liquidity providers. In this interview the team behind Radar Relay talk about launching an orderbook on top of the 0x protocol, and the opportunities in decentralized trading.
Q: For those unfamiliar, what is Radar Relay?
A: Radar Relay maintains a 0x order book and provides a simple interface to facilitate signing, finding, and filling 0x orders via browser interface.
Q: How did Radar Relay start? We know you are an anonymous team based in the U.S. but can you give us some background to the team, relevant experience and how you have been working on this project.
A: Radar Relay was born from our bad experiences with centralized exchanges (Mt. Gox, Bitfinex, Cryptsy, etc). We began work on Radar Relay as soon as the 0x team released their protocol. As a team of fewer than 10 people we have over 20 years of combined blockchain industry experience amongst us, which has helped navigate through these uncharted technology frameworks.
Our anonymity is part of a bigger strategy, which will be unveiled soon. We are excited to go public and share more about our team.
Q: As you moved from Beta to mainnet launch, what are the main challenges you foresee and how will you try to resolve these?
A: There are two distinct challenges with both our mainnet launch and scaling Radar. First, we have the traditional user acquisition challenge that any new product faces. These challenges are magnified by the need to educate our users on relayer functionality and using 0x to trade. We plan on marketing to our growing community through educational content, like Weth.io and TokenAllowance.io, and asking the token issuers we are working with to help drive traffic and liquidity to our platform.
Second, to scale Radar we’ll be putting quite a heavy load on the Ethereum blockchain. To help solve this problem, we’ve built Radar to minimize the number of on-chain transactions. As soon as we can, we’d like to dedicate resources, both capital and talent, to helping find effective solutions for helping Ethereum scale.
Q: One of the questions that comes up in a lot of our discussions about decentralized trading and the quasi-centralized role for relayers and order book managers is: Will this end up in a race to the bottom? Will trading fees go to zero? What’s your take on this?
A: Perfect competition mandates many competitors with identical products and no barriers to entry. Right now, there are few relayers and even fewer decentralized trading protocols. Relayers that do exist have unique user experiences thanks to the flexibility of the 0x protocol. For some insight into relayer strategies check out the 0x wiki or for a sneak peak into the differentiators that we’re working towards check out our latest Medium post.
Currently, like all new software categories, there are significant barriers to entry for new participants including technical competency, regulatory strategy, legal compliance, localization choices, and go-to-market strategy. Therefore, we conclude it’s unlikely fees will go to zero, but there may be market pressure in the long term for fee competition.
Q: In the nascent decentralized trading space, we rarely hear about a need for local and/or regulatory compliance. What is you view on this?
A: Our team believes in transformative regulatory change, not disruptive or antagonistic change. In fact, we’ve published a detailed overview of our regulatory strategy. In short, we believe the regulatory landscape needs to evolve in tandem with the blockchain community. We want to be a positive force of change and help work with regulators and legislators. One of the benefits of a resource-heavy centralized system is their ability to hire lobbyists and court politicians. As decentralized system participants we don’t have that luxury, so we have a responsibility to understand and operate within the boundaries of regulation.
We highly recommend other innovators in the space follow (and donate to) Coin Center. It’s an excellent place to get started and learn more about the regulations that may affect them.
Q: You’ve described the 0x ecosystem with relayers as a Modular Trading Network. A requirement for this network design to work is that relayers link to each other. Are you in discussions with other relay initiatives to enable this?
A: We are in dialogues with a few relayers, some active and some in stealth mode, regarding order sharing and have committed to building with the 0x relayer API standard to help facilitate this vision. We believe there will be high degrees of collaboration through mutual incentives, eventually leading to true networked liquidity.
Q: Trading protocols, networked liquidity and seamless/invisible token:token exchange are necessary components for a decentralized future. Besides plugging in and using Radar Relay — how can the crypto community help Radar Relay?
A: To help realize this decentralized future the crypto community can be active participants in the Radar community on Slack, Twitter, Medium, or Reddit. We are always looking for critical feedback on functionality, bug testing, and feature ideas. Most importantly, we are looking for talented engineers with a vision for the decentralized future.