Hashflow, a layer 2 protocol to build and operate an emerging generation of CeFi-DeFi hybrid exchanges, launched its alpha today on Ethereum mainnet and announced partnerships with six exchanges across the globe. Exchanges built using the Hashflow protocol combine centralized order-matching and trade execution with the decentralized benefits of trustless custody and post-trade settlement, without requiring a new blockchain or sidechain.
Over the last decade, cryptocurrency exchanges have been forced to evolve in order to keep pace with the development of the crypto market. The most recent evolution are hybrid exchanges that seek to blend the best features of CeFi and DeFi, and they are seeing rapid adoption. Hybrid exchanges allow market makers and high-frequency traders to build bots to operate their own unique algorithms, customize their trading strategy, and adjust their desired risk exposure, while keeping custody of their keys and avoid paying any gas fees. The Hashflow protocol is built to power this new wave of flexible financial markets by serving as a foundation layer for settlement, custody and liquidity. It seeks to reduce—and in some cases entirely remove—the most expensive and time-consuming components of creating and operating a hybrid exchange. In addition to exchanges, businesses such as OTC desks and market makers can simplify complex settlement workflows, which often involve manual procedures that are slow and prone to error. Hashflow’s process of decentralized settlement solves this issue in addition to reducing the risk of centralized custody, thereby also allowing users on Hashflow-powered exchanges to trade without the fear of losing their funds.
Hashflow’s alphanet is operational on Qume, a derivatives exchange for high-frequency traders. “When designing our exchange, we wanted to build an exchange for 2020, not replicate what everyone has seen in the past,” said Aditya Mishra, founder and CEO of Qume. Mishra further described the benefits of Hashflow technology for new hybrid exchanges such as Qume. “Being a new exchange gives us a lot of flexibility to grab the best of the best new technology. Given our primary focus is high-frequency trading of derivatives, we wanted a custody system that off-loads the risk of custody while de-risking post-trade settlement for our exchange and our smallest to largest market makers,” he added. In addition to Qume, Hashflow has also entered into technology partnerships with five other crypto exchanges, including Sparrow, Bitpolo, Bistox, Next Exchange, and Phemex.
“Hashflow is when CeFi gets DeFi’d,” said Varun Vruddhula, Founder and CEO of Hashflow. “We automate financial market functions to increase operational efficiency and security without requiring changes in the existing infrastructure, while also providing exchanges with on-demand liquidity and reducing settlement-related counterparty risk. Hashflow is doing this by protocolizing the hybrid exchange model.” Varun also believes in the power of a flexible foundational layer for multiple exchanges powered by Hashflow technology rather than developing a single solution, seen in cases such as Futureswap, dYdX and IDEX. “With Futureswap, people could capture the value of one market. By building a protocol, you’re capturing the value of the entire network,” adds Varun.
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