According to 0x Tracker, DDEX has reigned over all other decentralized exchanges for quite some time now. Technically a relayer that was originally built to implement the Hydro Protocol, DDEX now accounts for about 75% of the total volume of trades over the 0x Protocol each month. Mr. Bowen Wang, co-founder of DDEX, and Coin Central’s Munair Simpson had an occasion to sit down at the Blockchain Open Forum event in Seoul, South Korea to catch up on DDEX advances and his ambitions for the future.
Munair Simpson: Bowen, can you briefly introduce yourself and tell us about some of the advancements or developments that have been happening with DDEX?
Bowen Wang: Hello, everyone. This is Bowen Wang. I am the co-founder of Hydro Protocol and DDEX. We started DDEX in October last year. Right now, we are the number one decentralized exchange in the 0x ecosystem. We’ve been in beta since January, but we’re releasing our native mobile app with a wallet, and also the wallet within the decentralized exchange, in the next few months.
Munair Simpson: One of the things we love to do at CoinCentral is to take a step back and learn a little bit more about the team behind a successful project. Would you like to introduce your background and what inspired you to start DDEX?
Bowen Wang: I graduated from New York University’s Math and Economics program. I worked at a venture capital firm called ZhenFund which was Sequoia Capital China’s early investment arm. I learned about Ethereum and the Ethereum cofounder in 2016.
When I was doing investing, there was one project called CITA which was trying to fundraise. The co-founder is one of the co-developers in the Pi Ethereum project. That’s how I got to know Ethereum. That was during the time of the DAO hack. I understood how important the smart contract was and how different it was from Bitcoin. That’s why I got interested in Ethereum.
I was doing a lot of investment in the blockchain field for ZhenFund, and I had my own crypto funds on the side. I invested in many of the privacy layers and decentralized exchange protocols as well.
My co-founder, Tian Li, who is the CEO of DDEX, used to work at Microsoft and Palantir. He is a full stack engineer with a CFA. He went back to China to start his own startup called ClassBox, which had 30 million downloads and six million DAU’s. He sold the company and became an advisor to many venture firms. He’s a deep believer in Ethereum as well.
We partnered up to build our first crypto fund, and then we realized the one way that we can prove our investment thesis is right is to build one [decentralized exchange protocol] by ourselves. We built the very first prototype of DDEX on Ropsten in October of last year. We realized that there was much room to improve on the original generation of DEXes. We started out from there.
Munair Simpson: You guys have had a lot of progress in a very short space of time. There are other relayers that are in the space, like Radar Relay and Paradex, but you guys have been the most successful so far. What do you think has caused this success?
Bowen Wang: I guess three things. One thing is definitely that we have a really strong technical team. Many of the team members are from Tian’s previous venture, ClassBox. They knew each other for a really long time. They are really great full-stack engineers.
The second is our operations. We do list a lot of hard [to obtain] tokens and newly released tokens, which competitors don’t have access to.
The third point is definitely our quant trading platform. We are market maker friendly, so a lot of traders will come to market make on DDEX. Also, we have our in-house quant team to provide liquidity mandates.
Munair Simpson: One of the things you said was your team. How were you and your cofounders able to get so much talent on board and what was the path that you took to develop the DDEX exchange? Did you pursue traditional crowdfunding? Can you tell us a little bit about how you bootstrapped DDEX?
Bowen Wang: Basically, all of our team members are friends, referrals, and people who worked with us beforehand. They all came to join our team since they know us pretty well. DDEX first had equity fundraising from ZhenFund. There was also Initialized Capital from Silicon Valley, which is Garrett Tan from YC and Alexis Ohanian from Reddit. We did token generation for Hydro Protocol, which we want to build a thousand DEXes on top of. We did a private sale to thirty institutional investors, major crypto funds in China and Silicon Valley (FBG, Draper Dragon, Inblockchain, and many others).
Munair Simpson: Can you tell us a little bit about the plans for the future in terms of mentioning the many DEXes you would like to have on top of your platform? What progress have you made in this area?
Bowen Wang: We think that wallets, dApp browsers, and dApps, in general, should have an exchange built into their own native app. Right now, we integrate with Coinbase Toshi and Cheetah, which is a Chinese public company. We have been integrated into more than 10 Ethereum wallets already. We’re the only mobile-first decentralized exchange right now. We’re on all mobile devices.
Munair Simpson: What is your process for listing tokens? How do you deal with such requests?
Bowen Wang: We started out by taking a look at their communities, the number of token holders, the token distribution, and the quality of their social network. Their Twitter, their Telegram, their Reddit and how popular they are show signs of secondary market trading demands. Then we look into the smart contract. We would rate if there any flaws or root functions that can make more tokens. Lastly, it depends on whether we can technically integrate the token. Then, we start a business development period to talk about how to provide the best trading experience for our customers.
Munair Simpson: Can you tell us a little bit about the market that you target? Who are the ideal customers of the exchange?
Bowen Wang: The ideal customers are definitely the people who participated in the ICO. Every ICO participant has their token in their wallet, but they don’t normally have a place to sell or buy at the very first moment of the generation. We always want to be the first exchange to list that hot token or project. They can trade it right from their wallet. They can buy tokens right from their wallets without any complications.
Munair Simpson: I want to talk a little bit about your marketing plans. How do people learn more about your exchange? How are you competing in this space as well?
Bowen Wang: It depends on marketing. Broadcast marketing doesn’t make sense for the general public because they don’t have any tokens. We are Ethereum based so we only support Ethereum and ERC20. So we do online marketing which is more focused on where the hodlers are. There are people who are using CoinMarketCap and there are people who are using Reddit and Twitter. We do more with mailing lists and SEM.
Munair Simpson: There are a bunch of exchanges that are coming out in the third quarter of this year. At the end of the fourth quarter, we’re going to start to see some Plasma DEXes come out. Have you thought about what that is going to do to impact you and your business?
Bowen Wang: Plasma is definitely something we really want to see for the entire Ethereum community. We are closely monitoring any progress on plasma or side chains. If there is any working technology that comes out, we are trying to be the first one to adopt it as well. We would love to see more when Ethereum goes to P0S or Metropolis in the near future. Hopefully, it’s going to be sooner.
Munair Simpson: Can you tell us a little bit about the tokenomics of HOT? Who would be the ideal person to hold it and what time frames are we talking about?
Bowen Wang: Basically, a HOT Token is an incentive layer built on a utility protocol. A scenario would be like if CoinCentral wanted to have their own DEX, they can use our code to build and manage the engine. They can build their API and their SDK within a month and then deploy it on the server. They started their own exchange, but there is no liquidity.
Then there is an incentive layer. So if CoinCentral stacks actually contribute to the maker market, it will be granted contribution like a block producer, every 24 hours to grant HOT rewards. It’s going to be diminishing returns like Bitcoin mining, so it will decrease over time in a 24-hour period, but that’s where we see how we can incentivize the community to provide liquidity for different decentralized exchanges to share.
Like a decentralized exchange, we think that there’s going to be a geographic location barrier. The Korean DEX is not going to enter the Chinese market. The Chinese DEX is not going to enter the US market. We will be allowed to see more parties and partners from different parts of the world join us in Hydro Protocol.
Munair Simpson: Is there anything I haven’t asked you that you want to talk about?
Bowen Wang: The big news is definitely our native app. We will airdrop 0x tokens and our own HOT token. We will allow everyone to sign up early to get the airdrops. We want to share rewards with our community.
Thanks DDEX Team!
It was really special to be able to sit down with Bowen at such a busy event. Thanks again for taking the time to talk with the Coin Central team. We hope that they will continue to succeed and share those successes via CoinCentral. To learn more about Bowen and DDEX, check out the HOT whitepaper and DDEX website.