KuCoin AMA With Project TXA — Building A Cross-Chain Decentralized Settlement Layer for Hybrid Exchanges

2021/09/02 07:43:54

Dear KuCoin Users,

Time: September 1, 2021, 12:00-13:12 (UTC)

KuCoin hosted an AMA (Ask-Me-Anything) session with Jae Yang, Chief Architect of Project TXA, in the KuCoin Exchange Group, where he shared how Project TXA will power next-gen hybrid centralized/decentralized exchanges.

Project Introduction

The first architecture to support CEX-like trade speeds while also protecting user privacy and funds by not requiring centralized fund custody, TXA merges centralized order management with decentralized settlement to create the world's first hDEX (Hybrid-Decentralized Exchange).

Official Website: https://www.txa.app

Token Economics Paper

Follow Project TXA on Twitter and Telegram.


Jae Yang — Chief Architect of the Project TXA

Previously, Jae was Director of Engineering at Metal and has held a number of engineering roles in industries like fintech and aerospace.

Q&A from KuCoin

Q: Please introduce yourself to the KuCoin Community.

Jae: Glad to be here, and thank you for this opportunity!

I’m Jae Yang, Chief Architect of the Project TXA.

I’ve worked in the software field for 15+ years and have built many mission critical systems.

Project TXA is a unique attempt at bridging the gap between the speed and efficiency of CEX and the privacy and safety of DEX.

Q: What is Project TXA? And what is the story behind the Project TXA creation?

Jae: Project TXA was created back in 2019 when I thought about the advantages and disadvantages of CEXes and DEXes.

I trade a lot, and I realized that centralized exchanges merge custody and control, which often results in trader funds being compromised. Many exchanges spend a lot of resources on cybersecurity, and unfortunately, that sometimes isn’t enough.

But when I thought about DEXes, the problem is also structural - DEXes generally do not support cross-chain trades.

So the solution is to combine the speed and efficiency of the CEXes by using the parts that make sense - order matching engine while settling on-chain.

Project TXA will build TXA Decentralized Settlement Layer (TXA DSL), which is a system that allows Hybrid Decentralized Exchanges (hDEX, which I will expand on later) to focus on the exchange speed without having control over traders’ funds.

hDEXes will integrate with TXA DSL through partnerships. Building on TXA DSL will have the distinct advantage of being able to serve the traders with a non-custodial trading solution that is also cross-chain.

We ensure this by making sure that participating hDEXes only process orders, and the matched trades are recorded by what we call Settlement Data Oracles (SDOs) that operate within the TXA DSL.

When a trader requests settlement using his/her own Smart Wallet (a smart contract that allows a trader to self-custody funds), the SDOs will provide the necessary data for peer-to-peer settlement of the assets across multiple chains.

Q: What is your token use case? And how will new use cases come with time?

Jae: TXA token is part of the TXA ecosystem. The holders of the token can stake the token to operate Settlement Data Oracles (SDOs).

SDOs are an integral part of the TXA Decentralized Settlement Layer, and SDOs secure the DSL by providing accurate settlement data. By providing those settlement data, the operators of SDOs may choose to charge a data provider fee for peer-to-peer settlements. Thus operators of SDOs may earn steady yield based on the system being available to serve the community.

TXA tokens may also be used by the traders for various fees on the Decentralized Settlement Layer. TXA tokens may also be used for various governance functions that will determine parameters for the TXA DSL and how hDEX interacts with it. Over time, our aspirational goal for TXA token is to become something that is used for platform operation and to manage settlement risks by providing insurance funds denominated in the token value.

Q: Can you provide some progress on your roadmap, and what are your aims in the next 2 years? Where will Project TXA be after 2 or 5 years, according to your roadmap?

Jae: We’re building for the future.

In 2 to 5 years, Project TXA will have many partnerships and partner exchanges building on top of the TXA Decentralized Settlement Layer.

Within a year, we plan on having Alpha and Beta release of the TXA DSL.

After 2 years, we will have a mature system of cross-chain, peer-to-peer settlement platform.

Within 5 years, we will build a network with many asset exchanges (NFT marketplaces, crypto exchanges, and other kinds of exchanges we can’t even dream of now).

NFT marketplaces are of particular interest to us - we think that NFT hDEXes are going to revolutionize the industry. Imagine the future where NFTs created in one chain can be trustlessly traded for coins and tokens in another chain with full auction support.

We’ll continue to bring partnerships to Project TXA, such as partnership with DFINITY to integrate their tech with hDEX components.

Project TXA will continue to build and make sure that token holders can stake TXA tokens to be able to operate SDOs.

Our roadmap includes releasing the initial governance ruleset, a full audit of the open-sourced codes for core settlements tech, and bringing on partner exchanges.

Q: In addition to the characteristics and speed of the centralized exchange type order book, what other characteristics of CEX are applicable in hDEX, and do you think that hDEX will become a leader in the entire financial system worldwide?

Jae: I think that CEXes and DEXes can learn from one another and improve structural elements to provide traders with maximum value.

DEXes have a structural problem that is due to the nature of the blockchain itself - the speed of state update for the DEXes is limited by the blocktime of the underlying blockchain. This means that DEXes are bound by the speed of the underlying chain unless one considers layer-2 solutions.

CEXes are fast and efficient but provide security challenges for the operators.

hDEX architecture, which will be built on top of TXA DSL, seeks to bridge these issues by operating in two regimes where they matter most. hDEX has a fully-featured off-chain orderbook, and the settlements are handled in a trust-minimized way on-chain through the use of Settlement Data Oracles.

By adopting modern methods of trade and settlement and rethinking the way in which settlement is handled, TXA DSL and hDEXes can safely handle trades and save enormous sum for the operators of the exchanges.

With the advent of blockchain tech, traditional finance, which has for a long time relied on the institutional reputation and financial strength, can successfully transition into the world where code is law and relationships and incentives are well understood by the market participants.

Q: Which partnerships and marketing initiatives are you working on now to help build awareness for your platform?

Jae: Project TXA has partnered with Tacen Inc, a US-based, legal-first software development company, to create the first Hybrid Decentralized Exchange (hDEX).

Thanks to hDEX, traders will no longer have to choose between speed and safety.

Project TXA is also considering integration with Hedera Hashgraph’s fair-ordered queue. We think that Hedera integration could bring much-needed efficiency because of a persistent channel of data that can be vetted by multiple market participants. Hedera’s technology could be used to handle snapshot of aggregate settlement states across multiple chains or to broadcast raw trades.

We’re working closely with both organizations to expand developer awareness of both TXA and the partner projects.

Right now, we’re working with various marketing firms to make sure that the world knows about TXA and its benefits. I’ve been participating in many AMAs where people are hungry for more information about the alternative to current exchange and settlement technology.

We’ll keep sharing the news with the community and hope to see more great questions.

Q: How can the community contribute to Project TXA’s success? Do you wish to expand communities globally, or are you currently concentrating on local communities?

Jae: The crypto community at large can contribute to Project TXA in many different ways:

First, we’re looking for smart contract developers to be involved in the open-source development of TXA’s core technology. We think that the project can be global by tapping into the immense pool of talents from all over the world.

We plan on expanding the community to include many different language groups. We currently have a group that serves all languages in Telegram, but we will soon have communities dedicated to the Asia Pacific region as well as communities for Latin America (separately for Brazil and LATAM).

Currently, we’re focused on the following key areas where TXA has the most awareness and interest: China, Vietnam, Japan, India, Korea, Brazil, Singapore, and Eastern Europe. We’ll continue to serve the community with fresh news in native languages.

Free-Ask from KuCoin Community

Q: How did you come up with the idea of creating your project’s solution? Was it due to impermanent loss or some similar personal experience that made you understand that there would be room for such a solution?

Jae: Impermanent loss is present in AMMs serving DEXes, and AMMs themselves are stop-gap measures to provide ready liquidity for DEXes, which has a high cost of order changes. I remember trying to provide a liquidity pool for a pair in a DEX and realizing this fact.

The problem with AMM is that it announces publicly the price-supply curve to the world, which means that it can be gamed.

Usually, the provider of liquidity in AMM acts as the liquidity provider of last resort when standing orders are unavailable.

Dynamic liquidity provision is probably the only way in which true price discovery can occur.

Just my two satoshis.

Q: Does your project support staking program? If yes, how does your stake system work? What is the requirement for users if they want to stake in your platform? Do you have a token burning plan to increase token value and attract investors to invest?

Jae: Project TXA has a mechanism for the token holders to stake the TXA tokens to become Settlement Data Oracle operators. By staking the token, the staker can download, compile, and deploy the open-source program called Settlement Data Oracle (SDO). The SDOs provide a valuable role within the TXA Decentralized Settlement Layer (TXA DSL) and can decide to set up their SDO to charge fees for providing the data to the settlement requestors.

Q: Where can I buy your tokens now, and how can I buy them? What are your current contracts? Can you list 1-3 killer features of your project that make it ahead of competitors? What are the competitive advantages your platform has that you feel most confident about?

Jae: Well, you can purchase TXA token on KuCoin!

Killer features:

1. Cross-chain assets trading in a trust-minimized manner

2. Maximizing trader privacy

3. Fast-efficient trading venue support through hDEX integrations

4. Traders can settle their accounts even when the exchange is offline!

Q: Could you please explain the tokenomics of TXA about the supply and token lock release schedule?

Jae: Sure! We plan on releasing a detailed account of token schedules in the upcoming tokenomics paper. It will have all the details. But some highlights:

1. 50,000,000 fixed supply

2. No minting

3. Token burning through some usage functions on the platform

4. Team allocation unlocks starting June 25, 2022 (25 % unlock)

Q: Why does hDEX need DFINITY's oracle network to monitor payment processes and trade data? How does the oracle network contribute to hDEX in compiling, collecting, and monitoring data?

Jae: hDEX architecture requires multiple data backends. Something I learned while I was working as an aerospace engineer over a decade ago is that mission critical systems need redundancies. We want to make sure that SDOs have redundant data sources and fall-backs. SDOs have their own local cache of data recorded, and integration with DFINITY’s Internet Computer will be another data backend.

Q: Is there anything else you would like to share or you want us to know?

Jae: I want to thank the KuCoin community for their valuable time and great questions!

We’ll strive to provide new technology and value to the crypto community.

Giveaway Section

KuCoin and Project TXA have prepared a total of 518 TXA to give away to AMA participants.

1. Free-ask section: 20 TXA

2. AMA activity: 498 TXA

Activity 1 — Quiz: 375 TXA

Activity 2 — Price Guess: 75 TXA

Participation Rewards: 48 TXA

. . .

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