Jacob Canfield is the number one Bitcoin analyst on TradingView. He’s also a featured trader on Forbes, CNBC, and CoinDesk. His company SignalProfits is all about creating successful traders, taking people who are brand new to trading and investing in cryptocurrencies and providing them with the tools they need to win. Don’t miss this awesome interview in which he sits down with Digitex CEO Adam Todd to discuss the project, the testnet launch, and the importance of liquidity.
Jacob Canfield Interviews Adam Todd
In a face to face interview, life-long trader Jacob Canfield speaks candidly to Digitex CEO Adam Todd. Before jumping into the Digitex project, Jacob asks Adam to speak briefly about his background and introduce new people to himself and his motives behind creating Digitex.
Adam explains that he started out as a pit trader in the London International Financial Futures & Options Exchange (LIFFE) when he was 19 trading German government bunds. He was a very short term scalper, working there for about four years. He admits that he had no idea what he was actually trading; it was following the markets and price movements that were key.
Adam and Jacob laugh and agree that was pretty typical of traders. Scalpers don’t actually need to know anything about the instruments that they’re trading. Jacob says that he’s read a lot of books by pit traders and they said that you could feel the emotion and trade off of it. Adam agrees that in some ways it was easier, you couldn’t see the screens, but there was a lot more “elbow trading.”
He says that screens are better, more efficient, faster and cheaper, though; “the pits needed to go but they were an interesting place.” Jacob says that he really enjoys talking to people who are building exchanges that were former traders including Binance’s Changpeng Zhao. He asks how and if being a pit trader influenced his decision to build an exchange.
Adam replies that it absolutely did. He says that as a scalper, he was “killed by commissions,” and that he always had in his head that he wanted a commission-free trading environment. When he discovered Ethereum, the idea came to him how he could remove commissions by creating his own token.
Let’s Talk Digitex Futures
“I want Digitex to be a level playing field. I want it to be the only exchange where there’s no mechanical edge constantly eating away from you.” Jacob cuts in and asks Adam if by “mechanical edge” he means the house, to which Adam replies:
“Yes, it’s a fortune! I mean 0.07% isn’t that much, but if people are trading at 100x leverage, it’s 7% and that’s massive. It makes short-term scalping impossible.”
Jacob asks how Digitex manages to operate without fees, to which Adam goes into some depth. He says that there will be no maker or taker fees on any contracts but that “the way that we keep the lights on” and cover the operational costs of the exchange is through a different revenue model.
Digitex has been initially funded by the ICO, is currently in the second stage of financing through the Digitex Treasury, our ongoing public token sale over the next two and a half years. And that, after that we will issue a small number of tokens every year to cover the cost. “So there will be an inflationary cost on everyone but will be offset by demand and not fall on short term traders,” Adam explains.
Trading on the Digitex Exchange
Jacob listens and appears to find the model interesting. He wants to know more. “So, are you trading in DGTX?” he asks, to which Adam replies, “Yes, you are. It’s a compulsory exchange token. Your account balance, PnL are all denominated in DGTX.”
Jacob asks whether we will be adding fiat options or stablecoins to which Adam confirms that there will be no fiat on the platform, however, we are researching adding our own stablecoin “down the road.”
Jacob asks if traders can take hedges out against DGTX to counter its possible volatility during a trade. Adam confirms that, yes, we will be introducing a peg system to counter this problem while trading with DGTX.
The Journey to Get This Far
Jacob doesn’t mince his words. He brings up the fact that the journey to get this far has taken longer than we hoped. “You’ve had a couple of delays,” he says, “in fact, I think that video went viral! But the problem was the developers, it wasn’t your fault.”
Adam replies that in reality, the blame lies firmly with him as CEO, “to be honest it is my fault… there’s a lot of crappy developers out there and it’s my job not to hire them… that’s on me.”
Jacob believes that it shows a lot about Adam as a CEO that he didn’t want to launch a sub-par product and that he took the token price hit to ensure that we didn’t launch something that would have disappointed the community. It proves just how far he’s willing to go to get a good product.
He says that many products have been released that have been disappointing and unsuccessful. It’s good to see Adam keeping his standards so high. Adam agrees, “I honestly think that saved us,” he says.
“I’ve made mistakes, but I would like to be judged not by the fact that I made the mistakes but how I handled them, I hope I get judged by that.”
The Digitex Testnet Launch
The two traders speak next about the upcoming public testnet launch slated for 30th November. Adam gives some more details, explaining that it will be on the Ethereum testnet, and start with just one market (the BTCUSD perpetual swap) in free tokens.
Jacob asks if we will be adding other futures markets as well, to which Adam responds that he’s decided it’s better for liquidity not to. He says:
“We’re going to stick with perpetual swaps… I want a limited amount of markets. I don’t want a lot of markets. Liquidity is the most important thing in the market as far as I’m concerned and if products are really similar, I’d rather have one and do it well.”
How to Ensure Liquidity
When asked about his plans for liquidity, Adam explains our Liquidation Engine model and automated market makers that are programmed to lose. He says that the liquidation engine puts the profits into the Insurance Fund, and we will give them to the market makers to lose, giving them back to the market.
This is a novel idea. Jacob points out that many exchanges have for-profit trading arms trading against their users (like BitMEX); in contrast, our market makers are programmed to lose. This is a huge part of the Digitex difference. Traders actually have an edge built in their favor and not against.
Adam also briefly touches on the provably fair matching engine that is transparent and will allow people to see all actions. He reiterates:
“I want a level playing field where there is no mechanical edge no house edge working against you.”
Digitex Futures After the Testnet
Jacob appears interested but says to Adam that he’s seen many exchanges being built and that most are leaving out the U.S. Will that be the case for us? “How will it look? Is there KYC?” Adam sighs:
“Unfortunately, we have to implement strict KYC. There are no U.S. people on the exchange. We can’t sell tokens from Treasury to the U.S., we’re not operating from the U.S., the company is Seychelles. It breaks my heart to ignore the biggest market in the world but their hanging on to these centuries-old securities laws.”
Jacob asks about the non-custodial side of the exchange. Adam explains that the testnet will be launch as centralized, but we’re working hard on the non-custodial side as well. He says:
“We have a dedicated team researching the non-custodial side, the challenges… there are plenty of DEXs with no liquidity because you’re moving at the speed of the blockchain. It’s too slow and clunky, we’re trying to develop a system of decentralized accounts but with real-time trading.”
Adam thinks that Plasma is going to be the solution for us, however, there are other alternatives and our team is still figuring it out. “It’s research time for everyone,” he says, “but we’re on the cutting-edge researching decentralized real-time trading. If we can achieve that, we’re moving to mass adoption.”
Wrapping It Up
Finally, Jacob asks Adam what markets we’ll be adding next, to which Adam replies that Ethereum will be the natural next one. Jacob is curious as to why Adam is so dedicated to Ethereum and why he chose it for Digitex. He says:
“I love Ethereum, for me, it was the only contender… you’ve got other projects, but Ethereum is the best one, they’ve got the best team.. It’s the people behind an idea that really make it… I’m all in on Ethereum, I think it’s the one.”