At the Cutting Edge — Digitex To Implement Plasma Technology with Matter Inc.
Since Adam’s interview with Crypto Playhouse earlier this week, where he let slip that Digitex is partnering with one of Plasma’s development teams, our social channels have been blowing up! Well, we were going to wait a little longer to bring you all up to speed, but it seems that everyone is eager to know all the details. It’s great to see that the Digitex community is as excited over our latest development as we are.
While there will be a handful of other blockchain companies implementing Plasma, Digitex will be the only hybrid cryptocurrency exchange to use this groundbreaking technology. We’ll be making history--and helping Ethereum to make history in the process!
The Matter Inc. team has announced that their company is ready to release one of the first production-ready implementations of Plasma Protocol created in tight contact with the Ethereum Foundation.
Alexander Vlasov, Head Researcher at Matter Inc., approached Adam about working with them. Naturally, Adam jumped at the opportunity to be the catalyst company that showcases Plasma technology. In partnership with SmartDec and Matter Inc., we will bring about the Ethereum blockchain’s much-needed solution to their scalability problem with the Digitex Futures exchange version 2 during the second half of 2019.
Why Does Digitex Futures Need Plasma?
Currently there are two types of exchanges: centralized and decentralized exchanges. Centralized exchanges have central servers that are very fast and reliable, offering real-time trading and all the benefits that come from that. However, centralized exchanges must hold your funds, meaning that you must trust them with your money.
Decentralized exchanges allow traders to trade without having to trust the exchange or their trading counterparties with their money. However, this means that all trades must hit the blockchain which makes it slow and costly in terms of network fees, making it unsuitable for real-time trading.
Plasma will allow Digitex to combine the best aspects of a blazing fast centralized order matching engine that allows real-time trading with the security and trustlessness of a decentralized exchange that doesn’t need or want custody of its traders’ funds.
The Plasma Protocol is going to be a game-changer for the Ethereum blockchain, and our CEO Adam is one of Ethereum’s biggest fans, calling it the missing piece of the internet.
What is Plasma?
Basically a system for opening and maintaining side chains that allow for potentially billions of transactions to happen off chain and therefore avoiding the issues associated with scalability. But it also allows for greater security and decentralized account balances; the key to a non-custodial exchange like Digitex.
Our utility token, DGTX, is required to carry out any function on our platform. All your transactions, gains and losses will be denominated in DGTX.
Being an ERC-223 token, it can be used on an Ethereum-based Plasma side chain that is controlled by an independent smart contract on the Ethereum blockchain. The exchange has no control over that smart contract that holds everyone’s funds, which means that we can operate our futures exchange using the side chain without ever having to hold onto customer funds. We can offer traders commission free trading and full security--they never have to trust us with their tokens.
Non-Custodial Trustless Spot Trading in 2019
If dominating the cryptocurrency futures market wasn’t enough, Digitex will also be using our superior technology, industry-leading partnerships, and highly liquid trading platform to offer non-custodial trustless spot trading in 2019 as well!
Using Plasma technology, we’ll be offering the same type of cryptocurrency trading that’s available on most major exchanges today--but we’ll be doing it commission-free and ensuring that customer funds are 100 percent secure at all times.
Thanks to Plasma technology, we will be one of the very few crypto exchanges that does not hold onto customer funds. And because we understand that not all traders are futures traders and we want to extend commission-free trading to everyone, we’ll be venturing into spot markets in 2019 as well.
How Does it All Work?
We’ll be going into way more detail about Digitex and the Plasma Protocol as we progress, but here’s a quick overview:
Instead of depositing DGTX into their trading account by sending them to the exchange, traders will send their DGTX to an independent smart contract that holds onto their money the whole time. This smart contract acts according to known rules and is out of the control or ownership of the exchange. This smart contract can never be tampered with or switched off or edited in anyway for as long as the Ethereum blockchain is in existence.
This smart contract then communicates with our Plasma side chain and tells it how much credit each trader has. The purpose of using a side chain is to process blazing fast transactions at 25,000 transactions per second, which is 1500 times faster than the main Ethereum blockchain. All transactions on our side chain are processed into several blocks per second and these blocks are then batch committed to the Ethereum main chain every minute.
Despite our side chain being run by only our node, the whole system is fully verifiable and trustless because we don’t physically have your money. Any person can monitor for fraudulent or malicious transactions done on the side chain by the exchange. If the independent smart contract’s fraud checker verifies a malicious transaction by the exchange, all funds are automatically moved from our side chain onto the Ethereum main chain in a mass exit that cannot be prevented by the exchange.
All of this means that the trader keeps control of his or her DGTX tokens and doesn’t have to trust our exchange. The trader’s profits and losses are updated on the side chain in real-time which is possible because they’re not hitting the main chain. This saves not only time but also gas costs.
But, let’s not get too far ahead of ourselves, it’s still early days right now. The main advantage and takeaway for users of Digitex is that Plasma will provide us with a robust and fraud-proof technology that they can trust at all times.
A Quick Workflow Example
The Digitex exchange provides the opportunity to trade futures on BTC/USD, ETH/USD, and LTC/USD pairs. Users send their orders to a Block Producer which immediately includes them in the side chain block.
The matcher keeps track of all order transactions and matches intersecting orders by sending matching transactions to the Block Producer. The Block Producer then includes the corresponding transaction in the block.
All active trades are settled at the end of the trading day. The price is fixed and profits and losses are calculated at this price.
Why Is Plasma So Important to Digitex?
There are a billion reasons why we’re jumping at the chance to be one of Plasma’s first major use cases! In fact, just as their team said they couldn’t think of a better company to work with than ours, our sentiments are exactly the same.
Our company culture is based on agility, innovation, and a strong dedication to the latest technology. Being at the cutting-edge is a place that Digitex naturally feels comfortable--have you seen Adam on a skateboard?
We’re also fiercely dedicated to offering the very best solution to our users that technology permits. Not only will we soon have a non-custodial, commission-free, 24/7 futures and spot trading exchange up and running, but we’ll be one of the first companies in the blockchain community to implement Plasma to its technology stack!
We couldn’t be more excited about the Plasma team placing their confidence and trust in Digitex and that they see the exchange for what it has: the potential to become one of the biggest players in the industry.
With commission-free crypto futures trading, the implementation of non-custodial, trustless spot markets in 2019, and the very latest Plasma technology, we’ll be turning both the futures and the crypto industry on their heads.