DAEX Project Review: An Undervalued Project Aiming to Reconstruct Cryptocurrency Trading

Even though we are in a bear market and there’s a saturation of ICO projects that are not serving a real need, there are still hidden gems out there that can be considered solid projects that have a great product and team.

DAEX (Digital Assets Exchange), which is a Chinese-based project implementing a clearing and settlement solution for centralized exchanges, is one such project worth taking a look at. A closer look at DAEX will show that the solution they are developing has a real demand in the current (and upcoming) cryptocurrency market.

This article will outline a review of the DAEX project, and highlight both strengths and weaknesses of the project.

DAEX Project Overview

DAEX is creating a clearing and settlement ecosystem for centralized exchanges. The ecosystem will include a clearing chain, identity chain, settlement chain and the DAEX Wallet.

Centralized exchanges that are part of the ecosystem will have all their trades cleared on a public chain, which will establish a transparent and trustworthy trading infrastructure for their customers. The tokens (DAX) will be used to perform clearing of trades that take place between users who are part of the ecosystem, similar to how centralized exchange tokens, but in a distributed and transparent way.

The DAEX Ecosystem Proposition

The DAEX Clearing Chain uses ASPoS (Accumulative Signatures for Proof-of-Stake) as its consensus mechanism. APoS is an in-house developed algorithm that DAEX developed and bases each node’s stake on its deposit amount, activity levels and Clearing Value Factor (CVF).

They claim that ASPoS ensures nodes are rewarded based on how they contribute to the ecosystem, and penalizes malicious nodes by making them forfeit their deposits. Exchanges that join the DAEX ecosystem will have all trades cleared on the DAEX Clearing Chain (clearing happens after the trades are matched, and currently this part of the process is not transparent within centralized exchanges).

Another part of their proposition is allowing users to access their assets via the DAEX Wallet. Essentially, this provides access to any exchange within their ecosystem through one universal wallet. This not only transfers full control of assets from the centralized exchange (they currently store all their customers’ assets in hot/cold wallets until the funds are withdrawn) to the trader, but provides an efficient method for them access multiple cryptocurrencies across multiple exchanges.

The DAEX Team

Benjamin Gu (Chairman) – Benjamin Gu has experience in the clearing and settlement field for US options-based securities. He held several management level positions and is a master graduate from the University of Science and Technology of China. Benjamin was involved in the development of ENCORE, which is the system used today for clearing of all US-based options.

Jason Tang (Chief Architect & Co-Founder) – Jason Tang holds two patents in Mainland China related to development of blockchain technology. He used to work for China Zheshang Bank and was involved in the first blockchain project implemented across all commercial banks, and the first accounts receivables platform based on blockchain technology.

Hana Zhang (Co-Founder) – Hana Zhang is a cryptocurrency exchange investor and a member of IDEL (International Digital Economic League). In China she is an opinion leader in the blockchain space, and has worked for fortune 500 companies such as A.T Kearney, Dun & Bradstreet and Euromonitor International.

DAEX: Strengths and Opportunities

One strength of the project is the transfer of asset ownership from the exchange to the trader. It is common knowledge that centralized exchanges have been a target for hacking groups, even since the early days of bitcoin’s existence (Mt. Gox).

The DAEX solution will make exchanges distribute their pool of assets so that their customers each have their own wallet (the DAEX Wallet) that they access with a private key. With this infrastructure change, centralized exchanges will not need to focus heavily on protecting their hot/cold wallets like they do today, and traders will have their assets stored securely, without having to rely on an exchange to keep their assets safe.

The DAEX ecosystem strongly assists the establishment of newly formed exchanges, or exchanges that are not yet mainstream but are looking to expand. With centralized exchanges becoming increasingly popular, there are many challenges they face in such a competitive market.

One way the DAEX ecosystem can assist them is by immediately bringing them access to other traders who are using the DAEX Wallet. This will allow the exchange to obtain new customers, which should help generate higher liquidity on their platform.

DAEX has recently entered the Korean, Thai and Indonesian markets, with further plans to expand in Asia. Thailand recently implemented a new crypto regulation framework, and the Thai SEC have already received more than 20 applications for new digital asset exchanges.

The Korean government is also recognizing cryptocurrency exchanges as regulated financial institutions, and the nation is expecting more exchanges to establish in the near future. It is obvious DAEX have spotted an emerging market that they can tap into and serve.

DAEX: Weaknesses and Threats

One weakness of the DAEX project is that they are not established or big enough to cooperate with larger or more mature exchanges.

Giants like Binance, Bittrex, Coinbase etc. will be much less inclined to be a part of the ecosystem, because it requires a drastic change in their operational process and infrastructure.

Another weakness is that they are a China-based project, and China recently banned cryptocurrency trading and exchange entities. These regulations from the Chinese government restrict the DAEX project from cooperating with local exchanges and partners that could easily be accessible for them.

The DAEX Community

DAEX’s community spreads across multiple languages and countries, including:

They have 2 English telegram groups (https://t.me/DAEXOfficial_en and https://t.me/daexofficialgroup_en) which have 12,300+ users combined.

In China, they also have several WeChat groups where the majority of the community interact, presumably because this a more convenient platform for China-based users. A check of the DAEX WeChat community, reveals that they have more 10,000 users spread over 80+ groups.

Final Thoughts

DAEX provides a viable solution for centralized exchanges in the current market.

Overall, it promotes a more efficient and trustworthy trading environment for both the exchanges and traders who are part of it. Exchanges will be considered as a more trustworthy entity upon having their trade clearing and accounting information publicly displayed, and they will not be at risk to hackers, because a customer pool of assets will not be stored in their own exchange wallet.

The team behind the project certainly seems to be capable of delivering their proposal. Benjamin Gu has an impressive background in the traditional financial sector for clearing and settlement of options trading.

Jason Tang’s development experience and achievements are definitely worth noting. He has received two patents and has been involved in bank related projects for blockchain technology.

With a scalable solution that is able to serve an already large and expanding market, DAEX is in a good position to take advantage of new government regulations that continue to support cryptocurrency exchanges, and create a better infrastructure for trading cryptocurrencies.

Currently, DAEX has launched the second round of their bounty campaign, where they are rewarding a total of 1 million DAX tokens (Round 1 was 400k and Round 2 is 600k) across several tasks.

The KYC for their public sale is now live at www.daex.io and the sale starts at 1PM GMT, September 9, 2018. The DAX price for the public sale is $0.07 with a 7,000 ETH soft cap and 10,000 ETH hard cap.

Given DAEX’s proposition and goals, their token sale could be a great opportunity to get involved with the project.

Related: Crypto Trading: 4 Intelligent Tools To Help You Manage Your Portfolio