Using High-Speed Self-Custodial Exchanges: A Look at DeversiFi

22 Jun 2020

Self-custodial exchanges are often seen as a necessity in the cryptocurrency space: when a centralized trading platform suffers a security breach or mismanages funds, users lose money. Self-custody means users manage their own funds, and as such, even if the platform fails, users retain control of their funds.

Most self-custody trading platforms, however, fail to live up to the standards and experience set by centralized exchanges. This is especially true if you are a professional trader or fund. Some require extremely high fees to trade, others have thin order books and illiquid trading pairs, while others are simply not user friendly, unreliable or fast enough.

A self-custodial trading platform standing out is DeversiFi. As the platform uses StarkWare’s batching technology it’s able to settle over 9,000 trades per second via its user interface or via an API. The trading experience on it, as such, rivals that of a centralized exchange while offering some interesting advantages unique to the platform

DeverseFi is Built for Professional Traders

Unlike other self-custodial trading platforms, DeversiFi clears and updates users’ balances instantly, removing the threat of rollbacks of failed trades. Its order books are off-chain, while settlement occurs on the Ethereum blockchain. Traders, as a result, benefit from fast-moving order books without having to trust the exchange itself.

Moreover, it uses zero-knowledge proofs to ensure users’ balances and trading strategies remain private and safe from interception, despite settlement being on the blockchain. The website reads:

"A cryptographic Zero-Knowledge Proof of the DeversiFi state balances is then published periodically to the Ethereum blockchain."

The funds traded on DeversiFi, according to the exchange’s website, are secured by heavily audited smart-contracts ensuring that even if the platform goes offline, users can retrieve their assets.  It’s built so users can trade directly from their wallets, or through enterprise custody solutions.

Liquidity is also not a problem, as DeversiFi aggregates liquidity from both centralized exchanges and other self-custodial sources. This way, traders can capitalize on low slippage and a tight bid-offer. Its advantages also include competitive fees.

On DeversiFi, fees range from 0% to 0.2%, with up to 50% of the exchange’s revenues going to buy-and-burn its native NEC token from the market, in transparent auctions set to run every week. Per its words, it offers the “same competitive fees that you would expect from a large centralized exchange, and vastly lower fees when compared to self-custodial trading venues.”

In the future, DeversiFi is set to expand its offering with a “second-by-second countdown timer that shows exactly when your withdrawals will be processed.”

How to Use DeversiFi

As DeversiFi is a self-custodial cryptocurrency trading platform, the traditional email and password sign-up process is not applied. Instead, we have to connect our wallet to the exchange, so we can use our balances to trade on it.

To do this, all we have to do is on the exchange’s website click to start trading, and select the type of wallet we are using. There are a few available options, including using MetaMask, a Ledger wallet, and a Keystore or local wallet. Notice that MetaMask refers to browser wallets – Brave and Opera’s built-in cryptocurrency wallets, for example, work.

A local wallet will see DeversiFi create a wallet for us to use when trading on the platform. These wallets are automatically generated and can be backed up using a password.

The trading interface itself is simple to use. On the right, we have our token balances widget – showing both the balances in our wallet and those ready for trading on the exchange. To use DeversiFi, we will have to “lock” funds on the trading platform’s smart contract, which could be seen as an equivalent to depositing funds on a centralized exchange.

The rest of the trading platform resembles that of a professional centralized platform, including comprehensive charting tools, market and limit order functionality, order history etc so there aren’t a lot of differences to go into. DeversiFi does, however, have an over-the-counter (OTC) trading option, allowing users to set their own rates and trade with a specific counterparty in a completely decentralized and trustless fashion

These OTC trades are not shared on the exchange’s regular order book, and can instead be shared via a unique URL between the trading partners or broadcast as a public trade opportunity. Fees on these transactions, which can be used to execute larger orders without affecting the price of a token, are as low as 0.02%.

DeversiFi’s OTC trades can also be used when the trading parties do not trust each other. Strangers swapping tokens, for example, can use the OTC trades to ensure no one is going to get scammed, as the smart contract determines the trade is only settled after both parties fulfill their end of the deal.

All of this means that when using DeversiFi, users are more in control of their funds than they are when using centralized trading platforms without compromising on functionality. This exchange’s advantage over other decentralized exchanges are its infrastructure and low fees, which allow it to compete with centralized platforms when it comes to quality experience.


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