Should DEXs Be Worried After BitMEX? DeFi Founders Weigh In

Oct 1, 2020 at 21:42 UTCUpdated Oct 2, 2020 at 15:00 UTC.The sudden takedown of BitMEX has cast a new light on Ethereum's decentralized finance markets.

The value proposition of DeFi platforms becomes readily apparent during regulatory crackdowns such as with BitMEX, Robert Leshner, founder of DeFi lending platform Compound, told CoinDesk in an email.

"By contrast, DeFi done right is a breath of fresh air - complete transparency, accountability, tamper-resistance, and self-custody," he said, referring to the fact that DeFi transactions exist for all to see on Etherscan.

"In the coming months and years, regulators will likely embrace the virtues and benefits of DeFi.".

Regardless of DeFi's apparent virtues, the $11 billion DeFi market pales in comparison to the larger CEX market.

DeFi is often left copying the best CEXs have to offer.

Recently, BitMEX's most popular product found its way into DeFi markets with cryptocurrency derivatives exchange dYdX. The Andreessen Horowitz-backed firm launched its Bitcoin Perpetual Contract in May, followed by a perpetual contract denominated in ether in August.

In or about May 2018, Arthur Hayes, the defendant, was notified of claims that BitMEX was being used to launder the proceeds of a cryptocurrency hack. BitMEX did not implement a formal AML policy in response to this notification."

Stani Kulechov, co-founder of the Aave DeFi money market, told CoinDesk that builders shouldn't be daunted by Arthur Hayes' current predicament.

"For DeFi builders it might be relevant to have from the start a clear path towards decentralized governance similarly what Ethereum and Bitcoin is today, where there is no centrally controlled entity governing these protocols by design. In the end also remember who you are building for and make safe products for all stakeholders."