Paradigm, a provider of liquidity to institutional crypto derivatives traders, is expanding its horizons into the realm of decentralized finance (DeFi) through the introduction of Paradex, a decentralized perpetuals platform.
Paradigm, distinct from the venture capital firm bearing the same name, has introduced Paradex as an innovative hybrid derivatives exchange. This cutting-edge platform seamlessly integrates the liquidity and efficiency of centralized finance (CeFi) with the transparency, trustlessness, and self-custodial features of decentralized finance (DeFi). Notably, the exchange leverages the newly revealed appchains from StarkWare, a prominent scaling technology giant, as officially disclosed during the StarknetCC event held in Paris.
The system was created with the primary goal of tackling the prevailing distrust in centralized finance, which stemmed partly from the catastrophic multibillion-dollar collapse of FTX due to a liquidity crisis driven by mismanagement. Additionally, the platform endeavors to confront the issue of fragmentation across legacy CeFi risk engines, the software responsible for analyzing market risks. This fragmentation has been detrimental to capital efficiency and has resulted in reduced liquidity levels.
StarkWare, the company valued at $8 billion and renowned for developing the Ethereum layer 2 network called Starknet, has announced its latest project known as "Starknet Stacks." This initiative aims to provide software tools that simplify the process for developers to build custom layer 2 blockchains. These tailored chains, referred to as "appchains," are designed to be highly optimized for specific applications.
Notably, StarkWare partnered with Paradigm over a six-month period to collaborate on the creation of Paradex, which has been successfully integrated as a layer 2 appchain. Looking ahead, both companies plan to continue their joint efforts in evolving Paradex into a layer 3 solution. This upgrade will offer enhanced scalability and greater control over the technology stack, opening up new possibilities for developers and users alike.
“As we began evaluating blockchain scaling technologies that would enable Paradex’s ambitious vision, it became clear that we needed a solution that would not only delivers scalability, but also control and customization. A private instance of Starknet, or Appchain, provides this in abundance,” Nafaa Hendaoui, head of product at Paradex, said in a press release.
Paradigm, a Singapore-based company, was established in 2016 by Anand Gomes and Michal Koonin, both seasoned finance professionals with extensive experience from trading floors at renowned institutions like KeyBanc Capital Markets and Wolverine Trading. The company has garnered support from prominent investors such as GCP Capital, GSR (a leading liquidity provider), and CMT Digital, among other notable firms.