VeradiVerdict - Issue #265
As rightly pointed out in this article from Coindesk “Every CEX needs a DEX”, CEXs (‘Centralised Exchanges’) and DEXs (‘Decentralised Exchanges’) are often seen as competitors, but in reality they can be complementary with a CEX running a decentralised backend to guarantee security, transparency and permissionless transactions. Infact some of the largest exchanges in the world are already working with Brine.fi just for this one use case.
Brine.fi is a robust platform powered by Starkware, audited by PeckShield that allows CEXs, institutions, hedge-funds, high frequency trading firms and even retail users to trade crypto assets with millisecond latency while maintaining full custody of their assets. What truly sets Brine apart is its pioneering role as among the first decentralised exchange to grant institutions the freedom to execute orders exclusively with KYC-verified and known counterparties, establishing a new standard for security and compliance in the DeFi landscape for institutions.
What makes Brine special?
Innovation is an undeniably crucial constituent of decentralisation - we see new ventures within the DeFi space every day and these are as vital to DeFi as DeFi is to finance. Among the multitude of projects emerging, Brine stands out with its implementation of user-centric protocols and a strong push towards a more inclusive financial future.
The Brine Fi team includes former execs from CoinBase, PayPal, Venmo, Flipkart, Harvard, and MIT and are on a mission to deliver the best DEX experience possible to traders and institutions alike. Brine Fi was founded by university friends Bhavesh Praveen, Ritumbhara Bhatnagar and Shaaran Lakshminarayanan.
Shaaran Lakshminarayanan, co-founder and CEO at Brine Fi on a recent article by Forbes commented: “Having built one of the largest crypto exchange in India, we have had to diversify users assets constantly in multiple exchanges and venues to reduce asset loss risk due to troubled exchanges/parties, with Brine Fi we make it easy for institutions, centralised exchanges, HFT traders and retail users to reduce their counterparty risk and at the same time get the best price for their orders in the industry”.
A decentralised exchange allows users to trade on-chain i.e. traders can get their orders executed on the blockchain and hold full custody of their assets with them while placing these trades. While it could be the safest way to trade, majority of the institutions & traders opt for CEX today to counter higher trading fees on DEXs, price slippage, transaction fees ($5-$25 per transaction), liquidity issues, the absence of an orderbook, transaction delays and an inability to provide privacy on orders causing front-running attacks. All things that can impact profit margins and substantially increase the uncertainty of specific trades.
As CZ, the founder of Binance mentioned “Although DeFi evolution could take some time, it will likely take over centralised exchanges in the future”, we believe Brine is working towards catalysing this evolution. Brine allows traders to get access to the merits of a DEX and a CEX at the same place. Moreover, high volume traders and institutions don’t need to worry about front-running attacks anymore as Brine provides complete privacy on orders by using zkP (Zero Knowledge Proofs). To make it even more attractuve Brine has also priced their trading fees to be among the industry lowest (0.05% - 0.01%), making it an even more compelling choice as your go-to trading destination.
Brine’s commitment to DeFi is demonstrated by its continued contribution to the space, the latest example of which is the SafeGate wallet (safegate.app), which is currently being developed by the Brine team to take the name of the first hybrid MPC:AA wallet on starknet & many other ecosystems.
A Closer Look at Brine
Brine has two components: the off-chain section stores wallet based data and current state of orders and trades, creates batches for transactions and sends state updates to the L2 scalability engines, while the on-chain section holds the state commitments and system assets, manages accounts on-chain and is responsible for enforcing the validity of state transitions.
High level architecture of Brine:
The user deposits funds by interacting with the smart contract. Once confirmed, funds are transferred to the Brine wallet.
Whenever the user creates an order, they sign it with their Brine Key, with all the necessary parameters. Upon finding a suitable order, Brine matches the order and the same is then sent to the batch processor. The batch processor sends batches to SHARP (shared prover), which sends it to the starkware verifier and is finally pushed to L1 as a state update refreshing the balances of contract wallets.
Withdrawals can be made directly via the smart contract or by sending a request to Brine which allows the user to withdraw the funds with reduced gas fee.
Brine aims to offer a scalable infrastructure that can support growing demand while adhering to principles of decentralisation and security inherent in the world of DeFi by combining extensive research and development efforts with potent strategies.
Brine by the numbers
Launched to mainnet just weeks ago, Brine is already running volumes of over $500m, becoming one among the top ranked DEX globally (featuring #5 Dexes in DeFillama).
Brine is currently executing $3 million - $6 million daily trading volume and its high-speed execution engine is attracting a variety of high frequency and large institutional traders to its platform.
Pantera and Brine
Pantera recognizes the transformative potential of Brine in revolutionising DeFi and the key factor behind our partnership with Brine is our belief in their mission to dismantle financial barriers through decentralised technology and pave a new path towards financial inclusion. Moreover, by investing in projects that prioritise user-centricity and transparency like Brine, Pantera strengthens its commitment towards driving positive change within decentralised ecosystems globally. The alignment between Pantera's values and those upheld by Brine further solidifies our partnership as we forge ahead towards realising a more accessible world of finance.
- Paul Veradittakit
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Hi, I’m Paul Veradittakit, a Managing Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.
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