LXDX, a Malta-based provider of a platform to enable cryptocurrency trading, recently raised funding from Dymon Asia Venture Capital Fund LP to make its platform more widely available.
The amount of the deal was not disclosed.
For investors of cryptocurrencies, crypto trading can be frustrating due to repeated downtimes, delays, lack of liquidity and large price spreads which have made it difficult to have a meaningful investment in digital currencies.
LXDX is looking to change this by matching orders significantly faster than other solutions, and to enable market makers to offer meaningful liquidity across many products.
Launched in early 2018 it is led by Joshua Greenwald who is chief executive officer, Will Roman, chief operating officer, Steven Thomas, chief technology officer, and John Hazen, chief financial officer.
Greenwald is formerly of SpaceX and founder of Greenlight Trading, a high-frequency trading outfit based in Chicago.
LXDX offers full-spectrum technology services for cryptocurrency exchanges, including software that powers both public retail exchanges and private exchanges for institutional block trading. It is able to provide the performance, security and compliance required by professional traders and institutional investors.
The company is working with Dymon Asia Ventures to broaden its reach and strengthen its technology offerings. In addition to Dymon Asia Ventures, advisors include cryptocurrency investor and author Arianna Simpson, Justin Litchfield of Prochain Capital, and Alex Disney, formerly of Cumberland Mining. Legal representation includes DLA Piper, Masur Griffitts +, and DF Advocates.
Dymon Asia Ventures is the venture capital arm of Dymon Asia Capital, an alternative investment manager headquartered in Singapore with approximately US$4.9 billion under management as of June 29, 2018.
The management of LXDX, shared with BizWealth, their thoughts and hopes for LXDX moving forward.
What was the idea behind starting this platform? How is it unique and different from other cryptocurrency platforms?
Roman: Traditional financial markets have at least 25 years more technological experience than crypto. There’s a lot of tribal knowledge -success, mistakes, failures -to draw from. Crypto markets, for all their similarities, were not built with the same standards that are commonplace in conventional markets.
When Bitcoin was born, it wasn’t imperative that an order could be filled in 20 nanoseconds, but as the digital asset marketplace matures, and institutional players enter the game, attributes like latency, security, regulation, and compliance become far more important.
LXDX aims to bridge that gap, not only to facilitate the institutional investors entering the market, but also to provide those same features to everyday users.
Thomas: The early idea for LXDX was born when the founders were discussing our attempts at market making on the existing cryptocurrency exchanges. We experienced several problems on the crypto exchanges which have long since been solved by traditional retail exchanges. The crashing, out-of-order execution, and hacking/theft were a huge surprise and concern; the market potential was there, but the exchanges should have been far better considering the volumes for which they were responsible.
LXDX is different because the founders and engineers are the target market. We are the institutional traders that the competition has failed to attract, so we are keenly aware of what’s important to big banks, proprietary and semi-pro traders, and your average customer alike.
We previously solved the exact type of performance problems experienced facing the industry today. A several of us have a background in infosec, so we have a healthy paranoia about hacking and theft.
Greenwald: We built LXDX to bring the best features of traditional markets to crypto markets. We’ve spent our careers in trading, we built the platform we’d want to use. We run our exchange on our own hardware, not the cloud, radically improving performance and security when compared to the majority of the incumbents. We’re infinitely scalable. Our platform is built to support the trading of an enormous variety of assets.
Malta is the cryptocurrency hub of the world. Can you explain some of the appeal or benefits of being based in Malta?
Greenwald: Regulatory clarity. The recognition that cryptocurrencies, while transformative, need new legal frameworks and the will to put these into law. Openness and willingness to experiment and grow with these emerging technologies.
Roman: A clear financial regulatory environment enables companies and service providers to grow while ensuring the safety of investors. Malta provides a jurisdiction which has passed clear laws that create thoughtful rules that consider the unique opportunities and constraints of the cryptocurrency markets.
What are the key milestones LXDX hopes to achieve say over the next one, three and five years?
Greenwald: LXDX aims to massively drive down the effective costs to trade over the next year for both large and small cryptocurrency traders alike. We want to facilitative and participate in the massive tokenization that we believe will surely come to pass over the next few years. We would like to see 50,000 products for trade on our platform at the three year mark and one million at the five year mark.
So anyone can trade on the platform?
Greenwald: We’ve built a platform to the specifications of institutional traders, but also kept in mind the needs of retail investors. There are some restricted regions given the current state of regulations and licensing, but generally speaking, yes, anyone can trade on LXDX.
How does the platform safeguard users’ trading and personally identifying information? What are the platform’s protections against cybersecurity threats, such as hacking or intrusions?
Thomas: There are multiple layers of access to account information. The majority of our internal employees do not have physical access and none have unprecedented or unsupervised virtual access. We implement information compartmentalization very similar to most of the world’s intelligence agencies.
The hardening of our exchange is the most important aspect to us when it comes to our back end; once we achieved performance metrics superior to other cryptocurrency exchanges, we focused all efforts on data security and safety. This includes failover mechanisms, lockdowns, physical security, and cascading failure recovery protocols.
What other services does the platform provide?
Hazen: Members of the LXDX founding team spent over a decade building automated trading software for large proprietary trading firms. Our systems specialized in enabling these high frequency trading firms to obtain the best price possible in highly volatile markets.
Trading firms view this software as highly proprietary and keep its details closely guarded secret. It has never been open to the public. We have created similar technology for trading cryptocurrencies across our platform and are excited to open the door for all users to have access to professional grade trading software.