Maroon Updates

Your Keys, Your Coins: Maroon’s Innovative Hybrid DEX

March 20, 2024

Crypto is finally growing up. Nearly a decade and a half on from Bitcoin’s first mewling birth cries in cryptography enthusiast forums, financial institutions around the world are finally starting to take these once upstart digital assets seriously. Retail users are looking to add crypto to their portfolio, and governments globally are waking up, embarking on legislative reforms designed to bring crypto out from the regulatory cold and into the mainstream of day to day finance.

Growing Pains

It hasn’t been a smooth journey. The first wave of exchanges that have popped up to facilitate digital asset exchange have been beset with accusations of malfeasance and improper handling of customer funds. Several have collapsed completely, most recently FTX - an event which threw the entire crypto market into a multi-year winter.

It wasn’t the first time either. Mt. Gox is credited with causing the first crypto winter when it was unceremoniously hacked and 850,000 BTC of customer funds were stolen. The CEO of Binance, the world’s largest digital asset exchange, is subject to a $50 million fine, and the company $4 billion, due to federal charges of money laundering.

The Importance of Custody

For an asset class whose value is almost ideologically defined by the custody, and thus security, it confers its holders - it’s not a good look. For many, crypto is about having your own money. About owning something digital directly by a private key you hold, not a credit note on a service provider’s SQL database.

We’ve gone down this road with banks and fiat money before, and it’s the objectionable nature they frequently behave that drives many to crypto in the first place. If to trade crypto you need to surrender custody and give it to someone else, it undercuts the fundamental premise of what crypto is all about.

The Allure of CEXs

It’s understandable why people use CEXs, of course. As activity on a CEX isn’t on-chain, it’s just promissory notes being traded around, they can offer fast-paced trading experiences through traditional Web2 GUIs that appeal to retail traders. Even experienced institutional traders need quality interfacing like order books and features like accessible leveraging if they hope to build sophisticated, active portfolios both for themselves and their clients. Yet, for most now operating in crypto, it’s unconscionable to entrust your assets to centralised institutions.

Decentralised trading exists, of course. Yet DEXs lack the speed, features and interfacing necessary to cater to casual retail traders trading the hottest new memecoin on their phones in bed, or for institutions needing high volume, and often high frequency, trading. DEXs have and will have a growing role and more people become au fait with crypto as adoption grows, and when proper L2 scaling solutions become widespread, but cross-chain trading is expensive, and the technology still nascent. DEXs don’t provide the clean, institutional, regulated and retail-friendly experience traders demand.

Delivering Financial Self-Sovereignty with Maroon

Maroon’s mission is to deliver financial self-sovereignty and self-custody of digital assets to retail and institutional investors in a manner so smooth that they don’t even realise they have it. Maroon does this through its hybrid custody trading platform that combines on-chain wallets with off-chain order matching. Fast enough to cope with all trading demands, while never sacrificing user custody in the process.

Unlike traditional exchanges, Maroon’s user assets are verifiable on-chain by users at all times. Maroon stores user funds in non-custodial smart wallets that only users know the keys for. Assets deposited are recoverable at any point, even if Maroon were somehow to fail. In that event, you can set up recovery options, including social recovery, dead man switch for inactivity periods, or choosing to trust the key to a trusted institution of your choice.

Other than that, it’s the same as any standard on-chain wallet. However, with Maroon wallets, users can trade via Maroon’s off-chain order matching engine. With trades executed subsequently by Maroon on-chain. Custody is never lost, but still Maroon delivers the CEX experience - a hybrid-custody solution that is the next generation of digital asset exchange.

To access Maroon, users can login in through an account abstraction portal, rather than having to worry about using private keys that have been the traditional adoption to self custody. Users can of course still retrieve their private keys at any time, but don’t need to worry about them in order to trade.

Regulatory Compliance

After the wild west of the first decade, regulation is coming. Far from being a big bad spectre that will strangle all gains, as some crypto bros suggest, regulation is the foundation on which adoption will accelerate - and with it the growth of the crypto industry as a whole. Maroon is FATF and MiCa compliant, and EU VASP licensed, with further licensing being acquired in the UK as the new regulatory regime processes applications. It’s audited by PwC with hot and cold wallets insured by Lloyds of London. Maroon’s goal is to deliver high-grade institutionally facing and regulatory compliant crypto trading based on users retaining self-custody at all times while they benefit from Maroon’s deep liquidity and tight spreads offered through the order matching engine.

Maroon Mission

The eventual goal of Maroon is to become the biggest non-US digital asset exchange in the world, catering to a global market and focused on offering a new type of digital asset exchange that erases the stains of the cowboys of the past. To create the conditions for the trade that makes crypto grow without sacrificing the core ideals - and ultimate point - of crypto. Everyone should own their own assets, all of the time; the new on-chain financial system requires it. Maroon is building better institutions that make financial self-sovereignty a reality, and creates a path that everyone can take to it.

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