Hybrid DEX, INNODEX, emerges amid FTX, Silvergate liquidity crises

Silicon Valley Bank (SVB), representing the United States information technology hub, Silicon Valley, went bankrupt due to a bank run, massive deposit withdrawals, in under 14 hours. 

SVB’s bankruptcy is the second-largest in history after Washington Mutual went under during the Global Financial Crisis (GFC) in 2008.

Silvergate Capital, one of the top 10 cryptocurrency banks that announced voluntary liquidation on Feb. 8, is in the same situation as SVB. Silvergate said it suffered significant losses and sold billions of dollars in assets to address withdrawals a day after the crypto market crashed. The implosion began when investors began withdrawing money following the collapse of FTX.

As CNBC said:

“SVB claims that they have little relation between cryptocurrency companies and banks, but investors are connecting the two events, saying that SVB, like Silvergate, has become inevitable to reorganize financially.”

The fear of “bank run” remains

There are expectations that the liquidation of Silvergate, like the FTX bankruptcy, will cause a liquidity contraction. According to a recent report by JP Morgan, “the bankruptcy of Silvergate Bank will bring another disappointment to the cryptocurrency market,” and “it is difficult for cryptocurrency exchanges to change their networks for dollar deposits and withdrawals. The bankruptcy of Silvergate will significantly impact the cryptocurrency industry that relies heavily on a fast and efficient deposit and withdrawal system.”

The cryptocurrency market, which slightly recovered at the beginning of the year, is now inching lower following news of Silvergate’s liquidation. Bitcoin has since fallen from the $25,000 zone, testing $19.700 last week. Analysts expect another FTX-like incident to possibly force the markets lower.

Hybrid DEX technology to offer reprieve?

Due to consecutive ‘bank run’ incidents, the safety of investor assets is being emphasized along with liquidity contraction. In particular, the cause of the FTX bankruptcy was the unauthorized use of customer funds. Since then, existing exchanges have proposed various measures, such as periodic audits and reserve fund proofs for deposit methods and transparency, but a clear solution has yet to be found.

As the demand for ‘fund safety’ increases, the trading volume of decentralized exchanges is gradually increasing. Among them, attention is focused on a technology that solves the two biggest hurdles for existing users who want to move to decentralized exchanges: gas fees and transparency of assets.

The technology that does this is called “Stay Pending”. 

NvirWorld’s “Stay Pending” has been developed with its independent technology specializing in cryptocurrency transactions. Collecting transaction records and recording the results on the on-chain at once is possible, relieving the burden of gas fees for users and maximizing convenience.

The decentralized hybrid exchange “INNODEX” has been developed based on this technology. It is possible to store and trade assets in each individual’s wallet without complex personal authentication like a decentralized exchange. The ownership history of personal assets can be transparently confirmed on the blockchain. In addition, it offers a revolutionary transaction system that eliminates gas fees that occur with each trade, which is a chronic drawback of decentralized trading.

It absorbs only the advantages of centralized exchanges and decentralized exchanges. The core of ‘INNODEX’ is to directly store and trade users’ assets in their wallets rather than entrusting them to third parties. They also aim to provide a trading system through a bid/ask window without transaction gas fees like a centralized exchange.

Gas fees are not incurred for every transaction but only once when personal assets are synchronized with the blockchain at a designated time each day. Synchronization gas fees are not incurred if there is no change in the user’s assets.

The industry is paying attention to ‘INNODEX’ as an alternative that can alleviate the anxiety factors of existing cryptocurrency exchanges. It is evaluated as another form of evolution of cryptocurrency exchanges. Such attempts may create a new resonance in the stagnant cryptocurrency market. Having completed its fourth CBT, ‘INNODEX’ is expected to launch its open beta service in Q1 2023.

Meanwhile, the industry has recognized NvirWorld, a blockchain specialist company that develops and provides platform services based on various patented technologies, for its official partnership with Solana and ConsenSys. NvirWorld is the issuer of the deflationary coin “NVIR”.