The Advantages of DeFi on the Internet Computer

In the wake of FTX's downfall, decentralized exchanges like MakerDAO and Aave are experiencing double-digit weekly growth rates. Sam Bankman-Fried's tragic unraveling has clearly demonstrated to the whole world that without personally holding the requisite cryptographic keys, no one can truly claim ownership of their coins. That's why people across cryptocurrency are increasingly embracing an adage from the early days of blockchain: "Not your keys, not your coins."

The Problem with FTX

Millions of users may have been defrauded into thinking their assets were safe with FTX. In building up Sam Bankman-Fried, major news sources such as the New York Times arguably share some responsibility for misleading investors. As recently as May, the New York Times was glorifying what should have been identified as red flags in Bankman-Fried's lack of professionalism and flaunting of other people's rules.

Even as late as November 14, 2022, the New York Times' first interview with Bankman-Fried after the collapse of FTX felt like a salvage mission more than investigative reporting. The NYT also gave credence to a hit piece riddled with errors and inconsistencies commissioned by @ArkhamIntel despite them never having previously commissioned a report before. They published at least a couple of articles with the same 'Buzzy Cryptocurrency' tag that was clearly constructed to denigrate the validity of blockchain's largest R&D operation while making a wide range of unfounded and fallacious accusations that certainly made it appear as though this was an orchestrated and coordinated attack on the integrity and credibility of the DFINITY foundation.

But the tune, and the times, have changed. According to the New York Times' more recent reporting, Bankman-Fried allegedly used his customers' assets to borrow against himself to prop up struggling projects like Alameda Research. In fact, the amount of customer assets lent to Alameda could exceed $10 billion USD. Not only that, but a lawsuit from 2019 has come back to haunt FTX, with Bitcoin.com accusing the exchange of breaking anti-racketeering laws by aiding and abetting price manipulation.

Crypto Leaks says the Internet Computer's ICP token was among the cryptocurrencies negatively impacted by targeted attacks from FTX and Alameda Research executives. Similar sensational claims of price manipulation, made weeks ago by major cryptocurrency influencers like BitBoy (Ben Armstrong), are also finding collaboration from mainstream news sources, like Bloomberg.  

Meanwhile, MSNBC reports that FTX has turned on its former CEO, accusing Sam Bankman-Fried of colluding with Bahamian regulators to drain funds from his former company after it filed for bankruptcy.

Ironically, what's shaping up to be perhaps the most massive breach of trust in blockchain history was made possible because investors in decentralized cryptocurrencies have overwhelmingly embraced centralized exchanges (CEX) due to perceived convenience and security. And, while CEX is arguably necessary to mediate between fiat and cryptocurrency, blockchains were pioneered with the philosophy of restoring ownership to individuals by reducing centralized institutional power - the exact opposite of FTX's alleged modus operandi.

Individuals and institutions impacted by the fallout from FTX have a long road of reconstruction ahead. The DFINITY Foundation's Internet Computer (ICP), the blockchain that powers Infinity Swap, was hit particularly hard by FTX's alleged financial maneuverings.

Moreover, according to Crypto Leaks, favorable reporting on Sam Bankman-Fried, as well as the New York Times' highly controversial publication of ICP analysis by the largely discredited Arkham Intelligence group, appear to be connected to FTX's alleged criminal activities.

Thankfully, as evidenced by ICP's rapidly growing GitHub commits, the Internet Computer community and a growing number of software developers are dedicated to building back better than ever - and hit pieces won't stop them in the future. Ultimately, the truth will win out, and the world of cryptocurrency will be better for it.

How Infinity Swap is Different from FTX

In contrast to FTX, Infinity Swap is a decentralized exchange (DEX) that facilitates peer-to-peer transactions that occur directly between individuals. In this way, Infinity Swap's marketplace aligns with the original intent of blockchain technology by empowering the individual with direct asset ownership and control through decentralized finance (DeFi).

DEX transactions aren’t officiated by banks, brokers, or any other intermediary. In other words, there is nobody who can intercept your assets or hold them hostage to fund shenanigans in the Bahamas. With Infinity Swap, you need not worry about whether to trust the integrity of intermediaries, because there are no intermediaries. All DEX transactions happen on the blockchain via smart contract software.

Advantages of Decentralized Exchanges

Due to running on the blockchain, DeFi solutions such as Infinity Swap have many advantages over centralized exchanges when it comes to trading cryptocurrency.

Reduced Hacking and Counterparty Risk

First of all, funds traded on DEX are stored in individuals' own wallets. This substantially reduces both hacking risk and impact. Whereas hackers have routinely infiltrated CEX and siphoned hundreds of millions of USD from institutions like Mt.Gox, Infinity Swap simply doesn't have the same kind of vulnerability. Think of it this way. Hacking a CEX like Coinbase would be akin to robbing the vault at a bank. On the other hand, hacking a DEX like Infinity Swap would be akin to planning out how to pickpocket everyone in New York City!

Infinity Swap's decentralization also guards against what's called counterparty risk, or the chance that one party in a transaction fails to follow through. For example, whenever you order something online, counterparty risk refers to the possibility that your order won't be fulfilled or will get lost or messed up.

In the financial world, stocks, bonds, and other kinds of investments all carry their own kind of counterparty risk. DEX's use of automated smart contracts eliminates many transaction risk points by cutting out all intermediaries. DEX users also don't have to worry about the DEX itself defaulting or running out of money like FTX in the aftermath of a bank run.

Greater Privacy and Data Security

In addition to default risks, CEX can also endanger customers' personal data. CEX must comply with “Know Your Customer” (KYC) policies and regulations for governments and private institutions. Opening an account typically requires giving a CEX information about your legal name, address, and date of birth, as well as providing copies of photo IDs, passports, and sometimes social security numbers. While sharing this personal data is unavoidable and necessary in the modern world, it should only be shared when absolutely necessary. After all, identity theft is an ever-present danger and data breaches happen all the time.

By minimizing reliance on CEX and using Infinity Swap or a similar DEX, you can avoid giving your personal data to yet another centralized and vulnerable organization. DEX doesn't have a central authority, and thus KYC isn't needed. Your identity, if relevant, only needs to meet the verification standards of the other party directly involved in a transaction. Moreover, because transactions occur on the blockchain, proof of solvency is transparently available.

Open Source Blockchain Innovation

While it can be a bad idea to share personal data, it's almost always a good thing when projects share code for others to build on. DEX platforms like Infinity Swap are built on open-source code. They are composable, and not a walled garden like traditional financial software.

Anyone who's interested can see exactly how they work and leverage the tools that others have created before them. For example, Uniswap’s code has been adapted by other DEX platforms including Sushiswap and Pancakeswap. DEX has led to entirely new protocols that eliminate the need for market makers for investors who want to accrue passive returns on capital.

Due to the open nature of DEX, it's also a hotbed of innovation for new cryptocurrencies and discovering associated use cases. If you’re looking to strike it big on a hot new token in its earliest days, a DEX like Infinity Swap is the place to be! DEX marketplaces offer a dizzying array of assets to trade.

Practically anyone can mint a new token and try their luck. It's the digital finance equivalent of the Wild West in the best sense - a wide-open land of opportunity. Just make sure to stick with vetted projects and use common sense.

And speaking of innovation - the fact that Infinity Swap runs on the Internet Computer distinguishes it from other DEX. Thanks to ICP's direct integration with Bitcoin, it will be possible to enhance Bitcoin with smart contracts without intermediaries. Ethereum integration is also coming. This means Infinity Swap will be part of a bridgeless future, which is greatly desirable. During this year alone, bridge hackers have stolen an estimated $1.4 billion USD to date.

Expanded Accessibility for the Unbanked

Developers and speculative investors aren't the only ones who benefit from DEX. More than 1.4 billion people still do not have access to a bank account. DEX makes peer-to-peer lending possible without banking infrastructure. To use Infinity Swap, all that's needed is a smartphone and an Internet connection. That's part of the reason DEX has gained popularity in developing economies across the globe.

Lower Costs and Fees

Not only is DEX more accessible; it's also cheaper to use. Although the fees imposed by DEX can fluctuate based on network conditions, they are still far lower than CEX due to the absence of intermediary parties that require payment to facilitate a transaction. And, thanks to running on the Internet Computer, Infinity Swap doesn't even charge gas fees like Ethereum-based DEX such as SushiSwap.

Instead, Infinity Swap users benefit from the Internet Computer's novel implementation of reverse gas fees. On the Internet Computer, developers pay to host resources rather than users paying to access resources. Understanding how this is possible requires knowing about how software canisters work, which is a subject I've discussed at length in another article.

Conclusion: Infinity Swap DeFi is the Future

As the drawbacks of CEX become more broadly known, people are flocking to DEX like Infinity Swap to protect their assets. Our unique marketplace leverages the advantages of DEX and the Internet Computer and will allow trading classic coins like Bitcoin and Ethereum at Web speed without bridges, thanks to the versatility of the Internet Computer blockchain. Stay tuned for exciting updates!

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*Disclaimer: While every effort is made on this website to provide accurate information, any opinions expressed or information disseminated do not necessarily reflect the views of InfinitySwap itself.