WazirX, an Indian-based crypto exchange, is set to enter the decentralized finance (DeFi) space amid regulatory uncertainties in the country. In an August 15 blog post, the company announced that it is planning to develop and launch its first DeFi product in partnership with the Matic Network.
According to the announcement, WazirX is partnering with Matic Network to launch an Automated Market Maker (AMM) protocol. An AMM is one of the most innovative applications of DeFi meant to replace order books used in traditional exchange platforms. The protocol creates a liquidity pool where tokens are automatically traded using an algorithmic approach in a decentralized system.
WazirX said it chose the Matic network to launch its AMM protocol because of its Ethereum Layer2 which provides high level of security, scalability, throughput and decentralization. According to WazirX, the current high gas costs on the Ethereum network make it ineffective for any meaningful DEX to be used by large scale user base. The exchange said Matic on the other hand offers low cost gas fees and the side chains have also shown throughput of 7,200 TPS, which is very promising for the scale it wants to achieve with its AMM protocol.
WazirX?s AMM protocol is still under development. According to the announcement, the exchange is aiming to launch a testnet of the product in September. WazirX said it will keep sharing progress of the project with the community over the next few weeks until the launch.
According to Siddharth Menon, Co-founder and COO of WazirX, the exchange wants to bring the future of finance today and build infrastructure for the next big thing for small and big investors. He is optimistic that huge funds are coming into the DeFi space from institutional funds and that within the next few months, there will be an uptick of 6X volume in DeFi space with $5.6 billion already locked.