• Delta Exchange captures elements of both DeFi and CeFi, round led by token-native investors like Sino Global, Aave Ventures, and CoinFund
  • Delta Exchange chose to launch as a centralized exchange, incorporating some elements of DeFi

Delta Exchange, a digital assets derivatives exchange has closed a $5 million round in the form of a sale of its DETO token which will launch today.

The exchange offers perpetual swaps, futures and options on bitcoin and over 60 altcoins with up to 100 times leverage, according to a company release. Although Delta Exchange is a centralized exchange, the DETO token incorporates some aspects of decentralized exchanges that have become popular, namely automated market makers and liquidity pools, which have led to the stratospheric growth of platforms such as Uniswap

Like the FTT token from FTX, holders of the DETO token will get loyalty perks on the exchange and liquidity providers will earn DETO as a reward in addition to the returns generated by market making. 

“DETO is integrated across the value chain of the exchange. It will help boost liquidity via liquidity mining, it will help increase volumes via attractive cashback and it will help build customer loyalty as DETO can be used to pay trading fees, at higher of market price or MSP (minimum support price). These features will boost the platform’s growth which will in turn boost DETO,” said Pankaj Balani, CEO of Delta Exchange, in a statement. 

Sino Global’s Ian Wittkopp explained to Blockworks that the DETO token builds on lessons learned and best practices from platform tokens across the ecosystem. Platform tokens, he said, act as the glue that makes a platform sticky and creates a positive growth loop.

“When reviewing tokens as an investment vehicle, we want to see a strong link between the success of the protocol/project and the value of the token. Even better if the token creates a positive feedback loop within the project ecosystem,” he told Blockworks. “We were impressed at the wide array of utility use cases. Combined we felt confident that the token could create a powerful positive feedback loop on the Delta Exchange platform…it builds on lessons learned and best practices from platform tokens across the ecosystem.”

With the rise of DeFi, token-based fundraising rounds are becoming more popular — especially as many of these projects don’t have a traditional corporate structure — but they aren’t without their own challenges. Earlier this month, decentralized exchange Vega closed a $5 million funding round via a token sale. As Vega is a purely decentralized exchange, the tokens conferred rights to the project’s governance protocol to its holders. Per Delta Exchange’s white paper, this won’t be the case for this sale.

Delta Exchange’s India angle is certainly unique because of the country’s muddy stance on bitcoin and digital assets. Sino Global’s Wittkopp cites the “enormity” of the opportunity the country presents — something that’s made apparent by the growth of volume on local exchanges like CoinDCX. That considered, one could say it’s an interesting choice the company made to pursue a centralized versus decentralized operation. 

Bill Noble, Chief Technical Analyst at Token Metrics, points out that the tradeoff between a CEX and a DEX comes down to the benefit of being free of regulatory burden versus pricing, something that Delta Exchange might have considered. 

“I would expect the competition between CEXs and DEXs to accelerate since they are both focused on facilitating trading and providing liquidly for larger investors,” Noble said to Blockworks. “Ultimately, DEXs deliver on the promise of DeFi—decentralized finance—and will always have a market for those interested in a truly decentralized financial system.”

In the end Noble believes that the future belongs to the DEX. 

“The future of all of finance will be on decentralized platforms,” he said. “Banking, lending, trading, investment, real estate, the art market and the creation of yield curves for cryptocurrencies will all occur in a decentralized environment.”

  • Blockworks
    Sam Reynolds is a Taipei-based reporter, covering digital assets and regulation throughout Asia. Before joining Blockworks he was an editor at Forkast News and an analyst with IDC.