Decentralized Finance space is growing exponentially, all thanks to the ease of usage and enhanced user experience. Shapeshift is the latest to join the DEX bandwagon and eliminates the need for KYC requirements.
The non-custodian cryptocurrency exchange has completely transformed its business structure by removing its trading desk.
ShapeShift Drifts Away from KYC Model
ShapeShift has implemented DeFi to its business model and has announced that it would phase out its KYC policy and trading features to transition into an entirely DEX based service. The company said that integration of the DEX protocols on its system would provide an enhanced user experience and enable the customers to trade in Ethereum and other ERC-20 tokens.
The exchange initially required the customers to complete the Know Your Customer requirements to use its trading platform. Through the new business structure, KYC is no longer needed, and users can trade directly without ShapeShift role as an intermediary. Defi provides more flexibility, ownership, and security to the users. Thus traders can avail of higher liquidity and enhanced services.
ShapeShift CEO Erik Voorhees noted that originally ShapeShift had to be a “counterparty- the market maker-the market maker – to provide that service at scale.” However, with decentralized protocols, users can get better service. Thus, the firm is going through a revolution and allowing customers to leverage decentralized protocols. He further added that the centralized exchanges are like black boxes in which the control lies within the operators. With open-source finance, the company intends “to protect people and bring transparency to the financial system.”
As DeFi space grows at a massive scale, ShapeShift is all set to create a benchmark in the market as it alienates itself from the struggling model of centralized exchanges. Bitcoin trading would be available on ShapeShift through DEX integration in the first quarter of 2021.
Through DEX integration, the United States traders would be able to trade on ShapeShift without KYC and increase the reach of the platform to newer jurisdictions. ShapeShift would allow customers to experience frictionless and seamlessness trading without the need to share personal information.
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