Paradigm Dives Into DeFi Using StarkWare's Appchains

Paradigm, a liquidity provider for institutional crypto derivatives traders, is making its foray into decentralized finance (DeFi) with the introduction of Paradex, a decentralized perpetuals platform. Paradex, a separate entity from the venture capital firm with the same name, is a hybrid derivatives exchange that merges the liquidity and performance of centralized finance (CeFi) with the transparency, trustlessness, and self-custody features of DeFi. The platform leverages the newly announced appchains from StarkWare, a prominent scaling-technology giant, as revealed during the StarknetCC event in Paris. The creation of Paradex was driven in part by the need to address the lack of trust in centralized finance following FTX's multibillion-dollar collapse due to a management-driven liquidity crisis. Additionally, the platform aims to tackle the fragmentation across legacy CeFi risk engines, which hampers capital efficiency and results in decreased liquidity. StarkWare, known for its $8 billion-valued Ethereum layer 2 network Starknet, recently announced the development of "Starknet Stacks," a set of software tools simplifying the creation of custom layer 2 blockchains. These custom chains can establish "appchains," which are blockchains optimized for specific applications. In collaboration with Paradigm, StarkWare integrated Paradex as a layer 2 appchain, with plans to further develop it into a layer 3 solution, offering greater scalability and control over the technology stack. Nafaa Hendaoui, head of product at Paradex, expressed their rationale for choosing StarkWare's solution, stating, "As we began evaluating blockchain scaling technologies that would enable Paradex's ambitious vision, it became clear that we needed a solution that would not only deliver scalability but also control and customization. A private instance of Starknet, or Appchain, provides this in abundance." Paradigm, headquartered in Singapore, was established in 2016 by Anand Gomes and Michal Koonin, traditional finance veterans with extensive experience on trading floors at institutions like KeyBanc Capital Markets and Wolverine Trading. The company has garnered support from notable entities such as asset manager GCP Capital, liquidity provider GSR, and investment firm CMT Digital. With its move into DeFi, Paradigm is positioning itself to cater to a broader audience of traders and investors seeking the advantages of decentralized and self-custodial platforms. By leveraging StarkWare's appchains, Paradex aims to combine the best features of both CeFi and DeFi, delivering a comprehensive and efficient trading experience.