Why StarkEx?

The Idea

The aftermath of the FTX crash underscored the need for exchanges that blend the user experience of centralized platforms with the safety and transparency of decentralized ones. However, existing players fell short on both fronts:

• While centralized exchanges offered superior UX, transparency and trust remained significant concerns.
• Despite the transparency and security offered by decentralized exchanges (DEXs), their trading experience often lacked refinement, failing to cater to both professional traders and retail users effectively.

Selection Principles

In our pursuit of building a trustless exchange, self-custody and on-chain trade settlement were paramount. As we explored various infrastructural options, ranging from developing our own Cosmos or OP chain to settling directly into existing Layer 2 chains or building a Layer 3 on top of existing Layer 2, we established a set of rigorous selection principles:

• Avoiding Own Chain Deployment: we prioritized building the best trading venue instead of diverting resources into chain deployment that requires ensuring its sufficient decentralization and security.
• Trustlessness, Transparency, and Security: The chosen infrastructure had to be trustless, ensuring transparent, and secure transactions.
• Performance and Reliability: High throughput and low latency were crucial to offer an experience comparable to centralized venues.
• Integration Ease: Swift implementation and deployment were crucial.
• Customizability: The ability to deploy custom business logic on top of the chosen settlement infrastructure was essential for adapting to evolving market demands.

The Choice

After formulating our principles, it became evident that StarkEx was the optimal solution, meeting all our requirements. Developed by StarkWare, StarkEx is a scalability solution that  provides lightning-fast transaction processing, comparable to centralized solutions, ensuring an unparalleled trading experience and seamless UX. This is achieved while preserving complete trustlessness and transparency through three key mechanisms embedded into StarkEx:

• On-chain validations of the trading logic ensure that fraudulent or incorrect transactions, including liquidations, contrary to the on-chain trading logic are never permitted.
• The mark prices, which determine the liquidability of positions, are obtained from multiple independent oracle providers to prevent potential price manipulation and ensure fair and accurate asset valuation within our ecosystem. X10 utilizes 5 Stork nodes to define the median mark price.
• Publication of zero-knowledge (ZK) proofs on the Ethereum Layer 1 blockchain validates Layer 2 transactions, ensuring both their integrity and security.

When integrating StarkEx, X10 particularly emphasized the following capabilities of the technology stack:

• High Throughput: StarkEx is capable of processing hundreds of trades per second without any limit on order throughput. Combined with X10’s unique settlement architecture and parallel execution, this ensures performance that is comparable to centralized exchanges and surpasses that of other hybrid or decentralized exchanges.
• Abstraction of Gas Fees: StarkEx significantly enhances the user experience by abstracting away gas fees, facilitating a gas-free trading environment. In this setup, the dApp handles all gas costs related to publishing zero-knowledge (ZK) proofs on Ethereum Layer 1.
• Support for Cross-Margin Trading: StarkEx supports cross-margin trading, which is more convenient and capital-efficient than isolated margin trading, providing users with greater flexibility in managing their portfolio.
• Control Over Key Trading Parameters: StarkEx allows exchanges to retain full control over crucial trading parameters, such as margin schedules, liquidation, and funding logic. This control is maintained while ensuring the platform remains trustless.

For deeper insights, explore StarkWare's comprehensive documentation.

Beyond the above, StarkEx stands out as one of the most battle-tested scalability solutions, encompassing both zk and optimistic Layer 2 solutions.

Source: Link. As of 2024-06-10.

Distinction From Other StarkEx Solutions

Although there are multiple solutions built on StarkEx, we have introduced a unique settlement architecture combined with parallelized execution, enabling us to achieve remarkable performance in terms of throughput, end-to-end latency, and order settlement. Our performance is comparable to that of centralized exchanges and significantly superior to other hybrid exchanges or decentralized exchanges (DEXs), including those built on StarkEx.

For deeper insights into the X10 Architecture, please refer to this blog.

The Partnership

After our initial discussion with StarkWare over a year ago, we have already launched the product. We are excited to share our honest insights on the StarkEx product and our partnership.

StarkEx has proven to be a dependable core technology that enabled X10 to implement essential business logic for the exchange. This includes trading performance, featuring latency and throughput, on par with centralized exchanges and features such as partial liquidation logic, multiple trading accounts, and advanced order types. 

Additionally, StarkWare's team has been mission-driven and supportive throughout the process, providing a robust framework for developers to innovate and create solutions on top of their technology. This collaborative approach fosters a productive environment for growth and development within StarkWare's ecosystem.