On 15 August, India’s leading cryptocurrency exchange, WazirX, announced that it was preparing to create and set up its first Decentralized Finance (DeFi) product in partnership with the Matic Network.The move by the exchange to create a DeFi product comes at a time when the Indian crypto industry is clouded with regulatory uncertainty.
An automated market maker allows one to list and exchange digital assets without the need of the regular order book. Formula methods are used to establish the price of an asset, therefore, developing a liquidity pool. Meaning, the price in an automated market maker only shifts when a transaction is made hence less vulnerable to external manipulation.
— WazirX: Bitcoin & Cryptocurrency Exchange in India (@WazirXIndia) August 15, 2020
WazirX DeFi testnet to be launched in September
The CEO of WazirX, Nischal Shetty, declared the DeFi product was presently being designed, and that plans were underway to launch a testnet before the end of September this year. The grounds of partnering with Matic Network was because the network offered higher scalability and output compared to Ethereum.
The final product of this new product is intended to enable users to take part in the liquidity pool in exchange for WRX tokens. Furthermore, Shetty explained that it would allow institutional assets to take advantage of DeFi liquidity to carry out trades.
To increase liquidity, Shetty explained that WazirX would team up with several liquidity providers; however, he refrained from mentioning the prospects. Besides, he stated that WazirX plans to attract current users and new institutional funds.
Indian crypto industry facing regulatory uncertainty
The new DeFi product will be launched individually from the central WazirX exchange. However, Shetty insisted that they intend to pursue a deeper consolidation between the two platforms.
Shetty noted that he was convinced that favorable cryptocurrency laws will come to India, while commenting on the regulatory uncertainty facing the Indian crypto industry .This is an opportunity for WazirX to work on a new crypto project, as it risks coming to a dead end with hardly any user, if the draconian bill proposed in 2019 is passed..