Paradigm, a facilitator of liquidity for institutional crypto derivatives traders, is making an intriguing foray into the domain of decentralized finance (DeFi) by introducing Paradex, an innovative decentralized perpetuals platform.

Paradex, an independent entity separate from the venture capital firm bearing a similar name, distinguishes itself as a hybrid derivatives exchange that ingeniously fuses the liquidity and efficiency of centralized finance (CeFi) with DeFi’s hallmark attributes of transparency, trustlessness, and self-custody. The announcement of this platform took place at the StarknetCC event in Paris and is powered by StarkWare’s latest appchain technology.

The development of this system was, in part, motivated by the prevailing lack of trust in centralized finance following FTX’s colossal downfall, where a management-driven liquidity crisis shook the industry. In addition to addressing this trust issue, the exchange also aims to combat fragmentation across legacy CeFi risk engines, which adversely affect capital efficiency and result in reduced liquidity.

StarkWare, an esteemed company valued at a staggering $8 billion, responsible for the Ethereum layer 2 network Starknet, revealed its endeavors to create “Starknet Stacks,” a collection of software tools that streamline the process for developers to build custom layer 2 blockchains. These personalized chains can give rise to “appchains,” i.e., blockchains fine-tuned for specific applications. To bring Paradex to life as a layer 2 appchain, StarkWare and Paradigm worked hand in hand for six months in collaboration. Their shared vision includes advancing Paradex to a layer 3 system, where scalability and technology stack control will be taken to new heights.

Nafaa Hendaoui, head of product at Paradex, expressed their evaluation of blockchain scaling technologies, stressing the need for a solution that not only delivers scalability but also empowers control and customization. He emphasized that a private instance of Starknet, or Appchain, abounds in these much-needed qualities.

The Singapore-based Paradigm emerged in 2016, founded by seasoned veterans from the traditional finance domain, Anand Gomes, and Michal Koonin, who garnered extensive experience on trading floors at reputable institutions such as KeyBanc Capital Markets and Wolverine Trading. Paradigm boasts significant backing from prominent entities like asset manager GCP Capital, liquidity provider GSR, and investment firm CMT Digital, among others.