Nischal Shetty, co-founder & CEO of WazirX crypto exchange, has announced plans to establish India’s largest decentralized exchange (DEX). Notably, this new DEX will not be registered in India, following a similar model to WazirX, whose parent company is registered in Singapore.
During a recent virtual meeting of the Committee of Creditors (CoC), Nischal Shetty proposed launching a DEX and a native token as a means of compensating the exchange’s 4.4 million users who suffered a 45% loss due to a ₹2000 crore cyber hack on July 18. The WazirX management plans to restart trading on the exchange and simultaneously launch the new DEX in January 2025.
A question about the registration of the new DEX in India was posed to Nischal Shetty during the CoC meeting. In response, he clarified the entity’s registration plans, stating, “The DEX would need to be through a DAO. Due to the complexities of establishing such a structure in India, the entity will be registered outside the country as a nonprofit foundation.”
The meeting also touched on plans to revive WazirX’s operations and introduce a new DEX, designed to enable real-time, wallet-to-wallet cryptocurrency swaps, allowing users to maintain control over their funds. This approach differs from WazirX’s previous custodial model for peer-to-peer transfers. However, Nischal’s announcement raises concerns about whether a platform operating outside of India can regain user trust, particularly given the existing loss of faith in the exchange and its founder.
When a CoC member inquired about the funding status of the DEX, Nischal revealed that no funds have been secured yet. He explained, “Not yet, but the plan is to reach out to investors once the initial version of DEX is ready.”
WazirX has set an ambitious goal of becoming India’s largest DEX within a year, a claim that raises eyebrows given the firm’s current credibility issues. With the DEX still in its design phase and a test version not expected until January 2025, it’s unclear why such a bold claim is being made prior to the official launch.
WazirX is currently working on a three-year financial forecast and developing profit-sharing arrangements with Scheme Creditors. The timeline provided by the exchange suggests that the restructuring process may be lengthy, potentially leading to significant delays that could have a negative impact on users.
Another concern is that WazirX’s success still heavily relies on its user base. The firm has acknowledged that its future profits will be contingent on the number of existing users who continue to use the platform once it reopens, as well as the anticipated growth in new users and user balances.
With users already reeling from the drama, missing out on the bull run, and losing their hard-earned money, it’s a tall order to expect them to trust the exchange again. Compounding the issue is the exchange’s lack of clarity on how it plans to regain the trust of its existing users.
WazirX’s bold plans to launch a decentralized exchange and restructure its operations are fraught with significant challenges. The decision to register the DEX outside India through a DAO structure may further exacerbate user trust issues. The success of WazirX’s restructuring hinges on its ability to retain existing users and attract new ones. Given these hurdles, WazirX’s ambition to become India’s largest DEX within 12 months seems more aspirational than achievable. Only time will tell if these plans will ultimately succeed or falter.
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