ELI5: Paradigm and Deribit OTC trading

ELI5: Paradigm and Deribit OTC trading
on August 22, 2019

Paradigm is a new chat platform that aims to take over from Telegram as the de-facto cryptocurrency chat/trading platform.

Telegram’s success in the crypto community was organic. It sprung up as a popular messenger where projects could easily create groups and supergroups for communities. Early trading groups such as Whalepool and Whale Team quickly grew to tens of thousands of members. Rumours that some Telegram groups could control crypto prices attracted even more attention.

By the end of the 2017 bull market Telegram had become the definitive cryptocurrency chat platform.

But that could change soon.

Paradigm

Paradigm is a US (New York) based trading platform that feels like a chat system.

Although early comparisons have been made with Telegram, Paradigm is actually a trading platform with a chat, rather than the other way around. In fact, in their own words “Paradigm is an institutional-grade communications platform that automates price negotiation and settlement workflows for OTC digital asset traders.”. It’s a corporate grade messenger where the focus is on OTC peer to peer crypto trading.

How Paradigm Works

Paradigm currently uses the Deribit exchange for cryptocurrency order execution. According to The Block, the messaging platform will allow other exchanges to be used in the future.

Paradigm includes a TradeBot which, like moderator bots on Telegram, monitors channels for messages.

Simillarly to IRC, TradeBot listens to messages (commands) sent to it using a slash/command syntax. For example:

/5k USD/BTC 10,000

Would be read by TradeBot as an offer for U$ 5,000 worth of Bitcoin at U$ 10k price.

TradeBot then routes the command to Deribit using the exchange’s API and provides feedback from the exchange straight on the chat.

Once the order is executed, the chat is updated and the user has then completed a trade right from within the chat.

A Deribit user on their main exchange interface would be able to see the bid for approximately 1/2 a Bitcoin in the exchange’s book.

As you can imagine, more API’s can be integrated with TradeBot. It’s perfectly feasible to integrate other large exchanges, most of which offer open API’s for order processing and account management.

Our Take

It’s a nice addition to the cryptocurrency ecosystem.

From first contact it’s not impossible to imagine TradeBot being incorporated into Telegram itself! There’s no reason why the Paradigm idea couldn’t be expanded and turned into a general purpose trading robot based on chat commands.

Proper handling of trader security and privacy are of extreme importance here. Such a bot should be able to verify transactions either using biometrics present on most smartphones or more traditional password authentication methods.

It’ll be fun to experiment with Paradigm and see how it works in practice. P2P cryptocurrency trading is the future. Decentralization is good and every development in this direction is extremely welcome.

References

Paradigm.co Official Website

Deribit Exchange

Paradigm on Twitter

Paradigm Address: 110 Wall Street, Suite 5043, New York NY

Photo Credit: Paradigm via Twitter