An Interview with Ben Caselin on AAX- Lightning Network Integration and TARO Protocol Implementation
July 20 2022 - 3:58AM
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One of the leading crypto platforms, AAX has been making waves with
lots of new developments. Recently, the platform announced its
integration with the Bitcoin Lightning Network, which was soon
followed by another update regarding its support for TARO — a
protocol that enables asset issuance on the Bitcoin network. To
satisfy our curiosity, we decided to throw a few questions at Ben
Caselin, the head of research and strategy at AAX for some
insights. And, here’s how our short interview went. Q: We have been
hearing about many developments happening at AAX, with the latest
one being the integration of Lightning Network. Before we dig
deeper, can you please tell our readers more about AAX? A: AAX
launched in November 2019 with a keen focus on institutional
standards. It is currently among the most prominent exchanges in
the Asia-Pacific region and is quickly expanding into other
continents. Our platform is powered by LSEG Technology – the same
technology that powers London Stock Exchange, Borsa Italiana, and
Oslo Stock Exchange. We at AAX are deeply committed to accelerating
the adoption of Bitcoin and digital assets. As of now, our platform
can process most orders in under 800 microseconds, paired with a
myriad of crypto and DeFi-centric products. In 2022, we are
focusing on expanding our work in key emerging markets such as
Brazil, Nigeria and Turkey to provide everyone with access to the
benefits of crypto. Q: How is AAX different from other crypto
exchange platforms? A: For instance, AAX offers the lowest fees on
the market and above-market yields across savings. We are known for
our prompt customer service, which we offer 24×7 across multiple
languages. On top of it, AAX is the first exchange to switch to the
Satoshi standard. Following this, we also launched the first SATS
spot market with zero trading fees. Q: Tell us more about Lightning
Network integration and how it is expected to help the users. A:
Lightning Network is a second-layer solution on top of Bitcoin that
is experiencing accelerating adoption, especially in emerging
markets. This is mainly because transacting in bitcoin on the
Lightning Network is almost without cost, and settlement is
near-instant. To that extent, adding support for Lightning opens up
a new on-ramp for those holding bitcoin in a Lightning app to make
deposits in AAX. This, in turn, makes withdrawals cheaper while
facilitating smaller transactions (something that works in line
with our SATS spot market). By integrating the Lightning Network,
AAX aims to enable small traders/holders to enjoy the benefits of
lower fees and minimum limits. Additionally, this integration
allows for arbitrage between other Lightning-integrated exchanges
by plugging AAX into a rapidly growing bitcoin payment network that
the likes of Twitter are also integrating. The result will help AAX
lower barriers to participation, thus accelerating crypto adoption.
Q: What are the changes you expect to see in the user behavior and
experience on AAX following the Lightning Network integration? A:
Many bitcoin-focused community members look for exchanges
supporting the fast and cheap funding method. We expect to
experience easier onboarding in Latin America, where the Lightning
Network is seeing rapid uptake. Additionally, the integration also
opens up the door to more partnerships for liquidity provision and
potential innovation around Lightning-based yield products. Q: Is
there a migration process or some sort of action the users have to
take from their end to benefit from Lightning Network? A: Lightning
Withdrawals will only be helpful for users who have a Lightning app
or if they are withdrawing to another exchange that supports
Lightning Network. Users could also pay Lightning invoices with
their bitcoin funds on AAX. Q: Do you think people will be
interested in using BTC on the Lightning Network during this period
of market uncertainty? A: Bitcoin is a volatile asset, and as a
means for day-to-day payments, it’s probably too volatile for many
people. But there are multiple teams working on bringing additional
capabilities to this technology. One that we’re excited about is
TARO, a project that wants to add generalized smart contracts and
tokens to Bitcoin, using the same basic technology as the Lightning
Network. Its biggest selling point is of course the ability to
transact in stablecoins: cheap fees, and instant settlement of
Lightning, but without the price volatility of BTC. Q: What are
some of the opportunities with TARO and how is this protocol
different from other alternative first and second-layer chains like
say Solana, Polygon, or Ethereum? A: In Taro, smart contracts and
asset transfers are not executed by the blockchain, and they are
also not enforced by the blockchain. Instead, transfers are
executed by the sender of an asset (who has to make a corresponding
bitcoin transaction), and enforced by the recipient, same as the
Lightning Network. The Bitcoin network of course holds the
“checkpoint” data to make sure that if somebody cheats, the
transaction sequence can be reverted to the last shared point. Q:
When will AAX integrate TARO as well? A: It’s still too early to
say as the project is in testnet, and the TARO team right now is
not committing to any mainnet launch dates. Development is clearly
well underway, and we could expect to see the project live quite
soon. AAX will of course integrate it as quickly as possible once
it’s live and has seen some real-world testing. Q: Can you tell us
more about the Satoshi (SATs) Standard and the reason behind
adopting it? A: There is a price unit bias that gives newcomers to
the space the impression that Bitcoin is expensive while meme coins
are cheap. This is a misconception – adopting a SATS standard
counters the price unit bias. For instance, the smallest bitcoin
unit of measurement is a Satoshi (SATS) with a value of 1 SATS
equivalent to 0.00000001 BTC. Not only is SATS the answer to the
users’ perceived problems of bitcoin unaffordability and
inaccessibility, but it also is expressive of a long-term vision
and bullish expectation around the long-term growth of bitcoin.
There are only 21 million bitcoins that can ever exist, and since
there are more than 7 billion people, it is expected that over
time, SATS will be adopted as the more practical denomination. Q:
Will there be any confusion among new users on the platform who are
used to BTC denomination while using the SATs standard? A: Whenever
a new concept is introduced, people need time to get acquainted
with it – that’s basic human nature. That said, SATS is well-known
in the crypto space, and as people “stack SATS” and participate in
the conversation, it’s pretty easy to switch between denominations.
If people can understand cents, they can get SATS. In fact, SATS
are easier to understand and calculate and will play a crucial role
in facilitating micropayments and transaction fees on AAX. Q: What
are the other developments in store for AAX? A: We significantly
increased retail trading volume in 2021 as we onboarded thousands
of new users. In 2022 and beyond, we want to keep the momentum
going as we expand our user base across emerging markets. This year
AAX is focused on more product localization efforts to match the
benefits of crypto with the specific needs of communities. We will
also focus more on crypto projects designed to drive impact,
especially around important humanitarian goals – this is how we
intend to build community, advocate for the space, and work to make
crypto a force of good.
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