Sun. May 26th, 2019

BlockFyre Coin Reviews: Next Exchange – NEXT

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Blockfyre is an online platform that offers insights and services to provide Investors with a gateway to the world of blockchain and cryptocurrencies. Besides analysis and reports for investors, Blockfyre also offers research and consulting services aimed at companies in the blockchain/crypto sector. Our goal is to help this industry grow and succeed.

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NEXT Exchange

Overview

NEXT is a relatively new project that started in late 2017 within the crypto space, which is mainly focusing on revolutionizing the digital asset exchange market. The team, consisting of successful entrepreneurs and business professionals with a proven track record, developed a unique concept which combines the best properties of both, decentralized and centralized exchanges.

While they aim to compete with the many established exchanges that are currently dominating the crypto landscape, their approach stands alone and could hence capture a significant share of the market. They are not just providing the masses with an exchange, but rather a whole ecosystem backed by an in-house Blockchain. The ultimate goal of NEXT is to create the perfect trade-off in terms of security vs scalability vs decentralization, while keeping the user-experience as simple as possible. Since the team just mined the genesis block of their Blockchain on 23rd of April, we thought it might be the right time to have a deeper look into the project.

What Problem does NEXT solve?

There are currently two types of commonly used digital asset exchanges: centralized (CEXs) and decentralized (DEXs) exchanges, each come with their own advantages and disadvantages.

While often providing their users with a comfortabe ease-of-use, CEXs come, as the name already implies, with centralization, and are hence contradicting the actual purpose of trustless systems that DLT technology aims do deliver. All digital assets deposited by all users of the exchange usually end up in one or only a few hot wallets, of which private keys are not known to its users. In theory, they are losing ownership and control over their assets, while the CEXs just permit the users to transact these currencies. This common feature of CEXs displays a big security issue, as potential hackers would just need to gain access to one or few private keys. Additionally, even the order books remain centralized, leading us to the next disadvantage. CEXs are frequently accused of wash trading, which is currently gaining more and more awareness within the crypto-space. With the artificial increase of the trading volume and liquidity, users are erroneously attracted. It is also worth mentioning that centralized exchange platforms can flat out manipulate the entire trading experience, by pausing deposits, withdrawals, and transfers of assets during valuable times in pursuit of personal gain.

Out of the demand to solve the issues CEXs display, DEXs arose and initially seemed to be the key for resolving the aforementioned drawbacks. Indeed, DEX users regained their control over their own digital assets, since they are able to technically trade out of their wallets. Also wash trading becomes much more difficult with decentralized order books per se. However, current DEXs aren’t really able to solve the issues of questionable CEXs they are aiming to combat. The lack of a comfortable user interface may not sound like much for experienced traders, but is actually seen as a major disadvantage by many. Additionally, as the technology underlying DEXs hasn’t really caught up with CEXs’, DEXs lack quite a lot of functionality so far and scalability leaves much to be desired. Last but not least, they are often currency-centric. As they are usually built on a particular Blockchain infrastructure (i.e. Ethereum), DEXs consequently support trading of the respective currency as a sole base pair (i.e. ETH & ERC20).

However, there are also drawbacks that belong to both, CEXs and DEXs. Firstly, all DEXs and most CEXs lack proper FIAT gateways, making it difficult for new users to enter the crypto-space and familiarize themselves with the decentralized landscape.  Besides, it would be also desirable that each coin offered on a platform would be directly paired against any FIAT currencies, while most of the current solutions provide this solely for the biggest cryptocurrencies and the provided fiat options are typically limited to USD / EUR, depending on the exchange. Furthermore, an always reoccurring issue with digital assets is regulation. Most of the exchanges that are not closely following KYC / AML legislations, always run the risk of facing regulatory complications. However, this depends upon the jurisdiction in which a given exchange is operating.

NEXT.exchange, referred to as NEXT, is ambitiously dedicated to tackling the disadvantages of current exchanges by combining the strengths of both, CEXs and DEXs under one hood.

Product and Vision

Based in the Netherlands as an official B.V. and registered as an Ltd. in England and Wales, NEXT is a so-called hybrid digital asset exchange, as they are pioneering to create a DEX like exchange platform, which still remains regulatory compliant and provides their users with an optimal trading experience. But how are they accomplishing this?

The team behind NEXT has not just been busy developing a trading platform since the conclusion of their ICO, but building an entire ecosystem as well. This ecosystem primarily consists of the NEXT.chain, NEXT Wallet, NEXT.explorer, Masternodes, and the exchange platform itself, NEXT.exchange.

While NEXT is currently built on Ethereum, they recently mined the genesis block of the NEXT.chain,  which currently is in testing phase and is expected to fully launch into Mainnet this month.  NEXT.chain will be the future backbone for the exchange and the whole ecosystem, it provides quite an array of interesting functionality. The underlying core technology relies on the Bitcoin Blockchain. However, it combines PoW with PoS, eventually enabling users not just to mine NEXT, but also to stake it in Masternodes. Furthermore, in order to enable the ecosystem with high capacity and efficiency, NEXT.chain includes Zero-Confirmation Directed-Acyclic-Graph technology (Z-DAG). As DAG is known from projects like Fantom or IOTA, Z-DAG is a further development that adds a second layer on the top of a PoW blockchain consensus mechanism, resulting in high throughput up to 100k TPS, while enabling real-time transactions since it abstains from confirmation times.

While relying on the same hashing algorithm as Bitcoin (SHA256) for mining purposes, NEXT inherits a hybrid consensus mechanism allowing for the usage of Masternodes. Aiming for healthy growth, security and mass appeal for their users, NEXT is incentivizing them to run a Masternode not just with paying them their native token, but also with providing them with voting rights and partial governance over the NEXT.chain. Based on the hybrid consensus algorithm, there will be three different types of transactions:

  • Normal transactions: Basic transactions on NEXT.chain, hitting up to 1,000 TPS
  • Instant transactions: Processed by Masternodes, allows for instant confirmations of transfers, transactions are executed immediately upon transfer instead of having to wait on full settlement on the Blockchain. The TPS with instant transactions falls between 100–300,000, depending on the quantity of Masternodes on the NEXT network.
  • Private transactions: achieved by splitting a transfer over different addresses.

At the moment, NEXT.exchange provides each of its users with individual Blockchain wallets for each type of asset. In the future, and with the help of their Blockchain, the team plans on allowing users to export their private keys. Until then, each transaction carried out on the platform will be provided with a Blockchain transaction ID.

Additionally, NEXT.chain will allow its users to create digital assets on top of it. Similar to ERC-20 assets on the Ethereum Blockchain. This process will be free, but in order to create an asset, KYC will need to be passed and the deployment will need to be approved. Each asset generated will then be directly tradable on NEXT.exchange, allowing projects to attain increased exposure and liquidity. The ultimate plan for this feature is to deploy IEOs and STOs.

Besides the core ecosystem consisting of the above, NEXT comes with several interesting features including, but not limited to:

  • FIAT gateways like SEPA, iDeal and Klarna, as well as PayPal (withdrawals only) allowing for a fast trading commencement
  • Trading will go live with BTC, ETH and NEXT, as well as USD and EUR pairings. However, in the future pairings against CHF, RUB, GBP, YEN and TRY are planned.
  • Remarkably, ALL digital assets on the exchange will be paired with ALL pairings above.
  • 100% of the exchange’s trading fees (minus operating costs) will be collected and redistributed to NEXT holders
  • NEXT comes with its own wallet and block explorer
  • Fully regulatory compliance as well as regular financial audits by PWC & Deloitte
  • Accounts that promote wash trading and fake volume will be restricted

Team

While the team consists of more members, within the scope of this review we are focusing on the core roles of the project.

The Founder of the project is Christiaan van Steenbergen. He graduated at the Technical University Eindhoven, holding a degree in Computer Science and Innovation Management. With over more than ten years experience in software development, ten years in IT and Telecom Engineering and six years in the fintech and legal sector, Christiaan shows some serious business experience in various areas. As a result, he is not just the CEO of NEXT, but also its lead engineer, while overseeing accounting and legal as well.

COO of NEXT, Gleb Jout, graduated Florida Atlantic University as Cum Laude with a degree in Accounting, and accrued over 5 years of management and BD experience throughout his time with VIDELIO HMS, FFD Miami, and PopMechanic.

Chris Haveman, responsible for Board advisor & Business Strategy Operations, graduated over 40 years ago, holding a degree in mathematical science from Leiden University as well as a MBA of Insead. Starting working already during his studies, he collected over 40 years of business experience in roles like CEO, CIO, BD, marketing and sales, building up an international network.

In addition, NEXT’s website lists nine (not all employees are presented on the site) further team members, diversely consisting of developers, lawyers, marketing specialists, designers and community managers. The mixture of experience the team is providing makes us confident that they are covering all necessary areas to realize the vision described above.

Token economics: What is the NEXT Token?

Just like many exchanges, NEXT comes with its native token (soon to be swapped into coins) as well. In order to incentivize the supporters of the trading platform, NEXT holders enjoy several benefits including but not limited to:

  • Sharing 100% of the profits in ETH proportionally to NEXT holders
  • Access to FIAT trading and FIAT gateways
  • Reduced trading fees (without NEXT: 0.50%, with NEXT: 0.25%)
  • Priority access of newly listed assets for NEXT holders

Currently NEXT is still an ERC20 token. However, once the NEXT.chain Mainnet is fully deployed and live in May, the tokens will be swapped into NEXT coins at a rate of 1:1. From then, an interesting use-case for NEXT will be staking in Masternodes, hence participating to the growth and security of the exchange, while enjoying voting and governance rights. Masternodes will require a total of 25.000 NEXT coins. Furthermore, Masternodes will enjoy Seniority Rewards, meaning the longer a user stakes his coins in a Masternode, the higher his rewards will get, which is a popular way to further incentivize loyal users. Once the Masternodes network goes live, it will reward stakers with a ROI of up to 33% within the first year. Calculations for that can be found here: https://docs.google.com/spreadsheets/d/1YaKFxNXx7wu5tv2LvsNmQiPP-HmMtPYopwifJ268tVs/edit#gid=1399019834

As soon as the Mainnet it fully launched this month and tokens start to swap into coins, the final total token supply will be around 30.300.000  NEXT coins, further divided into:

  • Mining / Masternode fund: 15.400.000 NEXT, reserve for miners and stakers, to be released into circulation over a course of 15 years
  • Development fund: 6.000.000 NEXT, reserve for  funding further developments in the future are required.
  • Marketing fund: 5.000.000 NEXT, reserve for covering the costs of all marketing related things
  • Current circulating supply: 3.900.000 NEXT, accounting to a market capitalization of $1.174.266 USD at the time of writing

During the crowdsale 96.000.000 NEXT in total were available for sale out of a total supply of 121.000.000 NEXT. The unsold majority was burnt, with more to be destroyed during the token to coin swap process resulting in a total supply as low as 30.300.000 NEXT.

Growth potential and Roadmap

NEXT deployed their Testnet to the community back in February. While actively consulting with their actual users, they were able to thoroughly test their Blockchain, optimize it and according to the team, they are now fully confident with the technology they developed. As a result, on the 23rd of April they mined the genesis block, currently releasing the Mainnet to the public step-by-step. While having most features of the NEXT.chain as well as the NEXT.explorer and wallet already developed, the next steps will be to swap the coins once the Mainnet is fully functional, start onboarding Masternodes, list more tokens and ramp up the marketing for the exchange.

Currently the team is working on a white paper 2.0 which is expected to be finished within June-July, which will also contain the new roadmap. However, the team already released that current plans down the roadmap include the introduction of smart contracts, a bridge for transferring current ERC20 projects onto the NEXT.chain and lastly, atomic swaps. Interestingly, the team mentioned that another upcoming step, next to the introduction of IEOs and STOs, will be to offer tokenization of real world assets, precious metals, works of art, FIAT and properties.

The growth potential for NEXT is definitely interesting. If done right, new users can be attracted to the trading platform by offering an unique USP compared to other exchanges. Taking a look at the exponential growth Bitmax was showing rather quickly, it is quite safe to say that it was due to a convenient user experience, listings that were unique to their exchange, as well as margin trading for BNB that not even Binance itself was offering. Given the high demand and hype digital asset exchanges bring along, it’s up to NEXT how far they are going to use this potential. Taking a look at their product and vision, we are quite confident to say that we believe the team is ambitious enough to exploit their growth potential to the fullest.

Conclusion

NEXT is definitely taking an interesting approach to improving the current cryptocurrency exchange landscape. The coming and going of trading platforms for digital assets per se already indicates the significant demand the cryptocurrency-space still displays for an appropriate solution. While user-friendly exchanges bring great centralization and monopolies with them, DEXs are still exhaustive to use and are still rather low-key. NEXT is taking an astoundingly ambitious approach of not just solving most of the issues current exchanges entail, it also aims to provide their users with a huge proposition and great incentives. Even more attractive it obviously becomes with taking a look at the small market capitalization of around 1.2M USD. While it may be exaggerated to compare NEXT with Binance’s BNB, it is still the only other exchange that currently has its own live blockchain developed. But also comparing it with the rest of the trading platforms that could be taken serious within this space, there is still significant upside potential for NEXT.

However, it remains to be seen if the team will be able to deliver the highly ambitious goals they have set themselves. While we are confident in the ability of the team to realize their vision, success of digital asset trading platforms eventually relies on the adoption of enough users. In contrast, we like the concept the team developed and especially the big upside potential of the market capitalization might offer an excellent occasion in terms of risk / reward ratio.

Research by Jonathan Habicht and Simon Dedic.

The Daily Chain – Inform. Educate. Succeed.

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