We recently caught up with the developers of the Atomic Asset Exchange (AAX), a Malta-based cryptocurrency trading platform that’s powered by LSEG technology, which is a part of the London Stock Exchange Group.
Crowdfund Insider: You are the world’s first cryptocurrency exchange to be powered by LSEG technology. Please tell how this helps your exchange when executing trades.
Thor Chan: “Millennium Exchange’s low latency, resilient, and scalable matching engine provides AAX with solid performance and reliability. This is the same code base which runs the London Stock Exchange markets as well as other major exchanges, including Borsa Italiana and Oslo Stock Exchange. In other words, it is capable of handling institutional order volumes on par with capital global markets.
At our exchange, we’ve recorded latencies as low as 90 microseconds, with most orders processed in under 800 microseconds. This is faster than any crypto exchange out there. When needed, the matching engine can scale up to 1 million tx/s. When crypto goes mainstream, we’re ready.”
Crowdfund Insider: You’ve mentioned that you’re offering “an institution-grade platform for everyone.” Please explain how the same benefits of trading may be offered to both retail and institutional crypto traders?
“There are four main benefits to our users:
1. AAX is building a trusted market — transparent, proven, reliable, scalable. Because the same matching engine at AAX is used in regulated markets where fairness and transparency are formally required, our users can trade with confidence and assurance, knowing they’re participating in a clean market.
2. High performance and capacity — we anticipate the crypto markets to keep growing, especially as digital assets enable crypto traders to tap into traditional markets and institutional investors enter the market as well. Our matching engine and overall technology stack is built to cope with growth and enables us to offer a stable trading venue for all.
3. Accessibility — Our matching engine features FIX and Native Gateway connections, which may be appealing to institutional investors who prefer to use their own systems and favor direct market access for optimal efficiency. Retail traders favor our user-friendly app, and have the option to connect to connect via our API.
4. AAX is carving out new markets — Over the coming year, we will launch more futures contracts and new financial instruments including options, tokenized commodities, indices and security tokens. With AAX, our clients can be first to market across a growing variety of digital assets and reap the benefits of early engagement.”
Please tell us about the compliance measures you have taken and the importance of offering regulated digital asset trading services.
Thor Chan: “In traditional financial markets, clean capital, transparency, and fairness are taken for granted. This may not always be true for cryptocurrency exchanges.
Part of the work needed to change this entails implementing best practices gleaned from regulated markets. It also requires some bespoke measures that take into account blockchain’s unique features.
To ensure a high degree of market integrity, key measures include: thorough identity verification procedures, specialized market surveillance, the articulation of a shared set of rules, proper infrastructure, and education.
Having a clean pool of liquidity starts with having thorough Know Your Client (KYC) and anti-money laundering (AML) procedures in place. AAX leverages the services from Refinitiv to screen registered clients against global watch lists and ensure that our markets are free from bad actors.
Furthermore, Elliptic supports AAX in monitoring on-chain capital flows to keep the exchange in check with the latest regulations.
Integrity also rests on the underlying systems. Our matching engine is MiFID II compliant. It supports the work of offering a level playing field.
We also believe that all investors, retail and institutional, deserve fair markets, where prices are real and volumes are real. To this end, we are partnered with Solidus Labs to provide state of the art market surveillance. This helps to ensure that our market is free from wash trading and abnormal price movements; ensuring that all of our clients’ trading activities are protected.
Other measures we’ve taken include the implementation of robust pre-trade risk checks, as well as proper auto-liquidation mechanisms in our futures markets.”
Crowdfund Insider: What are the advantages of investing in crypto assets, when compared to regular or traditional financial investments? What percentage of an investor’s portfolio should be allocated to cryptos?
Thor Chan: “There are several ways to look at this. From an accessibility point of view, anyone who has a connection to the Internet and is not legally restricted can trade digital assets. Traditional assets often rely on brokerage services. From a safety perspective, traditional markets are highly regulated and able to offer better consumer protection.
But the point here is not about choosing between these two investment spaces, but about integrating them. It’s about connecting crypto to global finance, and making it easy to move funds between different asset classes, including fiat currency.
How portfolios should be organized is up to investors themselves and depends on their risk appetite.”
Crowdfund Insider: You’ve mentioned that digital assets derive value from blockchain technology. Explain how they acquire value this way.
Thor Chan: “While investors in stocks may benefit from financial statements and other company performance metrics, crypto assets generally work differently. For example, the value of XRP is not so much dependent on the performance of Ripple Labs. More often than not, the value of crypto depends on utility and usage.
For example, on the Ethereum blockchain, the more developers use it to build apps – for which they have to spend ETH – the more demand there will be for ETH, the more valuable it becomes.
But it’s also good to remember that we are an exchange. We provide an environment where prices can be determined accurately and fast. This is crucial for investors to know the true value of the various blockchain protocols, which in turn helps them to optimize their investment strategies and channel capital to the best blockchain projects.”
Crowdfund Insider: Tell us a bit more about your upcoming token launch.
Thor Chan: “We are launching AAX’s native exchange token AAB. As part of our mission to connect crypto to global finance, we are introducing a series of innovative financial instruments such as tokenized commodities, indices, Bitcoin dimension products, social trading programs, and security tokens. AAB enables traders to engage these novel instruments and to share in the growth of the exchange.”
Crowdfund Insider: What differentiate the AAX token from other tokens?
Thor Chan: “Compared to other exchange tokens, AAB is more aggressive in terms of the monetary policy that governs it. There will be daily buybacks and coin burns, funded by 100% of AAX’s earned trading fees. This will continue until half of the total supply of 50 million AAB is destroyed.
In terms of utility, AAB can be used to: enjoy up to 50% discount on all spot and futures trades; unlock exclusive services and facilities, trading bots, trading signals, and other premium offerings; maximize returns on lending, saving and staking products, and borrow at a discount; gain access to AAX’s unique financial products and programs. 10 million AAB, or 20% of the total supply, will be made available for public sale through a series of discounted flash sales starting from 14 April.”