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Messaging app Telegram has announced plans to build a decentralized exchange and non-custodial wallets in the wake of the FTX collapse.
Telegram founder and CEO Pavel Durov stated that the messaging app plans to push ahead with its buildout of crypto infrastructure.
Decentralized Exchange, Wallets In The Works
With the crypto space rocked by the collapse of the FTX exchange, Telegram has announced plans to build decentralized and trustless alternatives. Telegram founder and CEO Pavel Durov made the announcement on his Telegram channel on Wednesday. Durov stated that the company would be building decentralized exchanges and non-custodial wallets, enabling millions to use and trade their crypto safely. According to Durov, this would be a start to fixing problems caused by excessive decentralization.
“This way, we can fix the wrongs caused by the excessive centralization, which let down hundreds of thousands of cryptocurrency users.”
According to Durov, the project should be feasible, citing the development of Fragment, Telegram’s decentralized auction platform, which took only five weeks, and five people to develop.
Building Crypto Infrastructure
Telegram has been relatively successful in bootstrapping and building out its own crypto infrastructure, having sold $50 million in usernames through Fragment, its blockchain-based auction platform. Fragment has been built on the Telegram Open Network. The Telegram Open Network was initially abandoned by Durov after coming under significant regulatory pressure. However, the blockchain’s community successfully kept the protocol alive.
With the success of Fragment, Durov intends to enable Telegram to build further decentralized infrastructure, which could benefit millions of users.
Pushing The Industry Back Towards Decentralization
Durov called for the developer community to steer the crypto industry back towards decentralization and decentralized applications. He stressed on moving away from third parties who have led to uncertainty in the crypto space. According to Durov, the over-reliance on centralized entities has led to many users to lose their savings, as demonstrated by the FTX collapse.
FTX has been accused of mismanaging funds, lending them out to its sister concern, Alameda Research. This is a strict no-no for exchanges that handle customer funds. As a result of the collapse, other exchanges are rushing to implement robust mechanisms and better checks and balances. These include proof of reserves systems that verify possession of client funds on-chain.
Others Echo Durov’s Sentiments
Durov’s views about FTX found support in several quarters. Cardano founder Charles Hoskinson echoed the Telegram CEO’s views when speaking at the Financial Times Crypto and Digital Assets Summit, stating,
“The failures we’re having aren’t failures of protocols, aren’t failures of DeFi. They’re failures of trust, they’re failures of regulation, they’re failures of people.”
Other crypto users seem to feel the same way as well. Analysts at JP Morgan stated that they had seen a significant outflow of funds from other centralized exchanges such as Crypto.com, OKX, Gemini, and others after the FTX collapse. Other firms, such as BlockFi, have filed for bankruptcy, while trading desk Genesis has halted withdrawals.
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