For the long-term growth of exchanges, building their own public blockchain systems early can meet the market's rising demand for assets and technology. By integrating some advantages of DeFi, they can further enhance the composability of trading and applications.
The Push for Exchange-Led Blockchain Ecosystems
In the latter half of 2020, DeFi captured significant market attention, showing explosive growth in trading volume and user numbers. Core functions such as trading, smart contracts, and decentralized applications have gained widespread adoption. Major centralized exchanges adjusted their strategies to seek synergy and coexistence with DeFi.
Among various strategic options, exchange public blockchains serve as both foundational technical platforms and offer vast potential for integration with decentralized applications. As a result, exchanges have accelerated their development in this area.
By December, notable progress included Huobi's launch of its Eco Chain (Heco) and OKExChain's imminent mainnet launch. The native token OKT began its genesis distribution on January 1, 2021. To reward loyal OKB holders, all OKT tokens were distributed exclusively through OKEx Jumpstart, marking a new phase of growth in the exchange public blockchain sector.
A Closer Look at OKExChain
OKEx is an initial developer of OKExChain but does not act as the chain's manager. The plan is to evolve in a fully open and decentralized manner, with OKEx being just one member of the OKExChain community.
This is similar to the relationship between Facebook and Libra (now Diem). Although Facebook was the leading force, it is only one node with a single vote and does not control the entire organization.
Focus on Trading Applications
OKEx positions OKExChain as a "decentralized, high-performance trading public chain." As the name suggests, OKEx aims to focus on various trading scenarios and the implementation of related business applications. It seeks to ensure the security and anonymity of decentralized trading while meeting the high-frequency demands of diverse trading environments.
Key features of OKExChain include the ability for anyone to campaign to become a super node, issue custom digital assets, create trading pairs, and execute trades. It supports both decentralized order books and Swap trading mechanisms.
OKExChain facilitates spot and derivatives trading. In the future, it plans to integrate oracle solutions to support leverage, perpetual swaps, and other derivatives via liquidity pools or order book models.
The platform also intends to incorporate EVM virtual machine technology and OKEx’s cross-chain gateway. It will be compatible with Cosmos’ IBC cross-chain solution and aims to support oracles to enable a broader range of financial products.
The New Native Token: OKT
The newly introduced OKT is a distinct asset. Unlike many exchanges that integrate their public chains with existing platform tokens, OKEx decoupled its public chain from its platform token OKB. It launched OKT (OKExChain Token) as the underlying native token of OKExChain.
To incentivize OKB holders, the entire genesis issuance of OKT was distributed through OKEx Jumpstart via a staking mechanism. Market response was highly positive, with OKB’s price rising over 35% in two days, reaching a new all-time high of 8.1 USDT.
The initial issuance of OKT was 10 million tokens, with a theoretical total supply of 72,208,000. Similar to Bitcoin, OKT follows a halving model—initial block rewards are 1 OKT, halving every three years.
Super nodes on OKExChain receive two types of rewards: gas fees, distributed to block-producing nodes (similar to Ethereum), and inflation rewards. Annually issued OKT is distributed between block producers and all nodes based on voting weight, at a 25% and 75% ratio, respectively.
The OKEx DEX Platform
OKEx DEX is a decentralized exchange built on OKExChain. It supports both order book and Swap-style trading, wallet management, digital asset issuance, trading pair creation, and liquidity pool formation. The platform is designed to accommodate various types of DEX products and will eventually support derivatives trading.
The AMM Swap module is nearly 100% complete. Its core functions include:
- Creating liquidity pools for any token
- Adding liquidity
- Removing liquidity
- Token swaps
It also offers API interfaces for querying token prices, liquidity levels, and other key metrics.
Evaluating OKExChain from Two Perspectives
As a foundational technical platform, exchange public blockchains offer significant composability. Exchanges can use these chains to onboard more projects, enabling diversified development in trading, technology, and applications.
Underlying Public Chain Design
OKExChain is built using Cosmos’ Tendermint mechanism and Cosmos SDK. Its underlying architecture shares similarities with Ethereum 2.0 and Cosmos.
Ethereum 2.0 divides PoS nodes into 64 shards, though specific sharding rules haven’t been fully disclosed. In simple terms, Ethereum 2.0 uses one chain with multiple shards, while Cosmos uses multiple chains that also function as multiple shards.
OKExChain improves upon Cosmos by developing an application-specific chain. It retains cross-chain capabilities from Cosmos SDK while establishing a DeFi infrastructure optimized for various financial applications.
The Big Three Exchange Blockchains
OKEx, Huobi, and Binance have each laid the groundwork for their public blockchain ecosystems. For instance, Huobi’s Heco shares similarities with ETH 2.0’s development roadmap, supporting a mainchain and sidechain expansion architecture—already in test environment.
Binance Smart Chain (BSC) introduced smart contracts and is compatible with the Ethereum ecosystem, including MetaMask and other mainstream Ethereum applications.
OKExChain is a self-developed public chain system. In addition to supporting Ethereum smart contracts, it also enables cross-chain gateways. This allows mainstream assets to migrate to OKExChain and supports a multi-chain ecosystem. Through Cosmos’ IBC protocol, each major application can have its own dedicated blockchain while maintaining interoperability.
All three exchange blockchains are developing rapidly:
- Binance Smart Chain focuses on application layers
- Huobi Eco Chain emphasizes security while improving financial stability and throughput
- OKExChain prioritizes optimization in DEX, on-chain asset circulation, cross-chain functionality, and trading
As these mainnets go live, more complex applications and technical scenarios may emerge across technological, ecological, economic, and product dimensions. This could lead to more user-friendly decentralized financial products at the intersection of CeFi and DeFi.
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Frequently Asked Questions
What is OKExChain?
OKExChain is a decentralized, high-performance public blockchain developed by OKEx, focused on enabling a wide range of trading applications and financial products. It supports smart contracts, cross-chain functionality, and both Swap and order book-based decentralized exchanges.
How is OKT different from OKB?
OKT is the native token of the OKExChain network, used for staking, governance, and paying transaction fees. OKB is OKEx’s exchange utility token, used for discounted trading fees and other platform benefits. They are separate assets with distinct use cases.
What types of trading does OKExChain support?
OKExChain supports spot trading, derivatives, liquidity pool-based AMM trading, and order book models. It aims to incorporate oracle solutions to enable advanced financial instruments like leveraged tokens and perpetual contracts.
Can developers build on OKExChain?
Yes. OKExChain is open to developers. They can issue custom tokens, create trading pairs, deploy smart contracts, and develop dApps. The network supports EVM compatibility, making it accessible to Ethereum developers.
How does OKExChain achieve cross-chain compatibility?
OKExChain uses both a native cross-chain gateway and supports the Cosmos IBC protocol. This allows assets and data to move between OKExChain, Ethereum, Cosmos, and other compatible networks.
What incentives are there for node operators?
Super nodes on OKExChain receive block rewards in OKT and earn transaction fees. They also participate in on-chain governance. The inflation reward system distributes new OKT tokens to nodes based on their voting weight and contribution to consensus.
Conclusion
From a long-term perspective, developing native public blockchains allows exchanges to adapt to growing market needs in assets and technology. By integrating DeFi’s strengths, they can improve the composability of trading and applications.
OKEx’s introduction of OKT—decoupled from its exchange token—represents a step toward more decentralized trading services. Through staking incentives, DEX features, and oracle integrations, OKExChain is exploring a balance between CeFi and DeFi.