Ethfinex is a hybrid decentralized cryptocurrency exchange, founded in January 2018. It was designed as a spinoff of Bitfinex, one of the world’s leading exchanges, founded way back in 2013. Ethfinex opened to Bitfinex users even earlier – in December 2017. Ethfinex Inc. is registered in the British Virgin Islands and operates under the local law framework, although its headquarters are in Hong Kong. Bitfinex, on the other hand, is run by iFinex Inc. and is also situated in Hong Kong.
Apart from operating as a decentralized exchange, Ethfinex is also an information platform that aspires to be the leading hub for the Ethereum community of developers, traders, and enthusiasts where they can communicate and share ideas. At the time of this writing, the exchange’s long-term plans are focused on a transition from a decentralized hybrid exchange to a completely trustless trading venue.
Aside from trading, the exchange offers a variety of other features as well. For example, it allows users who do not want to trade but hold cryptocurrencies, to provide margin funding to other traders on the network. By taking advantage of the P2P lending market, users can earn interest on their cryptocurrency holdings. The traders, on the other hand, can benefit from the margin funding feature by getting the chance to trade with up to 3.3 leverage. The interest rate and loan duration are negotiable between both sides, which provides flexibility and transparency. Another interesting feature of the Ethfinex ecosystem is the token sale support. The exchange assists startups throughout their whole journey – from development to the crowdsale and trading (via a network of partners). Users, on the other hand, have access to a whitelist of tokens for which they can pre-register and contribute for their development via Ethereum donations.
Ethfinex has developed its own token, called Nectar Token. In its whitepaper, the exchange describes the token as a “loyalty reward for token market makers on the exchange.” The goal behind the token is to “incentivize the creation of the most liquid exchange for trading tokens and tethered assets on Ethereum.” The tokens are given for free to the market makers depending on the number of trades they participate in. The token owners can then use them to claim loyalty rewards in the form of monthly exchange fees, as well as advice the Ethfinex team on its governance.
Similar to Bitfinex, Ethfinex also targets more advanced traders. In order to “unlock the trading platform”, as the support team states, one should deposit at least $1 000 and maintain the amount consistently. Although at the time of this writing, users can set up accounts with no initial deposits, to be eligible to trade or interact with the platform’s features, they need to reach the specified amount. The truth is that the initial equity amount required was lowered to $1 000 in April 2018. Before that, it was equal to the one for Bitfinex users - $10 000. Furthermore, to gain access to withdraws or deposits, Ethfinex users should pass through a thorough verification process that takes up to 8 weeks to complete.
When it comes to discussing security measures, it is worth noting that Ethfinex utilizes similar policy and tools like the ones that Bitfinex does. Some of them include storing 99.5% of users’ funds in cold wallets (unaccessible directly from the exchange), two-factor authentication, withdrawal protection, email encryption via OpenPGP, and multiple verification tools to monitor suspicious behavior on the network. The exchange also gives its users the chance to choose to take their security in their own hands, via the Ethfinex Portal. The feature allows clients to keep track of the order book and even get involved in trading without having to deposit funds in their Ethfinex accounts initially. All trades are executed via smart contracts and, at the time of this writing, the exchange implements the 0x protocol.
However, it is worth noting that Bitfinex was the subject of one of the most notable hacker attacks in the cryptocurrency world. In 2016, more than $72 million were stolen from the exchange. Bitfinex did everything possible to minimize the damage and covered all losses, so the users were unaffected, in the end. However, it is worth noting since Ethfinex employs similar security measures, it can become a subject to a similar attack.
The aim that Ethfinex has set is to provide the most highly liquid and advanced trading service for ERC20 tokens and crowdsale campaigns. It is worth noting that the exchange’s team has managed to achieve just that. It is hard to find unsatisfied clients or complains that remain unaddressed or quickly resolved. At the time of this writing, Ethfinex is one of the highest-rated cryptocurrency exchanges on Trustpilot.
Although Ethfinex aims at continuously expanding its global presence, at the time of this writing, it is inaccessible for US users.