A partnership between decentralized investment protocol Solrise and identity verification platform Civic has led to the creation of an on-chain decentralized exchange (DEX) on Solana, one that provides permissioned access based on digital identity for institutional investors.
The new DEX, dubbed Solrise DEX Pro, is built on Serum, an on-chain decentralized exchange leveraging Solana’s high-throughput, low-cost blockchain technology to offer a traditional order book experience.
Growing Regulatory Scrutiny
The level of regulatory scrutiny has been ramping up in recent months, with defi developer Uniswap Labs among the latest to face investigation from the U.S. Securities and Exchange Commission (SEC), who have launched a probe into the team behind the popular DEX protocol.
A permissioned DEX, as envisaged by Solrise and Civic, allows for greater checks and balances within the defi ecosystem, enabling projects to better manage risks and meet KYC and AML requirements while retaining the innovative benefits of decentralized finance for institutional investors.
Commenting on the announcement of the partnership, Co-Founder of Solrise Filip Dragoslavic said:
“This is our way of bridging the world of institutions to defi without resorting to centralization, thanks to Civic.”
“With Solana already being the most familiar defi ecosystem for traditional finance, we expect to become one of the primary hubs for institutions that wish to jump into the ecosystem,” he added.
A Playground Suitable for Institutional Players
Combined with Civic Pass, Civic’s identity verification product for defi and dApps, Solrise DEX Pro represents a new permissioned defi layer on Solana that is geared towards institutional players who’ve long been locked out of permissionless decentralized finance due to regulatory constraints.
The permissionless ethos of defi is an important principle of the industry, though one at odds with institutional investors who would like to participate yet find themselves unable to access the benefits in a compliant manner. With Solrise DEX Pro, the Solrise and Civic development teams have created a parallel ecosystem that provides formerly excluded institutions access to the opportunities within defi. Giving them an opportunity to tap into the rich liquidity of the Solana ecosystem while staying in a familiar and compliant permissioned environment. The new DEX is designed to complement existing defi infrastructure, rather than subtract from or replace it.
“A permissioned DEX paves the way for more participants in the defi ecosystem, including institutional investment,” explains Chris Hart, CEO of Civic. “We’re building technology that thoughtfully protects individuals, their digital identities and our new financial systems. In Solrise, we’ve found a partner that shares our values and is working with us to set a higher standard that will ultimately benefit the broader industry.”
Solrise DEX Pro will receive support from Alameda Research, a long-time investor in the solana ecosystem. The quantitative trading firm will supply initial liquidity to the DEX and provide ongoing support.
How Does It Work?
Solrise DEX Pro uses the Civic Pass as a compliance input to determine which participants meet the required standards for verification before enabling their ability to trade. Users are directed to use Civic’s identity verification from within Solrise DEX Pro, which then uses the results from the Civic Pass screening process to allow trading on the DEX.
Civic and Solrise are leveraging the Indentity.com protocol to enable the use of each granted Civic Pass. Civic Pass then continues to monitor users for adherence to the rules, meaning dApps can later revoke access following a breach.
The DEX is already available for immediate use by qualified investors, which excludes entities in the United States and sanctioned countries. A demo video of the platform has also been made available.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.