Nash CTO talks the benefits of trading on a self-custody DEX and challenges of building a user experience for crypto ๐จ This article is 5 years old...
Nash CTO talks the benefits of trading on a self-custody DEX and challenges of building a user experience for crypto
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
CryptoSlate recently had the opportunity to chat with Ethan Fast, the CTO and co-founder of Nash Exchange, a self-custody DEX that has been gaining solid traction and attention over the past few months. In our interview, Ethan shares how he got started in crypto, what led him to start Nash, the challenges of building a quality user experience for crypto users and where he sees the blockchain industry going in the next few years.
What is your professional background and how/when did you get into crypto?
Ethan Fast (EF): I’m a serial startup founder who has also spent a lot of time in academia. I started a web analytics platform in 2011 after I finished my undergrad, which was funded by Y Combinator, and that experience taught me a lot about myself and the sort of mindset you need to be successful with startups. I then went on to do a Ph.D. in Computer Science and Human-Computer Interaction (HCI) at Stanford, where I worked on a number of things, but most notably some applied research in Programming Languages (PL) and (NLP) Natural Language Processing.
I bought my first Bitcoin in 2011 but didn’t dive deeply into the technology until 2017. At that time I was most excited by the applications of smart contracts on Ethereum and wanted to understand better what sort of design space the technology made possible. Working in HCI, much like with startups, when you see a new technology, you tend to think immediately about how you might use it to change the way people interact with the world.
Tell us about why you decided to start Nash?
EF: During the final years of my PhD I began working with a group of amazingly talented people who more or less bootstrapped the NEO blockchain open-source community. We all worked really well together and shared an excitement about the future of digital assets, so the idea of starting a company felt like a logical next step.
In terms of “why Nash?” specifically, the most compact form of our mission is “distributing finance for everyone” and that still does a good job of summing up why we are working on this company. Cryptocurrencies are unique among other assets in the level of control and empowerment they give the people who own them. We want to make these assets and their properties accessible to everyone. Another motto we have is “trust yourselves”, which perhaps gets even more quickly to the point: we want to give people the power to do that! We all love working with the tech, but these are the bigger things we also care about.
Where is your team located and why did you choose that jurisdiction?
EF: We are located all over the world. Our parent company is located in Vaduz, Lichtenstein, and this has been useful from a regulatory standpoint, but we have team members in more than fourteen different countries. The US and Europe are most strongly represented.
Among the co-founders, Tom and I live in the US, Fabio in Austria, Fabian in Switzerland and Luciano in Brazil. So we had a global team literally from day one.
What are some of Nash’s notable achievements or milestones?
It’s always possible to break things down in different ways, but I’d say our first milestone was the public sale of our Nash Exchange security token (NEX) in 2018. This was an extremely big deal for us and, really, the whole ecosystem, as no one had ever publicly sold and issued a token that also had legal standing as a European security. Getting this done took more than a year of communication and back-and-forth with regulators at the FMA in Lichtenstein. The reason we went through so much pain was to provide investors with legal protections and explicitly pay dividends from the services we are building, which is only possible with a proper security. In the end, more than 15,000 people invested and we raised around twenty million in the public sale.
Our second major milestone was the release of our exchange in early September of this year. We are the first exchange to demonstrate non-custodial, cross-chain trading of assets and tokens that live on different blockchains (for example, Ethereum and NEO) with performance on par with centralized exchanges. I can’t emphasize enough how difficult this was to accomplish and how proud we are of the team for pulling it off. All three of these ideasโlack of custody, cross-chain trading and high performanceโare critical for our users. I also want to note that our work on this product is far from done. We’re still optimizing and increasing user retention before opening the product fully to the public and are working to add many more assets, including Bitcoin. Having Bitcoin on a non-custodial exchange will have a huge impact on the industry.
What is self-custody so important but such a hard concept for new users to understand?
EF: I’m not sure it is hard for people to understand if explained properly. In its simplest form, custody is control. So self-custody means you control the asset. In almost every exchange that people use today, if you want to trade a cryptocurrency, you must give custody (and control) of that asset to an exchange. But this is terrifying because you have very little recourse if an exchange is incompetent or untrustworthy. If an exchange is hacked or steals your money, there is little the legal system (or anyone else) can do for you. Self-custody makes it impossible for an attacker or exchange operator to seize all your funds and vanish.
What are the benefits of using Nash as opposed to other exchanges?
EF: Self-custody, combined with similar performance and liquidity to centralized exchanges, is the biggest reason you should use Nash right now. So you should use Nash if you want to control your assets and trade on an exchange that has a good user experience.
What can you tell us about the Nash product roadmap? What upcoming features are you most excited about rolling out?
EF: Support for non-custodial Bitcoin trading is very exciting. Personally, I’ve also been spending a lot of time working with something called threshold signatures, which we are going to leverage to make user accounts even more secure. The basic idea with threshold signatures is that you can give us the power to enforce arbitrary security policies on your account without giving us control of the assets. For example, you could have us impose a daily withdrawal limit of your choosing, or lock withdrawals outside a certain time window. There are too many details to explain the system here fully, but this is a very exciting technology.
What are the biggest challenges of building a product and functional user experience for crypto users?
EF: This is a really big question, but I’m happy to go into two of the bigger ones. The first and probably most problematic issue is the general lack of guardrails that comes with self-custody. Self-custody is powerful because you are in complete control. But complete control also makes it very easy for you to shoot yourself in the foot or walk off a cliff. And even worse, it is very difficult for a third party to come on the scene and save you. We saw a lot of this with Neon Wallet, where users would lose tens of thousands of dollars (or in a few horrifying cases, even more) because they did not back up their private keys properly. Creating self-custodial applications where it is much harder for users to get into these terrible situations, no matter what they do, is a fundamental design goal for Nash across everything we build.
A second big problem, which I think gets talked about a lot, are the basic affordances of blockchains. Across most of the ways you interact with them, blockchains are really slow. If you look at Nielsen’s famous bookย Usability Engineering, he talks about the scales of time at which a user will remain engaged with an interaction. You need to be faster than 0.1 seconds for a user to feel that something is instantaneous, after 1 second a user’s thoughts begin to be interrupted and after 10 seconds it is quite difficult for a user to remain focused on a task. Typical interactions with blockchains blow past this scale. Even in a relatively fast interaction, it is rare for that to complete in under ten seconds. This speed issue, and the related issue of bandwidth make “second-layer” scaling solutions really important. These are protocols that work on top of a blockchain and provide useful security guarantees, but minimize interaction with the blockchain itself. We use a variant of this sort of technology to make the speed of Nash’s APIs possible.
What other projects and/or blockchain developments are you most excited about?
EF: I’d be excited to see regulators clarify some of their positions on digital assets, and governments enter the space with something like a USD token or CNY token. Even if these assets are not as decentralized, the right sort of platform would allow users to engage with other third parties without trust, and I suspect such national efforts would drive broader adoption. I’m also excited to see the Elrond blockchain grow in adoption. Elrond is solving some really hard scalability problems, though I need the caveat here that I am an advisor to the company.
Do you have any blockchain and/or crypto predictions for 2020 and beyond?
EF: I’m optimistic that the space will go through another boom cycle, hopefully this time driven by new companies and technologies solving real problems.
What are the biggest obstacles for mainstream adoption of crypto?
EF: The most important thing is that some cryptocurrency or token needs to solve a real problem that many people have besides store or value or speculation. When that happens, adoption will be fast and inevitable. The second issue is that self-custody of these assets needs to be accessible to everyone: easy to use and low risk to manage. Nash is working on both of these problems, and they each are really hard, but the second is definitely easier than the first!
What is your most controversial opinion relating to blockchain and/or cryptocurrency?
EF: Many and perhaps most tokens traded on US exchanges violate the Howey test.
For more information:
- Learn more about Ethan Fast
- Learn more about Nash Exchange
