CDx is Ethereum-based smart contract protocol that utilizes the 0x architecture to allow for the trustless issuance, trading, and resolution of credit swaps (i.e. insurance).
One problem that CDx addresses in the cryptocurrency market is a lack of security for users who store their funds on cryptocurrency exchanges. Since Bitcoin first launched, several billion dollars worth of cryptocurrencies have been stolen in exchange hacks, the most famous of which being the Mt. Gox hack that saw some 650,000 BTC taken from the exchange and eventually forced the company to file for bankruptcy.
CDx is essentially a decentralized, peer-to-peer insurance marketplace where buyers pay premiums to sellers in return for a set payment in case some pre-defined event, called a "credit event."
For example, a buyer can pay a premium to a seller in return for protection from exchange hacks so that they can store cryptocurrencies on exchanges where they are more liquid without being fully exposed to the risk of losing their funds. Meanwhile, sellers must put up collateral equal to the full protection amount they would pay if an exchange default occurs in order to qualify to receive the premium payments.
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- Mt. GoxBitcoin exchange based in tokyo, japan
- Cryptocurrency exchangeCryptocurrency exchanges are exchange markets for trading cryptocurrencies.
- Decentralized cryptocurrency exchangeA decentralized cryptocurrency exchange is an exchange market that utilizes blockchain or another decentralized technology to enable peer to peer transfer of digital assets without reliance on a trusted third party to hold funds.
- EthereumEthereum is an open-source, public, distributed blockchain computing platform featuring smart contract (scripting) functionality, which facilitates online contractual agreements.
- Nexus MutualNexus Mutual is an alternative risk sharing platform based on the Ethereum blockchain which replaces traditional centralized insurance companies.
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