ShapeShift is Decentralizing

“Once we wrapped the globe in endless circles of wires crossing the deserts and beneath the oceans, decentralization was not only possible, but inevitable.” -Kevin Kelly

With an eye toward the future, ShapeShift has begun decentralizing.

Decentralization will be a long process over the coming months. This blog explains why we’re doing it and our vision for the future.

If you’ve been watching us closely, this move won’t be a surprise.

Starting last fall, ShapeShift began integrating decentralized exchanges (DEXs) to replace its own trading systems. In January we integrated 0x’s DEX aggregator for decentralized ETH and ERC-20 trading. And on April 15 we enabled THORChain upon its launch for trading Bitcoin and other leading chains in a decentralized model.

That day, native, non-wrapped digital assets (such as Bitcoin and Ether) could be traded at scale, with no intermediary, for the first time in history. Future observers will mark THORChain’s launch as a pivotal moment in crypto’s ascent, though most still remain unaware of its power.

With our integration of these DEXs, ShapeShift no longer provided trading services, and yet users didn’t lose their ability to trade. We outsourced the regulated activity to an immutable decentralized protocol. This was better for our users, better for us, and appropriately in line with the ethos of crypto: privacy, immutability, and self-sovereignty in finance.

Just as it made sense for every company to utilize “the cloud” to avoid infrastructure friction in the 2000s, so too will many utilize “DeFi” to avoid political and economic friction going forward. Buzzwords both, and yet revolutionary.

Faster than most of us recognize, we are moving toward an open, immutable financial system. It started with Bitcoin as immutable base money, but it doesn’t end there.

It ends when we have an entire system of money, credit, and value exchange that is captured by no central entity, and subservient to no flag. A system that empowers all of humanity equitably, just like the mathematics upon which it is built.

ShapeShift is simply perceiving this trend and positioning accordingly.

And with our decentralized structure — adaptable, organic, widely owned, broadly governed, and non-territorial — ShapeShift is positioned as the world’s crypto interface: open-source, multi-chain, non-custodial, and beholden to no central party.

Governed by its users, ShapeShift will integrate with the most desired crypto and DeFi protocols, a neutral interface to the future financial system that everyone can influence, and no one can control.

But How Will It Actually Work?

Fundamentally, ShapeShift is moving from a centralized, closed-source application with bank accounts, governed and owned by shareholders, to a decentralized, open-source application without bank accounts, governed and owned by holders of the FOX Token.

Yes, this means ShapeShift is becoming a DAO.

Again, this is a process unfolding over some months; it is not immediate. Here are the major elements of our plan:

The Core Product

Our subsidiary projects all have different paths:

The FOX Token

DAO, Treasury, and Governance

The Corporation and Stakeholders

Our Story and the Next Chapter

When ShapeShift began, our vision was simple: create a useful tool for the frictionless trading of digital assets, without custody, done in a manner that protected users. Consumer protection, by design.

As we grew, and the regulatory climate evolved, it became seemingly impossible to achieve this vision.

To enable swaps in a frictionless way, ShapeShift was the market maker and counterparty to user trades. According to some, this pulled us into categorization as a “financial institution,” and arguably subjected us to regulations that are incompatible with protecting users’ privacy and security interests; in my view clearly constituting an unreasonable search without probable cause.

And yet, life finds a way. The innovations of brilliant minds brought salvation.

Digital asset technology advanced rapidly, and by 2020, decentralized exchanges had become demonstrably successful at scale. Further, the decentralized finance ecosystem developed a cottage industry of open-source governance tools.

There was a path out of the darkness: by embracing open, decentralized protocols and thinking about how digital economic organization can happen in the 21st century, it became clear that ShapeShift could choose a path that re-enabled the very vision we first set out to achieve.

The frictionless trading of digital assets across chains, without custody, done in a manner that respects and protects users is once again possible.

This can only be built upon a foundation of open-source software, decentralized protocols, and economics that revolve around a borderless, liquid token rather than a traditional equity structure bound by jurisdiction.

A year ago, this seemed fanciful. Today, it is imperative; both market competition and ethics require it. The trade of digital assets shall not be relegated to custodians and intermediaries.

Decentralization has become not only a viable organizational strategy, but the essential model for enabling the borderless, immutable financial system for which so many of us passionately advocate.

This decision is our way of renewing first principles and acting in the best interests of our stakeholders, our team, and our treasured users.

ShapeShift is decentralizing to build an open-source crypto platform for all people.

We welcome you to join us in this next chapter.

Toward peace, markets, and Bitcoin. CEO ShapeShift.com