The Road to An Open Trading Network

This is an analysis about the Fusotao Roadmap 2023, the first part.

In the earlier stage, the Fusotao team underestimated the difficulties of assembling liquidity, especially, from big layer-1 to an appchain. We thought that by providing the prover and vault and building an order-book DEX similar to the user experience of centralized exchanges, projects would be willing to list their tokens on it, or even builders could create their own order-book DEX.

Time to change the naive thoughts even we have done some technical. The “execute off-chain, verify on-chain” is the right direction that we still insist, but we’d like to make Fusotao more decentralized. How? Let’s take a look at the traditional finance and learn some experiences from it. There are three different roles:

• Broker: They always face to end-users directly, calling clients, recommending stocks to clients.
• Exchange: They don’t face to end-users but the brokers, only executing the trading commands.
• Bank: That’s where the money is while actually brokers or exchanges never touch the money.

In Fusotao protocol, there is a matcher, we usually call it the prover and give it a name Galois, to memory the great mathematician. Without that, Fusotao won’t work or just be another fake decentralized project in the name of decentralization. The prover actually acts the role of exchange, and the Fusotao chain acts the role of bank. The tricky point is that the prover must generate a proof for each command, then tell the chain that the trades are valid. If you are new of Fusotao and curious about how it works, kindly check the technical Green Book.

Oh, we just forgot the broker. Currently, we didn’t implement broker system independently but an inner component running aside with the prover. Users don’t care where to put their orders, so it is not very straight to aware of that. But it really doesn’t matter? I don’t think so, and that’s where we are heading forward from now on. We are making the nodes of Fusotao network to become brokers.

We are planning to implement a set of RPCs in the new version of Fusotao node. Thus, everyone could easily launch a broker and relay the orders to the prover, we call it Proof of Order Relay, much more easier than starting a prover. Of course, the node operator will get most of the transaction fees, excluding the part to TAO stakers. Even it is possible for building another website, or just embed the RPC request into any existing webpages.

We now have decentralized brokers and banks, but what about the exchange? Instead of making it decentralized, we chose to gain the prover forkability. As the Green Book mentioned, the matching system is a kind of serial system, same inputs will cause same outputs. Since the chain has already contained all the command sequences(submitted by the prover after executed), it is possible to recover it from anywhere.

So the prover is more like an infrastructure and everyone has the rights to run it, but only a single instance can submit the proofs. We are adding the on-chain governance to select off-chain prover periodically.

About the listing, currently it is free but not open, because it will involve the bridge registry, contracts mapping review is needed in case of fake assets. According to our plan, this issue will be resolved in the end of 2023.