Revolut’s Former Employees Raise $6.5 Million – New Product Aims to Fill Gap Left by FTX 

Key Takeaways

• Former Revolut employees have raised $6.5m for crypto exchange X10.
• X10 blends the features of centralized and decentralized systems to provide self-custody.
• The founders of the new service claim to address the gap left following the FTX fallout.

Former employees from the digital bank Revolut have concluded the first funding of their crypto exchange X10. The industry has called the platform a response to the market gap left by the now-defunct FTX. With a solid $6.5m backing, X10 promotes a hybrid approach to crypto custody. 

Funding for X10’s Hybrid Exchange Model

X10’s first funding round received  backing of $6.5m. The investment round saw participation from Tioga Capital, Semantic Ventures, Cherry Ventures, Starkware, and Cyber Fund, as well as notable individual investors including executives from Revolut and Lido founder Konstantin Lomashuk.

X10 is designed as a “self-custody” crypto exchange, which operates at the intersection of centralized and decentralized systems. 

The platform aims to offer users the execution speeds and features typical of a centralized exchange like Coinbase or Binance, but with the added security and control of self-custody. This means that users manage their funds directly on the blockchain.

The startup is led by Ruslan Fakhrutdinov, former head of crypto operations at Revolut, along with Dmitrii Krasovskikh and Stefano Franz, who also held key positions in Revolut’s crypto team. Their combined experience has culminated in the creation of X10, with a vision to fill the gap left by the defunct crypto exchange FTX. 

X10 Inspired by FTX

Fakhrutdinov, reflecting on the FTX’s misuse of customer funds, believes such a disaster could have been avoided. speaking to Sifted  he said the decentralized blockchain model can eliminate the risks. He pointed out that the reason behind X10 was witnessing numerous FTX customers lose access to their funds when the centralized exchange failed in the last quarter of 2022.

FTX’s multi-billion dollar fraud stacks up as one of the largest in the sector.  Investigations revealed that FTX executives, including then-CEO Sam Bankman-Fried, misappropriated billions of dollars of customer funds. This involved using these funds to cover losses at Alameda Research which engaged in risky trading strategies.

Fakhrutdinov believes that future incidents like this could be prevented through blockchain technology. X10 boosts promoting self-custody or financial independence. However, he acknowledges that while decentralized exchanges are generally safer, they tend to attract more dedicated crypto enthusiasts due to their complex and less user-friendly interfaces.

Technical Enhancements of Hybrid Model 

X10 operates using an Optimized Hybrid Model and Enhanced Settlement Architecture. The model allows for the high-speed trading of perpetuals in the decentralized finance (DeFi) space. The setup not only improves liquidity and user experience (UX) but also ensures the safety of transactions through on-chain trade settlement and validations.

The platform also uses a hybrid Central Limit Order Book (CLOB) to manage order processing, matching, and other critical operations off-chain. The throughput could enable market makers to quickly update order books, ensuring tight spreads and deep liquidity, thus providing up-to-date pricing and improved trading conditions.

Trade settlements are executed on-chain using the StarkEx Layer 2 engine. The method uses on-chain validations embedded in smart contracts to prevent fraudulent or incorrect transactions, while independent oracle price providers guarantee that asset prices within the platform are fair and not susceptible to manipulation.

Hybrid Models to Replace Centralized Exchanges?

The launch of X10 is an interesting development in the cryptocurrency exchange domain. Hybrid crypto exchanges blend the rapid transaction capabilities of centralized platforms with the security measures of decentralized systems. As hybrid models emerge as a new category, we could see a shift from centralized exchanges to hybrid ones, although it is unlikely they will completely replace centralized exchanges.

However, X10 and similar platforms will have to consistently demonstrate that they provide not only the security and transparency, but also the efficiency and user-friendliness of centralized exchanges for that to happen.