The Rise and Fall of Ether Delta

I fell in love with Ether Delta the moment I learned about it around June of last year. Sure, the interface was clunky, lacking certain features we take for granted on other exchanges.

The order book didn't refresh automatically, and users had took pay a fee to cancel buy/sell orders. Order matching was totally absent as well, meaning you had to select which orders you wanted to execute against.

Ask anyone who has ever traded on the website, and they'll tell you the user experience is frankly appalling.

Yet, it was precisely this lack of a user-friendly interface that attracted me to Ether Delta. It's decentralized nature meant ICO tokens would get listed almost immediately on the exchange, often on the very same day the crowdsale ended.

For a period last Summer, Ether Delta was the go-to place if you wanted to get a good deal on an ICO listing. Because so few people were using it.

It was where I went to buy 0x the day after the token sale before it pumped on other exchanges, or acquire a stake in Po.et after missing the public crowdsale.

So, while it for sure was a steep learning curve, it did away with the intrigue and politics that goes with most exchange listings. Anyone could add tokens to the smart contract, no questions asked. It also showcased the power of smart contract-based, decentralized exchanges.

I was therefore greatly saddened to learn that Ether Delta's DNS server had been compromised in or around the Dec. 20. Several users reported their tokens stolen, to the tune of hundreds of thousands of dollars.

I was fortunate enough to keep my assets despite having a decent chunk of my portfolio on their website. You see, tokens which I had bought back in September for amounts I was willing to risk at the time, had greatly appreciated in value, and what was at the time maybe 2% of my holdings had metamorphosed into close to 10%.

Upon reading about the breach, I rushed to myetherwallet and began withdrawing my tokens directly through the smart contract, fearing their website might still be compromised.

Shortly after completing the procedure described above, I learned Ether Delta would be launching their own ICO. This took me by surprise. After all, Ether Delta had received praise from Vitalik Buterin himself for self-funding their exchange without having to resort to an ICO.

The timing was also suspect. After all, you'd expect them to wait and do a little bit of damage control before going ahead with what seemed like a rushed crowdsale.

Adding further insult to the injury, the twitter announcement and the accompanying materials for the token generation event read like some weird creole parsed using Google Translate. I'm no grammar Nazi by a long shot, but when you're trying to raise $60 million from investors, it sort of makes sense to hire someone to proof read the press releases.

All in all, the whole thing seemed rushed and many in the community took notice. People voiced their concerns on Twitter and Reddit, and scam accusations were thrown around.

Almost a week into the New Year, it seems accusations of a possible exit scam were mostly unfounded, and that the token sale was likely a way to keep up with rival decentralized exchanges like Radar Relay. Very much like Radar Relay requires a balance in 0x tokens to trade on their platform, Ether Delta will now require new projects to hold an amount of Ether Delta Tokens (EDT) equivalent to 1% to 3% of the project's total marketcap.

I'll be watching Ether Delta very closely over the next couple of months before moving back into their website. Trust is one of the most important things in business, I feel they have to earn mine and a lot of other people's back.

Let's see if they deliver!