Cryptocurrency exchange Ethfinex, the sister exchange of Bitfinex, has launched a test decentralized autonomous organization (DAO), the company confirmed in a blog post on June 12.
Ethfinex — which earlier this month launched a decentralized over-the-counter (OTC) trading platform — said it wants to decentralize control of its operations.
The DAO was built by DAOstack and is known as efxDAO, with an initial funding budget of $5,000.
“Today we reach an important milestone in our path to decentralised governance of Ethfinex,” the exchange’s community lead, Ben Wilson, wrote in the blog post. Wilson added:
“We have collaborated with decentralisation protocol experts DAOstack to create an experimental funding Decentralised Autonomous Organisation (DAO), efxDAO.”
EfxDAO has a preliminary membership of 23 people, with plans to expand rapidly in the future. Those members have the power to decide how exchange funds are used in a decentralized manner.
Speaking to cryptocurrency industry news outlet Decrypt, however, Ethfinex’s co-founder, Will Harborne, said that the decision to reimagine governance went beyond ideology.
As Cointelegraph reported, upcoming regulatory hurdles are tipped to drastically impact how exchanges of all varieties operate. For its part, Ethfinex wishes to distance itself from potential repercussions.
“It’s a regulatory play,” Harborne stated. He added that previous legal issues involving Bitfinex also contributed to the move away from centralized responsibility.
Beginning late April, United States regulators singled out Bitfinex and the operator of stablecoin Tether (USDT) — which shares its CEO — for potential fraud after funds worth $850 million fell out of the control of executives.