Decentralized exchange, crypto staking, more in the pipeline

Cryptocurrency exchange WazirX, in a strategic move to recover user funds lost in a massive cyberattack, plans to launch a decentralized exchange (DEX) along with a revamped version of its platform. This initiative aims to help reimburse users affected by a security breach worth Rs 2,000 crore that occurred more than three months ago.

As part of its recovery plan, WazirX will introduce ‘recovery tokens’ for affected users, allowing them to initially recover 48 percent of their lost funds. These tokens, which will be distributed on a pro-rata basis, can be traded among users, potentially allowing holders to sell them pending full asset recovery. WazirX expects to resume full trading on its platform by February next year.

How will the decentralized exchange help customers?

Now in its early stages of development, the decentralized exchange will empower users by putting control of assets entirely in their hands, eliminating the need for intermediaries and reducing the risk of counterparty-related vulnerabilities. Recovery token holders will also have the option to exchange these tokens for DEX-specific tokens once the decentralized platform goes live. The company plans to release a trial version of the DEX in the coming months, with profits from both the DEX and WazirX being returned to affected users.

WazirX CEO Nischal Shetty highlighted the growing demand for self-management solutions in the wake of numerous security breaches on centralized exchanges. Shetty shared that only 13-15 percent of global crypto trading volumes come from decentralized exchanges, which serve a small portion of crypto users, underscoring WazirX’s goal to simplify DEX access for the average trader.

More new features in the pipeline

In addition to the DEX, the WazirX relaunch will include new features such as crypto staking, an over-the-counter (OTC) desk, and futures trading options, all aimed at increasing revenue to support the repayment plan.

Recovery on the way, but loss expected

These recovery efforts coincide with a court-approved restructuring process currently underway in Singapore, where WazirX has been granted a four-month moratorium. According to advisors, despite the planned recovery measures, users may face a significant financial loss of around Rs 850 crore as full refund is unlikely to exceed 57 percent.

Legal challenges

WazirX is also facing legal challenges from multiple stakeholders, including cases filed in the National Company Law Tribunal and the Delhi High Court. A coalition of more than thirty affected users is expected to file a joint complaint with the National Consumer Disputes Redressal Commission, reflecting the widespread impact of the security breach.

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