Ali Beikverdi on launching your own crypto exchange with HollaEx

0:00I'm Ashton Addison from the Cryptocoin Show and today on blockchain interviews we have Alli Beck Varity, co-founder and CEO of Hala X. Ally, welcome to the show and thanks for taking the time. >> Thanks for having me. >> Yeah, excited to dive into crypto exchanges, uh what makes a good exchange, how a lot of companies are starting exchanges, uh the fast and

0:21cheaper way. I've had friends who've started exchanges from scratch and it took a long time. it was very expensive and they didn't succeed anyway. Um, but I know that there are some secrets to success that I would love to dive in with you today and I would love to start off our conversation by just a high level on what Hollowax has built out with regards to crypto exchange and

0:42crypto infrastructure and then we can dive into all the details. >> Sure. Uh so at Hollax we built a white label uh crypto exchange uh where you can simply uh use the platform that is already pre-built and uh run your exchange platform. Uh when we say exchange it's uh obviously you know different layers uh from wallet management, user management, trading

1:07matching engine, building markets, liquidity, uh KYC, AML, there are a lot of different aspects to it that are all uh built in in different modules as part of the platform. So it just makes it very easy for a business that wants to do something uh blockchain related uh to just get on board, use the infrastructure that is already built uh tested, battle tested for many years and

1:30uh get pretty much like you know very quickly into the market. uh we built it in a very customizable way so that it's very easy for businesses to uh utilize the technologies and uh tools that are there uh and be able to like build upon that because we obviously know that there are a lot of different requirements there a lot of like different things that people want. So in

1:50a nutshell it's sort of like a very easy you can think of it like sort of like a WordPress for you know websites like we made it more for you know as a financial tool for people that want to use blockchain and dig digital assets. Definitely. And there there are a lot of pieces to the exchange. It's not just trading one asset for the other. And I mentioned I have friends that started a

2:14crypto exchange. They're trying to start like a derivatives per DEX. Uh but from what I understand, there are many financial institutions, many of them that have got into digital assets in the last two years. Maybe they're getting exposure to Bitcoin, Ethereum, and now they've realized the potential of stable coins as well. Are there other use cases

2:34for this technology for financial institutions that aren't actually just hey let's start our own crypto exchange? >> Sure. So initially uh when we started building this it was primarily uh a bitcoin on and off. Uh quickly we realized that there's so much more to crypto than just bitcoin. Uh all these other coins, all these other blockchains and digital assets. And then uh we put

3:00it out there and we sort of like realized that there are a lot of uh there's a lot of interest in uh tokenizations, building new assets, building tokens, utilizing these tools for different purposes, whether it's a gamified token to uh a regulated uh security token, uh building infrastructure on top of that on the blockchain. And then you sort of like

3:22want to have this exchange as a uh centralized component where it kind of puts all of that together because when you start uh you know doing all these blockchain and stuff it's sort of like out there on the blockchain it's very you know disintegrated but the exchange sort of puts like a nice wrapper around it and makes it very easy to uh you know uh basically sort of interact with uh

3:49which is uh very very powerful for uh traditional institutions for example you know bank can sort of like you know have similar concepts similar sort of APIs and things like that and it can connected to the exchange and then it gets connected to the blockchain word so it kind of like works also as a bridge uh the use cases are pretty much unlimited you can think of like a lot of

4:11different things that you can do with it uh which is what we of we've seen it's a wide range of like different use cases as I said from gamified tokens to uh a you know on and off ramp uh standard crypto exchange >> uh and and you know now also with uh stable coins uh even on the payment side. So for example if you want to uh process uh stable coin payments building

4:38like a new infrastructure from a scratch doesn't really make a lot of sense. You want to maybe also build your own stable coin uh you know sky's is the limit pretty much with with what we can do. Just put the software out out there. we give it to you and then you can uh build really nice uh you know components using uh these tools. >> Yeah, it's really interesting and I

4:59would love to see more businesses start accepting stable coins and have uh infrastructure that makes it easy to just have those on and off ramps so we could spend our stable coins without having to go through the exchange through the credit card all that stuff. Uh let's just get straight to stable coins. Um and and there's a lot of other use cases you mentioned there. I want to

5:20hone in on the like the full crypto exchange example a little bit more. You know, I mentioned my friends have tried starting an exchange. Maybe can you you can quantify the the cost and the effort that you're cutting back by using a system like HOL X? Are we talking like years and hundreds of thousands or millions of dollars to do it the hard way? >> Uh sure. So uh one of the key elements

5:48with uh you know what we provide with Hex is that it is a a financial software uh which makes it also extremely difficult. So it's not just the number of years that you need to spend building something. When once you finish building that which could take like years and uh possibly hundreds or millions of dollars uh with the development uh you end up

6:11with a software that is not like battle tested that hasn't been out there. So that that is another you know takes uh another couple years at least like you know three four years for for you to get to somewhere that you can actually launch a product and that's just a really really long time for you like if you want to get into the market like four years of like development and

6:32testing is definitely not ideal. So you want to just you know quickly get out there execute your [clears throat] business and uh you know put it in front of the market. So uh instead of like building all of that uh you you have like you know a very solid foundation uh with what we provide uh and you can you know pretty much reduce that to like weeks uh depending on like your

6:56requirements and and your market. Yeah, that's yeah, that's it sounds a lot easier. And um I know that there have already been like 100 plus exchanges and other parts of the infrastructure that that Hollax has been working with. Um can you give any examples of uh like sort of a success story of like hey we wanted to start an exchange, we tried to do it the

7:21hard way. uh we set it up in weeks and then now it's uh one of the main exchanges. >> So one of the interesting examples we have is an exchange in Dominican Republic. Uh these guys uh they be they were doing an OTC in the past. So uh they built like the largest network of Bitcoin ATMs uh currently in Dominican Republic. They started with one ATM. They were doing

7:48OTC. All the process was pretty much manual. uh and it wasn't just the scalable. So what they did is they uh basically made an exchange. they connected their ATM and their infrastructure >> with what uh you know uh the the exchange provides and now they became the largest uh exchange and uh they've got like the the the biggest ATM network in in the country and that just kind of

8:17gives an idea I mean in the smaller countries particularly where the the the technology might not be there or it might cost a lot to bring like you know some other uh do a development from scratch or things like that just makes it so much easier for someone that uh you know does things they already they've been creating values they've been you know exchanging like Bitcoin

8:40and other uh cryptocurrencies but they were doing it manually it just doesn't scale like the way you want >> uh with you know sort of like putting it out there as an online platform with a website a mobile app it just streamlines the entire process >> uh for you to like you know uh run your business very very quickly uh there also other interesting examples from like

9:01custodians uh you know regulated custodian that they've been serving you know uh financial institutions as a custodian service provider uh they simply have you know all the wallet infrastructure that you know is required but then you know adding all the trading elements making like you know putting it all putting it all like together uh having that exchange wrapper u is is

9:27pretty uh complicated. So like for a traditional custodian to like jump into the blockchain world, be able to like provide all that technology like you know they've used this this is a this is a custodian in Hong Kong that you know is is utilizing the platform and there are a lot of like other interesting examples like what we kind of like is you know how it makes it very accessible

9:48for people in different parts of the world in different countries uh where you know the the even like the traditional financial technology might not be as as you know up to date or not might not be as great as what it is in uh the western world. It really enables these guys to like sort of jump there and then be able to like provide these financial services uh very quickly uh

10:13without like having that great traditional financial infrastructure which is uh pretty amazing like what what you can do with uh you know having this sort of like access to the blockchain and sort of tools that we provide. uh on on top of that. >> Yeah. No, that's some really great success stories from Dominican Republic to Hong Kong. And talking about the

10:34different countries and and and regions, is there a difference from somebody in North America, Canada or US who wants to run uh uh a complete crypto exchange through Hal X versus some emerging country that doesn't have diff different regulations and compliance. Uh so it's very different in uh North America and Europe uh primarily because

11:03of the regulation. Uh it makes it a lot harder for players to enter the market. Uh you simply need to >> essentially do a lot of paperwork, make sure everything is compliant. There's already uh already a lot of regulation in place that you need to comply. While we do have uh certain you know uh regulation in terms of like you know the software and things like that already

11:26there still like is a bit of a process and it's quite costly. Uh while we do see a lot of like customers uh you know uh from from these countries uh it's still like sort of challenging for for some of them to pass the regulation. But then it as I said like you know sky is the limit with different ideas. It's not always just this traditional exchange

11:48like people come up with like really interesting ideas >> or it's something that is like complimentary to their existing business. Uh >> for example, you know, there's a business that does uh wines and then these guys like want to tokenize, you know, these wines and you know, put it out there in a more digital way. Uh you can essentially use the blockchain to to

12:11do that. and then you know going through uh the regulation in certain areas might be easier than others. So it sort of like really depends it's case by case. uh but at the same time I think what's really exciting also is like you know uh the the emerging markets like Latin Latin America like Middle East Africa uh a lot of there's a lot of you know or

12:34even Southeast Asia uh huge population lack of infrastructure in a lot of these countries and just you know getting into the blockchain and crypto war just like makes things like a lot easier and a lot faster to develop and execute because like blockchain sort of like is connected. So it's like you're instantly connected to a network that is being used everywhere and is compatible with

13:00like all different countries which makes it sort of like very different than the traditional system. >> Definitely. Yeah. there's hundreds of other countries uh that you can do international business and with crypto bringing everything globalized you know it's um I think the possibilities are endless and the use cases ex as well as you mentioned there about tokenizing

13:21wine uh you wouldn't think um that I there's so many different real world assets in the RWA scene that really hasn't like taken off yet. Um could you what do what do you think about the your team's software and the potential for RWA and more items to be tokenized and also can you touch on the tokenization of just currencies themselves if the company wants to create a token?

13:51>> Uh sure. So rwas I think uh they're quite interesting because when you look at the traditional way of doing things let's say a real estate who owns the real estate how do you transfer the ownership of the real estate >> uh or any other assets for that matter. It's done in a very kind of old school way and then a lot of uh fees are in

14:19place that you need to pay to a lot of different people and looking at the younger generation I think moving forward using these old school methods is not like what really people want to like is not going to be the way that people are going to do things. uh for example just even simply you know owning a stock like do you want this stock to be on a piece of paper or

14:45do you want it to be on your uh you know blockchain wallet. Uh when you ask different like demography of people they would answer this question very differently which is very interesting. Like if you ask older people like baby boomers they would rather have that on paper which is how things are done today. But if you ask like younger generation like you know the millennials

15:06or Gen Z now uh especially with Gen Z's I think you know it's like really obvious that they want it to be online. They want to have that ownership somewhere online like not relying on like some paper that says like you it just doesn't they it doesn't really uh make a lot of sense for you know that demography of people. So like we're going in that direction

15:31>> regardless. It's going to be uh there's going to be you know it's going to be more frictionless uh less people involved like lower lowering the fees and everything. >> Uh but it's also kind of a challenging you know path because uh you still have the baby boomers. They still prefer the papers. They still think like that's a better way to do it. And this needs to

15:52sort of like obviously connect to the real world assets themselves. Like this is the physical world. We can't do all of that online like on as a digital you know asset. It has to be sort of connected to the actual physical asset and someone needs to sort of verify that which is I think the most challenging part when it comes to uh RWA. How do you verify that this asset this digital

16:15asset >> actually is you know uh connected to the real world asset and I think we need more organizations centralized organizations in place. uh part of the challenge I think is just dealing with you know the existing infrastructure they don't want you know things to change because they're taking a lot of fees uh out of these and you know people are not very open to the concept of like

16:41you know having this sort of change it's a very much like a paradigm shift but whether we like it or not I mean it is happening players that are like ahead in this space uh they're going to be the ones that make a lot of uh profit ultimately as a result of that and it just makes things more open. I think people would rather have something that they have more transparency on that they

17:05can see they can actually like you know sort of uh uh understand the rules uh and the blockchain based assets just provide a better you know uh better system for that purpose. Uh one interesting example is uh for example the stable coins. Uh when you look at any stable coin it's very easy to see how much you know stable coins are actually out there. how much you know

17:32stable coins that we have when they exactly minted like everybody can see that there are even a lot of like you know people uh sending notifications as soon as like let's say Tedar Foundation like minted this much UST like we can all see that and that level of transparency is very very interesting like we don't exactly know how much US dollar I think is out there uh how much

17:54USD liquidity exactly in the market we don't have the data it's very hard to even find like how much USD is printed and uh you know that's the US like imagine other countries or countries with like you know even you know countries that have uh that are worse when it comes to transparency it's very very hard for people to even understand like what exactly is

18:18happening uh it's not just with currencies this is with everything else like you know when you think about a stocks like how many when a stock a new stock is issued like imagine if this was in the blockchain everybody would get notification It's obviously like you know sort of a it's it's democratizing how we do uh finances, how we deal with these different assets and uh that's

18:41just something inevitable. I think ultimately people would want to have that level of access and the market is going to go where you know when there's demand. So whether we like it or not I think this is happening. It just makes things a lot easier. Uh but then there's this transition phase like you know we're in this transitioning phase from the old infrastructure to this new

19:01infrastructure and this is like where we come like very handy as hollow x like we have those uh sort of tools that you know is connected to the traditional world like APIs and integrations and uh that level of like you know access for people to like have that while they are also entering the digital blockchain world and then being able to provide that and still have like certain level

19:24of like uh control and understanding about how things are done. Uh which I think is very important in order to like get into that uh phase of like you know having a very you know open uh network of of all these assets on the blockchain. So we're kind of like filling the gaps like you know for that transition. Mhm. Definitely there's a big transition period but it's

19:49inevitable as you say and I agree and it's happening and with say for example with the wine uh team they come and they want to tokenize their real world assets do they have an option of different blockchain technologies for example they want to tokenize on Ethereum or or Bitcoin or Salana or private blockchain you know is there limitations or recommendations using the hala

20:15infrastructure. >> Uh so we are pretty pretty much like blockchain agnostic. So uh we provide the solution on top of any any blockchains or there are number of different blockchains that are supported all the EVM uh chains and a lot of different uh blockchains like Salana, Polygon, Ethereum, Arbitrum. So uh it's pretty much like up to people exactly

20:41what they want to do and then they can achieve different things in different blockchains. I think there's still a competition of like who's going to be the winner of this race uh among these blockchains and necessarily I think they're not all competing. They're all like trying to achieve different things uh depending on like what they want to do. If it's like they if people want to

21:00do something really really solid uh you know we would recommend like maybe uh Ethereum if they want like faster transactions or lower fees uh you can go into like you know layer 2s or polygon arbitron or uh it can be a binance smart chain tron salana so there are different different [clears throat] use cases different needs and uh you can also like reach different communities and

21:25different like you know uh markets through different blockchains because some of these blockchains are more adopted in certain places. It sort of depends on on that as well. >> True. >> Uh but the tools are out there. You can you know easily like connect from one another. You can reach from one chain to another. So like we we kind of like help you with uh with that and we're very

21:45agnostic in like sort of the chain. We just provide like you know the tools uh and and the system and then you can decide like how exactly you want to or which blockchain you want to choose to move forward. >> Definitely. That's good to know. And yeah, the the chains, they need to all be working together because it's such a small piece of the pie compared to the

22:06traditional financial system right now. Um, and part of that is at least on the DEX side, you know, there's some of the chains need more crosschain compatibility to have better liquidity. But on the traditional crypto exchanges, Hala X infrastructure, uh, obviously liquidity and and token listings and that kind of stuff is important. How does the liquidity work um for an

22:32exchange that's just starting on day one? Um, because, you know, if there's not a lot of people trading yet, then it's a it's tough to have liquid trading when there's not a lot of users. >> Yeah, that's a very good question. And I mean uh there's a chicken and egg problem like when it comes to an exchange. Uh traditionally like you know it's just kind of a problem like you

22:54need uh people that are willing to like sell something so that other side of the market wants to buy like they should get matched but then if there's if you miss one side like the other side is not going to come in and then you end up with this uh problem which is like what we saw initially when we developed the software uh a lot of people like were

23:13struggling with that and we realized like this is a very important issue like how do you actually like you know resolve that uh It's I'd say like liquidity is a very complicated matter in general and then there's no one solution that fits all. uh what we sort of built over time is you know building over time with the liquidity of different clients that we have over time

23:36you managed to like build a bigger and bigger liquidity and then be able to like you know uh match people's orders with one another without like you know you providing all of that like bringing market makers >> uh you know that would uh provide uh liquidity for certain markets that would sort of like help to bootstrap the exchange so you don't have like that

23:58chicken and egg problem and but doesn't also limit you like you can still like add your own liquidity, you can still like add your own uh markets like if you're very if you have a lot of liquidity for example with certain uh you know asset uh you can definitely like you know add on top of that. It's kind of like it works with as a network instead of just you individually like a

24:19starting out like so it kind of like helps a lot of businesses to bootstrap that initial phase where you don't have any markets but then over time like you know you uh are able to like you know uh put your own liquidity and and you know uh push that forward >> uh with with your you know market. So the more the people are, the more users you have obviously like the bigger the

24:42liquidity gets. uh and as I said there's no like one solution that you know solves this uh completely but we're using like you know with the experience that we have and the network we're trying to like you know put put it all together so that uh this is handled in a much better way that these exchanges that use hol x like are kind of like you know uh helping each other out in a way

25:07uh that would help a lot of these businesses uh when they want to start. >> Yeah. I know that's important definitely because you don't want to have huge slippage or high fees and with the I maybe you know better than me but with the the the liquidity is important but also transaction fees and there's certain uh key features that users like from an exchange like they don't want to

25:32trade on exchange if the fees are too high or if there's not the right tokens listed. Do you guys have like a a sort of a checklist with the clients of like hey you know if you want to use this but also make a success you sort of need to have these certain things to have a great exchange. >> So uh first of all we have a very long feature list that's uh available there

25:55and then with a click of a button you can activate these features. Uh these are like some of them are very comp complex features. For example, we have a an advanced referral system where uh once you enable that and configure this referral system, it would allow users to uh basically uh you know when when you refer someone if they use your referral code like part of the trading fee that

26:18the the referee is uh is paying to the exchange would go to you. You can kind of like customize these fees, the percentage. Um maybe like you know you can set it up so that like the person who gets on boarded like gets a discount. Uh the lot of like very fine grain like niche features uh that you can configure and these tools already provided and is like right there. So

26:42just depending on the like your requirements you can activate a lot of these uh features. We also have sort of like a best practice like what are the things that you know we would recommend uh you know for an average uh business to be uh successful like what are the tools that they should use uh to be successful and uh you know but again like it's it's very case by case it

27:05really depends on like your target target audience like you know your market uh and and your approach uh and a lot of cases like we have clients that have like a very unique idea for example like let's say uh I don't want to like get any fees but I want people to like pay subscription for training or you know like there are a lot of different ideas that people uh

27:27come up with uh and uh you know you can build a lot of these features with the existing tools or you know you can build a plugin that would enable that uh which is sort of like you know where where we come in and we help them to sort of uh fine-tune like some of these features as like you know what exactly they need uh and uh they can achieve like you know

27:47they can have like different marketing uh for example plan or uh they have they can have their own unique like elements that would sort of make them a stand out compared to the other exchanges. >> Yeah. So many possibilities. I saw on the the Hala X X feed that you guys are also listing new new and great uh tokens to the exchanges like Aster and Pump

28:12Fund and these ones that are coming out and already at billion dollar valuations. So that's a lot to keep up with and and you mentioned at the beginning about battle testing it and then also going with the industry as the industry evolves. Looking forward as you guys are already running you know hundreds of different projects and then more are coming in. What else do you and

28:33the team work on in terms of like new features and keeping up with uh the growth of the administration and more institutions coming in to the space? Uh yeah, so we see an influx of uh larger traditional companies uh utilizing the platform now and with that there are a lot of uh more complex uh sort of requirements like uh you know very fine grained

29:03access to like role management on the operator control side. uh having different roles for different people and being able to uh dynamically for example set these uh setting like limits for certain users or a lot of these enterprise level features. It's just not like a standard thing that you would want to look at like on a standard exchange. But you know on a more complex

29:28uh you know system you want to have a lot of these complex features uh and automations also around a lot of these tools. Uh that is something that we're we've been uh focusing on. Uh you know recently we've been working on a feature where you can uh share your account access with someone else for instance. Uh which would be quite beneficial like you know in a traditional sort of uh

29:54let's say a hedge fund like I want other people to be able to like see my account but and then be able to like trade on my account but I want to be in charge like you know this is my account. Just want them to sort of like see that. uh did a lot of like interesting requirements and things that we you know never really thought about but then we just sort of

30:12like listen to what what our clients want what the industry where the industry is going and what we see is like a lot of like these sort of complex like features that goes more towards like institutions where more people are involved and uh it's I think sort of like the evolution of uh these financial tools and software we saw that in the past with you know traditional software

30:34now like on the blockchain similar things are happening like you know and people want similar uh sort of uh features added to their their platform which is where we're like you know putting a lot of focus on. Yeah, there's there's infinite requests from uh companies coming in making and you know making granular features and it's a lot to keep up with, but you and the team

30:56seem to be doing it successfully and wishing you guys all the best continuing that and getting more traditional companies into web 3 and blockchain whether it's for an exchange on-ramping stable coins tokenization of of their real world assets or shares or anything. There's so much. What is the best way first of all for companies to look into these features and and get started and

31:22then how can people follow along with the updates uh as Hollowax continues to release more? >> Uh so you can check out the website halx.com uh and in order to get started uh you can go to halax.comstart uh our team will be in touch with you. there's a form that you can fill out and we will get in touch and we will you know listen to your requirements and

31:46then help you out in the best path uh forward. Uh you can also uh follow us on on X uh for any updates uh and uh yeah >> sounds great. Ally u thank you for all the insights into not just building a crypto exchange successfully but tokenizing traditional businesses and bringing them on chain. uh there's just more and more businesses that are coming

32:12and ones that are eager to do it and don't know where to start and I feel like Holl X is a great uh opportunity for them to check out and and see hey how can we make this without the technical knowledge we want it done uh faster uh and we want to get started because crypto doesn't sleep and blockchains are building block byblock and there's just so much going on so I I

32:35will leave a link to the Hala X uh start page and the home page show notes below and the X and other socials as well. Uh, wishing you and the team all the best and would love to follow up in the near future. >> I appreciate it. Thank you.