How Apex Fusion Achieved FINMA Qualification Without Compromising Decentralization

In an exclusive interview with Hackernoon, Filip Blagojević, Director of Developer Experience at HAL8, provides an in-depth look into Apex Fusion's groundbreaking approach to blockchain infrastructure. From achieving FINMA qualification to pioneering a tri-chain architecture, Blagojević reveals how Apex Fusion is bridging the gap between regulatory compliance and true decentralization.

Ishan Pandey: Hi Filip Blagojević, welcome to our 'Behind the Blockchain' series. Can you share your journey in the blockchain space and what inspired you to focus on decentralized infrastructure? What motivated you to build Apex Fusion and how has the experience been developing a network that combines regulatory compliance with true decentralization?

Filip Blagojević: Glad to be here! I joined the Cardano community back in 2019 mostly as a lurker, trying to find out where I fit in. I come from a technical background and new technologies are always something I'm looking for. Decentralization as a resilience mechanism is a fascinating concept and the idea of software enforcing pre-agreed rules is something I'm excited and passionate about. I've had a wide array of different jobs both on the business and technical side and I'm happy to be in a role of director of developer experience at HAL8.

Apex Fusion for me is a unique take of using battle-tested technology and addressing well known challenges in the blockchain space in simple, practical ways. I am deeply passionate about the interoperability aspect of Apex Fusion because I've seen the effects tribalism has in this industry. It's a larger problem than we want to acknowledge. Regulatory compliance is one of the challenges this space faces. We want to be fully compliant, have real decentralization and are committing to that in our day-to-day actions. This is not always the easiest path, but it is the correct one and I believe it will attract many real businesses to build on Apex Fusion.

Because on Apex Fusion you can chose to build with compliance in mind and us not needing to invent new concensus models and using existing tech means we can focus on end user experience and actual developer adoption.

Ishan Pandey: You're now launching the SPO onboarding for PRIME Mainnet. What exactly are Stake Pool Operators responsible for in your network, and how critical are they to achieving true decentralization?

Filip Blagojević: Stake pool operators are technical community members who run and maintain the stake pool software. Prime uses an Ouroboros consensus protocol based on a proof-of-stake consensus mechanism. Stake pools receive delegated tokens and produce blocks depending on the amount of stake delegated to them.

Stake pool operators are a crucial part of Prime (and of the wider Apex Fusion ecosystem) because they are in charge of the blockchain being stable and up-to-date. As the number of stake pools and stake pool operators increases, Prime performs better and is more resilient through decentralization. They are the back bone of Prime, our Layer 1 and through them the blockchain is decentrilized.

Ishan Pandey: Apex Fusion has created an inclusive model where non-technical participants can join through Stake Pool as a Service partners. Why was this accessibility important to you, and what impact do you expect it to have on network growth?

Filip Blagojević: Operating a stake pool requires technical knowledge and experience and it can be overwhelming and scary to deal with that to non-technical people. Apex Fusion made partnerships with experienced professional stake pool operators. These professionals are a part of our Stake Pool as a Service program. They offer operating your stake pool for a fee letting you focus your energy on your business. We want to create a business-positive environment where you can find services for things outside your professional spectrum and offer your professional services and products in return. We expect this to be a game changer for projects building on Apex Fusion.

Ishan Pandey: Your team achieved FINMA qualification as a utility token - a significant milestone. How does this regulatory compliance enhance rather than restrict your vision for a decentralized network?

Filip Blagojević: I believe it's crucial for everyone in the crypto industry to recognize the direction our sector is heading. Regulation and compliance are becoming increasingly widespread in the blockchain ecosystem and they may no longer be optional. Compliance is becoming essential as blockchain technology gains traction with established corporate players.

From day one, Apex team embraced the principle of being "compliant by design," understanding that this would be necessary for any credible blockchain project. As a Swiss entity, APEX proactively sought regulatory clarity by requesting a ruling from the Swiss Financial Market Supervisory Authority (FINMA). This ruling validated the legitimacy of our chains and the cross-chain bridge, while also confirming the classification of the APEX token as a utility token.

It's not just about making investors feel safe—it's about protecting them from being rugged or blindsided by fraud, mismanagement, or shady practices. Investors need to trust that their capital is supporting legitimate innovation, not disappearing into the void of unregulated chaos.

Regulatory safeguards like the latest Markets in Crypto-Assets (MiCA) regulation ensure accountability, transparency, and fairness, offering much-needed clarity for Crypto-Asset Service Providers (CASPs) navigating an evolving landscape. By establishing unified standards across jurisdictions, frameworks like MiCA reduce ambiguity and help projects align with enforceable rules from the start. These protections help weed out bad actors, provide clear disclosures, and create a level playing field where informed decisions can be made, ultimately fostering trust and confidence among investors.

Obtaining a FINMA ruling before launching operations is a an achievement. This approach significantly reduces the risk of future regulatory challenges or legal actions that could jeopardise the project's longer-term success. By addressing compliance from the outset, Apex Fusion operates within a well-defined framework, avoiding the uncertainty and potential fallout that can arise when regulators step in after the fact. In short, this enables builders to focus entirely on innovation and development, free from the looming uncertainty of potential regulatory complications.

From this perspective I wouldn't look at it from the angle that it hinders progress, it achieves regulatory clarity and offers a neutral Layer 1 blockchain. It positions us as a haven for those dissatisfied with existing infrastructures that lack the flexibility to enforce their own rules for compliant and legitimate operations.

As we pursue progressive decentralization and strive for mass adoption, selecting the right tech stack is more critical than ever. Existing infrastructures, including many Layer 1 and Layer 2 solutions, often fall short in addressing key challenges such as scalability, flexibility, regulatory compatibility, and the ability to adapt to diverse use cases. These limitations create bottlenecks that hinder true decentralization and prevent projects from achieving their full potential.

By learning from the shortcomings of existing solutions, we've positioned ourselves to build a better, more robust infrastructure that enhances decentralization without compromising on performance or compliance. Our approach leverages insights from past experiences, enabling us to address these gaps head-on and provide an ecosystem that supports innovation, scalability, and regulatory clarity. Apex delivers a tech stack that not only accelerates decentralization but also ensures it is practical and sustainable for a global audience.

Ishan Pandey: Let's talk about your tri-chain architecture. Where does PRIME Mainnet fit within this ecosystem, and how will SPOs help facilitate cross-chain interactions?

Filip Blagojević: Apex Fusion was started by a group of people that were closely involved with initial ideas and design behind Cardano, Polygon and based on the problems they themselves faced while building not just protocols but also dApps on UTXO and EVM based chains.

This is how we came up with the idea of a Federated Multichain approach to designing networks. We took the existing tech and looked for ways to repurpose it in a different trust and economic model that works better in a multichain environment.

Prime is our base layer, a layer 1 blockchain, fully decentralized and secure. It serves as an anchor of the ecosystem and a place where AP3X tokens are created, it is fully decentralized and neutral. Nexus is a separate EVM blockchain with extreme speed, low cost and ease of use. Our UTXO execution layer chain called Vector is also based on Ouroboros and offers an environment to deploy Bitcoin and Cardano types of applications with more speed and less cost, like Nexus. Both Nexus and Vector use AP3X tokens to pay for transactions.

All chains are connected through the Reactor bridge which is another blockchain based on Polygon Edge infrastructure, highly secure and performant. This is similar to building an economy layer (L1) similar to a Proof of Stake version of Bitcoin with native liquid staking built in. Imagine Bitcoin but with Lido as part of the core protocol and with PoS instead of PoW.

Because you don't deploy apps on our L1 it does not try to compete with our L2s which adds more value to them as execution environments.

Ishan Pandey: Your network has been tested by 100 SPOs over six months. What were the most surprising insights from this testing phase, and how have they shaped your mainnet deployment strategy?

Filip Blagojević: We are extremely proud of our SPO community. I guess, the surprise for me was how much interest there is and how willing people are to help each other. I am interacting with SPOs daily and it's a thrill to be challenged and to learn from such competent and kind people. We make sure to ask them regularly for their thoughts and feedback. We listen closely to their sentiment and hold regular sessions through X spaces and Discord to make sure they know they are heard and appreciated.

Ishan Pandey: The delegation rewards for early SPOs are structured to incentivize participation. Can you break down how these rewards work and why they're essential for long-term network stability?

Filip Blagojević: The interest of everyone working on the Apex Fusion project is to decentralize Prime as soon as possible and to include dedicated new partners and stakeholders. SPOs are essential because there is no Prime and there is no Apex Fusion without them. With that in mind, Apex Fusion Foundation is providing 15% saturation of the stake pool (720 000 AP3X tokens) of delegation for the first 100 stake pools and 10% (480 000 AP3X tokens) of delegation for the subsequent 200 stake pools.

This incentive will enable these stake pools to create blocks and receive staking rewards in AP3X tokens every 5 days. They will work on their marketing and promotion attracting more delegation to their respective pools and thus receive more rewards. Prime is set up so that stake pool operators and delegators receive around 10% yearly return on staked AP3X tokens. Ouroboros is a delegated proof-of-stake protocol with no locking and no slashing so all holders can liquidate their tokens at will and do not have to worry about losing tokens.

Ishan Pandey: With the token launch planned for Q1 2025, what specific metrics will indicate successful SPO onboarding, and what should the community watch for in the coming months?

Filip Blagojević: Already we have 100+ SPOs on the testnet and 50+ SPOs on the mainnet in preparation for the token launch event. These are already indicators of a successful onboarding program, we have sufficient SPO community onboarded to decentrilise the network. Now, as with all successful decentrilised projects, it's in the hands of the community. Apex Fusion Foundation has provided the best possible incentives for all and the economics are credible for anyone wanting to establish an SPO as a business in supporting the network.

What to watch out for now is the variety and number of new SPOs who come forward to be part of the community and develop a credible business model in the process, this way we help the community grow and thrive.

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