Seriously. What shape should a distributed exchange take? How can it be funded?
As for the shape of a distributed exchange, I'm not so sure about that. Ideas?
Can't see how a distributed exchange could work. Transactions need fast confirmation on an exchange. If not traders will not touch it and you need traders to provide liquidity. Imagine being in a fast moving market and taking a long position but not being able to confirm your order was filled until 10 mins after the fact. That's 10 mins of exposure where your hands are tied. You can't sell because the counterparty you're selling too can't be sure you've got the BTC to sell them.
Just an idea - people provide limited access to their bank accounts to make money transfers, similarly how computers are made available for external traffic in the Tor network. This way a big distributed network is created, capable of making money transfers. To prevent stealing money from nodes, all USD/real currency in a node is backed up by freezing equivalent amount of node owner's BTC, as a guarantee.