Would cryptocurrency revolutionization be complete without decentralized exchanges?
Of course, we’ve seen headlines about certain centralized crypto exchanges getting hacked by some elite hackers. And a good example of some of these centralized exchanges are Mt. Gox and Bitfinex. But, do you think those hackers would have succeeded if they had focused their energy on decentralized exchanges? Theoretically, the answer is no.
Well, the general public are still confused on which direction to follow while searching for reliable and safe haven-exchanges because they lack the basic understanding of what both centralized and decentralized exchanges is all about, and perhaps the difference between the both of them. So therefore, let’s clear the air before going any further.
Decentralized exchanges aka DEXs are trading platforms that are not controlled by central authorities be it government or whoever. Interesting enough, with decentralized exchanges it will be difficult for elite hackers to have control over your password because your private keys are not stored on intermediate servers like the centralized exchanges.
On the other hand the centralized exchanges can be simply defined as a trading platform that can regulate users fund. Unfortunately on centralized exchanges, if the government let’s say U.S. Japan or China decides to shutdown the exchange for one reason or the other, even though your digital asset worth millions of dollars, you may lose such fortune forever.
Note: I’m not saying that centralized exchanges are not good enough to handle trade safety, what i’m saying is that they are more vulnerable to hacks compared to decentralized exchanges.
Over the past years, trading platforms have marketed themselves to be “decentralized exchanges,” but, they are yet to live up to it. For example, some DEXs are still taking peoples’ (or users) tokens whenever they want which is not an attribute of decentralization. Apparently, this has been one of the events that made people thinking of decentralized exchanges to be more of an aspiration in the cryptosphere.
“You’re not a ‘decentralised exchange’ if you’re taking away other people’s tokens whenever you want,” said Udi Wertheimer, a crypto developer, in one of his tweets
Additionally, here are few things you need to know about decentralized exchanges:
- With decentralized exchange, users have full control of their funds in other words, no central authority has control over them.
- Here also, you don’t have to rely on any intermediary to authenticate any transaction you want to make.
- Uncompromised anonymity is guaranteed with this exchange, and this is obviously one of the primary factors that make it stand out.
There are many decentralized exchanges in existence but here are the top promising ones.
IDEX is a hybrid, blockchain-based decentralized exchange that provides a trustless, real-time and high-throughput trading experience. IDEX is one of the most popular decentralized exchanges that enable its users to trade uninterruptedly without waiting for their transactions to ‘mine.’ Interestingly, on this exchange,users can fill in more than one order at a go and seamlessly cancel their order immediately without gas cost.
One peculiar thing about IDEX’s mainnet — an important technical foundation of any blockchain project, is that the component of IDEX will further develop into snowglobe — a complete decentralized exchange protocol. Snowglobe uses a combination of EVM — compatible childchains, and a peer-to-peer network to coordinate state updates in real time and further enable a shared liquidity pool across multiple high-performance decentralized exchanges.
Below are the few problems in the exchange industry that IDEX wants to solve;
- Enhancement in security at exchanges is at the expense of the user experience.
- The trade speed is being limited by block times.
- Filling multiple orders simultaneously and submitting market orders is sometimes impossible, and even cancelling the individual order cost gas.
- Order booked updates slowly, and they are repeatedly out of synchronization with the interface. Although “new relayers” on 0x are addressing some of these issues, but still, they fail in providing a reliable and remarkable user experience.
Below are the solutions IDEX are providing to solve these existing problem;
IDEX is centralizing the non-critical components of the trading process. Here, transactions such as deposits and trades, must be approved by end users and their private key; also IDEX maintains its ownership while broadcasting these authorized transactions to the network. With proper care in sequencing the dispatch of these authorised transactions, IDEX will provide its user with fantastic trade speed, a premium experience, topnotch security and a profound auditability experience.
IDEX consist of smart contract, a trading engine and a transaction processing arbiter. IDEX’s smart contract is uniquely designed such that only the exchange is authorized to submit endorsed trades to the Ethereum network. This design enables it to control the order in which transactions are processed, separating the act of trading from final settlement. Furthermore, the authorized transactions are passed to the ‘Arbiter’– who takes care of the queue of pending transactions, dispatching them in sequence to ensure that each and every trade is mined in the correct order and that the remaining smart contracts remain in sync with the exchange balances.
Apparently, IDEX’s design does not just allows users to trade continuously across multiple markets without waiting for transactions to mine, it also allows them to place true market orders at once, and get out of the orders very fast without gas costs.
Here is IDEX’s ICO information;
Name: AURORA (IDEX)
Project type: Financial Services
Token type: ERC-20
Token available (Pre-Sale + Public ICO) : 1600
Token emission :2000
Investment goal: 70% goes to development( IDEX, Snowglobe protocol and Aurora network) 15% goes to operating expenses, 8% goes to marketing and 7% goes to legal expenses.
Accepted payment: ETH
Total amount raised in ICO: USD 6 Million
Volume in circulation as at time of writing: 404.45 BTC ( $2,559,210)
Website : https://idex.market/
Openledger is one of the top blockchain-based decentralized trading platforms for novice and professional trader. At Openledger, there is no central platform that can be vulnerable to theft or any sort of manipulation.
Their trading platform is designed and built on a Bitshares-based system that is capable of handling about 100,000 transactions in just a second. Another interesting feature about Openledger is its scalability prowess — it soars your revenue by implementing new crypto and fiat gateways as well as fees. The company is equipped with over 40 blockchain and cryptocurrency experts that are tirelessly working every single day to enhance the performance of their platform. Based on recent record, this DEX has had over 200,000 unique users( or traders ) trading over 50 popular cryptocoins which includes Bitcoin, Ethereum, Monero, NEO, Litecoin, Dash, Steem, and many more.
At OpenLedger, users don’t need to lose sleep over security because they implement advance encryption, 2FA, cold storage and a complex access management to keep their clients account secured at all times. However, you need to take good care of your login password and your username as it is pretty complex. Here is a good example of how their password looks like:
Note that at the time of writing, its volume in circulation is about $447,407( 69.99BTC).
BarterDex is another top decentralized exchange in the cryptosphere. It is one of the most powerful DEX that is built by the world leader in atomic-swap technology. Currently, BarterDex is in its BETA phase of development, and it can be easily tested by just downloading it on your desktop.
Technically, BarterDex is a product of Komodo platform — a platform that is focused on empowering its users with freedom through blockchain technology. And this platform has a new method of trading cryptocurrencies directly from one person to another.
“Our decentralized exchange removes all forms of middlemen, vouchers and escrow services. It relies on an underlying concept called the ‘atomic-swap,’ and we are the leaders in this technology,” said Komodo team. In other words, as an investor or user you can trade currencies without having to pass through the arduous and risky process of centralized exchange
Note: BarterDEX’s registration process does not follow a long protocol like other exchanges, and their is no limit to its withdrawal. Almost 95% of the entire cryptocurrencies in existence including the bitcoin-protocol based coins, Ethereum-based ERC20 tokens etc. are currently supported by BarterDex.
CryptoBridge is one of the new entrants in the decentralized exchange markets that runs on the BitShare Network. This exchange is owned by Bridgecoins holders, and it supports the trading of ever-growing varieties of popular tokens and altcoins. At cryptoBridges platform, users can seamlessly deposit, withdraw and trade all popular altcoins without any form of complications.
There is no central point of failure at CryptoBridge and in fact, every transactions, be it deposits or withdraw are transparently stored on the blockchain. Interestingly, the blockchain behind this decentralized exchange is the ‘Graphene’ — it has the ability to process about 100,000 transactions in just 1 second and with an average confirmation time of 3 seconds . Now, the fact that this exchange runs on BitShare/Graphene does not implies that it is a fork of BitShares/Graphene.
Here is a summary of how CryptoBridge is correcting some errors in the exchange market:
First of all, the BTS Gateway is a central point of failure because the users depend on the gateway to deposit and withdraw funds; but,Cryptobridge corrects the situation by using a federated distributed network of gateways that communicate to each other. Secondly, BridgeCoin Profit Staking Coin ensures that 50% of the exchange profits are distributed among Bridgecoin owners. And finally, factors reducing trust are being corrected with the company’s multi-signature federated gateway software.
Note that at the time of writing, the volume on this exchange is about 404. 29 BTC ($ 2,589, 271) with over 38 plus cryptocurrencies/ crypto asset traded on it.
Bisq( aka BitSquare):
Bisq is a peer-to-peer trading platform for cryptocurrency like bitcoin. It is fully decentralized and it does not requires name, email ID or any other verification requirements. Bisq can also be described as a cross-platform desktop application that facilitates any user to buy and sell bitcoin in exchange for fiat and other cryptocurrencies.
Bisq is designed to enable users to exchange directly with one another over the internet, eliminating the need for trusted third party exchange services. It is a peer-to-peer network, that is, it requires no centrally-controlled servers, and it has no single points of failure.
More importantly, Bisq is on a mission to provide a secure, private and censorship-resistant way of exchanging bitcoin for national currencies like USD, EUR, YEN etc. and other altcoins over the internet.
As at the time of writing, this exchange supports over 126 plus cryptocurrencies but still have it in mind that the trading volume is still low compared to the aforementioned.
In conclusion: For now, it is very important to always remember that the decentralized exchanges are still in their infacies, so, the volume is still very low. Also note that their are some crypto trading platform in existence that operate in both centralized and decentralized form, that is, it might be very centralized in one aspect but quite decentralized in other dimensions.