ViteX? Why decentralized exchange?
felicity last edited by felicity
There are several DEXs that I know actually. Currently, Decentralized Exchanges are still far off from achieving the liquidity, scalability, and functionality needed for mass adoption. However, current attempts built for Ethereum-based tokens include 0x Protocol, Kyber Network, EtherDelta, BlockDX by Blocknet, and Radex. One unique DAO-based platform is IDEX. Decentralized Exchanges in early development include the Waves Platform, Binance Chain, and OasisDEX, which is built by MakerDAO.
0x Protocol and Kyber Network are considered serious contenders for the future of Decentralized Exchanges. Both use their own internal tokens (KNC for Kyber and ZRX for 0x). The largest difference between the two is in how order matching is done:
- 0x solves this problem with a hybrid method where order matching is done off-chain with an intermediate party and then using the blockchain for the actual trade.
- Anyone can be an off-chain matchmaker by maintaining an order book
Programmable Smart Contracts allow market makers to set fees for managing the transaction (accepting an order and posting it in the order books)
- Kyber solves this problem by using Smart Contracts and reserves.
Unlike 0x, Kyber does not use off-chain matchmakers, and instead, all reserve transactions are managed by Smart Contracts.
- Reserves provide liquidity, and a singular reserve is held by Kyber.
- Additional reserves can be public or private.
- Private reserves are private coin holders who choose to act as a source of crypto for the exchange and set their own rates
- Public reserves can receive contributions from the public, and the public benefits by sharing in the profits
- Looking at the above two (very strong) platforms, EtherDelta is very weak in comparison:
- EtherDelta was initially breached and the exchange never fully recovered to work properly
- Their ICO was launched before the exchange was working properly
- Cancellation orders are mined on-chain, and waiting for the next mined block means that real-time trading becomes impossible
- Order processing is not done on-chain, yet EtherDelta does not experience the speed benefits of off-chain order processing, and users report very slow functionality
- With EtherDelta, the order book matching (one of the four key functions) is handled by centralized EtherDelta servers. Due to this centralization, orders in the order book can be censored, meaning that the censorship-resistance philosophy is made moot, but the security benefit of controlling your own funds remains.
The 0x project is similar to EtherDelta, with the key difference being that 0x provides a multi-national chain, where many exchanges can collaborate to build a larger order book taking advantage of a shared liquidity pool. 0x has the same centralization concern of EtherDelta, whereby the centralized servers of an individual exchange handle order matching.
The IDEX platform lies in a category of its own, as it runs on top of the Aurora DAO (Decentralized Autonomous Organization), which is inspired by free banking:
They’ve developed a multi-token structure through the DAO, with IDXM, AURA, and Boreal tokens
- IDXM is used as a membership fee token
- AURA is the Snowglobe staking token that supports the multi-exchange protocol
- Market makers are rewarded with AURA while takers pay gas fees
Boreal is the stablecoin, also enabling decentralized P2P lending
The Decentralized Capital aspect of IDEX provides users with free banking and loans through Boreals.
As far as I know that Binance is building their own DEX too! I am really excited to see DEX is booming.
And Vite is not out of this awesome. With the current progress in their products, like deck, apps and DAG deployed with Smart contract. Why not?
Anyway, there are some more decentralized exchanges out there but they are either being built or have very low liquidity or are facing security difficulties.
However, irrespective of their current state, the future of decentralized exchanges looks promising.
Now it is time to hear from you: Which Dex do you use? Why do you choose DEX? What do you think about the future of Dex?