Decentralized exchange (DEX, decentralized exchange) Is an exchange, which works on the basis of a distributed ledger, does not store funds and personal data of users on its servers and acts only as a platform for finding matches on requests for the purchase or sale of user assets. Trading on such platforms takes place directly between the participants (peer-to-peer) without any financial intermediaries.
Moreover, most of the existing exchanges, calling themselves decentralized, are not really completely like that: they use their own servers to store data on trades and orders to buy or sell user assets, however, the private keys are kept by the users themselves.
How decentralized exchanges differ from centralized ones?
Centralized exchanges are run by a specific company or person, that are profit-oriented. Managers of exchanges are responsible for protecting user data and trading information., fully control the work of the platform and independently make decisions that are important for the development of the project.
Decentralized exchanges are managed automatically or semi-automatically with the involvement of platform participants in the process of making important decisions. Such platforms provide the technical possibility of direct interaction between participants and use a distributed ledger. (blockchain) for storing and processing all (or almost all) data.
Which decentralized exchanges are already working?
Here are some already functioning representatives:
- IDEX — децентрализованная биржа на Ethereum с торгами в реальном времени и возможностью торговли непосредственно с аппаратного кошелька;
- Waves Dex — мультиплатформенная децентрализованная биржа с возможностью обмена криптовалют на фиатные деньги от проекта Waves. Project representatives approve, that at the moment the trading volumes on the platform are more than 25% of the total trading volume on all decentralized exchanges;
- Bancor Network — децентрализованная биржа с автоматическим механизмом ценообразования и, hence, with no scatter between the purchase and sale prices of tokens;
- Switcheo Network — децентрализованная мультичейн-биржа на базе блокчейна NEO с нулевыми комиссиями.
На сегодняшний день существует более двухсот полноценно работающих децентрализованных бирж, however, now this number is difficult to compare with the number of their centralized counterparts, which, apparently, may exceed several thousand.
What are the main advantages of decentralized exchanges?
Most of the strengths of decentralized exchanges stem from their distributed architecture and the lack of a unified control center.. Here are some key benefits:
- decentralized exchanges provide complete user anonymity;
- the decentralized exchange does not store user assets, because no hacker attacks, nor a complete collapse of the exchange itself does not threaten with loss of funds, what makes them radically different from centralized exchanges, who are hacked regularly enough, including such large exchanges, как ShapeShift и Bitfinex;
- the decentralized exchange does not have a single entry point, through which one could get access to all assets and data, which makes it harder for crackers and makes the attack itself pointless;
- there are no personal accounts on the decentralized exchange, no verification required and no need to specify email, therefore no one can use or steal personal data of users;
- the decentralized exchange has no leadership, interested in manipulating prices within the exchange;
- since the exchange has a distributed architecture, authorities cannot close it or freeze your account.
Thus, decentralized sites leave users full control over their funds., requests and data, and at the same time full responsibility for their actions.
What are the main cons of decentralized exchanges?
The same architecture of decentralized exchanges and complete control of users over their own funds entails a number of difficulties.:
- many options for traders, such as stop losses (stop loss), margin trading or landing page, inaccessible to users of most decentralized exchanges;
- decentralized exchanges usually have a smaller pool of liquidity compared to centralized exchanges;
- a decentralized exchange, by definition, cannot have a support service, capable of affecting transactions or user accounts;
- since many decentralized exchanges are governed by smart contracts, cryptocurrencies, not supporting interaction with smart contracts, cannot bargain on them.
Based on the difficulties described above, decentralized exchanges are much more reliable and secure than centralized ones, but more suitable for advanced users, who are ready to take full responsibility for their actions themselves without the opportunity to contact support and demand a refund. Besides, some decentralized exchanges, for example, Bancor, имеют уязвимости, as a result of which unauthorized withdrawal of funds is also possible from them.
How decentralized exchanges are regulated?
В США регуляторы пытаются применить уже существующую законодательную базу, а в Сингапуре власти пытаются создать новую нормативно-правовую базу для работы таких бирж. Nevertheless, there is no unambiguous position regarding decentralized exchanges in these countries, and in other countries, decentralized exchanges are not regulated at all.
One of the main difficulties, related to the regulation of decentralized exchanges, is, that in most cases such exchanges are not controlled by specific legal entities or individuals.
This leads to problems with determining who is responsible in the event of any violation., difficulties with checking trading activity and identifying possible violations. For the same reason, some pre-existing regulations cannot be applied to decentralized exchanges., applicable to centralized exchanges.
How the concept of a decentralized exchange will evolve?
Argued, that centralized exchanges will gradually implement the functionality of decentralized, and therefore the future of online exchangers lies somewhere in the middle, offering the user the advantages of both types of exchanges. In general, decentralized exchanges are considered the most successful solution for serving the broad masses of cryptocurrency users..
Nevertheless, blockchain scaling problems, as well as the massive use of cryptocurrency (tn. mass adoption), still unresolved. Besides, to attract more users to decentralized exchanges, first of all, it will be necessary to solve the problem of the complexity of the user interface (и некоторые уже даже сделали это). Until all these problems are solved, decentralized exchanges, Most likely, will remain a purely niche product.
A source : forklog.com/chto-takoe-detsentralizovannye-birzhi-dex/