Decentralized exchanges (DEX) leverage block-chain technology; instead of relying on a centralized entity, a network of computers is used to complete and verify transactions.
What are DEXes
Decentralized exchanges incorporate block-chain technology, and instead of relying on a centralized entity, a network of computers is used to complete transactions. Due to this system, DEXs can allow users to keep custody of their keys and crypto. On top of this, DEXs are genuinely peer to peer as smart contracts or relayers will directly match buyers and sellers.
Order Books (On and Off-Chain)
Traditional markets operate with order books, which match buyers and sellers depending on their reservation prices. This gets a bit tricky to do on a DEX as network nodes will need to record all transactions, meaning miners must verify every-single transaction. These systems run into front-running issues as all transactions must be verified, which takes time, especially on ETH. This means that people can view the transaction queue and jump ahead large orders, causing slippage to DEX users, while the “front-runner” profits.
Other DEX’s have adopted Off-Chain order books, which create quasi decentralized exchanges. Instead of the order-book being on-chain and verified by the various nodes, a centralized entity hosts the order book. Since these transactions are verified off-chain, it is not truly decentralized. To execute trades, orders are recorded on a separate server that is then communicated to the block-chain using relayers.
Examples include:
On-Chain: Bitshares, StellarTerm
Off-Chain: Binance DEX, 0x and EtherDelta
What is an Automated Market Maker
The more widely adopted DEX’s use Automated Market Maker technology, which has recently boomed due to the De-Fi wave. AMM’s ditch traditional order books for liquidity pools, which automatically execute trades following a smart contract. These DEX's allow users to make the market by depositing liquidity and are incentivizes users through transaction fees. Most AMM’s also offer additional incentives in governance tokens to ensure the platform has ample liquidity.
CEX vs. DEX
So, where is the appeal behind DEX’s vs. traditional CEX’s? DEX’s appeal to many users as traditional Centralized Exchanges (CEX) have many weaknesses concerning coin custody, identity breaches, server downtime, fees, and even insider trading. DEX’s address many of these problems, especially as they continue to develop and innovate, improving on these weaknesses further.
DEX’s offer users a secure, open, and permissionless way to swap their cryptocurrencies. Typically the new user experience begins with signing up for a Centralized Exchange and then undergoing Know Your Custom (KYC) polocies. On top of this, the users must “trust” the centralized entity as they have custody of their assets, as well as their information. As previously mentioned, this is not the case for DEX’s, which allow users to begin trading instantly as long as theyy have a wallet.
Weaknesses of DEX
Due to no centralized entities making the market DEX's can struggle to maintain ample liquidity for specific token pairs. Typically CEX’s have very deep liquidity allowing buyers and sellers to agree on prices easier through keeping the spread tight. Due to DEX's niche nature that relies on liquidity providers to create market depth, certain low demand token pairs may not be offered or may trade at premiums. DEX’s combat this through providing liquidity incentives, but the issue is still prevalent in specific scenarios.
While CEX’s may not be the best option, they are much more convenient for new users. Traditional order-books and CEX UI’s offer users an effortless and instantaneous trading experience. On the other hand, DEX’s on networks such as Ethereum will face 10-15 seconds transaction times, which offer basic UI/UX. On top of this CEX’s are much more forgiving allowing users to recover funds and accounts easier, whereas if a user loses their wallet code, their crypto is un-recoverable.
Looking Ahead with DEXes
Decentralization has been a growing focus in crypto markets. As the space continues to innovate, DEX, technology will follow. Overall there are multiple On-Chain, Off-Chain, and AMM DEX’s that all provide innovation to the space. As the DeFi space continues to expand rapidly, we can expect DEXs to experience an influx of volume.
Keep an eye on these exchanges as they capitalize on traditional exchanges’ weaknesses and continue to innovate as the space grows.
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This is a paid press release, BSC.News does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. The project team has purchased this advertisement article for $1500. Readers should do their own research before taking any actions related to the company. BSC.News is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned in the press release.
This is a paid press release, BSC.News does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. The project team has purchased this advertisement article for $2500. Readers should do their own research before taking any actions related to the company. BSC.News is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned in the press release.
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Related News
A New Solana Memecoin With $19 Million: What is Milady Wif Hat?
Named after the renowned Solana meme coin Dogwifhat (WIF), Milady Wif Hat swiftly reached its maximum funding cap of 88,888 Solana (SOL) within hours of its launch.
Introduction: Milady Wif Hat
Milady Wif Hat, a new meme coin on the Solana network, has made waves by swiftly gathering $19 million in funding during its presale in just two hours. Named after the well-known Solana meme coin Dogwifhat (WIF), Milady Wif Hat garnered a maximum funding of 88,888 Solana (SOL).
🎩 Milady Wif Hat presale is now live! 🚀
— Milady (@miladymemecoin) March 18, 2024
Presale is live for the ever-fashionable SOL-loving Milady wif hat. Sending some love to the SOL community now 💗
Wallet address : 4K9tmyjpdu9ogw95JRTZkPkNppw8v1gnuGHBaYir96tt pic.twitter.com/1VdUjilB1E
With Milady Wif Hat, investors could participate with a minimum investment of 1 SOL, capped at 88,888 SOL. The presale, set for a 24-hour duration, saw an overwhelming response, becoming oversubscribed within hours of its launch.
📢 Closure of Milady wif hat presales! 🚀
— Milady (@miladymemecoin) March 18, 2024
Milady Wif Hat presale has soared to its limit of 88,888 SOL and is now closed. 🎉
Any additional Solana raised will have 100% of their funds returned.
Thank you all for the incredible support! 🙌 💖 pic.twitter.com/zEzDGEVlQy
Following the closure of the presale, additional contributions were reportedly returned.
Milady Origins
Milady memecoin's journey began as a decentralized meme token ($LADYS) on the Binance Smart Chain, debuting in 2022. Inspired by the internet meme culture surrounding "Milady" images, which exude grace and elegance, the project aims to infuse humor and lightheartedness into finance.
With a fixed total supply of 1 billion tokens, LADYS employs a deflationary mechanism, burning 10% of the initial supply to enhance scarcity. Furthermore, the tokenomics incorporate a 10% tax on transactions, with 5% redistributed to holders as rewards and the remaining 5% allocated to the liquidity pool, incentivizing long-term holding strategies.
Milady Wif Hat memecoin is the newest addition to the Milady ecosystem.
Challenges Along the Way
Despite its promising trajectory, Milady has faced challenges on its rise. Charlotte Fang, the founder of NFT projects Milady and Remilia, recently confirmed a security breach of treasury addresses, resulting in significant financial losses.
The transfer of ownership of the treasury to the drainer occurred before the suspicious transactions, according to PeckShield experts. Prior to this, in September 2023, Fang reported that the Milady NFT ecosystem developers had stolen about $1 million and hacked its social media accounts.
This is a paid press release, BSC.News does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. The project team has purchased this advertisement article for $1500. Readers should do their own research before taking any actions related to the company. BSC.News is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned in the press release.
This is a paid press release, BSC.News does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. The project team has purchased this advertisement article for $2500. Readers should do their own research before taking any actions related to the company. BSC.News is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned in the press release.
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