Decentralized exchange

A decentralized exchange (DEX) is a cryptocurrency exchange which operates in a decentralized way, i.e., without a central authority. Decentralized exchanges allow peer-to-peer trading of cryptocurrencies.[1]

Because users do not need to transfer their assets to the exchange, decentralized exchanges reduce the risk of theft from hacking of exchanges.[2][3] Decentralized exchanges can also prevent price manipulation or faked trading volume through wash trading,[4] and are more anonymous than exchanges which implement know your customer requirements.[5]

There are some signs that decentralized exchanges have been suffering from low trading volumes and market liquidity.[1][6][5] On the other hand, some businesses such as Spark, which is a notable disruptor of the remittance industry and for whom liquidity is thus crucial, the decentralized exchange has proven instrumental in enhancing liquidity. Central to achieving this is by working with fiat pegged cryptocurrencies (also see stablecoin) [7]

Currently existing DEXs include Etherdelta and IDEX.[6][8] Huobi runs a decentralized exchange called "HADAX" (Huobi Autonomous Digital Asset Exchange), with community voting for which coins to list.[6][9] Binance is developing a decentralized exchange.[4]

References

  1. 1 2 Russolillo, Steven; Jeong, Eun-Young (2018-07-16). "Cryptocurrency Exchanges Are Getting Hacked Because It's Easy". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-09-11.
  2. ↑ Sandle, Tim (2018-09-09). "Big investment in cryptocurrency startup Altcoin.io". Digital Journal. Retrieved 2018-09-11.
  3. ↑ Castellanos, Sara (2018-03-06). "Alexis Ohanian's VC Firm Invests in Crypto Trading Platform". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-09-11.
  4. 1 2 Young, Joseph (2018-08-11). "Decentralized Crypto Exchanges Can Solve Fake Volumes And Malpractices". Forbes. Retrieved 2018-09-11.
  5. 1 2 Fanusie, Yaya (2018-07-12). "Good Crypto, Bad Crypto: Blockchain Projects Gaining Legitimacy While Spawning An Underground". Forbes. Retrieved 2018-09-11.
  6. 1 2 3 Nguyen, James (2018-06-27). "Australian Tokens Can Now Apply For Listing On The Third-Largest Crypto Exchange". Forbes. Retrieved 2018-09-11.
  7. ↑ "RootBranded | Mindshift Magazine". RootBranded | Saving Great Ideas from Obscurity. Retrieved 2018-09-17.
  8. ↑ Castor, Amy (2017-08-15). "Researchers Find Issues With 0x, An Ethereum-Based Project Aiming To Raise Millions In An ICO". Forbes. Retrieved 2018-09-11.
  9. ↑ Liang, Chenyu (2018-03-10). "Artful Asset Exchanges Skirt China's Cryptocurrency Ban". Sixth Tone. Retrieved 2018-09-11.
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