Decentralized Exchanges: The Key to Unlocking Their Mass Adoption

Decentralized Exchanges: The Key to Unlocking Their Mass Adoption
фото показано с : beincrypto.com

2022-7-14 02:59

Decentralized exchanges (DEXs) have seen tremendous growth. But they haven’t been adopted at the same level as centralized exchanges. Here’s how to fix that so we can all access the permissionlessness, and censorship resistance that DEXs can provide, says Chad Barraford, Technical Lead at THORChain.

Decentralized exchanges: An alternative

The multi-trillion dollar global financial industry has been facing the heat – inflation, corruption, rising interest rates and threats of recession across major economies have left citizens frustrated with the status quo. The current state of affairs has left many people searching for a fairer alternative, where their voice matters. A place that values the individual over the institution.  

Decentralized Finance (DeFi) provides that alternative. It is a financial system that cuts out costly intermediaries and democratizes access to the financial system for the benefit of billions of citizens across the globe. In fact, according to Emergen Research, the global DeFi market is expected to reach over half a trillion dollars by 2028. This explosion of the DeFi industry has also led to the formation of one of its many innovations – Decentralized Exchanges (DEXs). 

Since their inception in 2014, DEXs have grown to handle over $1 trillion in trading volume in 2021. User autonomy is one key pillar underlying this growth, as demonstrated by recent operational decisions by centralized platforms. On a DEX, users exercise far more control over their assets. And, they are less likely to encounter issues of suspended or halted servicing. In addition, the decentralized nature of DEXs provide users with greater security by having no single point of failure, versus a centralized exchange (CEX) that can be a more vulnerable target for exploitation. 

Despite their tremendous growth to date, engagement with DEXs has yet to reach the levels of adoption, as seen with their centralized counterparts. Their complexity and lack of user-friendliness have stymied adoption for the less tech-savvy. In addition, DEXs often contend with limited liquidity, which is heavily dependent on the number of users actively trading on the platform, unlike CEXs.

Decentralized exchanges: evolution

Solving these issues requires a multifaceted approach. One overlooked solution could be DEX aggregators. DEX aggregators can go a long way in alleviating these issues. They offer a real-world solution by amalgamating data from multiple exchanges to serve up the best possible prices for users. This is while simultaneously enhancing liquidity. 

Traditional finance has failed to include as many as  1.7 billion people, who remain unbanked and marginalized primarily in emerging economies. DeFi and DEXs offer a new monetary track for addressing these issues. This is while enabling anyone to access financial products using decentralized infrastructure, with nothing but a smartphone connected to the internet. 

By acting on the notion of democratizing finance, DEXs can open up a world of opportunities for millions. They can unlock access to financial services like borrowing, lending, and payments. 

Organizing data

DEXs outperform their centralized peers with improved transaction management, lower barriers to entry and increased sovereignty over assets. Building on the non-custodial benefits of any given DEX, data aggregation provides a bonus layer of utility for the individual user. 

Data grows exponentially, and we need tools to help gather and organize it. Uber doesn’t own a single taxi, Airbnb doesn’t own a single bed, and eBay doesn’t own any of its listed products. Yet each platform is widely used due to its aggregation abilities. 

By building on the strengths of their predecessors, DEX aggregators are creating a new avenue for current DEXs to access the assets and liquidity of other DEXs in another ecosystem. This will involve including the layer one assets of previously siloed chains like Bitcoin, DOGE and many more. This is something that has never been achieved prior.

DEX aggregation sets the foundation for a whole host of data management features involving identity and intellectual property on Web3. The dissolution of barriers between siloed, legacy databases and the proliferation of open data will feed into the development of novel marketplaces. They can take advantage of the diminished cost of verification and trust.

Interoperability will lead the way

Interoperability is key to the development of DEX aggregation. Some proposed solutions for communication between different protocols, such as atomic swaps or wrapped tokens, fail to solve the issue of interoperability at its core. Neither are effective at scale. Native cross-chain swaps are an important technical capability that has already demonstrated its capacity to truly enable interoperability at scale.    

With no one solution fitting the fragmented standards of inter-blockchain implementations, the evolution of decentralized data aggregation depends on the freedom of data exchange. Complete interoperability on the web is one of the core enablers for aggregators, like Spotify or Netflix. It is often taken for granted. In a web of data abundance, these platforms have built business success around the discovery and commoditization of supply.

There are thousands of long-tail crypto assets and an ever-growing supply of non-fungible assets. Discovery and commoditization enabled by interoperability would unlock opportunities for Web3 consumers to discover and swap between thousands of native assets. This eliminates the need to participate in riskier wrapped assets, or bridges. 

With further development and additional liquidity sources, aggregators can also be manipulated to offer an open, permissionless API for Web3 developers. This allows users to leverage the integrated liquidity pools and functionality to enable many novel cross-chain use cases and applications. 

The future is bright

DEX aggregation is on the cusp of going mainstream. It offers users the exciting prospect of connecting many DEXs across different blockchain ecosystems. The process of integrating these DEXs is already underway. Once completed, it will mark a major step forward to securing a multichain future for DeFi. 

Once these capabilities are in place, the last barriers to the adoption of DEXs will fall and begin to cut away the market share of CEXs. CEXs cannot compete with the accessibility, ease, transparency, speed of innovation, permissionlessness, and censorship resistance that DEXs can provide. 

I’m excited to play a role in building this future and help develop a financial system that is accessible to all while empowering liberty and self-sovereignty to man, woman, and child on this planet.

About the Author

Chad Barraford is Technical Lead at THORChain, a non-custodial decentralized liquidity protocol that enables decentralized exchanges (DEXs) and users to seamlessly transfer their digital assets across blockchains.

Got something to say about decentralized exchanges or anything else? Write to us or join the discussion in our Telegram channel. You can also catch us on Tik Tok, Facebook, or Twitter.

The post Decentralized Exchanges: The Key to Unlocking Their Mass Adoption appeared first on BeInCrypto.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

Decentralized Machine Learning (DML) на Currencies.ru

$ 0 (+0.00%)
Объем 24H $0
Изменеия 24h: 0.00 %, 7d: 0.00 %
Cегодня L: $0 - H: $0
Капитализация $0 Rank 99999
Цена в час новости $ 0.0009581 (-100%)

exchanges decentralized centralized fix access resistance dexs

exchanges decentralized → Результатов: 126


Biconomy launches Forward Swap – a DEX that accepts gas fees in stablecoins

Decentralized technology is on a path of revolution — from traditional exchanges to decentralized exchanges, with the aim of facilitating a more convenient and secure trading space. Although the centralized exchanges conduct trade off-chain, it is necessary you know that despite the development occurring in the trading space, most of their existing challenges, especially the “high cost of transaction” are yet to be resolved.

2021-3-26 14:49


0x and StarkWare Partner to Create StarkDEX, Aims to Scale Decentralized Exchange Performance

A new trend has sprung up in the crypto world in the last few months which is the rise of decentralized exchanges as an alternative to traditional crypto exchanges. These exchanges offer certain benefits such as improved security for users and as a result, many traditional exchanges are beginning to launch their own actions such […]

2019-6-4 18:56


bZx ICO (BZRX Token): Decentralized Margin Trading Exchange Network?

This protocol provides a safer lending and cheaper trading with more liquidity. The BZX protocol enables decentralized margin trading, and it can work at any margin. Besides, it integrates well with already existing wallets to turn Ethereum wallet into an unBank account that is decentralized thus pays its users for holding. The decentralized exchanges need […]

2018-7-18 13:39


Фото:

In Finance Malda, supporting the first authorized bank of the word

Malta-based Founders Bank is to become the first community-owned decentralized blockchain-friendly banking institution in the world’s history. As it has been announced, one of the world’s major cryptocurrency exchanges by traded value Binance will become one of the key investors funding the launch of the first-ever decentralized bank. The future Founders Bank will be hosted

2018-7-13 14:16


‘I Hope They Burn in Hell’ says Ethereum’s Vitalik Buterin about Centralized Cryptocurrency Exchanges

Co-founder of Ethereum (ETH) Vitalik Buterin criticized centralized exchanges, saying that he hopes they will “burn in hell,” in an interview with a TechCrunch journalist Jon Evans, July 6. [embedded content] Buterin has reiterated his positive stance on decentralization, claiming that by developing “better” decentralized platforms, the  crypto community should be able to take away

2018-7-7 17:34