Decentralized exchanges, unlike those centralized ones, do not rely on a third party to conduct trades or store cryptoassets. Instead, they use Blockchain Technology to enable peer-peer trading without an additional third party. Moreover, they do not hold customers’ personal information, account balances and portfolio allocations. Unless centralized model-based exchange, centralized exchanges there is no single point of failure and trader’s funds, personal data, security and privacy are well preserved.
Decentralized exchanges are relatively young, they appeared in 2017. EtherDelta was one of the first to embrace this movement. Bitshares, district0x, Waves Dex, Binance Dex and Idex are few other more are coming.
However, current decentralized exchanges model suffers from practical challenges that must be solved in order to compete with centralized exchanges. Indeed, they are generally a poor user experience interface for common traders, also lack advanced trading functionality and liquidity.
User experience
In comparison with user friendly centralized exchanges, user experience of decentralized exchanges platforms provide a relatively poor user experience through interface, which restrict drastically their attraction.
Liquidity
Traders do not join decentralized exchanges because few other traders are on the marketplace to be the counterparty for their trade, which leads to a low transaction volume and the classic chicken and egg problem.
A direct effect of low trade volumes is that they contribute to limit the variety of cryptoassets available and to the lack of quality of cryptoasset to trade.
Considering the fact that in one hand centralized exchanges bring user friendly experience, liquidity and in other hand that decentralized exchanges provide security and privacy, the following question arises: can we find a hybrid system which provide the best of both models?
Tozex platform will propose the best of both model properties through a crypto exchange platform with an integrated decentralized order book.
Find more at https://tozex.io.
