Cryptocurrency Exchange

Decentralized Exchanges Are 2019’s Key to a Dapp Comeback

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Ethereum and EOS are the two unique platforms on which decentralized applications (dapps) are developed. These platforms enjoy the market capitalizations of $15 billion and $2 billion, respectively.

However, it is surprising to see that the many dapp users are not able to connect with the market capitalization. The figures are in the range of thousands.

While dapps executing functions in a decentralized way is interesting to see, it is inspiring to know that this action once required a centralized framework.

Their mainstream adoption will take years to get seen. But, putting that aside, the gambling dapps are getting used highly to date.

However, a class of dapp that we should all be waiting for is the decentralized exchange. A decentralized exchange is based on the blockchain and takes into consideration the shared exchanging of tokens near to that blockchain.

How this works:

It starts with the users connecting their cryptocurrency wallets to the decentralized exchange. Here they collaborate with the smart contract. This automatically coordinates, evaluate and executes transactions without any involvement of an outsider.

Generally, DEXs hare developed using the ethereum blockchain, but this has reached out to other blockchains, for example, EOS or NEO.  The decentralized exchange is a dapp that encourages liquidity, but their abilities go beyond this.

It will largely require different forms of tokens to operate. You may require the native dapp token, ethereum to send and affirm transactions on the blockchain, a capacity token to store the information for the dapp and maybe a couple of different tokens, which will depend on the needs of the project.

The project may have these tokens to control the services on the backend. The dapp can connect with the DEX and gives an in-time feature that makes a consistent user experience.  All through this procedure, there is no outsider API, or account setup is required.

The following are two examples of this: Liquidity and payments.

The collaboration of Melonport’s with a decentralized exchange like 0x is a perfect example of utilizing the liquidity pools that DEXs give. The company is trying to develop a decentralized tool which can help in managing assets. The tool will work at the front-end using IPFS, while the back-end is using ethereum smart contracts.

In this situation, the DEX operates as a liquidity provider for fund managers to get benefited from these pools when dealing with their portfolios.

The capacity to swap resources with a single tick is a helpful function for fund managers to trade or hedge their investments immediately.

Etheremon’s incorporation with Kyber Network represents another utilization of DEXs. As more dapps get made, so do the quantity of various cryptocurrency. This leads to more extensive and scattered token ecosystem.

Holders of cryptocurrencies are less inclined to hold BTC or ETH merely. However, they will not mind holding different altcoins in their wallets, along with the traditional ones.

Most of the dapps usually accept ETH and games’ native token. The suggestion is that players need to trade tokens each time they need to play, which may affect the user’s experience when playing such a game.

Here, the DEX is a swap service provider which is allowing its players to pay with ERC-20 token.

Streamlining the payment procedure into one platform will help users enjoy games without any disturbance; plus, it will encourage acceptance for the whole dapps ecosystem.

DEX’s Coming Future?

DEXs will undoubtedly play a vital role in the adoption and acceptance of cryptocurrency.

However, right now, they are very small. At present, only a specific group of people are using DEXs, and the technology behind them is still emerging.

But, no one can ignore the merits of DEXs.

Last year, Radar Relay, a P2P trading platform conducted a $10 million funding activity. Recently, Airswap, another P2P trading platform, undertook the world’s first security token transfer on an open blockchain.  SPiCE VC and Securitize backed this activity.

Major centralized exchanges like Binance are also pondering over having their own DEXs in spite of being one of the prime crypto exchanges in the global crypto market.

Undoubtedly, blockchain will assume a critical job in our technology DNA taking a step forward. Rather than seeing the blockchain as a just another thing on the internet, we should ask our self that what we can do more with this technology that we have not done yet.

The decentralized exchanges get this sentiment very well.

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