As you know, one of the first and main engines of progress was money and resources. Since time immemorial, people have been exchanging their products for those goods they wanted to get. It was the desire for honest exchange, the competitiveness of the market, and the ability to increase one’s capital that created various trading guilds, which later turned into stock exchanges, which in turn gave impetus to the creation of cryptocurrency exchanges.
However, most of the above examples in their traditional way are more related to something centralized and absolute. Epochs are changing, and today, more than ever, the question of the possibility of trading without an intermediary has become acute. It would seem that it is impossible to do this because many sites offering their services are centralized. And so it was until a solution appeared on the horizon – decentralized platforms. What it is and how it works on the OctoGamex platform you read in this article.
What is a Decentralized Exchange?
First of all, it is worth understanding the very definition of the term decentralized exchange. What is it, why is it in demand, and how did it appear?
A decentralized exchange, or DEX, is a trading platform where all operations and transactions take place directly between users (traders) and without the need for intermediaries. Thus, DEXs facilitate financial transactions and can completely replace the services of banks, brokers, payment systems, and any other intermediaries. All transactions on decentralized exchanges take place using smart contracts in the blockchain ecosystem. It allows each user to independently track when the transaction was made, its status, commission, and all other related information, which greatly facilitates the operation and exchange of assets.
DEX is one of the main achievements of the DeFi industry, acting as such building blocks, with the help of which it becomes possible to build truly grandiose financial complexes without the risks of centralization.
Now, decentralized exchanges are experiencing their boom, and the number of transactions carried out on such sites has long been running into hundreds of billions of dollars. It indicates the interest and trust of the crypto community in this kind of activity.
How do Decentralized Exchanges Work?
One of the main advantages of a decentralized exchange is how it works. Each DEX carries out trading operations using smart-contracts and transactions in the blockchain network. In fact, on any decentralized platform, you, as a user, interact directly with the smart-contract. A plus is also the available infrastructure, without any centralized points of failure, where all responsibility lies with the crypto traders of the platform.
Each DEX user has the opportunity to store their funds on smart-contracts and keep track of the commission that is spent on certain operations, such as transfer, exchange, purchase, sale, etc.
The mechanics of DeFi and DEX have been successfully implemented on our platform. We offer you to connect your wallet for comfortable and transparent interaction with OctoGamex. Any transactions that take place between users of the platform can be tracked using the created smart-contract on your wallet. The implemented DEX elements make working with OctoGamex convenient and allow you not to be distracted by several certain factors that are so inherent in centralized products.
Centralized vs Decentralized Exchange?
Now that all Octies know what DEX is and how it works, you should familiarize yourself with the differences between a centralized and decentralized platform. The difference between these two products, except for the most obvious one, is quite extensive and affects many functional and non-functional elements of the operation of crypto platforms.
For example, in terms of functionality, decentralized users have access to a limited number of order types, and cannot use margin trading, which in turn is offered by centralized platforms. However, work is underway to improve decentralized platforms, and soon the issue of margin trading will be resolved. At the same time, there will always be a wider selection of tokens and coins on the DEX for trading new in-demand assets since listing on the CEX always takes time and the decisions of the financial department of the platform. Decentralized platforms often use an automatic market maker (AMM) mechanism that allows you to instantly provide liquidity in an ongoing transaction between two assets.
Another global advantage of DEX is the ability for the user to retain control over their assets. Any centralized exchange is under the jurisdiction of the country included in its legal policy. It applies to all the problems associated with CEX regulators because they do not influence decentralized sites.
Decentralized Exchanges List
In conclusion, we would like to say that the choice of a cryptocurrency exchange depends solely on the personal preferences and vision of the user. It includes design, functionality, fees, and many other aspects of working with DEX or CEX.
Today, in the cryptocurrency market, there are many platforms of different types, both centralized and decentralized. However, based on publicly available metrics and various research by crypto analysts, here are some of the most successful and popular DEX platforms of 2022. Among them:
- Kine Protocol
- ApolloX DEX
- Curve Finance
The industry is actively developing and moving in the direction accepted by users. We hope that soon an ideal solution will be found that can solve the problems of both decentralized and centralized platforms, making the cryptocurrency ecosystem even more friendly and open to everyone. Happy trading, Octies!
I am an author at OctoGamex. An ambassador of the word and a tireless blockchain researcher. I know how to combine imagery with expert vision and scientific style. Blockchain has become an integral part of my life. I have experience with developing and writing expert articles on topics related to cryptocurrency, NFT, DeFi and GameFi, blockchain, mining, staking, etc.