Will DEX Become Mainstream? Brief Analysis of the Innovation of Well-Known International Digital Currency Exchanges


Hong Kong, China -- (ReleaseWire) -- 02/25/2021 --According to news on February 25, the monthly trading volume of decentralized exchanges (DEXs) in February has reached 64.83 billion US dollars, slightly higher than the 61.16 billion US dollars in January. Uniswap remains the market leader in the DEX field, with its monthly trading volume exceeding $30 billion for the second consecutive month. In addition, the monthly income of Ethereum miners in February also reached the highest level ever. About half of the revenue comes from transaction fees, which reflects the high cost of online transactions today.

The full name of DEX is Decentralized Exchange, which is translated as decentralized exchange. In DEX, the funds are fully controlled by the user in the user's wallet address or transaction smart contract. When a user initiates a transaction, the exchange executes a smart contract to complete the transaction, and the asset transfer is completed on the chain. The transaction record chain can be checked, open and transparent.

Next, look at the difference between DEX and CEX (Centralized Exchange).

1. From the perspective of asset security, CEX wallet stores the funds of all users. Due to the large amount of funds, it is easy to attract hackers. Once a problem occurs, almost all users will suffer losses. In the DEX platform, users' assets are not managed by the platform side, but managed by smart contracts. During the transaction, the platform party does not touch the user's assets, and the user's assets do not need to be recharged into the platform. The user's transaction operations are all peer-to-peer transactions. The order operation requires the trader to sign with the private key, and after the match is successful, it is verified by the smart contract. Assets go directly to the account wallet, no withdrawal is required, and the platform is only responsible for transaction flow.

2. From the perspective of asset control rights, in CEX, user assets will be controlled by the platform, and users need to recharge their assets to the wallet of the trading platform. The asset custody function of a centralized trading platform is just like a bank. The user deposits the money in the bank. The bank gives the user an account to record the user's funds. The bank has absolute control over the user's funds. In DEX, users' assets are completely under their control. DEX does not provide fund custody services, so it cannot control and transfer users' funds.

3. From the perspective of transaction speed, in CEX, because transaction data is not on the chain, as long as there is a matching counterparty, the transaction speed is extremely fast. DEX is fully supported by the blockchain. Every transaction order and every state change will be recorded as a transaction in the blockchain network, which often leads to problems such as poor liquidity, high cost, and slow speed.

However, both DEX and CEX have their own advantages and disadvantages, and they cannot be compared at all.

Previously, Omar, the CEO of the well-known international digital currency exchange ZB.com, pointed out the following points in the round table of the Block Global ECO Summit. Among the 300,000 daily active chat users on the ZB.com APP, the current proportion of DeFi group chats has dropped to less than 20%. But DeFi is still a track that continues to be worthy of attention. At present, ZAPP (similar to APP Store) of ZB.com plans to launch DEX wallet address service to conduct centralized and decentralized full-scene trusted asset management.

The CEO of ZB.com merely stated that ZB.com will launch a DEX wallet address service. From this point of view, ZB.com does not simply launch a DEX, but integrates DEX and CEX. In my opinion, this is undoubtedly a very good thing. At present, CEX and DEX have their own advantages and disadvantages, and this is undoubtedly an orderly integration of these two trading modes. This has increasingly confirmed the viewpoint of various authorities in the currency circle that "centralization and decentralization should be integrated with each other in order to develop better".

I believe that this change made by ZB.com this time will definitely point out a direction for all exchanges in the currency circle. At present, the CEO has revealed relatively little news. What will it be like in the future, let us look forward to it.