DECENTRALIZED EXCHANGE (DEX)

  • Decentralization: No central authority.
  • Lower hacking risk.
  • Lesser trading fees.
  • No broker, no third party.
  • Lower fees
  • Less operation cost
  • Lesser down time
  • DEXs create on-chain order books with tons of data of transactions which depletes all the network resources and affects throughput significantly.
  • Order matching waiting time increases due to transaction load.
  • The end users are under the same counterparty risk that existed in centralized exchanges.
  • On-chain trading is not real-time as all transactions have to be processed by miners.
  • DEXs don’t support a wide range of cryptocurrencies and lack interoperability between blockchain networks and other exchanges which limits trading pairs to a specific network issued token.
  • DEXs require thousands of different computers to sync with each other leading to a longer block confirmation time and slower transaction speed.
  • Trade collisions result in higher transaction fees.
  • Low throughput caused by the slow order matching has led people to gravitate towards the centralized exchanges.
  • Due to less influx of users, DEXs suffer from low liquidity problem.
  • No fiat currency trading: Fiat currencies require a trusted central party to record account balances.
  • Front-running and price-time priority issues.
  • DEX platforms are not intuitive or easy to use and require a high level of technical know-how.

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