There have been two types of crypto-exchanges, centralized and decentralized, until now. Bronix is the world’s first hybrid crypto-exchange. This means that Bronix incorporates the best features of both the centralized and decentralized flavours, while plugging the issues that plagued them. Let’s see how a hybrid exchange solves the problems of the existing crypto-exchanges.
In a traditional decentralized exchange, any user can simply transfer their cryptocurrencies to the exchange wallet and begin trading. No KYC needed. That is, until you try to withdraw your funds. Such exchanges do not have a centralized server and all data is kept decentralized over the peer-to-peer network. Due to their anything-goes philosophy, decentralized exchanges cannot allow access to margin and derivatives trading without racking up significant risks.
While centralized exchanges solve these problems, they are at the mercy of the jurisdiction where the centralized servers are hosted. Such exchanges can be shut down with a stroke of a pen. In return, they allow access to margins and enable derivatives trading.
Coming to hybrid exchanges, of which Bronix is the pioneer, they are simultaneously centralized as well as decentralized. Bronix, behind the simple user interface, is a modular architecture that allows users to seamlessly switch between the centralized and the decentralized modules.
The key Bronix innovation is not the hybrid crypto-exchange, but the complete integration with all the major crypto-exchanges such as Hitbtc, poloneix, and bitfinex. This has be achieved via integrating trade data of other crypto-exchanges to the Bronix backend via RESTful APIs (Application Programming Interface). An API allows communication between two different software, Bronix and the other exchanges in this case.
Now, when you place a buy order for BTC on the Bronix exchange,the API fetches the best price from all connected crypto-exchanges. This essentially takes down the walled-garden approach used by existing crypto-exchanges and provides connectivity across supported exchanges.
The current crop of crypto-exchanges, also known as v1 have different btc prices even if the time is same due to the effect of liquidity. If nobody is willing to sell BTC on poloneix but are selling it on bitfinex, the price of btc on poloneix will be higher than that on bitfinex. This is because liquidity is higher in bitfinex than poloneix.
In Bronix, due to the deep integration to the backend, of the trading data of supported crypto-exchanges, the problem of liquidity is solved as liquidity is the sum of all the bids and their matching asks.
Thirdly, due to its hybrid architecture, margin trading is a feature that will be available to all users who:
- Complete KYC
- Reside in a BTC-friendly country
Users can access funds larger than their existing holdings to trade in the futures and the derivatives markets of cryptocurrencies. Access to such financial products reflect the maturity of the cryptocurrency ecosystem and must be lauded.
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