The idea of decentralized exchanges (DEXs) is relatively new and still has a way to go before it reaches the mainstream. However, the way the market has progressed suggests there is a strong possibility that DEXs will eventually become the norm.
In recent years, cryptocurrencies have captured the world’s attention, and with good reason. It provides a smart and secure way for users to conduct transactions without the involvement of any intermediaries.
Further, it is important to be aware that cryptocurrency markets are quite different from our regulated security markets, regardless of whether you are a beginner or an experienced investor.
Cryptocurrency exchanges provide consumers with a way to buy and sell tokens. These exchanges bring buyers and sellers together on a proven platform to trade cryptocurrency, which helps establish a token’s market price.
Although the crypto space has evolved, centralized exchanges (CEXs) have been recognized as more vulnerable to hacking and data breaches. That is why decentralized exchanges leveraged their potential and have become a more viable alternative to centralized exchanges.
Given the uncertainty around centralized exchanges and the growth in demand for decentralized exchanges, it raises the question: Can DEXs be trusted?
Growth of DEXs
The establishment of DEXs was prompted by the need to maximize returns on trading activities while maintaining convenience, security, and privacy.
DEXs have a few significant benefits over CEXs as they do not require Know-Your-Customer (KYC) identification and they operate 24/7. This type of exchange also provides investors with yield farming opportunities, which are to help facilitate decentralized swapping or trading of digital assets in exchange for a small fee.
In a report from Chainalysis, DEXs have grown massively as a self-custodial, programmatic way for cryptocurrency investors to trade.
As a result of this finding, the chart shows how trade volumes on DEXs that rely on smart contracts instead of third parties to process user trade increased. The report also concluded that DEXs have become extremely popular during the explosive growth of the decentralized finance (DeFi) industry at large.
Transaction volumes at centralized and decentralized exchanges tend to be closely correlated with their market performance. While most CEX transactions occur off-chain on centralized databases and are stored in order books to reduce transaction fees, in DEX transactions take place through smart contracts on-chain.
On top of this, the development of decentralized cryptocurrency exchanges in recent years has solved many of the most pressing issues faced by CEXs, such as security, trust, high fees, and the need for personal documentation.
Due to this, and the rapid growth of DeFi in general, DEXs now has a lead in on-chain transaction volume.
The newest decentralized exchange — DOMINO DEX, allows users to swap between hundreds of trading pairs without an intermediary. This trading platform facilitates the swapping of tokens in a seamless way. Continuing the rapid growth of DEXs, DOMINO DEX aims to provide a secure and safe trading platform where users don’t have to worry about third parties interfering.
Blockchain technology has indeed been a very promising use case for DEXs considering their growth and popularity in the crypto space.
How DEXs Will Look Like in the Future
DEXs have evolved significantly in recent years proving that this service provides a secure way to conduct transactions without the need for a third party. DEXs may still be in their early stages, but they definitely offer a great alternative to fully centralized exchanges.
This recent blog talked about why decentralized exchanges are important in the cryptocurrency industry. It lets users leverage their positions by borrowing money, lending money to accrue interest passively, or providing liquidity to collect trading fees.
The number of DEXs has significantly increased, which shows how cryptocurrency exchange competition has intensified. Large, sophisticated crypto traders have preferred exchanges with scalability and innovation.
DOMINO DEX is one of the newest decentralized exchanges that offer you minimal fees and no hidden charges. DOMINO DEX facilitates transactions without requiring users to explicitly entrust facilitators.
Cryptocurrency market growth is expected to accelerate in the coming years. And as digital assets continue to enter the mainstream, DEXs are constantly developing to maintain users’ privacy and independence, with the help of technology that supports it.
Can DEXs Be Trusted?
Decentralized exchanges and protocols have addressed many of the challenges facing a general-purpose blockchain application, such as scalability, slow adoption, and volatility, in the past two years.
One of the considerations that led to the establishment of DEXs was their ability to maximize returns on trading activities while maintaining convenience, security, and privacy. Due to its multiple advantages and the ease of trading crypto tokens, decentralized exchanges are seeing tremendous growth in their demand.
The DEX provides all of the same features as centralized exchanges, but it is anonymous and trustless. When it comes to a non-custodial, private, and secure means to trade cryptocurrency, the trend towards decentralization in cryptocurrency exchanges is clearly supported by users.
These results show that it has more advantages when it comes to offering reduced counterparty risk. Additionally, since orders are filed against a smart contract instead of a person, this decreases the attack surface for malicious users.
Being a one-of-a-kind decentralized exchange, DOMINO DEX allows you to buy and sell tokens using gas-less orders that are settled peer-to-peer among its users. DOMINO DEX lets you experience the ease of trading where users can come together to exchange goods and services, creating a community that is trustless and decentralized.
Moreover, decentralized finance, and by extension, decentralized exchanges, have made it easier for anyone with an Internet-enabled smartphone to access financial services.
So as long as you can trust yourself to maintain your private keys, it is with no doubt that DEXs can be trusted.
