Why DataBroker DAO is investigating Decentralised Exchanges.
One of the good things about cryptocurrency is the idea that we don’t need to trust anyone, as well as being in full control of our own assets. So, if you’re still unaware, having your coins on Binance, Bittrex or any other current popular exchange, doesn’t assure your coins are stored safely. If you don’t own the private key to your wallet, you don’t own the coins.
The use of centralised exchanges may contribute to the ecosystem from a usability perspective however it is somewhat contrary to the principles of cryptocurrencies and represents a clear trade-off between usability and security. The latest news about the Bitgrail hack, should’ve opened a lot of eyes in the cryptosphere. It doesn’t only have bad financial influence for people’s gains, but exchange scams and hacks have a bad PR impact that ruins the reputation of the crypto space. If you’re here for the technology, you should understand that we cannot achieve the ideological goal of decentralisation without decentralised exchanges.
Unlike banks, where you have semi-protection from the government, a centralised exchange will only choose to refund you if it’s financially convenient for them. In many cases an excuse labelled ‘a hack’ will be made to deflect attention and skirt responsibility for paying out customers. Don’t believe me? Well, let’s have a quick stroll down the memory lane. Here are the most popular exchange downfalls from the past few years.
By the end of 2014, being the largest bitcoin exchange in the world, Mtgox became a victim of a massive ‘hack’ and lost 740,000 Bitcoins that belonged to its customers. This resulted in the exchange filing for bankruptcy, whilst users of the exchange lost their assets.
The exchange that was founded in 2011, allegedly ignored KYC laws in order to cater to a “specific” customer base. After a fine of $110 million against BTC-e for facilitating crimes like drug sales and ransomware attacks, the exchange was forced to close it doors in July 2017.
- Coincheck Exchange
In January this year, hackers broke into a cryptocurrency exchange called Coincheck Inc. and made off with nearly $500 million in digital tokens. It’s one of the biggest heists in history, with the exchange losing more than 500 million of the somewhat obscure NEM coins.
During a bear market in January 2018, Bitcoin investment and lending platform Bitconnect abruptly announced it is shutting down it’s services. Although Bitconnect doesn’t really count as an exchange, it perfectly shows how easy a centralised entity can shut its doors leaving it’s users in the cold.
BitGrail was until recently one of the main portals for the trading of Nano, a cryptocurrency formerly known as RaiBlocks. Last Thursday, BitGrail founder Francesco Firano claimed to have discovered that 17 million Nano tokens, then worth roughly $195 million, had been stolen by hackers. Which basically means, everyone who had their Nano tokens on BitGrail, can whistle for it.
Hacks are not the only issue with centralised systems. When interest peaks and new account openings spike, exchanges tend to cease sign ups without warning for new customers. Moreover, centralised exchanges are known to reduce withdrawal limits without warning and having unscheduled downtime preventing users access to their funds. Suddenly delisting coins is also happens, resulting in profit loss in some cases. For instance, this recently happened to CEX.IO. And the worst part? These exchanges act like totalitarian governments and demand high prices to get a coin listed.
Unfortunately most people who are new to the market have no idea what a decentralised exchange is, or more importantly why one would be needed. A lot of people who joined the crypto space in the past half year, did it mostly to “ride the wave” of financial gains. Furthermore, there is sometimes friction when a token changes exchanges as this requires people to change exchanges as well. It also falls short in that the most existing decentralised exchanges lack trades and liquidity. This seems like a chicken and egg issue. Because unless there is enough volume on DEXs, it will prevent people from using them.
Fortunately, the near future is looking bright for decentralised exchanges. We see more and more interesting projects surface that offer amazing functionalities and beautiful UI’s that should ease adoption. They allow you to exchange values peer to peer, meaning that you never have to submit your private keys to a third party upon deposit. You hold your keys, you are in control.
- Trading in privacy
- Protecting your funds from hackers
- Retaining control of your assets
- Trading diverse coins (not limited by central entity)
- No hacks or server downtime
The following DEXs are the ones we are investigating for listing the DTX token:
Waves’ DEX allows you to trade any token pairs that are on the blockchain. In addition, there are no restrictions on withdrawals from the DEX. As soon as your transaction is complete, the cryptocurrency will appear in your wallet.
EtherDelta is a decentralized Ethereum token exchange, brought to you by Etherboost. The exchange currently has only one fee, which is the 0.3% buyer transaction fee. Deposit, withdraw, and seller transaction fees are all free.
IDEX is allegedly the fastest and most user friendly decentralized Ethereum exchange available. With support for market orders, instant order books, and instant gas-free cancels, IDEX provides traders with the speed of a centralized exchange combined with the ironclad security of decentralization (including support for MetaMask and Ledger Wallet).
- Blocknet DEX (Bèta launch March 1st)
This is a decentralized exchange we’re most excited about. Blocknet DEX will have no central points of failure and will mimic the functionality and trading experience of central exchanges.
BarterDEX has decentralised order books that initiate Atomic Swaps through light-weight Electrum servers. The result is a basis for a secure and universal decentralised exchange.
- Token Store
It’s based on the principles first established by EtherDelta and uses a very similar smart contract with some minor additions. But it features a completely rebuilt orderbook, UI and has some extended trading capabilities like instant orders.
Radex is a secure, efficient decentralized exchange on the Ethereum blockchain. All transactions happen directly in the smart contract added security. And because Ethereum is a public blockchain, other developers will be able to write their own applications on top of this exchange, such as alternative user interfaces and trading bots, and benefit from shared liquidity without having to pay for it.
As you have already figured, DataBroker DAO is looking to list the DTX token on decentralised exchanges, primarily for the additional security for DTX token holders. That said, the choice for a decentralised exchange does not mean DTX will not be available on some popular exchanges in the future. Centralised exchanges are definitely a needed bridge to the coming decentralised ecosystem today as they provide fiat on-ramps into the crypto space. It’s also important for us that our customers can easily exchange our token with one another. We believe that both centralised and decentralised exchanges can successfully coexist, giving the token holder more options and allowing them to decide what trade-offs they want to make rather than imposing a one-size fits all approach that forces a choice on them.
This blogpost is mostly an informative piece to highlight the importance of decentralisation. We care profoundly about this amazing technology like the most of you. Being fairly confident that the transition to decentralised exchanges will happen soon, the only thing we can do at the moment is spread the word about how to store assets in a safe way.The DataBroker DAO Main token sale is open until June 30th. To contribute please read the following guide.