Is Stellar the best decentralized exchange?
One can think of Stellar’s decentralized exchange as not only a ledger with account balances and payments, but also a fully functional marketplace that stores buy and sell orders, and matches them accordingly, like a typical order book.
All of this in a decentralized exchange, also known as DEX. Stellar’s decentralized exchange is similar to a decentralized version of GDEX, Bitrix and Binance. How does Stellar’s decentralized exchange compare to centralized exchanges and Ethereum decentralized exchanges?
Private key
Centralized exchanges store private keys on central servers, which have a history of being hacked. Ethereum Decentralized Exchanges, store funds on smart contracts, which also have a hacking history. But with Stellar DEX, the owner of the account is the only person who knows his or her private key.
Order book
The order book can either be ON ledger, or OFF ledger. The order book is the the list of all trades as they are placed on the exchange, just like a stock exchange. If the order book is on-ledger, it implies that all these data points are stored in decentralized databases. In this case, trust is placed in centralized exchanges and their servers (it may go down and you won’t be able to place an order… that is why institutional stock exchanges and other trading platforms have disaster recovery sites). Due to long transaction times, and too few transaction per sec, buy and sell orders stored in the Ethereum blockchain can get backed up… forcing many Ethereum Decentralized Exchanges to store order books and match offers OFF ledger on one server. Because Stellar has an order book and matchmaking at the protocol level, ON ledger buy/sells are a simple addition to the decentralized database.
ON ledger settlement: Does the trade execute in the network with tokens truly being swapped? On centralized exchanges, this is not the case. The private key holding the newly traded tokens is stored on the centralized server. with Ethereum Decentralized Exchanges, and Stellar DEX, the trade actually occurs on ledger.
Cost
Another key difference is cost: On centralized exchanges, the transaction fee is roughly $0.25 per $100 transacted. On Ethereum Decentralized Exchanges, the fee is quite similar at around $0.24 per $100 transacted. On Stellar DEX however, the fee is about $0.000004 per $100 transacted… or roughly 60,000 times cheaper than either centralized or Ethereum DEX.
Speed
On this point however, centralized exchanges typically perform slightly better (1–3 sec) than Stellar DEX (3–5 sec)… and much better than Ethereum DEX (3min)
Irene Energy
Irene Energy is a renewable electricity supplier using the Stellar network to introduce radical transparency in the electricity supply chain by means of micro-payments. We created the Tellus, the world’s first compliant and green token, on the Stellar blockchain.
This is an explanation of our business: https://goo.gl/5KHjvq
So how does it work? https://youtu.be/kufVgZINcwc
Company information: Irene Energy (copyright) — Immatriculation Number: 827 900 846 R.C.S. PARIS
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To buy Tellus, please follow the steps in the links below:
English: https://goo.gl/mnKJ12
Russian: https://goo.gl/mcfyBb
French: https://goo.gl/1GGCDG
Content in this article on decentralized exhanges comes from the educational video by Lumenauts: https://www.youtube.com/watch?v=2L8-lrmzeWk
