Decentralized Finance (DeFi) Exchange Development Company
The rise of the cryptocurrency market has led to the subsequent rise of cryptocurrency exchanges. Coinmarketcap has listed a record of the top 337 centralized exchanges. Imagine the total number of centralized exchanges, considering hundreds of new exchanges are being developed every day.
However, that’s not to say traders enjoy a fruitful experience. They have their concerns with such centralized exchanges, and of late, the list just keeps piling.
Immediately seizing the moment, the fin-tech industry has once again disrupted the market with another platform, decentralized exchange, that sorts almost all the barriers of a centralized exchange.
Let’s learn more about decentralized exchanges, their working mechanism, about developing your own decentralized exchange, and its phenomenal business scope.
Challenges in a centralized exchange
Centralized exchanges act as the custodians of our wallets, crypto funds, and private information. Our entire database is stored on the organization’s server. So, all it takes to leak and steal our cryptocurrencies is to crack open their system.
It is the process of buying and selling orders at the same time to create a fictional demand for the commodity. This practice of manipulation has been found in centralized bodies.
Due to the presence of a middle authority, the trading fee incurred is high. It’s credited to the security measures undertaken by the administrator and the liquidity the platform provides.
The key decisions are taken by the board members of the organization. Sometimes it could be misleading, and in worst cases, they could even work behind the back of customers. The absence of governance token in centralized exchanges is one of the causes of low credibility.
Centralized Exchanges - Hacks
In 2019, $292,665,886 worth of cryptocurrency and 510,000 user logins were stolen from crypto exchanges. Of course, this is not the case with all centralized exchanges except the ones with below-par security.
Here’s a list of major hacks
Mt.Gox – 8,50,000 BTC
The biggest hack in the history of cryptocurrency. The total worth of funds lost is around $9,617,750,000. That’s 9.6 billion US dollars. Due to an error in the system, every withdrawal made was recorded as deposits, and the hackers swept the entire pool in two years.
Bitcoinica - 43,000 BTC
Bitcoinica was hosted on a web service provider called Linode. When Linode was hacked, the entire database of Bitcoinica was exposed.
Bitfloor - 24,000 BTC
Bitfloor was the four largest crypto exchange in the USA. Hackers took advantage of the unencrypted wallet keys and walked off with $250,000 worth of bitcoins.
Cryptsy - 300,000 LTC
A trojan virus was inserted into the code of Cryptsy by a hacker who went by the name of Lucky7coin. However, the owner was successfully sued for $8.2 million.
Gatecoin - 185,000 ETH
Hackers gained access to users’ wallets and stole up to $2 million. The exchange never recovered again.
Role and Benefits of DeFi in the crypto exchange
In decentralized exchanges, there’s no middle authority. They are known for their direct peer-to-peer transaction. Hence, your data is secure.
Due to the absence of an intermediary, the trading fee is highly reduced. Hence, huge volumes of trades take place in decentralized exchanges.
Decentralized exchanges are known for their security protocols. They are immune to hack and data breach because there are no third-party services involved.
While a standard centralized exchange has to manipulate the market for high liquidity, decentralized exchange effortlessly tackles and fares better by providing automated liquidity protocols. It means the market has consistent liquidity based on supply and demand.
The decentralized concept empowers traders with complete ownership over their funds and data. Every decentralized exchange has its decentralized (DeFi) wallet too.
The absence of intermediaries (who facilitate trades in a centralized exchange) is countered by the presence of smart contracts. Smart contracts are pre-coded agreements between buyer and seller, and they execute the functions when the conditions are met. They cannot be altered once written.
Decentralized exchanges have become traders’ favorite because they offer governance tokens with which traders get to vote on the key decisions taken by the platform committee.
Examples of decentralized exchange platforms
Uniswap is an open-source automated liquidity protocol built on Ethereum that allows trading and listing of ERC20 tokens. Uniswap has become Ethereum’s most popular automated market maker (AMM).
Binance DEX solves the issues encountered by its centralized exchange. It supports decentralized hardware and secure wallets.
Balancer Exchange allows users to swap ERC20 tokens across all the liquidity pools of Balancer. Tokens are exchanged without deposits, bids, or asks.
The SushiSwap exchange allows traders to swap any ERC20 token into any other ERC20 token through automated liquidity pools.
dYdX is a crypto-trading platform for digital assets, built with open-source protocols, enabling decentralized margin trading.
Business scope in a decentralized exchange
At the time of writing, the total value locked in DeFi contracts is $11.19 billion. Hence, it’s evident users are increasingly adopting the new sector of finance.
Here’s a list of the top seven decentralized finance (DeFi) platforms and their total value locked.
Launch your DeFi Lending/Borrowing protocol with Osiz Technologies
Osiz Technologies, a leading DeFi Development Company, has 10+ years of experience in blockchain technology. Our pool of blockchain architects and DeFi developers are guaranteed to deliver quality DeFi development services to launch your decentralized finance (DeFi) exchange platform.
Call/Whatsapp: +91 9442164852
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