Autor Cointelegraph By Anthony Clarke

TON Telegram integration highlights synergy of blockchain community

TON Telegram integration highlights synergy of blockchain community

Uverejnil používateľ | nov 27, 2022 |

As a result of a recent upgrade to the wallet bot, users of the Telegram app are now able to purchase and sell cryptocurrencies without leaving the application. The wallet bot was developed by The Open Network (TON, formerly Telegram Open Network) in April. The bot initially enabled users to buy, sell and trade Toncoin (TON) within the Telegram app, but a new update has added a fully functioning cryptocurrency wallet to the application.An independent team of TON developers created the wallet bot to simplify crypto transactions for Telegram users. A representative from the TON Foundation told Cointelegraph, “The creation of the wallet bot is handled by an independent development team, and we are certainly happy that more and more projects are choosing TON as the basis for creating new products,” continuing to say:“TON is intended for millions of users, and one of our goals is to make the use of blockchain no more complicated than using applications that users are used to.”The wallet bot also serves as a fiat on-ramp, allowing users to buy TON using their credit cards within the Telegram app. The currently supported fiat currencies for buying and selling Toncoin are United States dollars, euros, Ukrainian hryvnia, Belarusian rubles and Kazakhstani tenge.Regarding transactions within Telegram, the exchange service that facilitates them also functions as a guarantee and resolves any required conflicts that may arise between the two parties involved in the transaction. The other party may carry out the transactions in complete anonymity; nevertheless, users must provide the bot with their cell phone numbers before participating in any cryptocurrency-related activities made accessible by the application. Recent: Bitcoin miners look to software to help balance the Texas gridThe wallet bot doesn’t charge any fees for buying crypto through Telegram, but sellers will be charged a commission fee equivalent to 0.9% of the selling price for each complete transaction. Currently, the app can only be used to purchase Toncoin (TON) and Bitcoin (BTC). However, the TON Foundation plans to expand the number of cryptocurrencies available for purchase. In addition, in order to transfer crypto through the peer-to-peer functionality on Telegram, users need to register with The Open Network.When transferring crypto to another person, users send the coins to the recipient’s Telegram handle instead of their address. The TON Foundation representative highlighted this feature, saying, “The @wallet bot team is making great strides in this direction, as you can now buy, exchange, and send Toncoin to your contacts without leaving Telegram. There is no need for long addresses or special applications. We think that the future lies in projects like this.”History of Telegram and The Open NetworkTelegram Messenger grew massively in popularity within the crypto community due to its encrypted messaging and ability to create group chats. The bot functionality also makes automating tasks within the groups and chats easier. For example, bots can ban users, respond to questions and link users to useful resources for a project. In 2017, Telegram began monetization plans for the application since it did not use ads. As part of this plan, Telegram Open Network, or The Open Network, was founded by Telegram founders Pavel and Nikolai Durov, and the white paper was released in January 2018. The Open Network was developed as a platform for decentralized apps and an alternative payment processing network to major networks like Visa. To raise funds for the development of TON, Telegram held a private sale for the GRAM, which investors could exchange for the TON token when launched. However, the United States Securities and Exchange Commission would later class the token sale as an unregistered securities offering. As a result, Telegram decided to end its active involvement with TON in 2020. On June 11, 2020, Telegram and the SEC reached a deal in which Telegram agreed to reimburse $1.22 billion as a termination fee in GRAM purchase agreements and pay an $18.5 million penalty to the SEC. Telegram also agreed to provide the SEC prior notice if the company planned to sell any digital assets during the next three years.On May 7, 2020, Free TON was launched as an independent venture to continue the development of the Telegram Open Network, using the freely available source code. The community later grew to over 30,000 members by January 2021, and the Telegram team later transferred the ton.org domain and GitHub repository to the TON Foundation by August 4, 2021.The TON foundation has assumed responsibility for the Telegram token’s underlying cryptocurrency (TON). Before this, users of the apps collaborated on a fundraising effort for the cause. As a result, they contributed more than $1 billion to the growth of the TON ecosystem, which was made possible by their donations.What the future holds for TON and TelegramIt is possible that the TON Foundation’s new Telegram bot update may pave the way for a global cryptocurrency payments service. Furthermore, since the app has over 500 million active users globally, it can act as a catalyst for further crypto adoption if the wallet bot proves to be popular.When asked about the future of Telegram and The Open Network, a TON Foundation representative told Cointelegraph, “Telegram is a user-friendly platform for everyone in the Web3 world — both for communication and developing products using their disruptive technologies. Furthermore, the open platform allows developers to create working products with real-world use cases that can be deployed in the app.” “The wallet bot, based on TON, is a great example of this. There are also many services on Telegram that already use TON, such as donate, mobile and others,” they stated, adding, “A significant development is the launch of the Telegram username auction, which is a great demonstration of how the simplicity of tokenization on TON can open up many real-world examples of the use of blockchain technology.”As well as the wallet bot, The Open Network has developed additional Telegram bots that serve different purposes. The donate bot allows creators to post messages that accept donations via special action buttons that will facilitate a payment process within the Telegram application. The process works by a user contacting the donate bot and following the instructions. Recent: FTX’s collapse could change crypto industry governance standards for goodThe user will also have to add the bot as an administrator on the channel and submit payout information so they can receive the donations. The mobile bot allows users to access the internet when Wi-Fi is unavailable. The Telegram username auction allows users to purchase and auction off their Telegram handles for TON tokens.The recent update to Telegram’s wallet bot can open up a wider range of the public to using cryptocurrency. It can also further solidify Telegram’s reputation as one of the go-to apps for blockchain-based projects seeking to build a community, especially if additional tokens are added to the platform. Telegram already has a lot of the crypto community using the application, and the ability to buy and transfer crypto could bring non-crypto users into the market.

Čítaj viac
Fractional NFTs and what they mean for investing in real-world assets

Fractional NFTs and what they mean for investing in real-world assets

Uverejnil používateľ | nov 9, 2022 |

While nonfungible tokens (NFTs) are currently suffering in the bowels of a bear market, some are using this time to build and develop new concepts with the technology.Once such new concept is fractional NFTs — an iteration of NFTs that enable multiple investors to own a piece of a single token. These NFTs differ from regular NFTs in that they employ smart contracts to fractionalize the token into a number of parts predetermined by the owner or issuing organization, who then set the minimum price.When applied to real-world assets, these NFTs provide an interesting use case for investors who plan on owning valuable real-world goods.Fractional NFTs spread the cost of asset ownership over a wide range of users, making it possible for a group of investors to own a piece of a larger asset. David Shin, head of global group at Klaytn Foundation — a metaverse-focused blockchain — told Cointelegraph that they “enable more people to reap the benefits of asset ownership while reducing the amount of upfront capital required per user, creating more inclusivity for users who would otherwise have been priced out.” Tokenized ownership is not a new concept. Before the advent of NFTs, tokenization was a way for users to fractionalize real-world assets. However, fractional NFTs provide a new way for investors to divide the cost and transfer ownership of particular assets.More accessible assetsAccessibility is one of the major benefits of NFT fractionalization since it’s more affordable for investors, thus reducing the barrier to entry for owning certain assets. The collective ownership that comes with fractional NFTs allows a group of investors to own assets with traditionally high barriers to entry. For example, owning real estate or art pieces requires investors to meet particular requirements, whether a certain level of net worth or certain legal requirements. Recent: Gym owners aim to bring NFT memberships to wellness clubsBy using fractional NFTs, these hurdles could potentially be bypassed by the average person. Alexei Kulevets, co-founder and CEO of Walken — a move-to-earn blockchain game — told Cointelegraph:“No matter whether you are a builder, a collector, or a consumer, with fractional NFTs, you can co-own any fragment of an art piece or an NFT project you work on. Or, it could be something entirely different, where ownership is verified by an NFT (e.g., real estate). Think of it as an exchange-traded fund, only without intermediaries and management fees. I think it’s a beautiful concept, fully worthy of being called the new era of the internet. The era of co-creating and co-owning.”Joel Dietz, CEO of MetaMetaverse — a metaverse creation platform — echoed the sentiment, telling Cointelegraph, “It makes it easier and, more importantly, accessible. Asset fractionalization isn’t new, but it entered the NFT space not that long ago — one aspect is to make expensive tokens more accessible to different investors with different appetites — it makes it easier to set the price for NFTs and even unlocks monetization opportunities via DeFi platforms.”This accessibility could also bring additional investors into the blockchain space, Asif Kamal, founder of Web3 fine art investing platform Artfi, told Cointelegraph. “Fractional ownership is the way forward to enhance the size of the market massively and helps adoption and accessibility to a much wider audience to invest in the asset class more simply and in a much easier way,” he said. What are the use cases?Real estate is a popular use case for fractional NFTs, and the underlying blockchain technology provides an additional layer of transparency. For example, users can view previous buyers and investment activity via the blockchain explorer.Dietz said, “The usual case that everyone’s quite keen on right now regarding Fractional NFTs is the potential for an individual to transfer ownership of real estate (an IRL asset) — storing the information on the blockchain and it transferring seamlessly and immutably.” “Owning a fraction of an NFT that represents a real-world asset, investors can cash out of their crypto holdings without ever leaving the decentralized finance ecosystem entirely. Now, the hype focuses on real estate, but these fractionalized high-involvement goods could be very interesting in the manner of watches, paintings, boats, planes and more,” he continued.Play-to-earn gaming is another use case for fractional NFTs, enabling multiple players to purchase expensive in-game assets collectively. In-game NFTs can become very expensive due to demand, and enabling players to split the cost can make it easier for them to use those same assets. For example, the P2E NFT game Axie Infinity is currently testing the idea of fractionalized NFTs by selling fractions of the rarest Axie NFTs.Barriers to adoptionWhile fractional NFTs may make it easier for people to invest in certain assets, market conditions could potentially interfere with their adoption.Dietz said, “Given the market right now, though, we’re either going to see more creators and marketplaces utilizing these fractional NFTs and gain popularity through those mediums, but if things don’t change, I doubt fractional NFTs will evolve much further, for now at least. Who knows what the market will look like in the next three months, let alone three years?”Regulators and lawmakers could also slow down adoption. Since fractional NFTs let people own a fraction of an asset, they could be classed as stocks by the United States Securities and Exchange Commission (SEC). Yaroslav Shakula, CEO at YARD Hub — a Web3 venture studio — told Cointelegraph, “As an idea, fractional NFTs sound promising, but on a practical level owning them implies certain difficulties, with regulation being the most significant one. Fractional NFTs might be likened to stocks as they also confirm ownership of a share of an asset (NFT, in this case).”Shakula also says that current legislation is not clear on the legal status of fractional NFTs being used to own a share of physical assets. “In many cases, this type of NFT ownership is not clearly outlined in the legislation, and projects and users have a hard time figuring out how SEC or other authorities will deal with this ownership. So for now, fractional ownership is only valid in certain territories where relevant legislation is in place.”Shin similarly stated, “The success of fractional NFTs in allowing investors to reap benefits from real-world assets also depends on whether regulations operate in tandem. For example, dissonance will occur if fractional NFTs and traditional title deeds pose competing legal claims to real-world assets.”Due to the uncertainty behind the taxation and the legal status behind fractional NFTs, temporary ownership could be a safer bet for the short term. Recent: Could Bitcoin have launched in the 1990s — Or was it waiting for Satoshi?Shakula expanded on this, saying, “At the current point, a much more viable and doable approach is to transfer timeshare/temporary ownership through NFTs. Examples of use cases are the rights to rent a car or stay in a hotel. This way, NFT owners don’t have to decide who pays taxes or who’s handling damage costs. However, until these issues are solved, fractional NFTs look better on paper rather than have common use cases.”Regulatory concerns aside, some believe that fractional NFTs represent the values of a decentralized internet. Kulevets sees fractional NFTs as a catalyst for Web3 adoption, stating: “If you look at it closely, fractional NFTs represent the very essence of the Web3 concept. We call Web3 the next era of the internet for a reason: decentralization, security, ownership and creation without intermediaries are among its fundamentals. Everyone who shares the vision, skills and expertise can co-create and co-own the new reality and be a part of many projects.”

Čítaj viac
How low liquidity led to Mango Markets losing over $116 million

How low liquidity led to Mango Markets losing over $116 million

Uverejnil používateľ | nov 3, 2022 |

It would seem that the hackers used an “oracle price manipulation” tactic in the exploit on the Solana-based DeFi network, as indicated by a tweet sent by the official account for the Mango cryptocurrency exchange.In mid-October, traders took advantage of a vulnerability in the decentralized finance (DeFi) trading platform Mango Markets and stole more than $110 million worth of cryptocurrencies off the network. We are currently investigating an incident where a hacker was able to drain funds from Mango via an oracle price manipulation. We are taking steps to have third parties freeze funds in flight. 1/— Mango (@mangomarkets) October 11, 2022A further thread on Twitter provided a detailed breakdown of how the incident transpired. The attacker began their mission by funding an account on the site with USD Coin (USDC) for $5 million, which were used to purchase 483 unites of perpetual contracts in Mango (MNGO) token, the platform’s native cryptocurrency.The attacker used this technique to drive up the price of MNGO from $0.03 to $0.91, increasing the value of their MNGO holdings to $423 million.The funds were then used to acquire a loan for $116 million using several tokens on the platform, such as Bitcoin (BTC), Solana (SOL) and Serum (SRM). Unfortunately, the loan eliminated all of the liquidity in Mango Markets, which resulted in a steep drop in the price of MNGO to $0.02.The development team for Mango Markets subsequently said that it is looking into what occurred and has initiated an inquiry into it. The protocol made the news available to its users over its different social media outlets, stating that it has temporarily halted deposits while it conducts more research. Additionally, the team informed users that they should refrain from depositing cash into the site before they disable the ability to do so.How Mango Markets was exploitedThe attacker was able to manipulate the MNGO token price, driving it up 30 times in such a short amount of time, by taking out enormous perpetual contracts. An attacker can pull this off by taking advantage of limited market liquidity to artificially inflate a token’s price by making huge purchase orders to push the price and then use new investors as exit liquidity to cash out. This is the same strategy that is employed in pump-and-dump scams.Recent: ‘DeFi will replace institutions entirely,’ says BitGo CEO Mike BelsheHowever, this kind of exploit is difficult to carry out when there is a very large quantity of liquidity since the amount of cash required to manipulate the price would be much higher. Since new or relatively unknown tokens often have extremely little liquidity, pump-and-dump schemes are more common with such tokens.Mango Markets would have been able to protect itself from this exploit if it had enough liquidity. The use of an automated market maker (AMM) is one strategy that Mango Markets may have utilized to boost its level of liquidity. Automated market makers are computer programs that decide the price of a token by collecting liquidity from users and employing various mathematical formulas.Ben Roth, co-founder and chief information officer of Auros — an algorithmic market-making firm — told Cointelegraph: “Adverse trading behavior is a by-product of illiquid market conditions. Therefore, when ‘bad actors’ are able to construct an attack vector that has a high degree of certainty due to low liquidity, the incentive to undertake these sorts of ‘exploits’ rises.” “When working with an algorithmic market-maker, token issuers simultaneously disincentivize this adverse behavior while building confidence in the consistency of liquidity during a variety of market conditions,” he added.Large tokenholders, also known as liquidity providers (LPs), are responsible for the operation of AMMs. LPs are responsible for introducing equal quantities of token pairings (such as MNGO/USDC) into pools. This makes it possible for decentralized exchanges to outsource their liquidity while still providing the LPs with compensation in the form of a share of the trading fees collected on the platform.After the exploitOne day after the exploit on Mango Markets, the perpetrator made a suggestion via the decentralized autonomous organization (DAO) that was part of the platform. The attacker suggested that the Mango DAO pay off any outstanding debts with its $70 million treasury instead of using the attacker’s funds.The deal stated that the Mango DAO team should use the funds from their treasury to make up for any outstanding financial obligations. After that, the cybercriminal would send the stolen tokens to an address provided by the group responsible for the Mango DAO.By voting with millions of tokens taken during the exploit, the hacker appeared to support this idea, which is another kind of manipulation. Additionally, the perpetrator of the incident asked that no criminal proceedings be opened against them if the petition was approved.Eventually, the Mango Markets community agreed to let the attacker keep a large portion of the tokens as a “bug bounty.” The terms are part of a deal that will see the return of $67 million worth of stolen tokens, with the attacker keeping the remaining $47 million out of the $117 million taken.The deal was reached via a vote in the Mango DAO, with 98% of voters (or 291 million tokens) voting in favor. The proposal included Mango Markets not pursuing legal charges against the hacker.Attacker reveals their identityThe attacker behind the exploit later came forward to reveal their identity. Avraham Eisenberg announced on Twitter that he was “involved with a team that operated a highly profitable trading strategy last week,” i.e., those responsible for the $100 million attack perpetrated on Mango Markets. Eisenberg continued to say, “I believe all of our actions were legal open market actions, using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are.”He pointed out that as a consequence of the exploit, Mango Markets fell bankrupt, and he also said that the insurance money was not enough to pay all the liquidations that occurred. Because of this, more than one hundred million dollars worth of user cash was lost.However, Eisenberg claimed that he “helped negotiate a settlement agreement with the insurance fund,” to make all users whole again while recapitalizing the exchange. Eisenberg finished his Twitter thread by saying, “As a result of this agreement, once the Mango team finishes processing, all users will be able to access their deposits in full with no loss of funds.”Eisenberg continues to claim that his actions were legal, being similar to automatic deleveraging on cryptocurrency exchanges. Automatic deleveraging is a process where exchanges use a portion of the profits earned from successful traders to cover losses due to other traders that have been liquidated.However, Michael Bacina, partner at Australian law firm Piper Alderman, previously told Cointelegraph, “If this had occurred in a regulated financial market, it would be likely seen as market manipulation.”Recent: Can internet outages really disrupt crypto networks?While users could still theoretically pursue legal action against Eisenberg, Bacina said it is not commercially viable, stating:“Assuming claims survive the proposal, any claims would still need to be reduced by any amounts which had been received by a member as a result of the proposal, which may mean many members have limited commercial incentive to sue Mr. Eisenberg.”Going ahead, it will be interesting to see how DeFi protocols can better secure their protocols, either with AMMs to stop these types of exploits in the first place or through subsequent legal action. 

Čítaj viac
What directional liquidity pooling brings to DeFi

What directional liquidity pooling brings to DeFi

Uverejnil používateľ | okt 22, 2022 |

Modern decentralized exchanges (DEXs) mainly rely on liquidity providers (LP) to provide the tokens that are being traded. These liquidity providers are rewarded by receiving a portion of the trading fees generated on the DEX. Unfortunately, while liquidity providers earn an income via fees, they’re exposed to impermanent loss if the price of their deposited assets changes.Directional liquidity pooling is a new method that is different from the traditional system used by DEXs and aims to reduce the risk of impermanent loss for liquidity providers.What is directional liquidity pooling?Directional liquidity pooling is a system developed by Maverick automated market maker (AMM). The system lets liquidity providers control how their capital is used based on predicted price changes.In the traditional liquidity pool model, liquidity providers are betting that the price of their asset pairs will move sideways. As long as the price of the asset pair doesn’t increase or decrease, the liquidity provider can collect fees without changing the ratio of their deposited tokens. However, if the price of any of the paired assets were to move up or down, the liquidity provider would lose money due to what is called impermanent loss. In some cases, these losses can be greater than the fees earned from the liquidity pool.This is a major drawback of the traditional liquidity pool model since the liquidity provider cannot change their strategy to profit based on bullish or bearish price movements. So, for example, if a user expects Ether’s (ETH) price to increase, there is no method to earn profits via the liquidity pool system.Directional liquidity pooling changes this system by allowing liquidity providers to choose a price direction and earn additional returns if they choose correctly. So, for example, if a user is bullish on ETH and the price increases, they’ll earn additional fees. Bob Baxley, chief technology officer of Maverick Protocol, told Cointelegraph: “With directional LPing, LPs are no longer locked into the sideways market bet. Now they can make a bet with their LP position that the market will move in a certain direction. By bringing a new degree of freedom to liquidity providing, directional LPing AMMs like Maverick AMM open the liquidity pool market to a new class of LPs.”How does this benefit users in DeFi?The AMM industry and related technologies have grown quickly in the past few years. A very early innovation was UniSwap’s constant product (x * y = k) AMM. But, constant product AMMs are not capital efficient because each LP’s capital is spread over all values from zero to infinity, leaving only a small amount of liquidity at the current price.Recent: Institutional crypto adoption requires robust analytics for money launderingThis means that even a small trade can have a big effect on the market price, causing the trader to lose money and the LP to pay less.In order to solve this problem, several plans have been made to “concentrate liquidity” around a certain price. Curve made the Stableswap AMM, and all of the liquidity in the pool is centered around a single price, which is often equal to one. In the meantime, Uniswap v3 made the Range AMM more popular. This gives limited partners more control over where their liquidity goes by letting them stake a range of prices.Range AMMs have given LPs a lot more freedom when it comes to allocating their cash. If the current price is included in the chosen range, capital efficiency may be much better than constant product AMMs. Of course, how much the stakes can go up depends on how much the LP can bet.Because of the concentration of liquidity, LP capital is better at generating fees and swappers are getting much better pricing.One big problem with range positions is their efficiency drops to zero if the price moves outside the range. So, to sum up, it’s possible that a “set it and forget it” liquidity pooling in Range AMM like Uniswap v3 could be even less efficient in the long run than a constant product LP position.So, liquidity providers need to keep changing their range as the price moves to make a Range AMM work better. This takes work and technical knowledge to write contract integrations and gas fees.Directional liquidity pooling lets liquidity providers stake a range and choose how the liquidity should move as the price moves. In addition, the AMM smart contract automatically changes liquidity with each swap, so liquidity providers can keep their money working no matter the price.Liquidity providers can choose to have the automated market maker move their liquidity based on the price changes of their pooled assets. There are four different modes in total:Static: Like traditional liquidity pools, the liquidity does not move.Right: Liquidity moves right as the price increases and does not move as the price decreases (bullish expectation on price movement).Left: Liquidity moves left as the price decreases and does not move as the price increases (bearish expectation on price movement).Both: Liquidity moves in both price directions.The liquidity provider can put up a single asset and have it move with the price. If the chosen direction matches the price performance of the asset, the liquidity provider can earn revenue from trading fees while avoiding impermanent loss.When the price changes, impermanent loss happens because the AMM sells the more valuable asset in exchange for the less valuable asset, leaving the liquidity provider with a net loss. Recent: Crypto adoption: How FDIC insurance could bring Bitcoin to the massesFor example, if there is ETH and Token B (ERC-20 token) in the pool and ETH increases in price, the AMM will sell some ETH to buy more Token B. Baxley expanded on this: “Directional liquidity represents a significant expansion of the options available to prospective LPs in decentralized finance. Current AMM positions are essentially a bet that the market will go sideways; if it doesn’t, an LP is likely to lose more in impermanent loss than they make in fees. This simple reality arguably keeps a lot of potential LPs from ever entering the market.”When it comes to traditional AMMs, impermanent loss is difficult to hedge against since it can be caused by prices moving in any direction. On the other hand, directional liquidity providers can limit their exposure to impermanent loss with single-sided pooling. Single-sided pooling is where the liquidity provider only deposits one asset, so if impermanent loss happens, it can only occur on that single asset.

Čítaj viac
How decentralized exchanges have evolved and why it's good for users

How decentralized exchanges have evolved and why it's good for users

Uverejnil používateľ | okt 17, 2022 |

Decentralized exchanges (DEXs) first appeared in the cryptocurrency industry in 2014, allowing users to trade a wide number of assets peer-to-peer.However, the first iterations of these platforms could be difficult to use. But, since their inception, developers have worked to make them easier and more accessible for users.Decentralized exchanges work by using smart contracts to fulfill orders placed by traders, allowing users to trade directly with each other instead of relying on a centralized platform. Unlike a centralized exchange (CEX), when traders engage with a DEX, their funds are not stored on the exchange. Instead, users initiate trades directly, with tokens being taken and deposited into their noncustodial wallets.In the past, most DEXs used order books, a system that keeps a record of all the open buy and sell orders placed on an exchange. While many decentralized exchanges still use order books today, automated market maker (AMM) DEXs have grown massively in popularity due to their simplicity and increased liquidity.AMMs use smart contracts and liquidity pools to improve decentralized exchanges liquidity while also managing the price of a token whenever a trade is placed. When traders access an AMM-based DEX, they interact with liquidity pools that store multiple token pairs. For example, if a trader wants to swap Ether (ETH) for USD Coin (USDC), they’ll interact with a pool that stores equal amounts of both tokens. Recent: Why crypto remittance companies are flocking to MexicoThese pools are filled by liquidity providers who earn a portion of the fees generated by the DEX in exchange for providing liquidity. This makes it possible for trades to be settled directly without waiting for an order to be filled.Drawbacks of previous DEXsTrading on a DEX initially came with several significant drawbacks, including delayed transactions, a lack of liquidity and, generally speaking, a rather terrible user experience (UX). Cryptocurrency veterans were the most common users of decentralized exchanges because they were undeterred by the do-it-yourself aspect of trading on specialty platforms, but in order for them to grow, some changes were necessary.Trading on a DEX may be just as straightforward as trading on a centralized exchange in today’s market. A significant amount of additional work has been done on the user interfaces, making them easier to use for cryptocurrency traders with varying degrees of expertise. Since the emergence of decentralized finance (DeFi), the level of liquidity on the major cryptocurrency exchanges has significantly increased.Are decentralized exchanges user-friendly?Many early DEXs utilized order books, a system where users would place orders and wait for them to be filled by other traders. However, this system was not user-friendly for a few reasons. First, since it’s a decentralized exchange, users cannot store their tokens on the platform. Instead, they need to trade directly from their noncustodial wallets. Because of this, users need to pay gas fees every time they place an order, so if they make a mistake, they lose money in the form of wasted gas. This is a problem that is still faced by current decentralized exchanges, but the improved user interfaces make it easier to traders to place orders without making a mistake.Another problem is that early DEXs required users to manually input the number of tokens they wanted to trade and the price in ETH. For example, if a user wanted to buy 53,451 Token A for 0.0037 ETH each, they would type it out exactly or copy it. Having to manually input values made fat finger errors more likely to occur, with users inputting the wrong values. If users input the wrong value, they could end up vastly overpaying for a token. For example, the price for Token A is 0.0037 ETH per coin, and if a user mistakenly inputs 0.037 ETH for a buy order, they will pay ten times more than the actual price. Low liquidity was another issue that was common with early DEXs. It was common for users to have to wait a long time for large orders to go through since other traders mainly provided liquidity. Modern DEXs use liquidity providers and automated market makers (AMMs) to enable traders to swap tokens almost instantly.Today’s decentralized exchanges also use a much more minimal user interface, which differs from the past’s clunky and complicated order book style DEXs. The user-friendliness of modern DEXs is also evident by the larger number of crypto investors using them to buy low market cap coins in the 2021 bull market.However, some decentralized exchanges have additional requirements for users to access them. For example, regulated DEXs like Soma require users to complete a Know Your Customer check as well as Combatting the Financing of Terrorism and Anti-Money Laundering checks. This process is required since the platform has regulated assets like tokenized equities and exchange-traded funds.The most widely used type of decentralized exchange is the swap-style DEXs that grew in popularity from 2020 onwards, with platforms like Uniswap attracting both experienced and new traders. Swap DEXs use AMMs and work by the user connecting their wallet to the decentralized application (DApp), selecting the coins they want to trade and the amount they want to swap, with the tokens swapped straight into their wallet. The simplicity of Uniswaps DEX spawned similar projects like PancakeSwap for BNB Smart Chain projects.Modern DEXs are easier to use than their predecessors, with better liquidity and a simpler trading interface, and experts within the DeFi space agree. Recent: The state of crypto in Western Europe: Swiss powerhouse and French unicornsAndrei Grachev, managing partner at DWF Labs — a Web3 investment firm — told Cointelegraph, “DEXs are much more user-friendly than before. While the initial process of setting up digital wallets may be tedious, users can link to the platforms via mobile apps or desktop browser extensions.” continuing:“Connecting one’s wallet to DEXs only takes a couple of seconds, and the clean interface allows for fuss-free trading. Today’s DEXs usability closely resembles the user experience on CEXs.”Decentralized exchanges have changed a lot over the last few years, and they continue to evolve as more projects and teams start to build within the DeFi space. As the blockchain industry matures and decentralized finance continues to grow in popularity, we can expect to see DEXs become even more intuitive and easier to use.

Čítaj viac

Získaj BONUS 8 € v Bitcoinoch

nakup bitcoin z karty

Registrácia Binance

Burza Binance

Aktuálne kurzy