How CDzExchange Solves Key Challenges Facing Decentralized Exchanges
No doubt, decentralized exchanges are here to stay. The evolution journey from traditional to decentralized exchanges has been phenomenal. The reality is, the world of finance and trading stands to gain a lot more than envisaged. However, it’s not all roses with decentralized exchanges. While decentralization offers a better solution to the problems faced with centralized exchanges, there are still key challenges with decentralized exchanges that require adequate solutions if global scaling is to happen.
Low Liquidity and Volume
For effective running of operations, exchanges require sufficient liquidity for all assets traded on their platform. However, decentralized exchanges are still faced with this major problem — the average trading volumes on these platforms are low when compared to centralized exchanges. Traders thus have no choice but to depend on centralized exchanges due to the price slippage caused by low liquidity. Considering decentralized exchanges offer better functionality than centralized exchanges, the volume is still substantially low.
The DEX Market is Highly Fragmented
The market is highly fragmented due to the decentralized nature of these exchanges. This leads to a number of problems. One is very low transaction speed. DeFi apps that are especially sensitive to time, such as trading on DEXs, face critical problems when it comes to transactional speed. For example on Ethereum, DeFi apps can only process on average 15 transactions per second. This invariably leads to higher fees to be paid per transaction, which quickly stacks up for frequent traders.
Another issue this raises is interoperability. Decentralized exchanges currently have very few options for cross-chain trading of different protocol assets. Trading assets across different blockchains is a major difficulty with these exchanges due to the simple lack of infrastructure in the current DeFi landscape. The security level is also compromised except when trading across chains with the same security level. Implementing interoperability requires substantial development and resources to guarantee strong security and frictionless transfers.
Poor User Interface
For true massive adoption to happen, a full-fledged easy to use interface is highly necessary. Decentralized trading platforms, including derivatives platforms, fall short when it comes to a solid user experience when compared with centralized platforms. The on-chain requirements of smart contracts have made it difficult to develop a robust trading user interface and advanced API integrations common among centralized exchanges.
Overcoming these Challenges with CDzExchange
CDzExchange’s goal is to provide a more comprehensive solution to the aforementioned challenges by creating a unified trading experience. CDzExchange platform is being designed to be easy to use without complexities. The aim is to make DeFi trading a better overall experience for the user.
On CDzExchange, users will be able to trade tokens as well as crypto derivatives (CDs). CDzExchange is incorporating cross-chain technologies that allows users to transfer different assets like ERC20s to BEP20 counterparts. This encourages higher liquidity as it creates more opportunities to allow capital in different protocols to freely interchange within each other on CDzExchange.
Creating a unified trading experience via an easy to use interface and incorporating advanced cross-chain technology will tackle the fragmented DeFi challenge, where users have to trade on many different platforms to make different kinds of trades.
Image credit: Pixabay
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