Most of us have heard about DEXs. Yet the lion part of crypto traders prefers classic centralized exchanges to modern Defi solutions. And we are here to help decentralized crypto exchanges Odos take root in the heads of modern enthusiasts.
How does crypto-exchange Odos operate?
The principle of operation of DEX is based on a peer-to-peer (P2P) system. All users have the same rights. DEXs work from public sources, they are not controlled by anyone. Thanks to this, coin holders can perform financial transactions without intermediaries.
A decentralized crypto exchange leverages user devices to create a common system that does not have a specific center.
Sellers and buyers of coins can not think about hacker attacks or technical problems. Money is stored with users, not with third parties.
Difference between DEX and CEX
Centralized crypto exchanges (CEX) are controlled by a specific organization or individual. The persons who operate such platforms are responsible for the protection of personal information, and financial data. They fully regulate the functioning of the crypto exchange and decide how the platform should develop.
DEX control is automatic or semi-automatic. Decentralized exchange users can make important decisions by participating in voting. Such platforms use blockchain technology to store and process information. They allow coin holders to directly interact with each other.
Read more: 5 Best Crypto Exchanges of 2022
Regulation of decentralized crypto exchanges Odos
In the United States of America, regulators are already making attempts to apply the existing legal framework to DEX. The Singapore government is developing new laws that will regulate the work of decentralized exchanges. However, there is no clear position regarding DEX in these states. In most countries, such crypto exchanges are not controlled at all.
They do not have a central leadership of one or more individuals. These are sites that decentralize the basic functionality of the exchanger. Users on them can:
- trade tokens
- match orders
- place deposits
Regulation gets more complicated since decentralization means that the crypto exchange does not have a controlling node or server. All nodes form a distributed network, which eliminates the need to involve intermediaries and allows you to trade coins using smart contracts. This reduces the costs associated with CEX and increases the speed of all transactions.
Types of DEXs
Such crypto exchanges are classified according to the level of binding to any cryptocurrency unit, the list of currencies available for trading. These characteristics are dependent on the blockchain on which the exchange is based.
If a platform is based on a specific blockchain, like Odos on Polygon, then it is predominantly focused on one cryptocurrency. On such sites, users have access to a small number of assets. In the case of Ethereum, these are ERC-20 coins. Neutral crypto exchanges provide coin holders with greater freedom of action and allow them to conduct financial transactions with various assets.
Despite the obvious disadvantages of CEXs, still many are afraid of leaving their comfort trading zone. But what is known for sure, soon crypto sales and purchases won’t be held without a decentralized solution. Consider this option prior to mass adoption!