The rise of decentralized exchanges has been astonishing since their debut with the slogan of new-era banking. Uniswap’s popularity and new models that the UNI devs created (e.g., v3) have always been copied by other platforms. The most recent product of Concentrated Liquidity can be a good source of income for crypto investors who can arrange a pool that will be between support and resistance levels. Slowly but firmly, the developments on the side of decentralized exchanges may bring a mini-banking model at the top of a blockchain.
As the ecosystem integrates and adds more to the existing protocols, the simplicity and the risks (especially after the fall of FTX last year) started to bother the crypto community. As an inevitable consequence, we see rising interest in DEXes and DEX stakeholdership.
Basically, the dexes are useful layouts for smart contracts behind. Contrary to CEXes that have to burn money via incentives, no-fee campaigns, or paid partnerships, DEXes give ownership and high-level security in exchange for a relatively boring experience. Yet, at that point, we need to accept the fact that DEXes are one of the free blockchain-based products with real, and sustainable utility behind them.
Even though copy paste smart contracts might be a tiring experience for DeFi enthusiasts, we have lots of unique DEXes getting popular. In Hive ecosystem, we use Beeswap and Diesel Pools to enjoy our DeFi experience. Also, Beeswap was able to add value to its native token by distributing daily Hive and liquid BXT token. There are also successful projects that were able able to go further from what Uniswap has brought. Maverick protocol added dynamic features to the concentrated liquidity model by Uniswap. On the other hand, DEXes are valuable projects for new Layer 1 and Layer 2 projects as there are not enough people or crypto in the early times.
Decentralized Exchanges exchange value trustlessly. A buyer and a seller can do anything they want in their liquidity pools without a middleman or any interference from governments (!)
The policymakers, "the protectors of humanity", are against the domination rates of current centralized exchanges because they have an unnecessarily strong influence on the market and it is seen as a potential threat to the current systems. In the modern world, all your transactions are trackable if they are not done via gold, silver, or paper money. Dexes, on the other hand, are as transparent as clean water to track the activities of people with the help of blockchain.
Remember, the zero-knowledge technology was hunted down already. Wormholes, mixers, and privacy projects had an innate anarchy against the current system. Even when they had almost no reputation, among common crypto people, they are cut out.
From the side of us, cross-chain integrations, profitability, high speed, low fees, and security are priorities. Since 2017 - 2018, decentralized exchanges have been evolving to increase their efficacy. We can also talk about the speed and integration of Aggregators, Liquid Staking, and the platforms that provide Collateralized Debt Positions like a real bank. On the technical side, the future is perfectly bright.
However, When it comes to the sustainability of decentralized exchanges, in terms of policies and restriction resistance, they may face some issues like blacklisting, farm freezing, and more.
What do you think about the future of decentralized exchanges? Share with us below.
Hive On ✌🏼
