DEX (decentralized exchange) vs. CEX (centralized exchange) is a big debate. Which one is better? Normally all traders enter into the crypto world through CEXs. A CEX provides you with a fiat gateway and an easy interface for trading but you really have no control over your fund as you don’t hold the keys. “Not your keys, not your coin” is an old crypto proverb. Many CEXs have strict KYC norms. You may have to share your bank account details also to trade on a CEX. Sharing all such private information to a third party is often risky. The exchanges often get hacked. In case of a hack, you may lose your fund and private information due to data breach. Still, CEXs are popular due to the convenience of trading. The early Ethereum DEXs were really clumsy and slow but recently the DEX environment improved immensely. Many DEXs are offering user-friendly interfaces and hassle-free trading experience to the traders nowadays. Newdex is one of them. It was the first DEX dedicated entirely to the EOS ecosystem and it saw the day of the light in 2018. Newdex shifted to multi-chain trading later on but it was the favourite destination for the traders who wanted to trade EOS tokens.
Screenshot of Newdex trading window
Newdex – always experimental
There is no gas fee on EOS like Ethereum. Newdex’s smooth interface for trading was a quick hit. Post-EIDOS-attack and the dramatic rise of CPU price in 2019, the trading activity on various EOS DEXs suffered heavily but Newdex quickly solved the problem by offering 20 CPU free orders per day to a trader. Trading of multiple blockchain (ex: Tron, WAX, LYNX, TELOS, BOS) tokens was possible on Newdex by switching chains but the solution was not optimal. This was the reason Newdex launched cross-chain deposits and withdrawals. This service was aimed at bringing popular assets of other blockchains on EOS but somehow it did not click very well. Right now, ‘pTokens’ is popular to bring other blockchain assets to EOS via cross-chain DeFi composable tokens and Newdex is the ideal trading platform to trade those. Uniswap, an AMM (Automated Market Maker) based DEX, started to compete with top CEXs as per trade volume since the DeFI boom. With the success of Uniswap, many other similar platforms were launched on different blockchains. Newdex was quick to invest in Defibox, a successful AMM based DEX on EOS. Defibox is built on the simple concept of providing liquidity for exchange transactions in the form of on-chain pools. Defibox allows swap of EOS to any EOS token and vice versa.
Now Newdex into DEX aggregation
So far so good. Newdex is doing well. The user base is growing and the trade volume is smashing new ATH every month. But liquidity is a big problem in DEXs and Newdex is no exception. Low order book depth is a critical issue for mass migration in case of Newdex. Another issue is that the recent popularity of AMM based DEXs are eating up the share of traditional DEXs. People often like to swap their assets very quickly as per market price and the AMM based DEXs are offering good liquidity for doing quick trades due to various incentivized liquidity providing models. To counter this problem, Newdex innovated to become a DEX aggregator. They aggregated two of the top-notch AMM Swap pools on EOS - Defibox and Defis Network. When you place a buy or sell order on Newdex, the platform obtains prices across DEXs and finds you the most favourable price and then redirects your order to the DEX or a combination of DEXs offering the best deal.
Current market distribution for NDX/EOS pair – screenshot from Newdex
The best thing about Newdex is that it keeps on innovating and tries to cross the next barrier. This new shift from C2C (customer-to-customer) to C2C + C2S (Customer-to-swap) trading model is really game-changing. The swap depth aggregation is making trading easier. The swap protocols are becoming the depth supplier for Newdex and no additional fees are being charged. The transparent depth distribution map of an aggregated trading pair helps you to understand the source of the liquidity. Once you complete the swap, you can not only check the C2C transaction but also the transaction information from the swap. EOS DeFi is growing but liquidity appears to be the biggest hurdle. It will be interesting to watch whether the innovative approach of Newdex solves the liquidity issue or not.
Note: This post was first published here for Cryptowriter in association with voice.com.