OVERVIEW OF CRYPTOCURRENCY MARKET

Cryptocurrency is exploded since last year. Decentralized technology becomes the hottest topic more than ever. We are moving toward a new age of trustless economy where we remove third-party providers, middlemen, monopolies and risks.

Numbers speak for themselves, the cryptocurrency market has skyrocketed last year. At the beginning of January 2017, marketcap has been marked at $17.73 million.

At January 1st 2018 , we were seeing a phenomenal year of crypto space when it hit over $600 billion.

These number showed how promising the market is, global funds are flowing to cryptocurrency market.

CENTRALIZED VS DECENTRALIZED EXCHANGES

Centralized exchanges

However, today's exchanges are mostly decentralized. We could list some big names in space here: Coinbase, Kraken, Binance, Poloniex, etc.

The centralized exchanges perform as off-chain system, transactions will not be recorded to on-chain blockchain instead in their central server. Due to this fact, centralized exchanges has shown a massive problems in terms of security and storage of information, private keys and funds.

"Centralized and custodial exchanges are the exact antithesis of why Bitcoin was born and why (we like to think) people spend their time in the crypto world."

In order to tackle these problems of centralized exchanges, decentralized exchanges and other open protocols is born. They possess the true spirit of blockchain. They are "anonymous" , peer-to-peer trading and full of secure.

Decentralized exchanges

As previously mentioned, decentralized exchanges are giving back the control to their users. Users remain their authorities on their own funds. Exchanges leverage a blockchain technology to enable safer and more transparent trading.

Here is a summary of pros and cons of decentralized exchanges:

Major Benefits	Major Limitations
Security and privacy are key benefits of DEX's	Most are not viable, easily usable, lack of liquidity and trades and do not provide fiat payments.
Trustless, no middlemen intervened	Maintain scalability problems as same as blockchain technology

CURRENT DECENTRALIZED EXCHANGES

Decentralized exchanges have a bright future in cryptocurrency space since it solves key pains of crypto world and maintain a cryptocurrency spirit. The term "DEX", nowadays, becomes more and more popular.

Below is an overview (not an exhaustive list) of list of well-known and common DEX projects

0x

0x is an open, permission-less protocol facilitating ERC20 tokens to be traded on the Ethereum blockchain.

0x enables off-chain order-books to be settled on-chain. In 0x protocol, orders are transported off-chain, massively reducing gas costs and eliminating blockchain bloat. Relayers help broadcast orders and collect a fee each time they facilitate a trade. Anyone can build a relayer.

Airswap

Airswap is a Consensys project that is building an ERC20 decentralized exchange most similar to 0x. The project is currently live on Ethereum’s test network. Airswap has more of a focus to cater to institutional market makers, as seen through their partnership with Mike Novogratz’s firm Galaxy.

The key difference between Airswap and 0x is that Airswap trades are negotiated off-chain while makers/takers are mostly matched through relayers in 0x.

Kyber Network

Kyber Network Kyber Network is an ambitious decentralized exchange that aims to build cross-chain payment for business and all operate on-chain.

Kyber is not limited to ERC20 tokens, but aims to build a system that can automatically and seamlessly trade any token regardless of which blockchain it’s on. They attempt to solve the problem of interoperability in blockchain technology.

Etherdelta

Etherdelta was one of ERC20 exchange powered exclusively through smart contracts. It's been long-established and well-known decentralized exchange with daily volume reached to $10 million.

FUTURE PLAYER IN SPACE

NEX exchange

Neon Exchange (NEX) is a decentralized platform on the NEO blockchain that applies a publicly verifiable offchain matching engine to handle trading volume and support complex orders (such as limit orders) that are not possible on existing DEXs. NEX will be the first exchange to utilize NEO, NEO Gas and its own NEX token as base pairs to trade NEP-5 tokens. (source: cryptobriefing.com). The exchange planned to be introduced in 3rd quarter of 2018.

Woter

Woter is an hybrid platform which focuses in building an exchange for the people.

The most interesting about Woter incentives is that they will distribute 25% of transaction fee to Woter token holders.

They are planning to launch an exchange in Q4 2018.

CONCLUSION

As cryptocurrency market keeps growing exponentially. Users tend to aware of their privacy and safeness and attempt to find a way to protect their funds in an “unregulated” market. Since centralized exchanges has failed their promises in protecting their customers several times (remember of mt. GOX, cryspty). The need of decentralized exchanges is becoming more and more obvisous. Again, The year 2018 could mark as the year of enormous growth in the field of decentralized exchanges.

Resources:

• https://media.consensys.net/state-of-decentralized-exchanges-2018-276dad340c79
• https://medium.com/singulardtv/why-decentralized-exchanges-are-the-future-for-digital-assets-8a3b7f1032c2
• https://medium.com/@coreyj_miller/overview-of-decentralized-crypto-exchanges-3ce97627e771
• https://tokeneconomy.co/token-economy-31-%EF%B8%8F-kraken-the-death-of-centralized-exchanges-6d8b2080cdd0
• https://woter.trade/whitepaper/
• https://steemit.com/bitcoin/@thecryptofiend/why-we-need-decentralised-exchanges
• https://neonexchange.org/#roadmap