Dex, Cex, Popular Exchange and Trading Cryptos - Steemit Crypto Academy Season 4 - Homework Post for Task 7 By @justiceanietie.
Hello professor @imagen, I really appreciate your lecture because it has broaden my understanding. Below, I will be providing solution to your assignment for task 7: Dex, Cex popular Exchanges and Trading Cryptos.
The question to the assignment is seen below:
An Exchange take place where buyers and sellers meet in order to exchange currencies, goods and services. This can be seen as a market place. Fiats and cryptocurrencies are financial instruments, there are provided by exchanges. Here traders buys and sells the financial instrument. However, the specific price of the traded instrument is determine by the current market value of the said instrument which is traded oppon. The process by which an instrument moves from the seller(owner) to the buyer, an exchange has taken place. For example:
We have different types of Exchanges and there are categorised accordingly, like cryptocurrency exchange, forex trading, stock exchange etc.
Different Exchangers make provision of platform (market place) for easy trading of cryptocurrencies by traders or buy and sell coin for Fiat token respectively.
However, the Digital Cryptocurrency Exchanged (DCE) could be centralised (CEX) or Decentralised (DEX).
This Exchange is govern by a single authority, here all the transactions from either the buyer or the seller must pass through the authority(Third party). Users Fiat or crypto are held by the central exchanges in one place. Therefore, as a user, you need to develop some level of trust with the platform before investing your money.
Bellow are the top Cryptocurrencies spot exchanges. Note, ranking of Exchanges are done by the coinmarketcap. Here the marketcap ranks and scores Exchanges based on traffic, liquidity, trading volumes ever reported. This give the user/trader confidence to stake with the platform.
Binance Exchange is listed by coinmarketcap as the first Exchanges with a trading volume of $26,017,920,064 amongst other.
Coinbase Exchange is ranked 2nd with a trading volume of $5,405,434,447 in the last 24hours
Huobi Global is ranked 3rd with a volume of $4,928,912,829 in the last 24 hours.
FTX is ranked 4th with $2,763,656,627 trading volume in the last 24 hours.
Kucoin is ranked 5th with $1,953,690,819 trading volume in the last 24 hours.
Decentralized Exchanges are Cryptocurrency Exchanges that have no middle men between buyers and sellers. The operation do not depend on any central authority between buyers and sellers by replying on self-executing programs called smart contracts. This smart contracts helps to facilitate trading on DEX.
DEX uses a similar trust-less protocol, unlike Blockchain which work in a decentralised distributed manner. On this note, traders don't rely on the system/network. Without the reliability of buyers and sellers, traders are still executed by the smart contracts and the system is known as peer-to-peer (P2P) trading.
The features on smart contracts makes trading less expensive on DeX when compared to CEX. This is possible through the innovation which reduces transactions fees on DEX.
Customers KYC/AML is not always asked on decentralised Exchanges. Here transactions are carried out directly from your wallet via the smart contracts functionality.
Examples of Decentralised Exchanges are: Waves Dex, Bancor protocol, kyber Network, EtherDelta, uniswap, Tokenlon, venus Sushiswap, Compound etc.
| Wallets | Exchanges |
|---|---|
| 1. Wallets stores public and private keys | Exchanges stores assets/funds |
| 2. It comprises of public and private keys that is generated by the network. | while here the user has the opportunity to choose his password. |
| 3. It makes use of hard wallet and it is suitable for HODling investment. | It is recommended for trading. Like spot, futures, peer-to-peer, and margin trading. |
| 4. All the wallets are centralised | It is always inform of software/Blockchain. |
| 5. It does not hold users funds. | It always hold users find or Crypto. |
Advantages of DEX
• Because of its decentralized nature, the counterparty risk is limited. This means that the system can not be hack easily. Since the wallet does not hold fund, it reduces cyber attacks.
• It allows users to hold their keys
• The functionality of smart contracts enables instant trades at lower cost when compared to CEX.
• It ensures the custody of users crypto and managing of their wallets or account.
• Order books liquidity pools and aggregation tools are the features used to offer novel and experimental financial services.
• Since it is Decentralized, it means no single users have control/authority over the network.
• It has a user friendly platforms like Curve, Uniswap, Sushiswap etc.
• With the help of the smart contract, trading is done directly from the user's wallets.
Disadvantages of DEX
• Lack of private and public keys recovery option. Here when a user loss its seedphrases, all the assets of the users is loss and it can not be recovered.
• Liquidity Problem: In a decentralized Exchanges, liquidity and trading volumes are lesser when compared to centralized Exchanges.
• Only Cryptocurrencies are traded on DEX and it brings about absence of Fiat deposits and withdrawals.
Advantages of CEX
Safe keeping of Cryptocurrencies by the central authority.
Anti Money laundring (AML) and know your customer (KYC) regulatory compliance. This allows users to provide their true identification and information. This really prevent fake account creation in the network.
The publication of the physical offices and management, makes the system reliable and accountable.
It is easier for traders to make them have an options/alternative in their buying and selling on the platform due to high liquidity.
Fiat can be deposited via debit card or credit card.
It is suitable for trading. That is buying and selling of Crypto.
User keys are managed by CEX.
DISADVANTAGES OF CEX
Users have to trust the exchange platform in other to sacrifices the ownership of their funds. Here it is difficult for users to entrust their fund especially when it's of material value.
It involves high risk when it comes to the regulatory compliance. Failure to meet the requirements, the user account may be deactivated and this is not really a good experience for traders, especially during the verification process (KYC).
It can be seen as a center of attraction for cyber criminals since the network has a central authority that controls it.
learning from different Crypto platforms has given me a hight to know more about different Exchanges.
My experience on STEEM, SBD and TRON has been smooth but I equally have Binance, Roqqu and Trust wallet Exchanges.
Last month I sent REEF Coin from Roqqu to Trust wallet. But when the Crypto arrives, I discovered that the price of the crypto was lower than when it was in my Roqqu wallet. I decided to transfer it back to Roqqu, through my REEF address. but after 24 hours, I did not receive it and I don't know who to complained to, I now see's it as a scam and up to date, I have not received the fund in my Roqqu.
A friend sent me 5BTC USD and up till now I have not received it. This makes me to find out what should be the problem. I discovered that when ever you are sending from Trust wallet to Roqqu, you should convert it to Etherieum or USDT and you must include the Memo. There is always a warning: Please send only USDT TRC20 to this address, sending any other token may result in permanent loss.
Screenshot
When I started using Roqqu Exchanges, I never knew how it works. It was around October 2020. Then, ETH was #150000 I bought just #5000 worth of it, but to my surprise, as the cion decline in value, my #5000 became #4500 and because of not loosing all, I rushed and sold it out immediately with but know, I have gain deep understanding on how lovely on Roqq Exchanges work.
My major transactions is done in Roqqu and Roqqu is one amongst the Exchanges with good price.
My experiences on both Roqqu and Trust wallet in holding Cryptocurrencies have really build me up. Wallets are where traders or investors keep their funds safe.
The Global Cryptocurrency Exchanges provides high liquidity in the market and this helps in facilitating the acceptability and adoption of Cryptocurrencies globally.
Thanks for reading through, I appreciate your effort.