There has been a roaring fire of issues that have been plaguing the centralized digital asset trading arena, from comingling of funds to outright misappropriation of clients funds. The power of decentralization wasn’t even tapped into during these dark moments in the cryptocurrency space, they were manipulated to benefit the bad actors while causing harm to the masses.
In the world of Decentralized trading and self custody of digital assets this isn’t even remotely possible and that is why decentralized trading platforms such as Uniswap, Sushiswap and HootDex are growing in demand even as they build out. We will see a boat load of dry powder rolling into the decentralized cryptocurrency trading market as venture capital and private equity firms begin to see what the real big picture is, some of the platforms mentioned here will be a beneficiary of the inflows.
Uniswap was one of the first trusted and open source decentralized cryptocurrency trading platforms that hit the waves, to this day it is the most prominent of platforms in this space. Sushiswap basically mirrored Uniswap and road the coat tails of their success but in the end innovation always comes out on top. This is something that the powers that be realized and began to safeguard their platform, introduce innovation and improve the user experience. The thought of an open source system at first blush sounds great but the ability for a group to mimic your exact algorithms and coding, well that is where the brakes come into play.
HootDex is a new kid on the block but with some teeth, it’s blockchain enabled digital asset swapping system is being built out for the future. Featuring various cryptocurrency pairs and derivatives, SynthCryptos and project tokens, this is only where it begins. Providing a secure environment for members to swap digital assets, discover new verified projects and control their digital assets is key. HootDex is part of a much larger ecosystem and it will allow members to benefit from secure communication, social media and digital document execution. So there will be a lot of innovation coming from the new kid and this is something members will embrace.
Decentralized trading is the future but make no mistake some centralized platforms will be in the mix because they do provide a much needed service such as Coinbase does. They are the one centralized trading platform that has made it a point to adhere to Security and Exchange laws in the United States but that has not always benefited them. After the fall of the disgraced FTX the beneficiary was indeed Binance, they swooped in with a red cape to save the day for hundreds of thousands of cryptocurrency traders around the world. But be careful what you wish for because absolute power can corrupt absolutely.
Kraken another centralized platform has been pushed off the edge in the United States as of late and as with a lot of cryptocurrency companies suffered at the hands of the FTX fallout. Silvergate bank and other banking institutions followed suit, this is being mentioned because there is a need for a centralized banking system for cryptocurrency and a need for trusted centralized cryptocurrency trading platforms but decentralized trading platforms will grab the lions share in the coming year.
And here’s why, decentralized trading platforms are often more secure than centralized exchanges because they do not rely on a single point of failure. They use blockchain technology, which is immutable and transparent, making it more difficult for bad actors to manipulate or steal assets.
The level of transparency is clearly evident as it enables users to verify transactions on the layer-one blockchain the transaction took place. This means that all transactions are publicly visible, making it easier to track and audit. Blockchain scans such as etherscan and pecuscan have made this possible for their respective layer-ones.
Decentralized trading platforms provide a higher level of privacy because they do not require users to share their personal information and adhere to KYC (know your customer) rules of law. However that isn’t always a big plus, there are platforms hitting the market that will allow decentralized trading platforms to adhere to the laws of the land and that is a key to mass adoption.
Now the fees can be lower on decentralized trading platforms but keep in mind that the gas fees can be killer on certain blockchains, however they are lower than centralized exchanges because they do not require intermediaries, such as banks or clearinghouses, to process transactions.
The best part os the accessibility of it all, decentralized trading platforms are accessible to anyone with an internet connection, unlike centralized exchanges that may restrict access based on location or other factors.
One of the key factors of a decentralized trading platform is self custody of assets, there is a massive benefit as it allows people to control their own assets and not be at the mercy of a financial institution or be subject to bad actors.
In the end when you have self-custody of your digital assets, you have complete control over your private keys and can ensure that your assets are stored securely. It also provides a higher level of privacy, control, flexibility and options. It eliminated counterpart risks as we witness with FTX and with a multichain wallet a user can use various platforms as simply as pressing a button.
– Adam Hastings