The DC Blockchain Developers Meetup hosted a presentation on "Understanding Decentralized Exchanges" by Evan Botello. These are the slides presented by Evan.

1. Understanding
Decentralized
Exchanges

2. Background

3. What is a centralized exchange?

4. 99+% of all crypto trading
happens on centralized
platforms

5. Anatomy of a centralized exchange
● Hot wallet (very small percentage)
● Cold wallet (most funds stored this way)
● SQL database
○ User accounts
○ Trade activity

6. Centralized exchanges take
custody of user funds

7. Benefits of centralization
It’s not all bad
● Fast trades
● Talk with a real person to resolve problems
● Fiat bridge
● Liquidity
● Users don’t need technical understanding

8. Drawbacks of centralization
Not all that glitters is gold
● Rely on technical competence of exchange operators
● Massive hacks
● KYC requirements (varies based on jurisdiction)
● You don’t have custody of funds

9. Is there a better way?

10. It depends.
There are tradeoffs.

11. What is a decentralized exchange?
Let’s look at examples
Fully DecentralizedPartly DecentralizedFully Centralized

12. Digging deeper: comparisons
Partly Decentralized
● Example: radarrelay.com
● Business logic split between centralized
server and smart contracts
● Faster
● Not as expensive
● Less problems
● Less secure (centralized code can’t be
audited)
Fully Decentralized
● Example: etherdelta.com
● All logic lives in smart contracts
● Slowest
● Most Expensive
● Prone to problems
● Most secure (99% of code can be audited)

13. How is Decentralized Exchange
Possible? Why now?

14. Ethereum is a general purpose blockchain
Turing complete programmingLimited scripting

15. 3 major elements for today’s DEX
General Purpose Blockchain Browser Wallet DEX Protocol

16. The Glue
Browser app (javascript) calls out to Ethereum
smart contract *through* MetaMask

17. There are many protocols
Implemented as Ethereum Smart Contracts
0x
Swap
Bancor
Wyvern
Blockchains With Built In Protocols for DEX
Ripple
Stellar
Komodo
Other Ways
Atomic Swaps

18. Demo

19. Questions?