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Elements of DEX, Don Mosites @ blockchain.tokyo
- 4. A revolution is coming Digital assets on distributed ledgers establish immutable ownership Tokens can be created and swapped using smart contracts Creating standardization, transparency, and liquidity across capital markets Tokenization is the process of bringing the world online
- 7. Are we ready? Existing financial infrastructure is slow and expensive Crypto exchanges are regularly hacked and mismanaged The long tail requires high and low liquidity trading venues We need an efficient, safe, and scalable way to trade
- 8. The problem is trust.
- 9. Going trustless Atomic swaps between peers eliminates counterparty risk Personal wallets give you control over your assets until traded Prices can be communicated via any medium between peers Decentralized exchange (DEX) is between peers and smart contracts
- 10. Elements of DEX Custody — Who holds tokens? Execution — At what price do they trade? Settlement — How do they move? Most DEXs are at least non-custodial
- 11. Designs differ in execution (pricing) Design Execution AirSwap Peer-to-peer Smart Contracts DutchX Auction Smart Contracts IDEX Order Book * Matching Engine Kyber Order Book * Smart Contracts RadarRelay Order Book * Taker Queries Uniswap Algorithmic * Smart Contracts * Continuous (each execution impacts the next)
- 12. Front-running 1. A large order arrives for execution 2. The exchange operator or a blockchain miner inspects the order 3. They insert an order of their own in front for economic advantage Continuous markets are at risk of front-running
- 13. Price slippage Slippage is the expected price versus actual price For algorithmic (e.g. Uniswap) larger orders cause more slippage For some (e.g. Kyber) there is an upper limit (3%) On-chain continuous markets are at risk of slippage
- 14. Challenges IDEX (Order Book / Matching) — Centralized execution, front-running RadarRelay (Order Book / Queries) — Collisions, race conditions, front-running Kyber (Order Book / Contracts) — Costs to update price, front-running Uniswap (Algorithmic / Contracts) — Price slippage, front-running
- 18. Unique strengths Large orders — Any size, one and done Good prices — No middlemen, no slippage, no front-running No listing process — Peers announce intent to trade The atomic swap provides truly decentralized trading
- 19. Unique challenges Peers must be available — Fresh orders means online counterparties Smart pricing functions — Peers may depend on other markets for price Encryption — Price discovery should be private Our team provides tools to address these
- 20. Long tail liquidity with P2P Online Automated Makers (Programs) — Higher liquidity markets Online Manual Makers (People) — Larger OTC trades On-chain Makers* (Contracts) — Lower liquidity and limit orders People and programs can combine to cover all kinds of liquidity
- 21. Liquidity Scalability (No. of markets) Long tail liquidity with P2P
- 22. Online makers Liquidity Scalability (No. of markets) Long tail liquidity with P2P
- 23. Online and on-chain makers Liquidity Scalability (No. of markets) Long tail liquidity with P2P
- 26. For developers Easily embed the widget to bring trading to your website or app Run an order server to provide liquidity to the network Check out the API to build your own trading apps developers.airswap.io for documentation and support
- 27. Links DEX price data — https://dexindex.io/ DEX trading activity — https://dex.watch/ Swap Protocol White Paper — https://swap.tech/whitepaper Trade on AirSwap — https://instant.airswap.io/ AirSwap on Twitter (日本語) — https://twitter.com/airswap_jp
- 28. don@airswap.io