While centralized exchanges are considered more secure and efficient, proponents of decentralized platforms like Tim Shan argue that the user experience is improved on decentralized exchanges. There are also advantages inherent in decentralized exchanges, such as self-storage of assets, which make them more attractive than centralized exchanges.
Decentralized exchanges bridge the gap
seemingly have an advantage over centralized exchanges (cex), according to Tim Shan, COO ofDexalot.” However, the decentralized platform is not yet sufficient in terms of number of users and volume of transactions. One reason for this is that Cex platforms are often perceived as safer and perhaps much faster and cheaper to use than decentralized exchange (Dex) platforms.
Being slower and more expensive “is not a good combination for dex,” but in a written response sent to Bitcoin.com News, Shan argued that continuous innovation and improvements are helping to fill the decentralized platform gap. Additionally, Shan believes that the inherent advantages of decentralized financial (defi) platforms, such as self-custody, make the dex platform more attractive than the most trusted centralized exchanges.
In addition to discussing the case for the dex platform, Dexalot COO shared his thoughts on blockchain and crypto industry regulation, especially after industry-shaking events like the FTX collapse. Below are Shan’s responses to the remaining questions sent by Bitcoin.com News.
Bitcoin.com News (BCN):Why do users, especially inexperienced ones, put their trust in centralized platforms over decentralized exchange (dex) platforms?
Tim Shan (TS): Well, I think there are two main drivers here. First, the industry is still in its infancy, and the average crypto investor is used to online brokerage and bank accounts. Centralized platforms offer them a familiar experience because they hold the investor’s assets and transactions appear to be fast, inexpensive, and secure.
It is also human nature to “follow the herd,” especially when you see large daily trading volumes and TVLs (total value locked) and executives and influencers hyping them up on crypto Twitter. Obviously, we have seen in the last year many crypto participants large and small badly affected by the lack of assurance of supposed security in some large centralized organizations.
I think the second hurdle to mass migration from Cex to Dex is the ease of use of the wallets. I myself currently use Metamask and it is not user friendly enough. If cryptos can create products for different demographics like children and the elderly, that barrier will be removed for everyone.
Right now, regulators so far using wa have focused primarily on centralized platforms, as they have considerable experience in dealing with entities that take custody of customer assets, such as banks and brokerage firms. When you think about it, there is little difference in the way CEX and brokerage firms operate. Both provide custodial services for customer assets, both offer trading capabilities to customers, and both may use some or all of their customer assets for their own benefit, such as short-term investments or lending.
However, defi is different because there is no custody and users interact with open source smart contracts. What regulators will do is not target defi, but rather products that are traded on defi, such as stablecoin, by classifying them as “securities.”
BCN: Why did you decide to make dexalot in Avalanche?
TS: We feel that Avalanche offers unparalleled blockchain technology that delivers sub-second speed (time to finalization) in addition to app-specific horizontal scalability by subnet.
BCN: I understand that you have launched a subnet with Avalanche. Can you explain what that is and how it will benefit users?
TS: Subnet is basically a standalone blockchain that offers all the technical features of Avalanche but only builds a dexalot. This allows the chain to be optimized in key areas such as security, speed, gas costs, and compliance. In addition, subnets allow for easy integration with multiple chains. We have begun integrating with Avalanche’s C chain and plan to integrate with other chains in the coming months.
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