The rise in cryptocurrencies has led to the emergence of exchanges where cryptocurrencies are traded making it possible to enter and exit trades in crypto assets.
However, the problem which the market is facing is that cryptocurrencies while being decentralized assets they are being traded on centralized exchanges. This has raised contradictions.
This contradiction, however, is being handled with the development of 0x. The development of 0x is a revolution which is now in the cryptocurrency exchange space which is making it possible for the creation of decentralized crypto exchanges. This is also addressing the problem of older exchanges.
The Challenges of Exchanges
The challenge, however, is that these new decentralized exchanges do not have the capabilities and features which are found in some of the centralized exchanges. For example, traders who desire to trade on margin will have to go back to the centralized exchanges as this is not offered on the decentralized exchanges. This situation creates counterparty risk for the traders.
Counterparty risk arises when a third party on the margin lending defaults on the lending which can endanger the assets of an investor or trader.
Decentralized exchanges lack the capabilities found in some of the centralized exchanges due to certain technical challenges. The most profound challenge has to do with designing a reliable oracle for decentralized exchanges that can provide settlement security such as is found with centralized exchanges.
When it comes to application to margin lending, the oracle technical challenge is mainly attributable to the nature of Ethereum contracts which makes it difficult for them to be aware of the prices of assets on and off the market.
When trades go against an investor who is trading on margin it is difficult to liquidate the position to safeguard the lender. This means that smart contracts can’t efficiently serve the purpose of margin lending and trading in the market.
To address these challenges with decentralized exchanges, the bZx platform was born.
bZx Protocol
Largely decentralized, bZx is a unique margin funding and lending protocol. This peer-to-peer platform has been created over the Ethereum network with subtle integration via the 0x protocol.
bZx has developed a protocol which can be integrated into current exchange infrastructures which will make it possible to carry out margin lending and margin trading on exchanges.
The bZx solution would come at a ten percent fee of the interest earned by lenders.
The bZx Token
The bZx platform has developed a utility token for the platform. The symbol of the token is BZRX. The two main functions of the BZRX token are for:
· The incentivization of order book aggregation by relays and
· Governance of the bZx protocol
The token would also be used to facilitate the continuous, decentralized updates to the bZx protocol.
bZx Timeline
The development for the bZx project dates back to the month of June 2017 when Kyle J. Kistner and Stani Kulechov began brainstorming on the possibilities of creating a solution for decentralized margin lending.
In 2018, the timeline for the bZx project began with the development of the bZx.js library. The development activity for the year 2018 will come to its end as the development of the cross-chain asset lending begins.
Conclusion
With the bZx protocol, cryptocurrencies can maintain their decentralized nature by being traded on decentralized exchanges. Investors will also enjoy the benefits of secure peer-to-peer margin lending on decentralized exchanges. website whitepaper telegram twitter medium
Author - Coltpython
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