About a week ago, Binance (officially) stopped offering services to residents of the United States; this restriction is common among centralized exchanges due to the SEC’s unclear and undecided stance on most utility tokens. Soon after, strangely, Bancor followed in Binance’s direction and also ceased services for US residents—Bancor is meant to be a decentralized exchange!

Popular decentralized exchanges like DDEX and Bancor aren’t actually decentralized if they blacklist a certain region’s IP addresses. Additionally, other claimed decentralized exchanges, including the market leader IDEX, are considering to place KYC requirements on users, and this too could lead to subsequent blacklisting of regions. One of the key points of decentralized entities is that they are open to access to all. With such usage limitations, supposed decentralized exchanges are strongly tilting towards being increasingly centralized month after month.

While several decentralized exchanges are becoming or have already become centralized, an exchange backed by John McAfee, one of the biggest supporters of decentralization, has retained its decentralized state.

Genuinely Decentralized

SwitchDEX.ag, which is a part of the Switch.ag ecosystem, remains an Ethereum-based decentralized exchange that neither blacklists any IPs nor mandates KYC for its users. While mounting pressure has caused other DEX operators to bend, Switch has remained decentralized; this shows that the other claimed DEX weren’t decentralized to begin with as there’s clearly an operator who can mandate operational adjustments at will.

While most ERC-20 tokens are primarily traded on centralized exchanges, some portion of the market volume is allotted to the major DEX. However, said DEX are only placing a façade of being decentralized; i.e. DDEX charges listing fees and blacklists IPs, IDEX has controlled listings, and others either blacklist IPs or require KYC. The volume allotted to these exchanges is often driven by members of the community who seek to tilt away from centralized exchanges, but they are being deceived as the title of decentralized isn’t true to most DEX.

On the other hand, Switch does not charge and control costly listings as anyone can connect a smart contract of any ERC-20 token, nor does it blacklist IPs or mandate KYC requirements. Moreover, the exchange’s smart contract-stored revenue earnings are distributed to the platform’s token holders. Thus, the community is the complete operator of Switch as it’s the community that can list any token and it’s the community that claims the exchange’s fees. Thus, Switch genuinely encompasses the principles of a decentralized exchange; this is a standard unmet by other DEX in the industry.

Reaching the Wider Community

Decentralized ecosystems needn’t be limiting. A common defense by highly centralized DEX is that their centralized state is necessary to accommodate new market entrants. However, this is disproven by the operation of the simple token swap platform used by Switch.

A purely decentralized exchange can be a bit difficult to manage by new market entrants. To ensure that the decentralized state of trade is not limiting to any members of the decentralized community, whether they be veterans or novices, Switch ecosystem’s Switch.ag platform offers a more convenient way to swap tokens than the UX available through the typical order book.

It’s imperative that the users who utilize DEX for the sole purpose of advancing the decentralized state of trade recognize that most DEX are actually not decentralized at all. Instead, it’s best to highlight those platforms that are genuinely decentralized and have been designed such that they forever maintain their decentralized state.