DAEX: A Cryptocurrency Clearing Solution Based on Distributed Ledger Technology
Hello crypto traders, I have something for you that will boost your trading experience.
Maybe you have been trading so long on a Centralized exchange or maybe you are a fan of a Decentralized exchange. But you will agree with me that they both have their strength and weaknesses. For the Centralized exchange, there is a centralized order matching mechanism designed for traders hence you can’t create an order outside this, they are in charge of your funds and so on. Now for the Decentralized exchanges, they often suffer problems with liquidity and transactions take longer time.
These are the concerns, but there are somethings amazing about a Centralized or Decentralized exchange. Now we have a platform that is going to bring together the good features of both exchanges and solve a major problem that has been the bane of the cryptocurrency market today.
I present to you DAEX.
What is DAEX
DAEX or Digital Assets Exchange is a cryptocurrency clearing Solution based on distributed Ledger technology as can be found on their website @ https://daex.io It is an open or a distributed cryptocurrency clearing platform. The clearing services is based on distributed ledger technology. The goal of the platform is to provide a better infrastructure for the cryptocurrency industry by taking the positives of the mainstream security trading industry and harness the potential of the advanced distributed ledger technology to provide clearing solutions for centralized cryptocurrency exchanges.
I mentioned earlier that they want to bring the positives/benefits of Centralized and Decentralized cryptocurrency exchanges. Doing this led them to create a Hybrid Exchange.
The problem
For a platform like DAEX to come up, that means there are problems in which they are planning to solve in the cryptocurrency industry.
We have two types of cryptocurrency exchanges in the industry right now; Centralized and Decentralized Exchange. Discussing the problems with both exchange, for the centralized exchange, the order matching mechanism for traders is centralized. Here third parties handle the order books and they are in charge of traders’ fund. This makes them more vulnerable to hack, cyber and malware attacks. The one that still lingers in the memory is the Coincheck exchange hack where $530 million worth of NEM was stolen. This has been the downfall of many Centralized exchange and the centralized model where customers’ funds, transactions are all centralized.
Decentralized exchanges solve the issue of the centralized model by cutting out third party functions through the use of a distributed ledger technology and smart contracts. On a decentralized exchange, traders are in charge of their funds hence the exchange does not have access to them. Here, traders are assured of security as they don’t have to entrust someone to keep their funds save. However, decentralized exchange has a major drawback of low liquidity and transaction takes a longer time.
The solution
To solve the problems discussed above, DAEX came up with a hybrid exchange. This exchange integrates the benefits of both a centralized and decentralized exchange to provide a highly secured, open, strong liquidity and a transparent ecosystem which is the core values of the DAEX ecosystem.
The idea is separating the trading and clearing services into 2 separate entities. Now, the centralized exchange will continue to handle the trading services while the settlement and the clearing services will be based on the DAEX protocol (solution). This will be based on an open source public blockchain which allows traders to be in charge of their fund.
So as a DAEX user, you continue to enjoy the benefits (fast and easy trading) of a Centralized exchange and you don’t have to worry about the risk (hack and theft) attached to it. DAEX will get you covered in area of security and more.
DAEX Ecosystem
The DAEX ecosystem is composed of clearing service (CaaS) based on a distributed ledger technology, a centralized exchange and a user wallet.
CaaS is a provided using a cloud mode. The clearing facility is deployed on a public cloud. Clearing members and exchanges obtain clearing related services through clients or APIs
As mentioned earlier, traders/users are in charge of their funds with DAEX. When traders make trades on an exchange using own wallet, the exchange sends matched trades to the clearing service. This is carried out by a smart contract on the distributed ledger technology.
Benefits of the DAEX ecosystem
Security
Just like trading with metamask on decentralized exchange, DAEX provides a secured trading platform. Funds can’t be moved without users’ permission as asset are held on a public blockchain. For further security, private key is also used to protect users’ asset and an-easy-to-recover mechanism in case of loss.
Trust
For transparency, all operations and assets are open and transparent on the DAEX blockchain. Separating trading and clearing is the best way to secure traders fund. With security, DAEX ecosystem provides a trustworthy and transparent environment thus reduces the level of distrust between traders and exchanges.
Open
The DAEX ecosystem is open to new and existing exchanges and there is no discrimination whatsoever. All the DAEX services will be available to all exchanges that will be lucky enough to participate in the DAEX ecosystem which includes clearing and wallets. More value added services will also be available to all participating exchanges.
Underlying technologies and features
Clearing chain
The DAEX ecosystem is made up of 3 participants; the DAEX foundation(daex.io), Centralized exchange and the End users. The DAEX foundation serves as the connecting bridge between the centralized exchange and the end users across the DAEX blockchain which is the clearing chain.
Clearing chain is a cryptocurrency clearing service that is based on a distributed ledger. It provides clearing services to exchanges using CaaS.
Process
- Traders performs trades on exchanges that supports DAEX using their wallet.
- The order created is matched by the exchange.
- The matched order is sent to the clearing chain and the trade is completed using a smart contract.
The smart contract sitting on the clearing chain serves two function; validates matched trade to ensure it meets requirements and update the ledger with the latest information.
The DAEX clearing chain supports atomic transfers. This allows instantaneous transfer of multiple digital assets between different chains. This can be done only using the DAEX wallet.
Clearing Account
Every DAEX user must have an account (clearing account) on the DAEX platform. This account is used to check balances, register assets and check transaction history.
DAEX Decentralized Wallet
This wallet supports multiple cryptocurrencies which includes BTC, NEO, ETH, QTUM and also compatible with ERC 20 tokens. The wallet helps users to interact with the ecosystem.
A unique public address is provided to user on the clearing chain once KYC verification has been passed. The wallet will generate a 3-part private key;
- User part: this is stored on the clients’ phone. Level one signature.
- Wallet part: this is stored on DAEX server. Level two signature when level one has been passed.
- Backup part: this is stored in a cold storage on the clearing chain. It serves a recovery purpose in case of loss while the other parts are needed for transaction.
DAEX token
The initial token of the DAEX platform will be ERC 20 compatible and a swap at ratio 1:1 will be conducted when the DAEX blockchain is launched. The ticker is DAX token and will be used as reward mechanism.
Conclusion
With the problem of centralized and decentralized exchanges and with the growth of the cryptocurrency industry, then there is a need for a more robust and save medium to trade our favorite cryptocurrency. With the DAEX solution, I believe we have the solution.
To learn more about DAEX’s cryptocurrency clearing solution, visit online today at
Website: https://www.daex.io
Whitepaper: https://daex.io/whitepaper.html
️Twitter: https://twitter.com/DaexBlockchain
Telegram: https://t.me/DAEXOfficial_en
Reddit: https://www.reddit.com/r/DAEX_Blockchain/
Authors bounty0x username: Miracle24