The ultimate way out of cryptocurrency exchanges: decentralization (below)
The full text is brief: Alicoin|Exclusive view
With the endless stream of asset security cases such as hacking and self-stealing of centralized exchanges, new and effective security system solutions have become the common expectation of the industry. At present, the industry has formed a consensus on the future trend: centralized exchanges It will become a historical exit stage, and decentralization is the way out for cryptocurrency exchanges. In the future, it must be the era of decentralized exchanges.
With the endless stream of asset security cases such as hacking and self-stealing of centralized exchanges, new and effective security system solutions have become the common expectation of the industry. The decentralized trading model has gradually entered the field of vision and construction. The topics related to centralized exchanges have been discussed enthusiastically by more and more people. At present, the industry has formed a consensus on the future big trend: the centralized exchange will become the historical exit stage, and the decentralization is the way out of the cryptocurrency exchange. It must be the era of decentralized exchanges.
How is the decentralized trading model that is consistently optimistic in the industry solve the asset security problems of the current mainstream centralized exchanges?
Decentralized exchanges first achieve data decentralization, relying on technology to achieve open transparency of the overall transaction process, data can not be falsified to achieve community trust, in the decentralized exchange, the user obtains the account key, 100% With the control and ownership of digital assets, it is logical that assets cannot be stolen (unless the user reveals the secrets themselves).
(Author: ALicoin Institute)
At present, there are three main modes of decentralized cryptocurrency transactions:
1, order book hosting mode:
The transaction matching of this trading mode is carried out under the chain, the settlement of the order is completed in the chain, and the overall transaction volume of the exchange determines the efficiency of the transaction matching; the order book mode matched by the pure chain transaction can completely realize the decentralization. However, various operations involving orders, such as modifying the number of transactions, canceling trade orders, etc., need to consume gas, and the cost and speed are the difficulties that need to be broken in the current technology.
At present, the order books are all hosted on the chain, which involves the cost of high user operations. Currently, it is rarely used. Many project teams use a combination of partial data chaining to achieve high performance, liquidity, and Reduce network delays, and solve problems such as solving user asset security and transparent transaction data.
2. Reserve pool mode:
There is no concept of the order book in the reserve pool mode. In the reserve pool mode transaction, there is a reserve pool provided by the reserve manager. The smart contract confirmed by the community user provides the best reserve pool price, and finally relies on the smart contract in the chain. The transaction settlement can be completed quickly. The main advantage of this model is that it realizes the fast settlement of the transaction. It is the fastest decentralized mode in the current decentralized transaction mode.
However, the problems in this model are also very prominent. First, sufficient reserve funds are needed for start-up, and the number of reserve pool providers is also crucial. Secondly, the liquidity of transactions is highly dependent on the number of people in the community. The performance is not satisfactory.
3. P2P over-the-counter trading mode:
The P2P OTC trading mode is similar to the transaction information intermediary. It finds other users with trading intentions for the trading users, and directly conducts peer-to-peer price negotiation. It can provide personalized communication services for different trading users, and finally the transaction settlement is executed through smart contracts; Speed depends on the speed of the user price negotiation.
However, a series of processes involving price negotiation, finding the counterparty, and the amount of the transaction, the overall transaction speed is not high, and the price of each transaction order on the whole network is negotiated by the individual, and may eventually be sold at different prices. Forming a unified trading price reference line is likely to cause market price confusion.
On the whole, the above three decentralized trading models are relatively simple in structure compared to the centralized model, involving major transaction asset custody, transaction matching and transaction settlement calculations, and do not involve asset centralized custody, assets and secrets. Key centralized storage and other issues; from the transaction cost, transaction efficiency, decentralization degree, etc., the three models also have their own advantages, both can protect the user's asset security through different technologies and ensure the transparency of transaction data.
At this stage, there are still many technical problems that need to be solved in decentralized transactions. Before the existing technical bottlenecks have not been broken, the centralized exchanges will still occupy a larger trading share in the future of the cryptocurrency market for a certain period of time; Decentralized trading technology continues to mature and break through, and the market will gradually be transformed from centralized trading to centralization and decentralization. Ultimately, the decentralized exchange will replace the centralized exchange and open the cryptocurrency decentralization. The era of trading.
At present, mainstream cryptocurrency exchanges have arranged decentralized transactions, investing heavily in technology research and development of decentralized transactions, and advanced digital asset trading ecosystem technology and model transformation in advance, highlighting these influential exchanges. The ambition of the development of the centralized trading business sector.
The new technology solutions will enter the cryptocurrency market and will explore and reconstruct new trading models, provide better digital asset management services to trading users, and promote deep reform of the cryptocurrency market. Strong technical support is provided for circulation and trading worldwide.