By reducing costs and fuel costs, the DEX outperforms the CEX.

The DeFi world has seen rapid growth in contracts and TVLs. Data from Footprint Analytics shows that from January 24 of this year to November 269 this year, there were ten times more shipments of the new standard in DeFi, than in the case of DEX. Regarding TVL, DEX now supports 30% for the entire DeFi industry.

Foot exam: DeFi and Dex monthly contract number

Footprint Analysis: DeFi TVL and DEX TVL Trends

However, while DEX is an important part of DeFi, many believe that DEX cryptocurrency trading will not replace CEX.

There are no market mechanisms.

Congestion in the Ethereum network leads to increased fat.

This article describes how DEX resolves these two important issues.

How DEX Solves the Market Maker Problem

AMM, automatic developer

Footprint assessment: volume of DEX protocol tokens from major projects

Currently, all DEX projects with the highest trading volume use the AMM trading model. These include Curve, Uniswap, Sushiswap, and Balancer.

Uniswap, Sushiswap, and Balancer have over $ 1 billion in token products.

The AMM model is not perfect and there are some issues. For example.

Due to limitations in operating procedures, the terms and conditions of the DEX AMM must be fulfilled in real time on the exchange pool.

For the chain to function, the entire process, from manufacturing to manufacturing, must be done on chain, which clogs the network and leads to high oil prices.

If the size of a business is too large for the size of the trading pool, it will cause slippage, which can have a huge impact on the cost and cost of completion.

For example, a user buys an ETH offer for $ 1000, and in the final check, the market value of ETH drops to $ 995 due to network connection, but the user still needs to buy $ 1000 for buy ETH. In other words, the user has to pay an additional $ 5 in ETH, which is a big loss.

The shortcomings of this AMM model have been filled by the DEX parallel platform and the AMM mechanism has been further improved.

Footprint Analysis: Market Share of Top 20 DEX TVL Protocols

The main reason for Curve's career in DeFi projects is that it has established itself as a decentralized exchange designed specifically for stability parts since its inception, and achieved high slip and high fuel costs even in the AMM model. . Bancor update v1 to v2 is the same, allowing users to borrow their capital aside to earn income without the risk of failure.

Uniswap continued to iterate from V1, V2 to V3. The upgrade to Uniswap V2 aims to expand business partners, support all ERC-20 tokens, and enable integration of LP tokens. With Uniswap V3, we are offering a wide range of Performance Providers (LPs), including increased investment and payment options (0.05%, 0.30%, 1.00%).

PMM, business developer

Footprint analysis: DODO TVL trends

According to data from Footprint Analytics, TVL on the DEX DODO project in early June rose more than 340%, from $ 49 million to over $ 200 million in just a few days. The original PMM algorithm is more user-friendly than the AMM protocol, the less permanent loss of assets is affected. PMM stands for Active Market Maker and is the biggest difference between DODO and other DEXs.

The purpose of PMM is to take a value by specifying the value parameter in Oracle to get the current market value of a token. This allows more capital from the industry to combine with the average cost of the industry, making the price curve relatively flat and providing more water.

It also means PMM has higher investment, lower cost, and better cost.

DMM, a dynamic business developer

Kyber's DMM oversees the packaging industry's supply chain to reduce downside and increase supply chain revenue through dynamic costs.

When the market is stable, DMM behaves like any other AMM.

If the market volume is higher than usual, DMM will increase the price.

If the market volume is less than usual, DMM will reduce the cost.

This is similar to the revenue maximization strategy of industry professionals who are dynamically developing the industry.

How DEX cuts fuel costs

DEX aggregator

DEX Aggregator reduces trade, packaging and fuel costs by aggregating and delivering intelligent orders, resulting in better business performance.

Currently, representative DEX aggregation projects have sprung up, between 1 inch aggregation projects such as 1 inch, Matcha, and Paraswap.

1 inch supports delivery through a variety of liquid processes.

1inch is a DEX aggregator that automatically matches users with market information and performs redemption with one click.

DEX Aggregator uses advanced algorithms to analyze multiple contracts to see the best deals, allowing investors to get the best value for their business.

According to data from Footprint Analytics, the difference in TVL and volume for 1 inch is stable, and 1 inch v2 in ninth place in the DEX protocol industry rankings, indicates that the aggregator is also constantly updated for provide better performance to users.

Footprint Analysis: 1 inch TVL Trend

Footprint Analysis: 1-nti Trading Trends

As mentioned above, it suffers from poor performance and difficulty finding the best exchange rate for the industry. Aggregators can find the best token exchange rate for users in the shortest possible time, and many strategies such as contract sharing, maximizing profits, reducing costs, low fuel costs, etc. allow users to get the right information so that users can get the best price. Negotiate to avoid losses and risks due to price fluctuations.

Therefore

Initially, DEX copied the CEX model manual for the manufacturer. However, compared to the average competitor, the oil prices and competitive pricing make it a second choice for profitable cryptocurrency and freeze markets.

However, the blockchain ecosystem is constantly evolving and evolving, and many activities are still impacted and innovated. DEX is currently addressing issues such as network connectivity, high fuel consumption, and low investment. These improvements have provided a better experience and greater value for businesses and users, and have benefited DEX in the future.