Decentralized exchanges, or DEXes, have seen a recent surge in attention, particularly following the announcement by crypto pioneer Erik Voorhees that ShapeShift is moving all of its services over to DEX platforms. Google Trends also indicates that DEX interest is higher than at any other point in the previous year, particularly following several high-profile token delistings from centralized exchanges.

However, this exciting rise of the DEXes has coincided with an unfortunate side effect of the renewed cryptocurrency bull market: high fees and confirmation times. Both Bitcoin and Ethereum, along with impressive price increases, have also experienced high congestion. What’s particularly unfortunate about this is that trading on a DEX requires on-chain transactions, triggering the very problem plaguing the two major chains. The DEX revolution risks moving ahead without the two biggest players in the cryptocurrency space.

That’s where faster, cheaper, more nimble projects come in. Dash, in particular, benefits from very low transaction fees, no scaling issues, and, best of all, instant transaction confirmations. This combination of attributes makes it not only an attractive option for transacting, but an ideal fit for the rising DEX world.

Off-chain scaling has largely happened on centralized exchanges

Of course, when the subject of scaling issues for Bitcoin and Ethereum come up, a common response is: “But what about off-chain scaling?” It’s true, off-chain transactions have largely alleviated pressure from the beleaguered congested networks. However, it’s not off-chain in the way we might think, involving scaling solutions like the Lightning Network, Loopring, and others, but in the form of simply keeping funds on centralized platforms such as exchanges, and making transfers on their internal ledgers. Coinbase already allows this for its customers to transfer funds between each other without actually touching the blockchain, and Ethereum-based publishing platform Publish0x suggested users withdraw directly to centralized exchanges to avoid ever-rising fees. This has largely seemed to work, as by far the most dominant use case for cryptocurrencies at the moment tends to be speculative trading. The average user doesn’t even notice high fees and wait times, as they aren’t affected by them.

On a DEX, however, this primary use case of trading does, in fact, involve on-chain transactions. This means that, for the purposes of facilitating trades on a DEX, Bitcoin and Ethereum haven’t scaled all that well. Trades made on those platforms will still involve the same insane fees and transaction times we’ve unfortunately become used to, giving an edge to competitors without these issues.

Dash’s FastPass initiative helps, but not enough

First, a quick crash course in the special features that make the Dash transaction experience different. With a regular blockchain such as Bitcoin, transactions are broadcasted and viewable within seconds, but they aren’t considered secure and finalized until miners include them in a block, which can take about 10 minutes (much longer if the network is congested). Depending on the coin, most exchanges require several confirmations (Coinbase requires three for Bitcoin and a staggering 1,008 for Bitcoin SV, for example). Dash has a special feature called InstantSend, which uses its network of collateralized nodes called masternodes to lock transactions instantly, so that they can be considered secure before attaining a confirmation in a block. A separate feature, called ChainLocks, uses the same masternode network to lock-in a block after receiving a confirmation by miners, making it, and all the transactions it contains, permanent. Essentially this means that a Dash transaction is as secure after two seconds as a Bitcoin transactions is after 10 minutes, and as secure after 2.5 minutes (Dash’s blocks come out four times more frequently) as Bitcoin will ever be.

Not every service and exchange recognizes these special features though, and most simply treat it like another Bitcoin clone. That’s why the Dash team has created the FastPass initiative, essentially creating a “club” of partners that support Dash’s special features, guaranteeing that users of these services will get the full and real Dash experience. This is a great step in differentiating it from the other coins that still require waiting for confirmations, however, it still only encompasses a small portion of the average user’s experience. Most users likely deposit funds on to an exchange, make their trades, and withdraw to cold storage occasionally. Only the first of those actions will necessarily see an improvement from Dash’s speed, as most users withdrawing aren’t in a hurry to send those funds somewhere that requires confirmations (only some will be seeking immediate arbitrage opportunities on other exchanges), and trading happens off-chain. Some may not even notice a speed difference if they’re not paying attention.

The DEX boom will expose users to just how much it sucks to wait for confirmations

That can’t be said about using a DEX, however. Rather than being conducted on the internal ledger of a centralized platform, trades actually move the coins themselves on-chain. This means that each time you make a trade, you have to wait until sufficient confirmations have been attained before the trade is completed, and those newly-acquired coins also have to wait until confirmed before you can trade them again. Contrast with the Dash experience where a trade can be completed in seconds.

With the DeFi boom in full swing, we’ve already seen the negative impact of high fees in an on-chain trading environment. Both Uniswap and ShapeShift users, exposed to on-chain Ethereum fees (some as high as X), have reacted with justified bewilderment. Transacting on a scalable chain such as Dash with sub-cent fees is a massive improvement, however this isn’t an experience unique to Dash, as Bitcoin Cash, Bitcoin SV, Litecoin, Dogecoin, and others have similarly low fees at the moment. Instant confirmations, however, are something more or less unique among its peers.

If implemented into the most popular DEX platforms, Dash’s special features could quickly turn it into the hottest trading coin on the hottest new trading platforms. The question that remains is when, and which platform will be the first to benefit from the FastPass trading experience?

Joël Valenzuela is a veteran independent journalist and podcaster, living unbanked off of cryptocurrency since 2016. He previously worked for the Dash decentralized autonomous organization and now primarily writes and podcasts for the Digital Cash Network on the LBRY decentralized content platform.

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