The Modern Generation Of Cryptocurrency Has A Huge Missing PieceMay 7, 2018
There is a possibility that this year could end up as a banner year for a more-hyped cryptocurrency creation. Decentralized exchanges have moved out of the R&D phase and currently enrolling early adopters. The users can’t still rejoice since there is a chicken-and-egg problem, which is avoiding the model in challenging the Coinbases and Krakens of the world.
In only suggests that there is still a need for liquidity to get adoption. Furthermore, the liquidity must be a fact that can be acknowledged those who can see the possibility of high-tech trading offerings. Most of the time, experts solve this problem by making deals with market makers to incentivize them to make liquidity. The incentives are in the form of a reward that will be exchanged for a specific amount of what traders call “order book depth” that must remain all the time.
Several centralized exchanges will use temporary strategies to solve the problem. Some of these techniques include market making themselves using their capital and replicate order books from other liquid exchanges to convince traders.
Meanwhile, there are also practical issues like decentralized exchanges are restricted to trade only in cryptos. It suggests that the users will not be able to use regular US dollars in buying a token. They still need to go on a regulated exchange to put in US dollars to buy Ether or bitcoin.
According to Pactum Capital CEO Daniel Cawrey, “Most investors/traders are already intimidated by bitcoin. So, to have them jump through hoops to trade on a decentralized exchange to trade a token with a tiny market cap causes a lot of people to give up.”
Cawrey identified it as a question of benefit and cost. On the other hand, AirSwap, the co-founded by previous Virtu Financial trader Michael Oved now uses a bulletin board-style system that imitates the way traditional foreign exchange traders interact towards one another.
The platform changes the traditional order book with a particular search engine known as “indexer,” wherein traders can publicize their intent to trade, which make them discoverable by peers that use smart contracts. It recently trades 25 tokens and is expected to grow in numbers.
AirSwap co-founder Don Mosites stated,” There are people all over the world looking to make trades, often in large amounts, but may not have the tools.” “The first –day volume was a testament to the global community we’ve built, our peer discovery system and the smart contract used by peers to make trades. There is a ton of demand for a simple and secure OTC system like this,” he added.