Kyber, Binance Developing Decentralized Exchange
BitcoinMagazine reported that both Kyber and Binance recently talked about their efforts towards creating decentralized exchanges. Binance announced the launch of its decentralized exchange called Binance Chain, and Kyber released the beta version of their decentralized exchange called Kyber Network to the public.
Why move to decentralized crypto exchanges?
Traditional exchanges are centralized, where users trust one single party to trade, store their money and protect their personal information. Such exchanges earn their revenue through charging a fee for each trade. Centralized crypto exchanges usually have an easy-to-use interface, offer advanced trading options and have easy liquidity.
De-centralized exchanges, however, use blockchain technology to enable peer to peer trading without the need of a middleman. And since such exchanges do not need to pay the middleman, they offer almost free crypto trading, which is much cheaper than when trading on a centralized exchange. The challenge with decentralized exchanges is that they are not very user friendly, have little liquid cash and tend not to have advanced trading options.
So why would people want to move from a well-established centralized trading platform to a less comfortable one? For one very simple, but very critical reason. Security.
Since the beginning of 2018 – that’s 3 months so far – hackers have stolen more than $700 million worth of cryptocurrencies from centralized exchanges. Decentralized exchanges may have lower liquidity, but the peer-to-peer structure in such exchanges make it virtually impossible for hackers to such sums of money from them.
Users are therefore now beginning to migrate to decentralized exchanges. Which means traditional exchanges will also need to evolve to keep up with customer expectations.
The Kyber Network, Kyber’s decentralized exchange, announced on March 19 that its beta version was open to the public. The CEO of the new decentralized network, Loi Luu stated that the target was to drive volume and test the new platform for stress. They exchange is also going to focus on the issue of liquidity through a mechanism of “reserve managers”.
Reserve Managers are users who have idle or unused cryptos in their accounts, which can be used to fill orders for other users. They are incentivized by being offered a profit on the cryptos they have used to fill other customers’ orders.
Binance, a centralized crypto exchange with more than 7.9 million users, recently announced that it would be launching Binance Chain, its decentralized exchange. The plan is that users will use Binance’s cryptocurrency token, BNB, to power the decentralized exchange, which will be a high throughput, low-latency platform that users will find easy to use. The company has not confirmed any date for the launch yet, though.