How can blockchain projects benefit from deploying their own DEX?
Cryptocurrency exchanges have been instrumental in the adoption of blockchain technology, but the industry has become too dependent on them. Today, the crypto industry is still geared toward exchanges and traders rather than blockchain projects and developers. There is too much friction for developers building projects on the app layer.
Getting listed on a major centralized exchange (CEX) is a six-figure expense, plus additional fees each month for a market maker to ensure liquidity. In 2018, a Business Insider investigation found that crypto exchanges charge between $50,000 and $1 million to list initial coin offerings (ICOs).
Even after those expenses, exchanges are the ones who profit from all the trading fees, which drains value from crypto projects and makes it hard to attract liquidity in a sustainable way.
Besides exorbitant listing fees, DApp builders lose control over the liquidity and value of their tokens by having to abide by the exchange’s policies and fees. In addition, listing on centralized exchanges can also lead to counterparty risk (not your keys, not your coins).
One of the alternative approaches to attract liquidity is to turn to decentralized exchanges (DEXs), which have reduced counterparty risk and low fees due to the absence of intermediaries. This solution may give app builders more control over the liquidity of their tokens, reducing reliance on centralized exchanges and improving security. Moreover, using DEXs rather than CEXs allows blockchain applications to benefit from DEX features, including non-custodial trading, reduced security risks and lack of KYC obligations.
As beneficial as DEXs are, they do have some drawbacks. For example, they are limited by the transaction capacity of their
Read more on cointelegraph.com
