Gaining Popularity with Increase in Volume
The post Gaining Popularity with Increase in Volume appeared on BitcoinEthereumNews.com. Decentralized Exchange (DEX) is a peer-to-peer marketplace where buyers and sellers are met directly without the intervention of the Central Authority. Decentralized Exchange is currently used only for the trading of cryptocurrency. DEX gained popularity with the growth of Decentralized Finance (DeFi). DEX being decentralized uses blockchain technology and smart contracts in place of a central authority. Understanding Components of Decentralized Exchanges (DEX) Smart contracts are basically self-executable programs dependent on predetermined conditions which means that contracts get executed themselves if the specified conditions are met. Blockchain is a ledger where transactions are recorded. Transactions executed by smart contracts are recorded in the blockchain ledger and it facilitates faster execution and with effective record-keeping ability. In the world of crypto-currencies, buyers and sellers exchange their assets between two pre-existing wallets for digital Assets through DEX and can safely store their digital assets on these wallets to transact in the future as well. To match buyers and sellers without the intervention of central authority it uses a new and advanced type of order management technique called Automated Market Makers (AMM). These AMMs facilitate the trading of digital assets by using the Liquidity Pool without the need for any permission. The above figure explains the functioning of DEX by taking the example of Tesla Shares. Though these are generally done in the pair of crypto-currencies, Tesla shares are used for the simplicity of understanding. Let us now understand more about Liquidity Pools. Liquidity Pools are composed of pairs of Assets that are traded and can be instantaneously executed in any trade and essentially transaction is executed similarly to a market order. How do Liquidity Pools facilitate transactions and create Arbitrage Opportunities? The funds are provided by the users known as Liquidity Providers and they earn fees as a percentage of the amount…
The post Gaining Popularity with Increase in Volume appeared on BitcoinEthereumNews.com.
Decentralized Exchange (DEX) is a peer-to-peer marketplace where buyers and sellers are met directly without the intervention of the Central Authority. Decentralized Exchange is currently used only for the trading of cryptocurrency. DEX gained popularity with the growth of Decentralized Finance (DeFi). DEX being decentralized uses blockchain technology and smart contracts in place of a central authority. Understanding Components of Decentralized Exchanges (DEX) Smart contracts are basically self-executable programs dependent on predetermined conditions which means that contracts get executed themselves if the specified conditions are met. Blockchain is a ledger where transactions are recorded. Transactions executed by smart contracts are recorded in the blockchain ledger and it facilitates faster execution and with effective record-keeping ability. In the world of crypto-currencies, buyers and sellers exchange their assets between two pre-existing wallets for digital Assets through DEX and can safely store their digital assets on these wallets to transact in the future as well. To match buyers and sellers without the intervention of central authority it uses a new and advanced type of order management technique called Automated Market Makers (AMM). These AMMs facilitate the trading of digital assets by using the Liquidity Pool without the need for any permission. The above figure explains the functioning of DEX by taking the example of Tesla Shares. Though these are generally done in the pair of crypto-currencies, Tesla shares are used for the simplicity of understanding. Let us now understand more about Liquidity Pools. Liquidity Pools are composed of pairs of Assets that are traded and can be instantaneously executed in any trade and essentially transaction is executed similarly to a market order. How do Liquidity Pools facilitate transactions and create Arbitrage Opportunities? The funds are provided by the users known as Liquidity Providers and they earn fees as a percentage of the amount…
What's Your Reaction?
