Innovations are helping to significantly narrow the gap between decentralized and centralized exchanges – Dexalot COO –

While centralized exchanges are considered safer and more efficient, proponents of decentralized platforms like Tim Shan insist that the user experience on decentralized exchanges has improved. Additionally, the inherent benefits associated with decentralized exchanges, such as asset self-custody, make them seem more attractive than centralized exchanges.

Decentralized exchanges close the gap

Although they appear to have an advantage over centralized exchanges (cex), according to Tim Shan, Dexalot’s COO, decentralized platforms still fall short when it comes to the number of users or volume traded. One reason for this is, among other things, that cex platforms are often perceived as more secure and perhaps much faster and cheaper to use than decentralized exchange platforms (dex).

Though being slower and more expensive is “not a good combination for Dexs,” Shan insisted in his written responses Bitcoin.com News points out that ongoing innovation and improvements are helping decentralized platforms bridge the gap. In addition, Shan believes that the inherent benefits of decentralized finance (defi) platforms, such as B. Self-custody, make Dex platforms more attractive than even the most trusted centralized exchanges.

In addition to making the case for Dex platforms, Dexalot’s COO also shared his thoughts on the regulation of the Blockchain– and crypto industry, especially after industry-shattering incidents like the collapse of FTX. Below are Shan’s answers to the rest of the questions broadcast by Bitcoin.com News.

Bitcoin.com News (BCN): Why do users, especially the inexperienced ones, trust centralized platforms over decentralized exchange platforms (Dex platforms)?

Tim Shan (TS): Well, I think there are two main drivers here. First, this is still a nascent industry and the average crypto investor is even more familiar with online brokerage and bank accounts. Centralized platforms give them that familiar experience, where investor assets are held by them, transactions are quick and cheap, and there’s an air of security.

Also, it’s human nature to “follow the herd,” especially when viewing large daily crowds or TVL [total value locked] and a lot of hype on crypto Twitter from executives and influencers. Obviously, we saw last year that the perceived security for several large centralized entities was not assured and many large and small crypto participants were badly affected.

I think a second hurdle blocking cex to dex mass migration [platforms] is the usability of wallets. Although I use Metamask myself today, it’s just not user-friendly enough. If crypto can build products for a different demographic like children and the elderly, those barriers will fall for everyone.

Right now, using a wallet is still like it was in the early PC days, where too many complicated technical features are exposed on the front end when they shouldn’t be seen by the average user. That being said, new wallets like Avalanche’s core solve many of the pain points I just mentioned and encourage new user experiences that help “grow the pie”.

BCN: What lessons can decentralized platforms learn from their centralized counterparts that can potentially help them attract more users?

TS: There is a technical disadvantage that dex [protocols] have against cex [platforms]. Decentralized exchanges operate on blockchains and depending on which blockchain a Dex is built on, users will likely experience slower speeds and higher transaction costs than centralized exchanges. Slower and more expensive is not a good combination.

However, blockchains are constantly being improved, and one such chain is the new Avalanche Subnet. This subnet allows crypto projects to create their own custom blockchains for specific use cases such as: B. more transactions per second, faster overall speed, lower and almost non-existent fees and the implementation of compliance checks.

Not only do these blockchain innovations significantly narrow the gap between decentralized and centralized exchanges, but they also offer significant benefits inherent to Defi, such as: B. Users holding their assets in their own crypto wallets. You don’t have to trust a company and its employees to manage your assets. And there is full transparency of activities on the blockchain.

BCN: How do you think the regulatory landscape for the defi space will evolve and could bad decisions by regulators set back the industry and innovation by a few years?

TS: For us Defi projects, that’s the big question. So far, regulators have mainly focused on centralized platforms as they already have some experience dealing with entities that hold client assets such as banks and brokerage houses. If you think about it, there is little difference between a CEX and a brokerage in how they operate. Both provide custody services for client assets, offer clients the ability to trade and both may use some to all client assets for their own gains, such as B. short-term investments or lending.

However, Defi is a different beast as there is no custody and users interact with smart contracts that are open source. I think what regulators will do is look not so much at defi as at the instruments that are traded with it, like stablecoins and others, by categorizing them as “securities”.

BCN: Why did you decide to build on Dexalot? avalanche?

TS: We feel Avalanche offers unprecedented blockchain technology that offers sub-second speed (time to finality) and enables application-specific horizontal scalability across subnets.

BCN: You have launched a subnet Avalanche. Can you explain what it is and how it would benefit users?

TS: A subnet is essentially a standalone blockchain that offers all the technical features of Avalanche but only with Dexalot built on top of it. This allows us to optimize the chain in areas as important as safety, speed, gas costs and compliance. The subnet also allows us to easily integrate with multiple chains. We have started an integration with Avalanche’sc-Chain and we also plan to integrate with other chains in the next few months.

What do you think about this interview? Let us know what you think in the comment section below.

Terence Zimwara

Terence Zimwara is an award-winning Zimbabwean journalist, author and writer. He has written extensively on the economic woes of some African countries, as well as how digital currencies can provide an escape route for Africans.

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