The Decentralized Cryptocurrency Exchange System Can Avoid False Transactions in the Global Market
Last month, Zhao CHANGPENG, CEO of binance, the largest centralized cryptocurrency exchange, shared an analysis of the false trading volume created by the main trading platforms. The analysis clearly describes the dishonest means used by market leaders to expand trading volume.
Researchers from cryptocurrency Research Institute cer investigated the three trading platforms of bitcoin, fcoin and coinex. Within a few months after listing, these platforms were listed on the list of the top 10 cryptocurrency exchanges, and evaluated their business model and trading volume.
CER researchers explored the social media participation, website traffic and overall needs of the three trading platforms and compared them with Kraken and upbit, the most trusted cryptocurrency exchanges in the industry. The researchers found that the three digital asset exchanges lack active users, traffic and social media participation, and the activity level of the exchanges is not enough to prove that their trading volume is too large.
"Considering our analysis results, it is obvious that bitcoin is likely to use wash transactions to increase transaction volume, which is the most commonly used method at present. Although trade can be carried out in different ways, large transaction instructions are usually used to reduce risk loss. This practice is consistent with the analysis results we have received and serves as an additional proof of bitex's volume operation activities." CER researchers said.
In centralized trading, it is cheap, simple and easy to initiate wash trading and BOT trading in order to increase the trading volume. More importantly, since central exchanges are managed by the central government, their number, business model, revenue and operation are opaque to the public.
As chief executive of waves and Vostok, Ivanov explained: "of course, there is also the problem of fake volume. This is likely to be solved as in the traditional market, and the exchange must be supervised and controlled."
Therefore, in the past year, investors in the cryptocurrency market are expected to develop complex decentralized exchanges that are fairer and more transparent than centralized exchanges.
Conceptually, decentralized exchanges have advantages over centralized platforms in every conceivable aspect, such as security, transparency and liquidity. As freedehrsam, co-founder of coinbase and former senior executive of Goldman Sachs, explained, since decentralized exchanges can share a liquidity pool on trading agreements, their liquidity is much higher than that of centralized platforms.
However, a key limitation of distributed platforms is the user experience. Unlike the centralized trading platform, all data requests must be processed through the public blockchain network using smart contracts.
Many decentralized exchanges and exchange protocols, such as kyber network, airexchange, 0x and wave proposed by vitalik buterin, the founder of Ethereum, should focus on developing a seamless user experience through expansion in the near future.
"Decentralized exchanges will become more and more important, and it will be easier to filter out fake volumes in a decentralized environment. Because basically, everyone can see all transactions and see if some transactions are suspicious. In the near future, we will see a complete victory for decentralized exchanges, but at the same time, there is a gap between centralized and decentralized exchanges There will also be some interaction, "added Sasha Ivanov.
Binance has begun to develop its own decentralized trading platform. Although the decentralized trading platform may have an adverse impact on binance's core business model, its forward-looking thinking on a completely decentralized ecosystem shows that investors' demand and confidence in the decentralized trading environment are increasing.
