We are in the age where an open and global financial system like Defi exists. The exchange platform powered by Defi is adding dollars to cryptotrader’ pockets with every passing hour. The open financial system was built due to the dire need for an alternative system that wasn’t opaque, firmly controlled, and held together by age-old infrastructure and processes.
More or less, Defi lays the control and visibility of your money on you. Also, various aids like global market exposure, alternatives to local currency, or banking options exist in the blockchain universe. So far, almost tens of billions worth of dollars subject to crypto have flowed via Defi applications and counting.
Coming up with a Defi-powered Decentralized Exchange (DEX) to swap tokens like BEP-20 using Binance Smart Chain (BSC) is way more straightforward than it seems. This exchange is somewhat a combination of Decentralized Applications (DApps) and Automated Market Maker (AMM) for fast yet low transaction fees.
The decentralized exchange is trending in the crypto universe since 2020. The prime objective behind the development is to improve the user experience and become useful for the DEX platform. The exchange platform offers a plethora of features like a lottery system, swapping, liquidity pool, and others.
Understanding Defi and Exchange Platforms
Defi is an acronym for ‘decentralized finance.’ Defi is altogether an umbrella term for an array of financial applications in blockchain or cryptocurrency geared toward eradicating financial intermediaries. Defi or decentralized finance draws inspiration from blockchain technology, enabling various entities to keep a record of a history of transactions.
Precisely, it isn’t controlled by any central source. Unlike traditional financial institutions, restrictions of speed and sophistication of transactions are directly controlled by users. Besides, Defi works a bit differently because it expands the usage of blockchain and cryptocurrency from a simple value transfer to diverse financial use cases. Binance Smart Chain and many other digital-native assets remove all intermediaries from transactions.
Traditionally, when the payment was executed with a credit card at places like a bookstore, the financial institution used to sit between you and the business holding the control over the transaction, having the authority to stop or pause the transaction and keeping a record in the private ledger.
With Binance Smart Chain, those institutions are completely cut out of the picture. Direct transactions aren’t the only type of contract that comes under the functionality of Defi. All financial applications like loans, insurance, derivatives, crowdfunding, betting, and more fall under the radar. Altogether, cutting out intermediaries from all kinds of transactions is one of the critical advantages of Defi.
Decentralized exchanges or DEXs are cryptocurrency exchanges. They operate without any central authority, enabling users to execute peer-to-peer transactions and control their funds. DEXs deteriorate the risk of price manipulation, hacking, and theft, as crypto assets are not in the exchange’s custody.
DEXs also deal with token projects that often rival centralized exchanges yet keeping them free from listing fees. Without the existence of DEXs, these projects would have included millions of dollars payments to get a token listed on any centralized exchange.
Some exchanges apply decentralization degrees, wherein centralized servers shall host order books or other features but do not contain users’ private keys.
Notable aspects of Decentralized Exchange Platform
- Automated – As there are no intermediaries, DEX trading is relatively fast as long as there is sufficient liquidity. The trading comes with the least follow-up formalities too.
- Non-custodial – The crypto assets are never revoked as the underlying assets’ ownership isn’t under any middleman’s custody.
- Cost-Efficient – the exchange platforms powered by DEXs have minimal or no trading fees, allowing users to swap assets like BEP-20 at little or no cost.
- Globally Accessible – DEXs come with global accessibility; therefore, they do not require any sign-ups containing zero counterparty risk.
- Evolving – The latest trends help in evolving the trading in DEXs. As in the past, they have grown from order books to simple points and now click swaps.
- Least hassles – The user needs to connect a wallet of their choice for beginning the trading cycle. It doesn’t require a profile or background information.
Primary Features of Decentralized Exchange Platform
Staking and Yield Farming – An Exchange Platform strengthens yield farming by holding cryptocurrency. This keeps liquidity high so that, further, it can offer to other crypto traders. Later, the Defi platform rewards with tokens. The liquidity pool tokens support the yield farming trade.
Exchange Process – The model on which the DEX platforms are developed could comprise Automated Market Maker (AMM) and Decentralized Applications (DApps), or one in particular too. Among both, the Automated Market Makers (AMM) ensures to eliminate order books from the trading platform. Apparently, the exchange platforms aren’t restricted to swap and trade. There are plenty of opportunities to explore.
Lottery System – The users holding tokens earned from yield farming or another way can use them in the lottery exchange system. The only requirement is to have at least one token for ensuring their participation in a lottery exchange.
NFTs – The DEX powered exchange platforms offer multiple unique features that will help the users to earn using Binance Smart Chain (BSC).
Swapping – This feature enables the user to earn more tokens by swapping tokens like BEP-20 or other crypto tokens with different traders.
Liquidity Pool – The pooling system in DEX allows the user to deposit their crypto-tokens in order to earn the trade fee. This trading fee is generated from the trading that took place due to the pooling.
Voting System – The token-holders and users’ suggestions and feedbacks regarding any improvement or fall-off are brought into consideration. This helps the exchange platform to evolve and improve. The voting system has so far been very beneficial for many DEXs.
Bug Bounty Source – The bug detecting procedure is considered very crucial; thus, some DEXS also offer rewards. The users or token holders, whosoever finds any bug or error and reports for the same, get added benefits.
Profile Updation – The exchange platform user can create a profile and update the rest on the same platform.
Mechanism of the Defi powered Exchange Platforms
- Support Trading – Ensuring the radical increase in the number of trades, the platforms have effective risk management, reducing stop loss.
- Margin Trading – DEXs support the traders who run out of funds but are still willing to trade. The platforms lend them coins that come with an expiration date which means before expiry, and they have to return the coins to the lender.
- Order Sharing – The exchange platform allows the mirror orders to pool the currency and increase liquidity.
- Referral Program – The users get rewards and sometimes commission after the transaction of the referral is completed. This increases the trade and also escalates the liquidity.
- Multicurrency Wallet – For supporting fiat and cryptocurrency, multicurrency wallet payments are accepted to ensure the global reach of the exchange. It includes both payment and withdrawal.
- Mobile Application – The exchanges support both iOS and Android devices. The users can track the price movement of the cryptocurrencies in the live Market along with live price alerts. Being an unpredictable currency, the tracking feature holds high importance.
- Payment Gateway Integration – The cryptocurrency deposit and withdrawal are possible via Visa, Mastercard, Wire Transfers, and other methods. The integration helps in involving traders on the global front.
- API Integration – There is no restriction on the coin as long as they have integration mail service and SMS service providers.
- Multi-language support – The exchange software supports languages like Mandarin, French, Korean, and Russian. The upcoming up-gradation will include more languages to simplify the transactions.
- Panel for Admin Backend – The panel allows viewing all current functions, including Tickets issued, Referrals, KYC, and all transactions.
- SEO/SEM Feature – Text readable SEO widget allows admin to pay additional attention towards focus keywords, which ultimately escalates Google search.
The exchange platforms garnered huge accolades and buzz in 2020. A large part of the globe is turning towards the same, considering it to be the tomorrow of financial institutions. The reason stated for such popularity is the prospering return. Presently, there are hundreds of cryptocurrencies in the market.
Trading and various other options are currently the trending modes of earning in the blockchain. The opportunity is enormous as with no middlemen, the earning quotient automatically increases. Blockchain and Defi exchanges offer this golden chance. The future is of digital currency and couldn’t be denied. To keep a hold of the same, indulging in opportunities like trading or developing exchanges will help in all aspects.
The professional developers are exceedingly skilled. They have specialized in developing Defi platforms using Binance Smart Chain. These developers help in pooling crypto and many other things. The exchanges employ them to ensure trading profitability. The prospects of blockchain exchanges are incredibly vivid in the future.