The DEX (Decentralized Exchange) Thread

[mhps]

I was referring to a high volume of transactions

OK. Distributed systems tend to be slower to reach consensus.

[monsterer]

Confusion of context, I was referring to a high volume of transactions, not value, which I guess is the same as high frequency.

High frequency trading requires very, very fast response times; that's the key part. It doesn't necessarily follow that trades are submitted at a high frequency in HFT.

[Fuserleer]

Confusion of context, I was referring to a high volume of transactions, not value, which I guess is the same as high frequency.

High frequency trading requires very, very fast response times; that's the key part. It doesn't necessarily follow that trades are submitted at a high frequency in HFT.

That's what I said up thread, its not possible to get that fast enough in a decentralized system.

Confusion of context, I was referring to a high volume of transactions, not value, which I guess is the same as high frequency.

It doesn't necessarily follow that trades are submitted at a high frequency in HFT.

That's not entirely true IMO.

If the frequency of submitted trades are low, then the likelihood of a conflicting trade being presented at the same time is also low, so the millisecond settle time is not as important with regard to conflicts.

Even if you are referring to the issuance of high frequency trades that want to take advantage of the minute price movements that happen over the course of a second, then without the absolute volume of trades overall these tiny differences in price over the course of a second won't occur either, as there aren't enough traders making multiple trades per second on that resource anyway to effect the price enough for anyone to take advantage of.  Thus the millisecond settle time again is mitigated.

If the frequency of trades are low, then any trades you make in the above manner are just trading on the last buy/sell, which is likely yourself.

I don't suppose it matters much to argue about it though, as its not possible in a decentralized, or even semi-decentralized system to get anywhere near these millisecond settlement times.

[enet]

One can create reputation and credit systems on top of trustless systems.

IMO, this is a very bad idea. When identity generation is trivial, there is no recourse for the long con attack; attackers create an identity, build the required trust and then pull off a huge scam and repeat the process until the system as a whole is worthless.

There is little reason to buy an asset from an anonymous counterparty (stocks or bonds require trust in the issuer). Cash and assets are entirely different things. Capitalism requires more than cash. Credit and reputation are strongly related. Almost every action in the economy relies on some previous record of an individual or organisation and involves more than 2 parties. Although Bitcoin minimizes trust in a third party, still that's doesn't change that 2 counterparties interact in some way based on a range of assumptions. If Alice sends Bob 1 BTC she expects something in return. Escrow solves that only in a limited way (although that concept could probably generalised to work in many more contexts).

But in terms of pure DEX (and ignoring the very hard problem of consensus on assets): instead of just talking about HFT, its more fruitful IMO to think about price determination and total order of events in general. Blockchains implement only partial order, so by default auction systems on top of them are not really going to work in a meaningful way. A solution would be desirable for determining prices of transactions themselves (fee market).

[monsterer]

That's not entirely true IMO.

If the frequency of submitted trades are low, then the likelihood of a conflicting trade being presented at the same time is also low, so the millisecond settle time is not as important with regard to conflicts.

Even if you are referring to the issuance of high frequency trades that want to take advantage of the minute price movements that happen over the course of a second, then without the absolute volume of trades overall these tiny differences in price over the course of a second won't occur either, as there aren't enough traders making multiple trades per second on that resource anyway to effect the price enough for anyone to take advantage of.  Thus the millisecond settle time again is mitigated.

If the frequency of trades are low, then any trades you make in the above manner are just trading on the last buy/sell, which is likely yourself.

I don't suppose it matters much to argue about it though, as its not possible in a decentralized, or even semi-decentralized system to get anywhere near these millisecond settlement times.

I was just making the clarification that HFT bots need fast response times in order to work with any chance of a profit, which we can't have in a decentralised system, rather than just a plain high TPS which you could argue that bitcoin with a huge block size might have, but this would be a totally inappropriate design for HFT traders to use.

I agree that it's largely pointless arguing about the minutiae of this in the face of the fact that it's impossible, though

[monsterer]

There is little reason to buy an asset from an anonymous counterparty (stocks or bonds require trust in the issuer).

Then I fail to see what the point of using a decentralised solution would be - if you add trust, you might as well use a centralised service, which would have all of the advantages with none of the disadvantages.

its more fruitful IMO to think about price determination and total order of events in general. Blockchains implement only partial order, so by default auction systems on top of them are not really going to work in a meaningful way. A solution would be desirable for determining prices of transactions themselves (fee market).

It depends on whether a semi-deterministic ordering of transactions can substitute for a total ordering. You can get a semi-deterministic ordering using a similar methodology as the LCR for blocks, the probability of the ordering holding increases logarithmically in N for blocks which are N behind the head.

[enet]

There is little reason to buy an asset from an anonymous counterparty (stocks or bonds require trust in the issuer).

Then I fail to see what the point of using a decentralised solution would be - if you add trust, you might as well use a centralised service, which would have all of the advantages with none of the disadvantages.

Decentral as a word is misleading and doesn't say much per se. Bitcoin for instance is used by millions, but only a very small fraction uses it without trusted third parties. And the people who use its advanced features is even smaller still. And as I mentioned Bitcoin does require trust in your counterparty - if you send someone BTC or USD doesn't make much difference from the standpoint of counterparty risk. Bitcoin minimizes risk to third parties, not counterparties. Bitcoin has ways to minimize counterparty risk, but almost nobody uses them, for reasons related to what I've described here. One of them: to do anything at scale requires some interaction with the law, and soon as one has a business at scale most things change (modern economies scale via organization).

[monsterer]

Decentral as a word is misleading and doesn't say much per se. Bitcoin for instance is used by millions, but only a very small fraction uses it without trusted third parties. And the people who use its advanced features is even smaller still. And as I mentioned Bitcoin does require trust in your counterparty - if you send someone BTC or USD doesn't make much difference from the standpoint of counterparty risk. Bitcoin minimizes risk to third parties, not counterparties. Bitcoin has ways to minimize counterparty risk, but almost nobody uses them, for reasons related to what I've described here. One of them: to do anything at scale requires some interaction with the law, and soon as one has a business at scale most things change (modern economies scale via organization).

Bitcoin is not designed to be a trading protocol, it is designed to be a transfer protocol. You'd need a new design for a trustless trading protocol, and even then you'd only be able to trade tokens within that system.

However, bitshares does have something to teach us from that perspective; which is that, for purpose of trading and speculation, owning a token which exactly tracks the value of some real world asset, is equivalent to holding that real world asset.

[evi_stale]

I just googled it and you so many options to choose from. I'm still waiting to see which ones will survive. Any advice witch one to use right now with enough volume?

[evi_stale]

Agree, this is currently the best decentralized exchange solution in development. There is also a project going on for Ethereum platform.
I personally think that centralized exchanges do not have a future (look at MtGox, Cryptsy,...).

InstantDEX from jl777 & SuperNET is probably the closest to completion. It's been in development a long time now (some problems with GUI dev afaik), but when it's launched it'll mark a dramatic shift in the cryptosphere.

http://www.instantdex.org/

InstantDEX (Beta) is a decentralized exchange that is currency agnostic. It connects to exchange APIs and gives a single unified view of all exchanges – automatically detecting arb opportunities. InstantDEX allows cross coin trading of both altcoins and BTC without the need for any centralized exchange – thus keeping your assets safe and secure.

The “Instant” of InstantDEX refers to the core nature of this exchange: the exchange exists in a decentralized fashion across all machines in the network. Orderbooks are instantly updated and trades instantly cleared as they are matched. This is possible due to an advanced p2p messaging protocol, which will also include methods for private currency transactions and messaging via the BTCD components of teleport and telepathy.

Don't forget Mintpal !

[CoinHoarder]

I added InstantDEX to the OP.

funny nobody seems to want to mention the ELEPHANT in the room:

https://bitcointalk.org/index.php?topic=1309597.0

Most of the information on this seems to be in Russian. As mentioned up-thread, it also seems kind of scammy. At this point, I am waiting for projects to be more "established" before adding them to the list. The only vaporware I have included is B&C Exchange, which already has an established community and development team with a history of successful releases (Nubits/Nushares). Admittedly, Nubits/Nushares is in dire straights right now and I am monitoring that situation.

Here is another project

Lykke

website: http://www.lykkex.com
whitepaper: https://wiki.lykkex.com/colored_coin_exchange_white_paper

Lykke is a more of a mix of decentral and central exchange targeting a large scale market and also institutions. The authors have significant expertise in the traditional financial markets and I think that is a valuable perspective. As outlined its not the same as the idea of decentral exchange in the Cryptocurrency sense.

It is good to begin with the word exchange and think backwards from there. To physically exchange goods you need to be in the same location. To transport goods around the world one needs permission from those who control the flow of goods. Then one has the problem that one good might be legal in jurisdiction A and illegal in jurisdiction B. Part of a marketplace is also the definition and registration on what goods should be traded (markets where the cost of creating a digital asset is zero removes friction, but also leads to spam).

If both sides of the trade are not in the same jurisdiction its not an exchange in any legal sense - no legal protection for the buyer and seller. There is no purchase contract underlying the transaction, and no legal recourse. Note that the way the economic system currently functions is that we have large institutions which determine the outcomes of these processes and provide the market infrastructure. If you for instance want to buy a stock certificate in a developed country you have many different institutions involved (stock exchange, market-makers, brokers, settlement). The simpler, but still non-trivial case is a warehouse receipt. If two parties exchange 1 bar of gold for instance usually one has some expert acknowledging the quality of the metal. There are only 20 or so commodities traded on the large markets. To exchange a good or service is far more complicated than it seems. If one is exchanging physical goods for instance there is the question of quality and location. Undeveloped countries often lack financial infrastructure and need to build this on their own. In the case where such countries build up a new exchange market one can see what is involved with developing a marketplace. And this doesn't touch even on the complexity of equity and bond markets. A lot more research could be done in this area to show what things are possible and how Crypto-economics could lead to new types of markets.

Lykke seems like another iteration of Ripple/Stellar, seeing as though it is only IOUs that will be tradeable. Also, it seems that a corporation/private investors owns 80% of the tokens. IOUs are a big reason why we need to pivot from centralized exchanges to DEXs... to pivot away from IOUs and the risk of hacks/theft/insolvency. They only DEX in the OP that currently uses IOUs is InstantDEX, but the way I understand it, they are planning on implementing non-IOU trading in the form of PAX. PAX = BTCD yet-to-be-developed feature (http://bitcoindark.com/pax-faq.html and http://bitcoindark.com/docs/pax-infographic.png)

Don't forget Mintpal !

You are probably aware by now, but Mintpal ended up being a scam. You did post this in 2016 though and the scam has been well known since 2014.... http://siliconangle.com/blog/2015/02/23/mintpal-scammer-ryan-kennedy-arrested-in-u-k-over-theft-of-3700-bitcoins/

[hv_]

Has anybody considered creating a SWAPCHAIN-BLOCKCHAIN ?

Blockchain combined with

https://en.m.wikipedia.org/wiki/Swap_Chain

Would that work?

 

[CoinHoarder]

Has anybody considered creating a SWAPCHAIN-BLOCKCHAIN ?

Blockchain combined with

https://en.m.wikipedia.org/wiki/Swap_Chain

Would that work?

 

I don't think so, or at least I can't conceptualize how it would work with different blockchains.

[CoinHoarder]

Bumping this thread on the news of the Bitfinex hack. How many more exchange defaults are needed before most people realize.a switch to a decentralized exchange is necessary?

Mt. Gox, Bitcoinica, Bitfloor, Bitcurex, Canadian Bitcoins, Mintsy, Cryptsy, Bitfinex ...

[bbc.reporter]

Yes. The question is why is not there support from the users to invest their money thru a DEX. It is safer and they control everything and the trade is direct with the other users. Maybe the problem is that most of the users do not care.

[chryspano]

Bitfinex? Oh, thats only a scratch!

https://youtu.be/zKhEw7nD9C4?t=1m25s

[hv_]

Bumping this thread on the news of the Bitfinex hack. How many more exchange defaults are needed before most people realize.a switch to a decentralized exchange is necessary?

Mt. Gox, Bitcoinica, Bitfloor, Bitcurex, Canadian Bitcoins, Mintsy, Cryptsy, Bitfinex ...

....  Bitmarket.eu

....

[Igor76200]

Up

[vaddi]

Hi,
due to the frequent outages at Poloniex, many people are looking for alternative exchanges now. DEX seems very intersting to me. I would like to hear some experiences others made with DEXs, so i wonder why this thread is so dead.
Is there maybe another thread that i have missed?

[GreenMatrix]

Hi everyone!
Interesting thread.
Did you take a look at the new DEX that already have Waves Platform?
Own wallet with DEX.
They are working on the new gui.
In 4-6 weeks must have this look: