Any advantages and disadvantages using this hybrid exhange or its a pure user friendly that give full advantages to user?
xCrypt decied to give the users 2 options:
CEX/DEX
In today’s world, those looking to participate in the cryptocurrency boom can turn to
centralized exchanges (CEX) and, more recently, decentralized exchanges (DEX).
The problem? Neither of these provide full functionality that allows individuals and
institutions to participate in the market efficiently.
CEX — Speed & Liquidity with Digital Vulnerability
Centralized exchanges have long been the standard in the real world, away from coins,
tokens and distributed ledgers. Those like NASDAQ, NYSE, and others, allow the trading
of stocks and similar assets and have provided low latency (quick processing of orders),
liquidity, and tools like marginal, and high-frequency, trading. This attracted significant
participation from individual and institutional investors, the latter contributing to even
more liquidity.
In the crypto world, however, CEX is a bit of a dirty word . This is because all the buy
and sell orders are routed to a third party, and often requires users to place their private
keys in the hands of the exchange. These third parties are vulnerable to government
influence and hacking attacks.
Two of the largest exchanges in China, for example, froze all Bitcoin withdrawals for a
month after China’s central bank attempted to intervene. Others have forced exchanges
to collect data on their users causing concerns for the privacy that cryptocurrency users
cherish. CEX concentrate large amounts of cryptocurrency, which makes them attractive
and vulnerable to hacking attacks. These attacks have already costed users millions of
dollars in digital assets; notably the attacks on Mt. Gox, Bitfinex, and Coincheck, among
the others.
DEX — The Spirit of Crypto at a Cost
Many think the solution to these troubles lies in the other end of the spectrum, that is to
say Decentralized Exchanges, which allow users to keep much of the privacy by retaining
absolute control of their private keys. Since they mostly rely on software, it is difficult
to subject them to the kind of government regulation that requires CEX to collect
information on their users. Additionally, since DEXs do not hold their users’ assets, they
are not as vulnerable to hacking, providing more security than their CEX counterparts.
However, DEXs do not hold currency nor do they have a central ledger containing
all buy and sell orders. This prevents them from offering the instruments, latency, or
liquidity that would motivate institutional investors to enter the market.
Clearing and settlement
Another issue with crypto exchanges is how transactions are cleared and settled via
their platforms. As cryptocurrencies exist within an unregulated space, clearing and
settlement cannot occur through traditional, regulated channels, making clearing and
settlement risks abnormally high.
Moreover, exchanges aren’t willing to act as anything other than a third party that
only arranges trades between buyers and sellers. This means that they are not a
direct counterparty to every transaction that takes place and so are not bearing much
responsibility for what takes place on their platforms. However, it must be said that they
do act as a counterparty where they can correctly make margin calls in time to recoup
funds from the wrong sides of contracts.
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