To address your questions about how trading is done and where the funds are stored, as well as KYC concerns, both trading and fund storage in TEX are conducted in a decentralized manner, similar to decentralized exchanges. Funds from liquidity providers are stored in smart contracts, while traders' funds are held in their own wallets. Just like decentralized exchanges, TEX does not require KYC verification.
There is still a point I don't fully understand, if you say that:
Both trading and storing funds in TEX is done in a decentralized manner, similar to decentralized exchanges. Funds from liquidity providers are stored in smart contracts, while traders' funds are held in their own wallets.
If TEX works like decentralized exchanges what is the need then ERC-4337 social retrieval method, as long as everything is decentralized then you don't need to use your private key on the exchange, hence the need for a way to recover it.
Can this point be clarified, when using TEX do we need to use the private key of the wallet or not?
Regarding the use of ERC-4337 social recovery method in the context of TEX, which is designed to offer transparency and security like decentralized exchanges (DEXs). Let me clarify the role of ERC-4337 and the need for private keys when using TEX.
In most cases, users will not need to use their private keys when interacting with TEX. However, it's important to have a backup plan in place to address potential risks, such as losing access to the private key.
While it is true that in a fully decentralized environment, users maintain control of their private keys and do not need to share them with the exchange, there are still potential risks involved. For instance, users may lose their private keys due to accidents, device failures, or security breaches. In such cases, the funds in the associated wallet become inaccessible, leading to a significant loss for the user.
The ERC-4337 social recovery method is introduced to address this issue by providing a mechanism to recover access to funds without compromising decentralization. With ERC-4337, users can assign trusted contacts who can help recover their wallets if the private key is lost. It is important to note that these contacts do not have direct access to the user's funds or private key, but their collective approval can enable the wallet's recovery.
Of course, users also have the option not to add any friends or KOLs as guardians, ensuring the highest level of security. In this case, it is crucial to remember and keep the private key safe, as losing it will result in permanent loss of access to the wallet.
To summarize, when using TEX, users still maintain control of their private keys and do not need to share them with the exchange. The ERC-4337 social recovery method is an additional security layer to help users recover their wallets in case of lost private keys, ensuring a more user-friendly and secure experience.
Problem with majorify of those "decentralized exchanges" is that they are not really decentralized. Good example of that is Pancakeswap that is based on highly centrazlied BSC so how decentrazlied it can be in the end? In the same time, truly decentralized Bisq has only ~$100k daily volume so it makes it very costly to buy/sell any bigger amount of bitcoin.
I agree with your perspective that many so-called decentralized exchanges (DEXs) in the cryptocurrency industry have not fully achieved decentralization, like PancakeSwap on the Binance Smart Chain (BSC).
However, there are still truly decentralized exchanges, such as Uniswap. To identify genuine DEXs, we need to consider the following factors:
The underlying blockchain on which they are deployed should be decentralized. BSC, for instance, is not truly decentralized, so DApps built on it cannot be considered fully decentralized either.
In contrast, Ethereum and several prominent Layer-2 chains offer a more decentralized infrastructure. Therefore, when choosing DEXs or Transparent Exchanges (TEXs), opt for those deployed on Ethereum or major Layer-2 chains, keeping in mind that Ethereum has higher gas costs, while Layer-2 chains offer lower gas fees.Oh, really?
Alright, let's see
1.
Uniswap Says It Now Collects Certain Data From Users2.
Uniswap Labs restricts access to certain tokens through its interface, citing 'evolving regulatory landscape'3.
Wallets Banned by Uniswap Labs for Alleged Crimes4. I remember IDEX asking for KYC from users at one point. Another so-called decentralized exchange using smart contracts deployed on Ethereum
Decentralized much?
You make some valid points, and it's essential to address the concerns you raised about Uniswap and other so-called decentralized exchanges. While some DEXs might implement certain centralized features, it's important to differentiate between the DEX protocol itself and the user interface provided by the developers.
Uniswap collecting user data: It's true that Uniswap collects certain data from users. However, this data collection pertains to the user interface developed and maintained by Uniswap Labs, not the underlying smart contracts. Users can still interact with the Uniswap protocol using alternative interfaces or directly with the smart contracts, which do not involve data collection.
Uniswap Labs restricting access to tokens: Similar to the data collection issue, the restrictions on certain tokens are imposed by Uniswap Labs on their user interface, not on the protocol level. Users can still access these tokens using alternative interfaces or by directly interacting with the smart contracts.
Wallets banned by Uniswap Labs: Again, this pertains to the Uniswap Labs interface and not the underlying smart contracts. While it may appear centralized, it's essential to remember that the protocol itself remains decentralized, and users can interact with it through other means.
IDEX asking for KYC: In the case of IDEX, their implementation of KYC does indeed go against the principles of decentralization. It's crucial to differentiate between truly decentralized exchanges and those that adopt centralized elements.
In conclusion, while there are concerns with some aspects of DEXs like Uniswap, it's important to distinguish between the protocol level and the user interface provided by the developers. Decentralization exists at the protocol level, and users have the option to interact with the protocol through alternative means that do not involve data collection, access restrictions, or banned wallets. The crypto community must remain vigilant and continue to scrutinize the practices of DEXs and other platforms to ensure the highest level of decentralization and transparency.
Transparent Exchanges（TEX) which aim to strike a balance between decentralization, security, and user experience. While complete decentralization is a desirable goal, it's important to recognize that achieving it might come at the cost of user experience in certain cases.
TEX focuses on ensuring transparency and security while offering a user-friendly interface for traders. This means that while some aspects of TEX might be centralized, the overall goal is to provide users with the best possible trading experience that upholds the fundamental principles of the cryptocurrency space.
In summary, TEX seeks to find a sweet spot between decentralization, security, and user experience, ensuring that users can enjoy a transparent, safe, and convenient trading environment in the rapidly evolving cryptocurrency landscape.
Not add any friends to recover your private key, similar to current decentralized wallets. You must securely store your private key, as no one can help you recover it if lost.
Use account recovery (ERC-4337) by selecting trusted contacts during account creation, who participate in the recovery process
Your idea will be more convincing to us if you are talking about a deposit to a multi-signature wallet address. You choose the trusted parties so that you have the option that these parties be:
- 2-of-3
- 3-of-5
- 3-of-7
- 5-of-7
- 4-of-9
- 5-of-9
More or less thus giving a dynamic to the user, the only problem is ensuring how securely those private keys will be generated without a third party sharing them.
As for the idea of smart contracts and with all the bad reputation of bridges, I advise you to stay away from them, although I do not see how the privacy of users will be enhanced through them.
I appreciate your input on this topic. ERC-4337, also known as the Social Recovery Wallet, does share some similarities with multi-signature wallet solutions, but it offers a more user-friendly approach. In a multi-signature setup, users need to manage multiple private keys and coordinate with multiple parties to sign transactions. While this does provide a level of security, it can be cumbersome and less convenient for users.
ERC-4337, on the other hand, allows users to designate a set of "guardians" who can help recover access to their wallet in case they lose their private key. These guardians can be friends, family members, or trusted third parties. The user sets a threshold number of guardians that need to approve the recovery process. This way, the user doesn't need to manage multiple private keys, making the process more user-friendly.
As for smart contracts and bridges, I understand your concerns about their reputation. However, it's essential to note that not all smart contracts and bridges are inherently risky. As the technology evolves, new solutions are being developed to address these concerns and enhance the overall security and privacy of the blockchain ecosystem. TEX aims to leverage the best practices and the latest advancements in technology to provide a secure and transparent trading experience for users.
The ERC-4337 social recovery wallet is a security solution proposed by many cryptography experts, including Ethereum co-founder Vitalik Buterin. This solution aims to provide users with a more user-friendly wallet recovery experience while maintaining a high level of security.
Maybe you can to further research the ERC-4337 social recovery wallet and related security solutions to understand the potential of these technologies in enhancing user experience and security.
[moderator's note: consecutive posts merged]
