3 ms·
I’m taking about working between chains, not staying on a chain or other cryptos built on the same chain. Someone is building a decentralized exchange, the inte
by smaryjerry 4y ago
I’m taking about working between chains, not staying on a chain or other cryptos built on the same chain. Someone is building a decentralized exchange, the interaction or adding the next new crypto currency to that exchange and choosing how it is setting the price of the exchange or possibly relaying on other centralized exchanges - typically to set the exchange rate you would rely on the bid ask spread, but if it doesn’t look at other exchanges someone can just buy from one exchange where it’s cheaper and sell on the other. Have you seen office space? The movie where they make the program steel fractions of a penny in each transaction? This is doable in the setting of the prices and fees and the way rewards are set for liquidity, benefiting the person who created them - so who knows how these places work, no one except programmers, and maybe they gain trust over time from others that never had a problem with them before. But when something does goes wrong, who will foot the bill and be held accountable. That’s why centralized exchanges are a must because if something goes wrong you call the police.
- TimJRobinson 4y agoDecentralized exchanges don't use an order book, they are Automatic Market Makers (AMM's) that use a bonding curve instead. They don't rely on centralized exchanges at all. There is a lot of arbitragers on all chains equalizing prices between them all. What you've described with office space is known as MEV in the DeFi world. All the exchanges are completely open source, you can learn how they work if you put the time into it. I recommend the Balancer whitepaper. If you can figure out how they can go wrong feel free to explain. But it seems you don't actually understand them yet and are just making assumptions. Your belief that we need centralized exchanges is just an opinion, and it's wrong, which you'll discover as you dive deeper into seeing how they work.