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I think the speed and low-fees required in (some types of) financial trading just can't happen fully on chain. So that's another reason for centralization in ex

by firasd 4y ago

I think the speed and low-fees required in (some types of) financial trading just can't happen fully on chain. So that's another reason for centralization in exchanges Also it's interesting to note that in regular finance, exchanges and brokerage firms are separate entities .. meanwhile eg FTX was both the exchange and the 'broker' Edit: just searched twitter and came across someone asking SBF this exact question about the conflict of interest in being both the exchange and broker (of course he was also trading with client funds on top of that..) https://twitter.com/dwarkesh_sp/status/1593243104114458627 https://twitter.com/dwarkesh_sp/status/1593243104114458627

x-complexity 4y ago
> I think the speed and low-fees required in (some types of) financial trading just can't happen fully on chain. So that's another reason for centralization in exchanges That's currently being resolved with the implementation & adoption of rollups: There're currently multiple efforts towards developing zk-based rollups, with everyone (Polygon, zkSync, Scroll) taking a different approach towards providing it. Right now, optimistic rollups are the dominant rollup strategy right now, with improvements & decentralization already undergoing development & deployment. Most still have guardrails in place, but it's publicly known & already being worked on. https://l2beat.com/scaling/risk https://l2beat.com/scaling/risk
tromp 4y ago
> I think the speed and low-fees required in (some types of) financial trading just can't happen fully on chain. So that's another reason for centralization in exchanges You could have an exchange whose users have 2nd-layer channels open to it for all the currencies they trade. Trading can then happen near-instantly with 0 fees. While still centralized, it doesn't need to take custody of any user's funds.

by firasd 4y ago

x-complexity 4y ago

> I think the speed and low-fees required in (some types of) financial trading just can't happen fully on chain. So that's another reason for centralization in exchanges That's currently being resolved with the implementation & adoption of rollups: There're currently multiple efforts towards developing zk-based rollups, with everyone (Polygon, zkSync, Scroll) taking a different approach towards providing it. Right now, optimistic rollups are the dominant rollup strategy right now, with improvements & decentralization already undergoing development & deployment. Most still have guardrails in place, but it's publicly known & already being worked on. https://l2beat.com/scaling/risk https://l2beat.com/scaling/risk

tromp 4y ago

> I think the speed and low-fees required in (some types of) financial trading just can't happen fully on chain. So that's another reason for centralization in exchanges You could have an exchange whose users have 2nd-layer channels open to it for all the currencies they trade. Trading can then happen near-instantly with 0 fees. While still centralized, it doesn't need to take custody of any user's funds.