CEX-like DEX Made Possible by Syscoin

Web3, unhindered by scalability or security problems, will invite world-changing technology to flourish as we witness the next leap forward for human civilization. With Syscoin’s quickly approaching mature Layer 2, the pieces of the puzzle are falling into place. We are building what is needed for this to take place, and many exciting dApps are already being prepared. Not least of which are the advancements taking place in DeFi, for which our newest partner, Dexchange has a lot in store.

Dexchange is an order book DEX running on multiple Layer 2 solutions. Their core premise echoes the words of Satoshi, and is simply, “No custody of user funds.” This tenet permeates their platform, meaning every transaction is governed by code, never by individuals. They provide users with a high-speed, self-custodial, decentralized trading platform with a competitive and transparent pricing structure, ultra-low slippage, near zero gas fees, and the full security of Syscoin.

In a recent interview with Hotep Jesus, Lead Core Developer of Syscoin, Jagdeep Sidhu stated the solution to the problems we have seen arise in centralized exchanges, most recently with FTX, is the capable level of decentralized finance that will come once rollups and Proof-of-Data Availability are working together to achieve limitless scalability with Bitcoin’s security as is currently only being realized by the Syscoin Platform.

That moment is nearly here, and it is exactly what will allow Dexchange to facilitate a CEX-like order book trading experience without ever encroaching on user custodianship.

This sort of perpetual trading on-chain was not scalable previously, which is why no one has been able to offer it. Swap DEXes have temporarily filled the gap, because they are quick and simple, utilizing liquidity pools to make trading possible. The problem with this model is that the user does not know if it’s several people or just one providing all the liquidity, which allows individuals to abuse the system through rug pulls, and inflict impermanent loss on the person on the losing end of the deal.

On the contrary, order book exchanges like Dexchange work in real time with transparency meaning retail or institiutional users have access to all the information they need to make an informed decision. While rollups give the exchange the ability to process an arbitrary number of transactions off-chain and bring them back, creating a decentralized exchange at scale for the seamless centralized exchange experience people are accustomed to.

With this partnership between Syscoin and Dexchange, we will also focus on leveraging important tech like Account Abstraction, which is a smart wallet that simplifies the accessing of funds for users, helping ease account recovery, and even allowing for multiple owners depending on the parameters set by the owner, ensuring a more user-friendly experience. Dexchange will be focused on utilizing rollups built on Syscoin’s NEVM, whether they be ZK, Optimistic, Compliance-based, or Layer 3.

Sidhu added, “We are working to make Dexchange a primary player in the TradeFi ecosystem. Technically speaking, we are pursuing ZK technology for its ability to relegate state transitions to the Data Availability layer (PoDA within Syscoin’s architecture). The implications of doing so mean a million transactions can occur on our DEX model with merely two account updates of fifteen to twenty bytes each, thereby offloading the dominant costs to off-chain computations. As ZK hardware solutions come into play, the costs will be minimized and market driven, opening a new line of revenue for those running ZK provers akin to and potentially greater than the current mining market.”

About Dexchange

Dexchange is an order book DEX running on ZK-Rollups and other L2 scaling solutions. Their core premise echoes the words of Satoshi, and is simply, “No custody of user funds.” This tenet permeates their platform, meaning every transaction is governed by code, never by individuals. They provide users with a high-speed, self-custodial, decentralized trading platform with a competitive and transparent pricing structure, ultra-low slippage, near zero gas fees, and the full security of Syscoin.

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About Syscoin

Syscoin is a decentralized and open-source project founded in 2014 whose NEVM blockchain combines the best of Bitcoin and Ethereum in a single coordinated modular platform.

Syscoin is ushering in the next step in the evolution of blockchain technology, providing Bitcoin's proven security and Ethereum's Turing-complete programmability elevated to true scalability via Optimistic, ZK-Rollups, Cross-chain ZK-Rollups and other Layer 2 technologies.

Dec 28, 2022 by Syscoin Foundation