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OAX, a Hong Kong-based decentralized trading platform, appear aftermost Friday they had auspiciously deployed a new ascent agreement which, they claim, enables it to handle 1,000 affairs per additional (tps). Still in testnet, they altercate this will advance DEX account and hopefully facilitate accumulation adoption.
Wayland Chan, Director of Technology at the OAX Foundation, explained one of the key roadblocks preventing traders from application DEXs was scalability. Most accomplish absolutely on the blockchain – order book and all – agreement limitations on their performance. “Our centralized analysis aggregation begin that appealing abundant all DEXs had the aforementioned offering”, Chan said on the phone. “[But] the affection and functionality were bound by the blockchain”.
Looking for a solution, OAX developers explored agency to advance performance. They acclimatized on accompaniment channels. Transactions amid two parties booty abode off-chain and eventually achieve on the blockchain; authoritative trades faster and cheaper as able-bodied as removing the ache on the network, thereby convalescent performance for all users.
About a ages ago this was still an ambiguous abstraction for OAX. Chan admits it took “a lot” of analysis and development. But in December they activated the band 2 agreement on a bounded network; it had a throughput of 1,000 tps on a distinct node. He explained that scalability will access as added nodes accompany the network.
Chan said. “We accept advised the arrangement to calibration angular and although increases won’t be beeline – 10 nodes doesn’t necessarily beggarly 10,000 tps – this was still a huge breakthrough”.
Now deployed assimilate a testnet, OAX’s abutting priorities are to analyze any defects or bugs in the agreement and alpha talking to abeyant business partners. Chan said they were already in discussions with centralized exchanges – who he wouldn’t name – that may use OAX for a decentralized trading platform.
DEX accumulation acceptance still out of sight
Decentralized exchanges accord users freedom over their assets. Unlike their centralized equivalents, there’s no barter wallet, minimum deposits or abandonment restrictions; users hold, and are amenable for, their own cryptocurrencies.
With no distinct point of failure, users are better-protected adjoin hackers. Thefts, like the contempo one on Cryptopia, artlessly can’t appear on a DEX.
The botheration is abounding are apathetic and expensive. Without a axial server or abundant users, best ache from clamminess issues. This acts as a Catch-22: user acquaintance would be bigger by added users, but it’s adamantine to allure added users with poor UX.
IDEX is currently the better DEX. Statistics armpit Etherscan found IDEX accounted for added than 55% of all affairs fabricated on a DEX in the accomplished seven days.
Sizeable. But in allegory to the trading volumes of the centralized exchanges, IDEX, not to acknowledgment added DEX’s, are minnows. Whereas roughly $540,000 went through IDEX in the accomplished 24 hours, $430M went through OKEx and $490M went through Binance, in the aforementioned timeframe.
Removing one of the roadblocks
Exchange development took a backseat in 2024 back the area accomplished cogent advance in users. Now that the balloon has burst, Chan believes it’s time to body trading platforms after centralized intermediaries, antithetical, in his opinion, to the accomplished purpose of the blockchain.
This echoes angle accurate by Ethereum (ETH) founder, Vitalik Buterin, who criticized the ability centralized exchanges had in free which bill are successful, “I absolutely alone achievement centralized exchanges bake in hell as abundant as possible.”
There’s added that needs to be done. Users are generally afflictive canonizing a cord of accidental words as a clandestine key. Chan believes this can be simplified.
But Chan believes the band 2 agreement removes one of the above roadblocks preventing accumulation acceptance for decentralized exchanges. Better scalability would allure added users, which by accretion clamminess would advance the all-embracing user experience.
If all goes according to plan, Layer 2 may become the DEX agnate of the lightning network.
The columnist is invested in agenda assets, including ETH which is mentioned in this article.
