Since the inception of decentralized exchanges (DEX) a few years back, there has been a significant shift away from the conventional centralized exchange (CEX). There have been many discussions about the best exchange model to withstand time.

Both arguments are valid and have a lot to do with the various issues involved. However, DEX has managed to continue to draw massive investments despite only being in existence for half a decade.

There are currently at least 35 DEX platforms that use different blockchains. The market continues to grow and there is no indication of a slowdown. Yahoo Finance reported that DEX trading volumes had surpassed $140 billion. That number continues to rise.

The viability of DEXs has come up in a lot debate. Industry experts agree that DEXs and CEXs must exist for the sake of sustainability.

A forward-thinking Blockchain startup created a way for CEX and DEX exchanges not to be separated.

123swap, a decentralized cross-chain network, wants to bridge the gap not only between DEX and CEX, but also to enable interoperability among different blockchains’ smart contracts.

DailyCoin’s Tomas Ambrazas is the CEO of 123swap. He discusses how his startup plans to change the way that crypto traders trade using custom solutions.

123swap was born out of many factors. One of these factors is the non-scalable and difficult issues inherent in centralized exchanges. Ambrazas discussed some major problems of CEX, which have allowed for rapid growth of DEXs.

He stated that there have been an increasing number of active blockchain systems in recent years. This has also led to an increased number of cryptocurrency tokens running across each blockchain.

Ambrazas also stated that CEXs are finding it increasingly difficult to handle the large majority of these tokens. He cited this in particular when it concerns the execution of trading activities like swapping or yield farming.

Ambrazas stated that the trading reality in today’s world is that each blockchain would like its tokens to be hosted on its own network.

Using as an example, Ambrazas noted that about 90% to 95% of most utility tokens were hosted on the blockchain. Now, things have changed a bit.

“Unlike a few years back, we now have more alternative blockchains like Binance chain, Harmony chain and Polkadot, among several others. The implication of this is that a good blockchain token, which is mostly designed to be interoperable, can now be hosted on multiple blockchains, it could be 5, 10, or even more,”
Ambrazas said.

Ambrazas pointed out that USDT’s Tether stable coin was once Ethereum’s most used stablecoin before blockchain interoperability became possible; now, the stablecoin is also traded on other blockchains like TRON, where it is now getting more transitions than in Ethereum.

How does it work for a central exchange?

“Basically, if you want to add a token to a CEX platform, you must also add every blockchain that it supports. DEX platforms add blockchains and allow host tokens to be added. And that’s exactly the primary solution DEX exchanges are offering,”
Ambrazas explained.

Ambrazas explained that in order for a token’s listing on a CEX exchange platform to do so, they must satisfy a minimum liquidity requirement. Unfortunately, this is often unrealistic for many crypto projects. However, on a DEX platform this is not possible.

CEX can make it difficult for tokens to scale. DEX on the other side is intended to allow tokens to quickly scale even if they are only available for a limited time.

123swap Will Bridge the Gap Between DEX and CEX
Having highlighted some of the setbacks with CEX, and given expert’s advice on CEX-DEX coexistence, 123swap built a solution that eliminates the disparities between the two exchanges.

The platform connects to DEX platforms and bridges gaps that exist between CEX-DEX.

“Our solution [is to] complete Binance smart chain and Ethereum chain’s edits for swaps, farming, yield products, as well as their governments. These two popular chains can be used for farming and swapping. You can likewise, add, and remove liquidity, as well as check all our systems to see how it’s working. It’s live and fully working,”
Ambrazas said.

Ambrazas said that his team was currently working to build what he calls the “best bridging mechanism for interoperability” between Binance (ETH) and Binance. Additionally, they are working to create more multichain bridges which will make it possible for them to grow their chain network.

Ambrazas says that their ultimate goal is for users to be able seamlessly to swap tokens between different blockchains and exchanges. They also want to make it easy to trade on one platform.

On The Flipside

• Because 123swap is still in its early phases, the solution is limited to only a few exchanges and blockchains for now.
• The platform will need to take time in order to seamlessly integrate APIs from different blockchain networks.

What are you supposed to care about?

Contrary to popular belief, trading’s future may not depend on decentralized exchanges. Both CEX and DEX systems offer distinct benefits. The possibilities are even greater when you adopt a platform which connects these two ecosystems.

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