DEXes can unlock access to loans and payments, among other financial services, to benefit millions of users. DEX aggregators will allow including top-tier assets from previously isolated chains like Bitcoin and DOGE.
Although decentralized exchanges (DEX) have grown significantly, their adoption is not as high as centralized exchanges. However, there are several ways of accessing the permissionlessness and censorship resistance provided by DEXes, according to software engineer Chad Barraford.
Decentralized Exchanges Emerge as an Alternative to Benefit Citizens
Inflation, corruption, rising interest rates, and threats of recession have affected the multibillion-dollar financial industry, leaving citizens frustrated with the status quo. Many people look for an alternative place that values the individual over the institution.
They can find that alternative in decentralized finance (DeFi), a financial system excluding expensive intermediaries and democratizing access for billions of citizens. According to data from Emerging Research, the global DeFi market aims to reach over USD 500 billion by 2028. That has also led that industry to create decentralized exchanges, among many other innovations.
DEXes have handled a trading volume of over USD 1 trillion since their inception in 2014. That growth has been possible thanks to user autonomy, evidenced by recent operational decisions by centralized platforms.
DEX users have greater control and are less likely to encounter suspended or interrupted service maintenance problems. The decentralized nature of DEXs has more than one failure point, in contrast to centralized exchanges (CEX). That allows greater security, as DEXs are less vulnerable to exploitation.
Despite their significant growth, the adoption of DEXs has not reached levels as high as centralized exchanges. Their complexity and difficulty of use have hindered their adoption by the less tech-savvy. Besides, DEXs often suffer from limited liquidity, highly dependent on the number of active users, unlike CEXs.
Decentralized Exchanges Offer a Multifaceted Approach to Solve Problems
It would be possible to alleviate those problems with a multifaceted approach, including DEX aggregators. They merge data from multiple exchanges to offer users the best prices possible while improving liquidity.
Traditional finance has not been able to include 1.7 billion people who remain unbanked in emerging economies. DeFi and DEX allow anyone to access financial products through a decentralized infrastructure and a smartphone connected to the Internet.
DEXes can benefit millions of people by acting on the notion of democratizing finance. They can unlock access to loans and payments, among other financial services.
Decentralized Exchanges Use Aggregators to Organize Data
DEXs offer better transaction handling, lower entry barriers, and greater asset sovereignty than centralized exchanges. Data aggregation provides individual users with additional utility based on the noncustodial benefits of a DEX.
Since the volume of data is growing exponentially, tools to collect and organize it are necessary. Neither Uber nor eBay owns the products or services offered, but each has high aggregation capabilities.
DEX aggregators create a new avenue to access the assets and liquidity of other DEXs in other ecosystems. That will allow including top-tier assets from previously isolated chains like Bitcoin and DOGE for the first time.
That tool lays the basis for many data management capabilities involving identity and intellectual property in Web3. Dissolving barriers between siled legacy databases and proliferating open data will drive the development of new markets, which can benefit from low costs.
By Alexander Salazar
