NEON Exchange: The Best Of Both Decentralized and Centralized Exchanges?
Crypto has really exploded in the past couple years. Make no mistake: daily trading volume has grown from ~$60M in January 2015 to over ~$15B in March 2018. But even though the majority of crypto assets are built on top of decentralized architecture, the overwhelming majority of trades still take place on centralized entities. These centralized exchanges take full custody of assets to facilitate the process of exchanging assets between traders.
Given the enormous scale and frequency of hacks within centralized exchanges, people have taken interest in the potential of decentralized exchanges to address rampant security issues. The most significant problem that decentralized exchanges purport to solve is removing the "counter-party risk" of 3rd parties maintaining custodianship of a traders tokens. This may come at the cost of lower liquidity and trading capabilities.
One pivotal question: is it possible to build an exchange with the liquidity of a centralized exchange, but the security benefits of a decentralized exchanged?
I had the chance to catch up with Fabio, founder of City of Zion, to discuss his new project NEX (Neon Exchange). NEX aims to combine the performance of centralized exchanges with the trust and security properties of decentralized exchanges.
The NEX system consists of three main components:
1) Off-chain trade matching engine - Trades are signed and sent to the matching engine. Matched orders are signed off chain and set back to users accounts on the blockchain.
2) A smart contract where trades are executed - Matching engine interacts with smart contract that holds users funds during active trades. Once match is made, smart contract is sent all user addresses and tokens to be exchanged which are then distributed.
3) A payment service where global assets such as NEO and GAS can be converted to tokens that can be transferred directly by smart contracts, making them compatible with the exchange
In this interview, Fabio will tell you first-hand about the NEX project and answer the following questions and more:
- How does NEX plan to address the liquidity problem with DEX's?
- Why and how is NEX a hybrid solution of the best of both worlds (decentralized and centralized exchanges)?
- Their upcoming ICO and TGE details
- What is the utility of NEX tokens?