How is Iotabee as a DEX different from CEX?

Automated Market Maker

The vast bulk of cryptocurrency trading occurs on centralized exchanges (CEX). These centralized exchanges are overseen by a single authority (the corporation that manages the exchange), require users to deposit funds under their custody, and permit trading through a standard order book mechanism. Buy and sell orders are given in a list together with the total amount placed in each order in order book-based trading. The number of open purchase and sell orders for a certain asset is referred to as "market depth." A purchase order must be matched with a sell order on the opposing side in order to conduct a successful trade utilizing this technique, and vice versa.

Market Makers create multiple bid-ask orders (price) so buyers and sellers do not need to wait for each other but rather trade with them directly. This way, everyone’s request is satisfied and the market stays active (good liquidity).

Liquidity is equally important for cryptocurrency because high liquidity means that a token can be traded easily with fair price. In DeFi, the role of a traditional market maker is replaced by Liquidity Providers, who provide assets, and the trade price is determined by a protocol named AMM (Automated Market Maker).

AMM uses a mathematical formula to price assets ( we’ll explain how the formula works later) and liquidity providers provide assets to ensure that there will be transactions. With AMM, no order book is needed to record orders. All transactions are done through trading with the Liquidity Pool.

Know more:

Permissionless system

Iotabee's services are designed to be permissionless, meaning that they are fully accessible to the general public without intentional limitations on who may or may not use them.

This allows anyone to engage in free trade, provide liquidity, or establish new markets, without the typical restrictions based on geographic location, socioeconomic status, or age that are often imposed by traditional financial services.

Last updated