DAEX, or Digital Assets Exchange, is a decentralized cryptocurrency clearing ecosystem. Find out how it works today in our review.
What Is DAEX?
DAEX, found online at DAEX.io, is an open and distributed cryptocurrency clearing platform. The goal of the platform is to provide clearing solutions for centralized crypto exchanges.
The project is being led by a Switzerland-based organization called the DAEX Foundation. That organization has already reached partnerships with the Qtum Foundation, Jenga Blockchain Capital, Sora Ventures, 8 Decimal Capital, 360, and others.
DAEX wants to create a hybrid exchange that brings together the benefits of centralized and decentralized exchanges. DAEX is one of several organizations seeking to launch a hybrid exchange.
What Problems Does DAEX Seek To Solve?
Why do we need a solution like DAEX? The platform seeks to solve a number of major problems with today’s cryptocurrency industry.
Today, there are two main types of exchanges, including centralized and decentralized exchanges. Centralized exchanges provide a centralized order matching mechanism for traders. They hold onto traders’ funds, and traders complete trades across the order book. These exchanges are fast and have high liquidity, but traders don’t have full control of their funds.
Decentralized exchanges work in a different way: they cut out the middleman and allow traders to complete P2P trades. Traders have complete control of their assets, allowing them to maintain full security of their funds. However, decentralized exchanges often suffer from problems with liquidity and long transaction times.
DAEX aims to solve both of these problems by creating a hybrid decentralized/centralized cryptocurrency exchange.
How DAEX Blockchain Clearing System For Crypto Exchanges Works
DAEX provides a hybrid cryptocurrency exchange infrastructure. The goal of the platform is to combine the benefits of centralized and decentralized exchanges. The end result, ideally, is a platform with high security, fast transaction times, strong liquidity, and a trustless environment.
The key innovation with DAEX is that it will separate the clearing and trading services into different entities.
That means centralized exchanges that use the DAEX protocol will be able to continue providing trading services. However, all clearing and settlement services will be based on the DAEX platform. DAEX’s platform is an open source public blockchain that guarantees the trader’s assets are kept in their own account.
The end result is that DAEX users can enjoy the benefits of a centralized exchange – the easy and fast trading – along with the security of a decentralized exchange – including maintaining complete access to their funds.
DAEX achieves this with a few fundamental technologies, including the Clearing Chain, the Clearing Account, and the DAEX Wallet.
What Is Clearing Chain?
The Clearing Chain brings together three users on the DAEX ecosystem, including end users, centralized exchanges, and the DAEX Foundation (DAEX.io). The Foundation acts as a bridge connecting the other two participants across the DAEX blockchain – which is also called the “Clearing Chain”.
The Clearing Chain will provide clearing and settlement services for individual and institutional users. Here’s the basic process involved in each trade:
- First, traders use their wallets to perform trades on a DAEX-supporting exchange
- Second, the exchange matches the trade order
- Third, after the exchange finds a matching trade order, the order is sent to the Clearing Chain, where a smart contract is formed to complete the matched trade
- The smart contract sits on the Clearing Chain, where it serves two functions – it validates the matched trade to make sure it meets the requirements; and, it completes the consensus mechanism and updates the corresponding accounts on the ledger with new trading information
DAEX’s Clearing Chain supports atomic settlements: multiple digital assets can be instantly transferred between different chains using only the DAEX wallet.
Each DAEX user will have a Clearing Account. This account is used to register digital assets, monitor asset balances, and view transaction history.
Since all DAEX-supporting exchanges use the same ledger, the customers’ trading assets are all managed on the same transparent ledger.
The DAEX Decentralized Wallet
Clients will interact with the DAEX ecosystem through the distributed wallet. The wallet supports multiple types of cryptocurrencies, including BTC, ETH, Qtum, NEO, and any ERC20 compatible token.
The DAEX wallet will create a unique public address for all KYC-verified clients on the Clearing Chain. The wallet will also generate a three part private key, including a user part (stored on the user’s mobile device), the wallet part (stored in hot wallets on DAEX’s servers), and the backup part (stored on the Clearing Chain in cold storage). The backup is only used for recovery purposes, while the user and wallet parts are required for transactions.
How Do DAEX Tokens Work?
DAEX tokens are used as a reward mechanism. Those who contribute to the DAEX ecosystem – like nodes that participate in the clearing process – will receive a reward in the form of DAEX tokens.
There are three types of nodes eligible to receive DAEX tokens, including public nodes, exchange nodes, and super nodes.
DAEX tokens are ERC20 tokens on the Ethereum blockchain. However, when the DAEX blockchain is launched, those tokens will be repurchased and destroyed, at which point the company will release new native DAEX tokens with a 1:1 ratio.
DAEX tokens were distributed via an airdrop at the end of February. 20,000 tokens (listed under the symbol DAX) were allocated to the airdrop program for the first 500 users who submitted applications through the DAEX Foundation’s Telegram group. Additional airdrop programs will be announced over the coming months (check DAEX’s Telegram to view the latest airdrop news).
Who’s Behind DAEX?
DAEX is led by 5 full-time team members, including Benjamin Gu (Chairman), Hua Zhang (Co-Founder), Jason Tang (Co-Founder and Chief Architect), Yan Zhou (Wallet Architecture Scientist), and Bingliu Shen (Partner).
DAEX has already partnered with ACX, Star.io, Allcoin, BCEX, CoinComing, and Bitstamp.
The DAEX Foundation was founded in Switzerland in 2018.
Centralized and decentralized exchanges both have unique problems. DAEX aims to unite centralized exchanges with decentralized technology, creating a system where users enjoy the benefits of both.
To learn more about DAEX’s open and its decentralized clearing ecosystem for cryptocurrencies, visit online today at DAEX.io.