A new decentralized crypto exchange called DAIHard has just announced that it is opening its beta services to the public. The platform was created in order to help the users who wanted to have access to exchanges that did not hold their money for them.
This is a very common problem. Most exchanges are very centralized. This is unfortunate as cryptocurrencies are decentralized and can offer a lot of very interesting alternatives for the people who are not interested in this kind of centralization and want to hold their own assets.
For the people who got problems with restricted jurisdictions or any kind of censorship, these platforms are not far from the ideal. They are too prone to be blocked by governments and to impose several risks for the security of your assets.
Centralized exchanges are somewhat contrary to the original founding principle that guided cryptocurrencies and, yet, they are the most popular way to trade today.
We are seeing some new decentralized exchanges, though, so it seems like something is changing. IDEX is a fairly popular option and even the giant Binance has decided to create its own DEX (decentralized exchange).
How Does DAIHard Work?
This new platform basically uses smart contracts in order to let people connect with each other in a decentralized way to trade cryptos for money and vice versa. It is somewhat similar to LocalBitcoins.com in this regard. The users can trade DAI tokens via MetaMask using this platform.
You can access the platform without any kind of middlemen or intermediator at all. If both parties agree, you can use bank transfers, credit cards, in-person cash, whatever you want. The whole idea is to give you a lot of freedom while using the system, which is based on the Ethereum technology.
In order to be able to make the transactions, all that the users need are the amount of DAI tokens they want to transact and some ETH that will be used as gas for the transactions. The idea is that the users will stake ⅓ of the money purchased as a burnable deposit. This means that in order to acquire 30 DAI, you need at least 10 DAI before.
Why is this done? Complex game theory is used in order to make the transactions more secure. There are many risks in making this kind of transaction, so the idea that the company had was to create these mechanisms in order to diminish the chances that one side would end up losing the funds. The users are always incentivized to follow the best route by using the funds in a smart way.
Without this so-called “credible risk of burn”, the DAIHard users would be at more danger without having a centralized control.
This whole platform was created around the idea of a factory contract, which is described by the team as something that runs in a continuous way for as long as the ETH blockchain works and people want to use it.
Because of this, it does not require any kind of personal information or bank details and it does not have jurisdictions as well. Since the factory contracts will work forever, people can just continue to use the service forever until the Ethereum network is no more operational.
Without the risks of the authorities shutting down the service, it can become considerably more effective to be protected against censorship and it will be a completely borderless platform, too, as you can use any fiat currency you want.
If you want a platform that is completely borderless and really decentralized, it looks like DAIHard might fill the criteria. We cannot say how safe it actually is, but the team promises that it's game theory burning idea will protect people during most sales.
The platform is still in development, so it may be prone to bugs.