Unlock the New World of Liquidity with Airswap

ยท 03 Sep 2018 in Analysis

Unlock the New World of Liquidity with Airswap


Ever since cryptocurrencies hit the mainstream, top cryptocurrency exchanges followed suit. Exchanges form the “bridge” that connects the various new digital currencies with traditional fiat money. This is where the action happens: where trades and fortunes are either made or lost.

Cryptocurrency exchanges are convenient and easy to use, and most have advanced features to help out even the most savvy of investors. They are essential for buying any cryptocurrency at all. But they are fraught with danger.

Just last year, hackers hit popular exchanges such as Youbit. Mt. Gox, at its time the largest bitcoin exchange, lost over $450 million worth of bitcoins due to theft or mishandling. And with minimal regulation in place, stolen or missing coins are most likely gone for good. As if trading in an entirely new, volatile cryptocurrency market isn’t risky enough.

A System Loophole

The problem with traditional crypto exchanges is that they are centralized. Ironic, given that the cryptocurrencies they work with have decentralization as a core security concept. This centralization makes them vulnerable to the same dangerous things any centralized system is exposed to.

The thought of having all that hard-earned digital money being one hack away from being wiped out is just too uncomfortable. Fortunately, there’s a safer, more secure alternative. All it took was to take decentralized methodology and blockchain technology benefits and applying that to exchanges. Decentralized Exchanges (or DEX) were born.

Enter the Decentralized Exchange

A Decentralized Exchange removes the need for a middleman to hold crypto assets Instead, trades are made peer-to-peer, directly to and from users. You never have to expose your private keys to anyone, which means you are directly in control of your coins at all times.

In a traditional exchange, users deposit their funds and the exchange issues an IOU, which can be traded. Once a withdrawal is requested, the IOUs are converted back into the cryptocurrency and sent to the user.

In DEX’s, coins are always with the user and never with a third party exchange. There are a lot of solutions and systems being used. Some issue proxy tokens, while others utilize an escrow-based system.

The obvious benefit of this system is increased security. The trustless nature of DEX means you don’t need to entrust your assets to a third party. It also offers more privacy, and since it is decentralized, there is no risk of downtimes.

There are of course, also downsides. Compared to traditional exchanges, decentralized exchanges are too basic. They only allow exchanges of a predetermined value. No sophisticated features here like margin trading, lending or stop loss. Decentralized trades are also of low liquidity.

But that is about to change. A new update to a popular decentralized exchange will give more power to high net worth traders and high rollers.

Built on the Ethereum network, is one of the leading decentralized exchanges available today. They allow easy peer-to-peer trading of ERC-20 tokens. And they are leading the charge with a new feature rolling out support for Over-the-Counter (OTC) trading

In terms of finance, OTC means trading of stocks and derivatives without the need for an exchange. It happens from agent to agent. Airswap’s OTC Trading allows for high net investors or those with high-risk appetites to trade any quantity they choose, directly with others. This opens up the possibility of a totally new world of liquidity and flexibility

How Airswap Works

At the heart of the Airswap OTC is the chat feature. This allows you to privately discuss and negotiate trades with the other party, without exposing anything publicly. This new wave of conversational OTC trading allows anyone to assess who they are dealing with in a safe manner.

An identification feature will also be implemented and managed by Wyre, a money service business. This ensures that Airswap complies with Know-Your-Customer (KYC) regulation. To further gain investor’s trust, Airswap has partnered with BitGo, a multi-signature crypto wallet used by high-end users.

It has always been Airswap’s goal to make OTC trades easier and more secure. Traditional OTC transactions used to be real-time and required a longer settlement time. The drastically lower transaction fees and security of Airswap should entice investors to do high volume trades. With the increase in crypto telegram signals dissemination, investors can do more trading with ease.

In addition, support for request for quotes (RFQ) will be implemented in this new release. This allows takers to broadcast to a whole network of makers. Makers can then engage and negotiate with these takers in a hassle-free way.

If you haven’t used Airswap before, how it works is quite simple. Makers, or those who want to sell/exchange cryptocurrency, use Airswap crypto tokens (AST) to signal their intention to sell. They can set a bid or ask price on the asset they want to purchase and sell, respectively.

Takers can then accept the bid or ask price, and the trade commences. Trading for takers is free on the Airswap DEX. Orders are settled and enforced by an Ethereum smart contract.

Solving Known Problems

Airswap also solves the problem of front-running that plagues many other decentralized exchanges. Front-running is basically a miner or operator placing an order after they have seen someone else’s order before it gets executed. In finance terms, this is akin to insider trading.

Airswap overcomes this by connecting traders off-chain, only putting the order on the public blockchain once it gets settled. Miners are then not exposed to information that they can exploit. This off-chain methodology also makes transactions much faster when compared to other decentralized exchanges like EtherDelta.

The known decentralized exchanges do all operations on the blockchain, making them slow by comparison. Other Airswap features include Airswap Indexer, which functions like a search engine for makers and takers. Airswap Oracle is a price suggestion and discovery feature, which investors can consult for price advice. Collectively, they eliminate the need for a centralized order book.

Clearly, Airswap is poised to take over the race of being the top decentralized exchange platform. It’s also in a prime position to become the key platform for the high rollers in the crypto world. With over 40% of all crypto trades done OTC, Airswap’s next-generation platform is positioned as the future of the cryptocurrency revolution.

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