What is a DEX?

Today, in the Web 2.0 world, if you want to buy a stock on the stock market, you need to go through layers of intermediaries, which increases the time and cost of transactions, and because you’ve transferred your money into your brokerage account – which your broker controls – there’s always a risk that your money might get lost along the way.

In the cryptocurrency world, exchanges using this traditional model are called centralized exchanges, or CEXs.  CEXs typically require users to deposit assets (cryptocurrencies or fiat) in their custody before any trading can happen. Unfortunately, this means a bad actor CEX can then misuse user assets for the CEX’s own benefit .

On the other hand, a decentralised exchange, or DEX, is a peer-to-peer marketplace where transactions occur directly between users without intermediaries facilitating the custody and transfer of assets. Instead, DEXs substitute these intermediaries with blockchain technology; by connecting your wallet to a DEX, you can trade directly with other sellers on the DEX without needing anyone else to help make the transaction happen. That’s possible because of smart contracts, which ensure that both sides must hold up their end of the deal before assets are exchanged.

DEX vs CEX

CEXs offers a traditional Web 2.0 trading experience for cryptocurrency assets. Most people are used to depositing funds with their broker, so the overall user flow is easier to understand and may feel more familiar.   By contrast, DEXs introduce a new user experience  which can take some time and effort to understand.

The biggest advantage of DEXs is that users hold their own assets and can trade directly through their own wallet. That means complete control over the trading process, as well as total transparency on where your funds are. Even if a DEX goes bankrupt, for example, the user’s funds are still safe, because the assets are held by the user rather than the DEX.\

	DEX	CEX
Token Custodian	No token custodian	Trading platform
Trading Engine	Total transparency	No transparency
Trading Experience	Direct wallet-to-wallet	Reliant on trading platform

Table 1. Comparison of DEX vs. CEX

DigiFT is a Digital Assets DEX

DigiFT is the first and only DEX currently in the Monetary Authority of Singapore (MAS) FinTech Regulatory Sandbox. We are an exempt Recognised Market Operator and Capital Markets Services Licensee.

We operate a digital asset DEX, built on the public Ethereum blockchain, that offers real world assets for crypto natives. DigiFT’s technology helps map traditional financial assets onto the blockchain in a fully compliant manner, allowing investors to trade and hold asset-backed security tokens directly through their wallets. This increases the availability of capital for issuers and provides liquidity to previously illiquid assets.

關於 DigiFT  

DigiFT aims to provide regulated decentralized finance solutions on the Ethereum public blockchain. We are operating the first regulation-abiding decentralized digital asset exchange where asset owners can issue blockchain-based security tokens and investors can trade with continuous liquidity via an Automatic Market Maker mechanism. We are a global outfit backed by well-established venture partners. The founding team originates from Goldman Sachs, UBS, Citibank, and Morgan Stanley, and has deep blockchain technology knowledge, having successfully developed digital asset exchange and products in the past. 

For more information, please contact: 

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