Decred (DCR) Opens Permissionless Decentralized Exchange

Published on August 1, 2019 by Cryptovest Staff

The Decred decentralized exchange (DEX) will rely on atomic swaps, and be fully permissionless and decentralized.

Decred (DCR) may be late in launching a decentralized exchange (DEX) but plans to offer a unique product. The Decred project will use atomic swaps - a direct connection between blockchains - to perform peer-to-peer exchanges.

https://twitter.com/decredproject/status/1156652797229748224

Decred has been testing atomic swaps for months, and while the technique has a relatively low capacity, it is one possibility to switch between assets without a centralized exchange mechanism. In this way, Decred hopes to deal with bot-based order placement and other forms of high-frequency trading.

“The DEX described in this document is based on atomic swaps, signed and transmitted by the clients. Thus, the exchange of funds is trustless and secure. The purpose of the DEX is to facilitate such peer-to-peer trades, while disincentivizing manipulative or abusive trading patterns, and utilizing an independently verifiable order matching algorithm that is difficult to game by traders and operators alike,” explained the Decred team in the GitHub documentation.

The only exchange offering atomic swaps is the Komodo DEX, although it has a relatively low capacity. The Decred DEX will aim to offer an anonymous service - without requiring customer monitoring, or KYC.

It is uncertain if the DEX would remain anonymous for long - previously, even EtherDelta, one of the most widely used Ethereum DEX, was called to ban certain IP addresses. Decentralized exchanges are not fully exempt from the need to monitor their customers since digital assets are universally seen by regulators as a tool for money-laundering.

Following the news, DCR picked up the pace to trade at $26.60, close to a recent peak above $30. DCR reached levels above $300 in early 2018, but failed to keep the positions. DCR was seen as following the path of Litecoin (LTC), for its strong claim to partnering with Bitcoin (BTC). Decred is one of the protocols compatible with the Bitcoin and Litecoin networks for atomic swaps.

Currently, DCR trades predominantly on OceanEx. The coin was delisted from Poloniex in one of the latest rounds to remove coins that may create problems for US-based traders. The Decred network offers returns based on partial proof-of-stake mining, thus potentially being taken for an unregistered security paying out a form of a dividend.