BEMEX is the brand new product of BEM foundation, a decentralized exchange with unique properties that will amaze you. Here we give you a brief introduction of decentralized exchanges with some hints from capabilities of BEMEX as a one.
DEX in a nutshell
DEX stands for decentralized exchange and is a cryptocurrency where traders make their transactions directly and peer-to-peer without handing over their fund’s management to an intermediary or custodian. These transactions are done with help of smart contracts (a self-executing code written to implement the agreements automatically), so there is no requirement for a third party to oversee the performing of the trade in a specific exchange.
More about decentralized exchanges
Decentralized exchanges rely on smart contracts to allow traders to execute orders without an intermediary. On the other hand, centralized exchanges are managed by a centralized organization such as a bank that is otherwise involved in financial services looking to make a profit.
Centralized exchanges account for the vast majority of the trading volume in the cryptocurrency market because they are regulated entities that custody users’ funds and offer easy-to-use platforms for newcomers. Some centralized exchanges even provide insurance on deposited assets.
The services offered by a centralized exchange can be compared to those offered by a bank. The bank keeps its clients’ funds safe and provides security and surveillance services that individuals cannot deliver independently, making it easier to move funds around.
In contrast, decentralized exchanges allow users to trade directly from their wallets by interacting with the smart contracts behind the trading platform. Traders guard their funds and are responsible for losing them if they make mistakes such as losing their private keys or sending funds to the wrong addresses.
The customers’ deposited funds or assets are issued an “I owe you” (IOU) via decentralized exchange portals, which can be freely traded on the network. An IOU is essentially a blockchain-based token that has the same value as the underlying asset.
Popular decentralized exchanges have been built on top of leading blockchains that support smart contracts. They are built on top of layer-one protocols, meaning that they are built directly on the blockchain.
Working mechanism of DEXs
As decentralized exchanges are built on top of blockchain networks that support smart contracts and where users keep custody of their funds, every trade incurs a transaction fee along with the trading fee. In essence, traders interact with smart contracts on the blockchain to use DEXs.
There are three main types of decentralized exchanges: Swaps or Automated market makers, Order books DEXs and DEX aggregators. All of them allow users to trade directly with each other through their smart contracts. The first decentralized exchanges used the same type of order books, similar to centralized exchanges.
Order book Decentralized Exchanges
There are multiple generations to decentralized crypto exchanges and DeFi products. The first generation of decentralized exchanges use order books, similar to conventional centralized exchanges. These order books compile a record of all open buy and sell orders for a particular asset. The spread between these prices determines the depth of the order book and the prevailing market price. On DEXs with order books, this information is often held on-chain during trades, while your funds remain off-chain in your wallet. Many DEXs specialize in a particular financial instrument that is executed in a decentralized manner.
BEMEX is an order book DEX so users can always be sure their tokens are traded in price range of their choice.
Swaps or Automatic market makers Decentralized Exchanges
The next generation of decentralized exchanges does not use order books to facilitate trades or set prices. Instead, these platforms typically employ liquidity pool protocols to determine asset pricing. Peer-to-peer in nature, these exchanges execute trades between users’ wallets instantly — a process some refer to as a swap. The DEXs in this category are ranked in total value locked (TVL), or the value of assets held in the protocol’s smart contracts.
One main advantages of swaps is instantaneous trading, but it comes to the cost of volatile pricing, which can be irritating specially in high volumes. BEMEX brings some kind of liquidity pool and staking mechanism to the order book DEX to have fast trading capability and appointed price trades both in a single package.
Decentralized Exchange Aggregators
Decentralized exchanges use a number of different protocols and mechanisms. Although this dynamic results in higher security and autonomy, it also results in disjointed liquidity across platforms. This lack of liquidity can be a deterrent for institutional investors or wealthy independent traders who want to purchase a select crypto asset in large volumes. To address this, DEX aggregators have developed tools to deepen asset liquidity pools across centralized and decentralized crypto exchanges.
BEMEX in summary
BEMEX is the name of an exchange that consists of the two words BEM and Exchange.
BEM + EXCHANGE = BEMEX
BEMEX is a decentralized exchange and has Multi-Chain asset and token support, and it will support major blockchains like: Tron, Ehereum, Binance and Bempire. This exchange will start as a swap, but it is an order book exchange in its core so tokens can be easily traded with your intended price.
Among the options of this exchange, we should mention its liquidity pools, farming and multi-chain support, which make the exchange services more convenient for users.
Holders and traders of BEM foundation’s tokens should know that the start of BEMEX is the beginning of the second phase of BCN and the third phase of BEMT.
BEMEX will have a strong support for BCN and BEMT. This use-case attracts holders and new users, which will results in nothing but price growth.
The expected launch time of BEMEX is March the first of 2022. Tell your friends and share this post to bring more awareness to this unique product of BEM foundation.