Deep dive: Polkadex Orderbook

Learn more about our core product and how it sets Polkadex apart from existing DEXes and CEXes

  • Users of decentralized exchanges who retain control of their assets and thus lower their risk of losing funds, but have to put up with an inferior user experience, limited functionality of the platforms and network-specific issues.

Centralized exchanges (CEXes)

Advantages

CEXes tend to have user-friendly interfaces that make buying and storing crypto convenient and easy. They also have a wide functionality and provide their users with tools like limit and stop-loss orders, algorithmic trading, bot integrations and many others. The heavy regulatory landscape and the centralized nature of CEXes forces them to be actively compliant, which in turn favours the presence of institutional investors. The activity of institutional investors is very important as they contribute to increased liquidity which in turn keeps CEXes’ trading volumes high and improves the price efficiency.

Disdvantages

As the name suggests, CEXes are centralized, meaning funds are held and operations are run by one central organization. For cryptocurrency exchanges, centralization comes at a cost and brings some serious disadvantages for users. First of all, the burden falls on security. Since centralized exchanges keep custody of the users’ funds, they are constantly targeted by hackers. While hacks to CEXes are not a very frequent occurrence, when they happen they are catastrophic and result in million-dollar losses.

Decentralized exchanges (DEXes)

Advantages

Decentralized exchanges have changed the way people trade crypto. Users can trade privately and in a transparent, verifiable and trustless manner while retaining full control and custody over their assets. DEXes are exponentially more secure than CEXes as there is no central target to attack and, thus, there is a very low chance for users to lose their funds due to a hack.

Disadvantages

However, the advantages of decentralization, so far, come at a price of multiple disadvantages.

Meet the game changer: Polkadex Orderbook

Features of Polkadex Orderbook

Broad functionality and advanced trading tools

We want Polkadexers to have a choice of trading options. We are bringing algorithmic trading, high-frequency trading, on-chain trading bots, and more to the masses! Polkadex users will be able to connect to the community’s favourite trading bots like Hummingbot or 3Commas through APIs. To continue the long list of available functionalities, traders will also be able to set limit and stop-loss orders, margin calls and more. All of the above in a decentralized manner.

Convenient and pleasant user experience

We made a bet on multiple devices, so you can choose your way to trade. With beautifully designed desktop, mobile and app versions, Polkadex Orderbook is super easy to use. Whether you are new to the crypto space and have no prior crypto trading experience, are an experienced individual or institutional trader or a crypto native looking for an advanced decentralized trading platform, we tried to create a solution for everyone.

Custody and security of funds

On Polkadex Orderbook, user funds always remain on the native blockchain and are controlled only by the user’s private key. The Layer 2 solution capabilities are limited to placing and executing trades, but never balance transfers. Only a user that has access to the private key can initiate a balance transfer.

Fiat support

Polkadex integrates fiat gateways and markets via fiat on-ramp and off-ramp functions. Essentially it means that you can buy crypto using your credit card and cash out your crypto assets into fiat in one click. This helps newcomers jump right into DeFi and will also allow for an increased institutional investment activities.

Lightning-fast transactions

Polkadex Orderbook reaches the speed of up to 500,000 transactions per second and has a low latency of 20 milliseconds. Those numbers are currently unmatched in the industry and became available to us due to a technological breakthrough. Our R&D made Polkadex significantly faster than DEXes and even faster than some CEXes.

Zero gas fees

Polkadex Orderbook also keeps fees in check. As we are building on the Polkadot network and its Substrate framework, we eliminate any network fees. Feeless transactions are powered by our Layer 2 scaling solution on SubstraTEE (an abstraction layer for the Substrate framework of the SGX Trusted Execution Environment). All the orders will be executed by a non-custodial operator and sent back to the blockchain through TEE-implemented balance transfers. There are no fees for transfers since all the executions are happening off-chain, verifying and eliminating bad actors in the process.

No front-running

Feeless transactions also solve another problem that plagues DEXes: front-running. Eliminating the network fee not only takes away the power to control the order of execution from users with deeper pockets but also cancels the economic incentive to engage in front-running in the first place. Thus feeless swaps level the playing field and give equal opportunities for every trader placing a transaction on the orderbook.

Interoperability between blockchains

Thanks to Substrate Polkadex builds an interoperable blockchain without having to worry about block production and consensus. Using parachains, Polkadex will create a single unified ecosystem that connects multiple blockchains and enables smooth cross-chain communication. For users, this translates into more coins available for trade on the platform.

Cross-chain liquidity support

Polkadex trustlessly taps into liquidity from other blockchains through the Polkadot Relay Chain network. Built for the future, Polkadex can also integrate with other liquidity providers via forkless upgrades.

No slippage

With AMMs directly connected to Polkadex’s trading engine as on-chain market making bots, when a trade is not matched against the order book, the Polkadex Engine will check if the on-chain trading bots can make an order that will match. If they provide a better price, the trade will be executed. If not, the trade will be submitted as a market-making order in the order book. This ensures there is no slippage for traders.

Privacy and diversity of the ecosystem

Decentralized KYC keeps full privacy of the users’ personal data, but cuts off the possible harmful effect of anonymity on the exchange’s ecosystem. Adding this process Polkadex can offer fiat support, address the lack of institutional money that comes with no KYC on DEXes and make sure there are no illegal activities on the platform. All in all — continue to create a ‘best of both worlds’ decentralized exchange. Polkadex Orderbook users will be able to verify their identity while keeping their personal data and documents private. This means that Polkadex (or any other decentralized application you choose for proof of authentication) never has access to your personal details as they always remain stored in your wallet. It also means that you only go through the KYC process once and then can just use your wallet for automatic verification on multiple Web3 platforms that also use KILT Protocol. Easy, fast and secure.

How Polkadex makes it all possible

  • Trusted Execution Environment (TEE) is a technology invented by Intel that allows modern CPUs to have an isolated section independent of the Operating System, BIOS and other core components of a computer. Its main advantage is that the computation executed in TEE is verified by the blockchain and any tampering in the logic will result in the blockchain rejecting the TEE. TEE handles the balance state management of users in the Orderbook. It prevents theft of funds, verifies the matched trades provided by the Orderbook Engine, settles trades and enables traders to reserve and unreserve assets on the native blockchain.
  • Orderbook Engine maintains a high-performance Orderbook, matches trades and provides them with TEE for verification and settlement.
  • IPFS or Interplanetary File System maintains a snapshot of the latest state of balance transfers. In case the hardware is corrupted or the network access is lost or if the operator itself is compromised or turns into a bad actor, the blockchain rejects all future transfers from the orderbook and returns the funds to its users within 12 seconds, the fastest recovery mechanisms available in the market today. This acts like an insurance policy for the entire exchange.

Conclusion

We hope this article has helped you see how, as a Polkadexer, you will enjoy the best of CEX and DEX worlds in a ground-breaking and easy-to-use non-custodial exchange. We are working non-stop and aiming to launch Polkadex Orderbook later this fall, so you can level up your trading game and focus on the most important aspect of your crypto experience, namely making profitable trades.

A sneak peak into what is to come

We are getting ready to show you a demo of Polkadex Orderbook interface already this Friday!

⛓Cutting edge orderbook based DEX built on Substrate 📲 www.polkadex.trade