How does DeversiFi differ to Kyber or Uniswap?

DeversiFi operates differently than purely on-chain exchanges. 

Protocols such as Kyber and Uniswap operate completely on the Ethereum blockchain. Order books are broadcast on chain and traders can take an order by submitting a transaction. The tokens are swapped atomically (meaning both sending and receiving must happen at the same time). This fully on chain system has certain benefits:

  • It cannot be shut down or censored 
  • It is permissionless - anyone with an Ethereum wallet can participate
  • It is simple to use - trades only require 1 transaction
  • Any ERC20 token can be added to the system

However, new Ethereum blocks are mined only once every 10-20 seconds and only a finite amount of transactions can be included in each block. This has a few consequences:

    • The speed of execution is significantly slowed down
    • There is no guarantee that your trade transactions will be picked up
    • The gas (network fee) you pay to have you trade included in the block competes with every other user of the blockchain and can become very high in congested times
    • Because of the slow updating of the order book, the spread needs to be significantly wide to protect the market makers from sudden price fluctuations
    • Liquidity is provided by automatic market making algorithms hence the fees charged need to be significantly high to provide a positive yield to the users that have pooled their funds in the market making collateral pool
    • All trades are public 

DeversiFi is a product targeting traders, hence our system has been designed to optimise for speed, privacy, certainty of execution and cost efficiency. 
DeversiFi has improved on the concept of a DEX for professional traders over the past two years, by allowing for high speed  execution. This is achieved by hosting the order books ‘off chain’ (similar to centralized exchanges). Once a trader has locked their tokens into a smart contract,whilst still maintaining control at all times, the trader can submit, modify and change orders just by signing each change with their Ethereum key (as simple as clicking a confirm button with user friendly wallets like MetaMask). This is instead of having to submit a full transaction to the Ethereum blockchain every time they would like to update an order or trade. This saves gas fees and enables traders to employ more advanced trading strategies that are dependent on quickly being able to update orders.

To find out more details about the scaling solution used by DeversiFi, refer the knowledge base section on StarkWare.

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