Blockchain projects have become too reliant on centralized exchanges (CEX) for liquidity, which comes at a high cost. However, decentralized exchanges (DEXs) have emerged as a solution to reduce reliance on CEXs, lower costs, and increase control over native tokens. In this article, we will explore how blockchain projects can benefit from deploying their own DEX, and how Native provides a solution for this.
The problem with centralized exchanges
Getting listed on a CEX is a costly affair, with initial listing fees ranging from $50,000 to $1 million, plus additional monthly fees for market makers to ensure liquidity. Moreover, exchanges profit from trading fees, which reduces value for crypto projects and makes it hard to attract sustainable liquidity. Developers also lose control over their tokens by abiding by exchange policies and fees, while listing on CEXs can lead to counterparty risk.
Regaining control over native tokens
To attract liquidity and regain control over their native tokens, blockchain projects can turn to DEXs, which have low fees due to the absence of intermediaries and reduced counterparty risk. Using DEXs also allows blockchain applications to benefit from non-custodial trading, lower security risks, and lack of KYC obligations.
The drawbacks of DEXs
DEXs do have some drawbacks, including limited transaction capacity, increased fees with rising volume, and lack of efficiency to compete with CEXs. DEXs prioritize revenue for liquidity providers and token holders, not projects who use them. Additionally, the user experience is not seamless, as users have to leave the apps they love to make a trade.
The solution: Native's DEX infrastructure layer
Native provides a DEX infrastructure layer that allows blockchain projects to create their own DEX, cutting out middlemen and reducing costs. Native's proprietary integrations with liquidity providers and market makers account for over 30% of daily crypto trading volume, giving teams a significant advantage over standalone DEXs. Projects set their own swap fees, which go to token issuers, and can create any type of exchange they want using any liquidity sources, pricing models, and trading pairs they desire.
Liquidity is king
Liquidity can come from the project itself, the community, or external liquidity sources such as automated market makers (AMMs) and professional liquidity providers. Native leverages a wide range of liquidity resources through off-chain pricing and on-chain RFQs (requests for quotes), allowing any project to use market makers and professional liquidity providers for on-chain liquidity.