As the cryptocurrency market has matured, thousands of tokens have come online, creating a vibrant and fast-paced blockchain industry and global digital asset marketplace. With thousands of Ethereum ERC20 tokens currently trading, users have nowhere else to turn but centralized exchanges with limited token options and troubling security issues.
Decentralized exchanges, on the other hand, offer unparalleled security but lack the streamlined user experience and intuitive ease of use of their centralized counterparts. They also require users to maneuver through several convoluted steps before successfully making a trade and tend to lack liquidity for most trading pairs.
Dolomite, an exciting new decentralized exchange, bridges the gap between the ease of use and liquidity that centralized exchanges offer and the incredible security and token trading options of decentralized exchanges. By putting user experience at the forefront of development, Dolomite provides users with a streamlined trading experience across a vast array of ERC20 token trading pairs. One example is eliminating the need to manually wrap ETH to trade.
Before delving into the feature-rich details of the Dolomite decentralized exchange, portfolio management portal, and wallet, let’s first take a more in-depth look at the current trading options and their limitations.
Shortcomings of Current Options
Currently, cryptocurrency traders and investors use centralized exchanges to buy and sell billions of dollars worth of tokens on a daily basis. Centralized exchanges such as Binance, Coinbase, Upbit, Huobi, Bitfinex, and others provide users with simpler user interfaces and higher liquidity. However, this offering comes with one huge tradeoff — security . Although safer options in the form of decentralized exchange options exist, they are far less popular, lack high liquidity, and most glaringly, offer user experiences that are not intuitive and are needlessly complicated.
Poor User Experience
In an attempt to improve the security of current exchanges, one major aspect was forgotten: user experience. It seems as though the developers behind decentralized exchanges have not experienced how needlessly frustrating it is to interact with their UI. Upon first glance at current decentralized exchanges, a couple of issues become very apparent. Glaring problems like poorly labeled graphs, non-intuitive market search bars, and nonexistent crypto-to-fiat value conversions line the front page of most DEXs. These problems prevent users from making quick, insightful decisions. In the fast-paced world of crypto trading with minute-to-minute price fluctuations and minimum user-safety-nets, clunky interfaces can result in losing money or leaving money on the table.
Current DEXs not only have bad layouts, but also force users to have multiple third-party applications open at all times. Having a DEX and other tools such as TradingView, CoinMarketCap, and other resources constantly up and running not only feels cumbersome, but can also add additional time-consuming steps to making transactions. Decentralized exchanges arose from a need for trading security and anonymity. However, when current solutions offer that in exchange for a hair-pulling user experience it is easy to see why many would rather expose themselves to the consequences than trade on a decentralized exchange.
Centralized exchanges expose your crypto and personal information to hackers
By their nature, centralized exchanges are extremely vulnerable to hacks, resulting in stolen usernames, passwords, API keys, and tokens themselves. In recent years, centralized exchanges compromised over $1 billion worth of user funds:
2014: Mt. Gox hacked for $437 million
2016: Bitfinex hacked for $72 million
2018: Coincheck hacked for $530 million
Users of centralized exchanges are also at risk of having their real, offline identities exposed due to the rigorous KYC (know your customer) standards in place at most exchanges. This means that to sign up and use a centralized exchange, users must upload and share sensitive documents such as passports, bank account details, and home addresses with centralized exchange authorities, which often operate overseas and with little to no oversight. It isn’t uncommon for security breaches at centralized exchanges to result in those sensitive documents being stolen and traded in dark web markets.
Low liquidity — lack of orders on the market — plague decentralized exchanges
At the time of posting, centralized exchange Binance ranked first in 24-hour trading volume with a reported $1.14 billion worth of trading. In contrast, Kyber Network, a decentralized exchange protocol that launched in the first half of 2018, recorded just $161,364 in 24-hour volume over the same period. IDEX, a popular decentralized exchange reported only $3.03 million in the same 24-hour window, still significantly trails its centralized counterparts.
Why do traders worldwide typically flock to centralized exchanges? The answer is simple: user experience and liquidity. Users looking to trade a given cryptocurrency want the ability to be able to buy or sell assets at competitive prices easily. Decentralized exchanges with already poor user experiences, clunky interfaces, and low liquidity can be incredibly slow to react to the fluctuations of the market. This is in large part why decentralized exchanges before Dolomite have suffered from far lower use than anticipated.
Dolomite was developed to address the significant downsides associated with centralized exchanges as well as the poor user experiences and liquidity offered by decentralized exchanges. Dolomite is an intuitive, next-generation solution that offers the benefits of an effortless and secure trading experience as well as the best long-term liquidity solution and order settlement mechanism via the Loopring Protocol.
How will Dolomite solve the issues of user experience, security, and liquidity? Let’s start with user experience.
Dolomite is built by crypto traders and investors, and is designed to make common user processes as simple and effortless as possible.
Ease of Use
Trade right from your wallet without ever manually wrapping ETH or manually approving tokens
Dolomite simplifies cryptocurrency trading by bringing decentralized exchange, portfolio management, market analysis tools, and a secure wallet, all under one roof. With just a few clicks between you and the market, Dolomite’s intuitive user interface makes trading a breeze. Current solutions require lengthy sign-ups, a potential myriad of authenticator apps, and messy user experiences. By the time you’re able to trade, a significant amount of time has passed, and the likelihood of responding directly to market conditions has been greatly minimized. Dolomite’s seamless transition from wallet to exchange enables you to move in time with the market and never miss a beat.
Send and receive tokens from the feature-rich Dolomite wallet
Dolomite’s decentralized exchange can be accessed directly via any Ethereum wallet, including the ones you can create on Dolomite. The advantages of this arrangement over the methods employed by centralized exchanges are enormous and not to be ignored.
Track your portfolio with in-depth market data
The Dolomite wallet features a real-time portfolio with graph displays of your portfolio’s performance against several metrics and fiat currencies, your transaction history (allowing you to track your trades and dollar-cost-averaged (DCA) prices accurately), and a token discovery option, allowing you to view token information and pricing data across market-wide exchanges. Having this powerful tool, users should never find themselves having to stray away from Dolomite to conduct research on their next investment or to see how their current portfolio is performing.
The Dolomite portfolio manager currently tracks over 500 different Ethereum-standard ERC20 tokens and, most importantly, the exchange does not require users to wrap their own ETH manually. Instead, this process is tucked away as elegantly as possible behind a smooth user experience. As the Loopring Protocol is expanded to work with other blockchains such as NEO and QTUM, the Dolomite decentralized exchange and portfolio manager will evolve to grant users cross-chain trading options and aggregate portfolios across multiple wallets and different blockchains.
With Dolomite your crypto and your personal information stays secure with you
In sharp contrast to centralized exchanges, Dolomite does not store your private keys and never will. As a centralized exchange user, you do not own your private keys. The exchange holds those keys for you, meaning that if the exchange is compromised via a hack, your private keys can be taken and your funds stolen. Dolomite users retain full ownership and control of their wallets which translates to there being no central point of failure for bad actors to compromise the Dolomite network. The result is a fail-safe environment for Dolomite users.
Better Scaling/Long-Term Liquidity via Loopring
Loopring allows for secure liquid trading
Dolomite’s DEX is built on top of Loopring, a protocol for decentralized token exchange. In essence, the Loopring Protocol is a blockchain agnostic standard which Dolomite, along with a host of other DEX’s, use to create a decentralized exchange network featuring higher liquidity.
To visualize this process, first think of the way exchanges currently operate. Binance, Bitfinex, Huobi, and others exist as separate silos — each maintains their own order book and none are in communication with each other. Dolomite’s Loopring Protocol-based exchange, on the other hand, matches orders across the entire web of Loopring-based exchanges and the Ethereum blockchain by using an order-matching model called ring matching .
Ring matching is a process by which several different orders across trading pairs can be broken down into fragments and swapped at the best market rates available. Let’s suppose for instance that Bob wants to trade 20 OMG for 0.3 ETH, Alice wants to trade 10 REP for 40 OMG, and John wants to trade 1 ETH for 20 REP. Using ring matching, all three orders will be handled within a single trade, with any remnant fragments from the trade broken down and settled by subsequent ring matches.
Margin splitting is a Loopring feature in which order matchers who find and settle exchanges are rewarded for finding the best possible deal between parties. For example, if Bob is looking to trade 5 ETH for 200 OMG, but an order matcher can find Bob a better rate at 5 ETH for 204 OMG, then the 4 OMG will be split equally between Bob and the order matcher, thereby allowing Bob to secure a better trade while incentivizing the order matcher to find better deals for the user.
The beta test release of the Dolomite decentralized exchange is scheduled for September 2018. The number of initial Dolomite testers will be capped at 100. If you are interested in becoming a Dolomite test user, please register your interest at dolomite.io. Additionally, you can join any of Dolomite’s social media channels to keep up to date with Dolomite news and discussions.