DEXes are the future (as long as we can get there)

Decentralized exchanges offer real benefits over their centralized ancestors – better transparency, control over your own funds, reduced counterparty risk, and less worry about losing funds to an exit scam, hacker, or government intervention.

Despite those benefits, trade volume on DEXes remains a fraction of volume on centralized exchanges. Why? The biggest problem is low liquidity.

Fragmented liquidity

If we want to speed up the rate of adoption, we need to tackle the problem of low liquidity. Or more to the point, fragmented liquidity across DEXes. Just on Ethereum, there are several different and incompatible DEX protocols. 0x’s pooled liquidity has potential, but as we’ve seen, relayers can simply fork the protocol, further fragmenting liquidity.

When you compare an asset’s price on a single centralized exchange to its price on a single DEX, the DEX’s price is almost always worse. This drives traders away – often to centralized exchanges – creating a feedback loop that keeps liquidity low on each DEX and across DEXes.

Is the answer a giant robot?

Sort of. At least in the sense that as a single unit, DEXes can be better than the sum of their parts. To accomplish that, we’re excited to introduce DEX.AG, a new Settle app that lets you instantly compare prices across decentralized exchanges.

Until now, there hasn’t been an easy way to compare prices on different DEXes. It’s cumbersome to navigate each DEX’s interface and remember each price, and by time you finish checking them all, your opportunity may have slipped away.

DEX.AG simplifies the process by checking numerous DEXes and serving up the best price in just a few clicks. Now traders can think of DEXes in the aggregate (that’s the “AG” part of the app’s name), almost as if liquidity were programmatically pooled. You might be surprised how often you can beat the centralized exchanges’ prices when looking at prices across DEXes.

Plus, by empowering users with instant price comparison, DEX.AG should help increase competition among DEXes, driving innovation and in turn making DEXes even stronger against centralized exchanges.

We think DEX.AG can help usher in a world that recognizes the inherent advantages of decentralized exchange. Check it out, and if you agree, you can share the wonderful tale of how DEX.AG’s pack of robot lions came together as a multicolored warrior with lion heads for feet and hands… Er, anyway, you can say that you were there when the tides turned in the battle between DEXes and centralized exchanges.