DEX or CEX: Why Hybrid is the Answer

Rudolfs Medvedevs, Founder and CEO of the hybrid exchange Ternion, explains why the hybrid functionality is the best option for security and liquidity in this fast read update:

Cryptocurrency fever gained quite a momentum in the recent years, and now it is being treated as an alternative to traditional money. A need for an efficient implementation of cryptocurrency into the mainstream adoption intensifies the pressure to have a good exchange that can handle the volumes and provide reliable liquidity. Liquidity is important because low liquidity makes the market volatile. Liquidity refers to the degree to which a particular asset can be quickly bought or sold without affecting the general stability of its price.

Although liquidity is usually attributed to centralized platforms, such platforms are notorious for being exposed to security breaches. Right now, we are witnessing a surge in the popularity of decentralized exchanges. Binance has recently released an alpha version of its decentralized exchange in the attempt to provide a more secure solution for traders.

Decentralized exchanges are considered to be safer because they are set up in a way that allows users to maintain ownership of their assets using private keys. In design, DEXs should avert accumulation of cryptocurrency in one spot, thus making the exchange harder to hack. However, in reality, Bancor, a decentralized exchange, has been hacked, thus showing that decentralization is not always the most secure or appealing option.

So, if centralized exchanges tend to provide more liquidity and decentralized exchanges tend to be more secure, then what we need is a convergence of two: a hybrid exchange. The recent emerging hybrid fiat-to-crypto exchange is Ternion. Due to being licensed, it allows institutions to efficiently to operate with cryptocurrency. By providing a robust liquidity strategy and being appealing to brokers, the exchange will combine the functionality of DEX and CEX and will be the pioneer in a successful adoption of a hybrid structure.

Once all the current crypto exchanges understand that being only centralized or only decentralized is not enough, they will turn to a hybrid solution. The change will be slow and hard for some radicals to accept, however, when the alternative is a failure, the path towards innovation and accommodation becomes an easy one.

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