Stellar Lumens is among the first to market with developing a platform for a decentralized cryptocurrency exchange. Stellarport, unrelated to the team behind Stellar Lumens, has released a new decentralized exchange built on this platform.
Currently, the Stellar distributed exchange can be accessed using the StellarTerm interface. There are a handful of coins that can be traded, including XLM MOBI, CNY, RMT, KIN and HKDC. This may not sound like much, given that the most popular, centralized exchanges at minimum have the most popular cryptocurrencies listed (BTC and ETH), and at maximum, have as many as two-hundred coins available to trade, with possibilities for fiat as well. However, the release of Stellarport shows that people and companies are adopting the decentralized technology provide by Stellar Lumens, and could be an indicator that either more coins will be listed on the exchange, or that XLM might go up in value. At present, XLM has a value of $0.4538 USD with a market cap of $8.37 billion and a trading volume of $110.6 million USD according to CoinMarketCap. If Stellarport is successful with building a user base, it would mean more trades against XLM, increasing its total volume and ultimately, quite possibly, it’s value.
Most exchanges are centralized. A single company, like Binance or Bittrex, manages the trades, accepts deposits into its internal wallets, and sends withdrawals out to users’ wallets. These exchanges do have problems. When too many users are online, the servers can become overloaded, resulting in system shutdowns where users are locked out of trading, as in the recent, temporary shutdown of Binance. A decentralized exchange would theoretically eliminate such a problem, as it would more or less operate on the CPU power of every user in the network. However, a decentralized network would present other problems. The most notable would be the slow speed of cryptocurrency transactions. On a centralized exchange, the crypto isn’t actually moved from one wallet to another in real-time. That happens when you make a withdrawal so that trades are cheaper and faster. On a decentralized network, you may be limited by the speed of the currency pairs you’re moving from one location to another.
With Stellar Lumens, the decentralized model is unique. Users hold their coins in their wallets, and trades move the coin from one user’s wallet directly to the other user’s wallet. The funds don’t pass through a centralized exchange, meaning that there is no intermediary. Most decentralized Ethereum exchanges operate in this way. In the case of the Stellar Decentralized Exchange, there is just one official, decentralized exchange that holds user listings. This model is meant to solve problems associated with a fully decentralized exchange, by offering some of the benefits of centralized systems. These include high volume, liquidity and lower costs.
Stellarport facilitates adoption of its exchange platform by enabling users to manage their Stellar Lumens wallets, including hardware wallets. Trades happen in real time and fees are 0.15% for takers, and free for makers.
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