Position Exchange

<h2 id="header-0"><strong>What are Decentralized exchanges?</strong></h2><p>Decentralized exchanges, also known as DEXs, are peer-to-peer marketplaces where cryptocurrency traders make transactions directly without handing over the management of their funds to an intermediary or custodian. These transactions are facilitated through the use of self-executing agreements written in code called smart contracts.</p><h2 id="header-1"><strong>How do DEXs work?</strong></h2><p>As decentralized exchanges are built on top of blockchain networks that support smart contracts and where users keep custody of their funds, every trade incurs a transaction fee along with the trading fee. In essence, traders interact with smart contracts on the blockchain to use DEXs.</p><p>There are three main types of decentralized exchanges: Automated market makers, Order books DEXs, and DEX aggregators. All of them allow users to trade directly with each other through their smart contracts.</p><h2 id="header-2"><strong>Advantages of using a DEX</strong></h2><h3 id="strong-token-availability-strong"><strong>Token availability</strong></h3><p>Decentralized exchanges can include any token minted on the blockchain they are built upon, meaning that new projects will likely list on these exchanges before being available on their centralized counterparts.</p><h3 id="strong-anonymity-strong"><strong>Anonymity</strong></h3><p>When users exchange one cryptocurrency for another, their anonymity is preserved on DEXs. In contrast to centralized exchanges, users do not need to go through a standard identification process known as Know Your Customer (KYC). KYC processes involve collecting traders’ personal information, including their full legal name and a photograph of their government-issued identification document. As a result, DEXs attract a large number of people who do not wish to be identified.</p><h3 id="strong-reduced-security-risks-strong"><strong>Reduced security risks</strong></h3><p>Experienced cryptocurrency users who custody their funds are at a reduced risk of being hacked using DEXs, as these exchanges do not control their funds. Instead, traders guard their funds and only interact with the exchange when they wish to do so. If the platform gets hacked, only liquidity providers may be at risk.</p><h3 id="strong-reduced-counterparty-risk-strong"><strong>Reduced counterparty risk</strong></h3><p>Counterparty risk happens when the other party involved in a transaction does not fulfill its part of the deal and defaults on its contractual obligations. Because decentralized exchanges operate without intermediaries and are based on smart contracts, this risk is eliminated.</p><p>To ensure no other risks arise when using a DEX, users can quickly do a web search to find out whether the exchange’s smart contracts have been audited and can make decisions based on other traders’ experience</p><h2 id="header-3"><strong>Disadvantages of using DEXs</strong></h2><h3 id="strong-specific-knowledge-is-required-strong"><strong>Specific knowledge is required</strong></h3><p>DEXs are accessible using cryptocurrency wallets that can interact with smart contracts. Not only do users have to know how to use these wallets, but they also have to understand security-related concepts associated with keeping their funds secure and fund it with the correct tokens.</p><p>Additionally, slippage tolerance on DEX platforms has to be manually adjusted for orders. Adjusting slippage can be technical, and some users may not fully understand what it means.</p><p>Without specific knowledge, traders can commit various errors which may lead to a loss of funds. Withdrawing coins to the wrong network, overpaying transaction fees and losing out to impermanent loss are just a few examples of what could go wrong.</p><h3 id="strong-smart-contract-vulnerabilities-strong"><strong>Smart contract vulnerabilities</strong></h3><p>Smart contracts on blockchains are publicly available and anyone can review their code. Moreover, smart contracts of large decentralized exchanges are audited by reputable firms that help secure the code.</p><p>Exploitable bugs can still slip past audits and other code reviews. Auditors may even be unable to foresee potential new exploits that can cost liquidity providers their tokens.</p><h3 id="strong-unvetted-token-listings-strong"><strong>Unvetted token listings</strong></h3><p>Anyone can list a new token on a decentralized exchange and provide liquidity by pairing it with other coins. This can leave investors susceptible to scams such as rug pulls that make them believe that they are buying a different token.</p><p>Some DEXs counter these risks by asking users to verify the smart contract of the tokens they are looking to buy. While this solution works for experienced users, it circles back to specific knowledge problems for others.</p><p>Before buying, traders can try to get as much information as possible about a token by reading its white paper, joining its community on social media and looking for potential audits on the project. This type of due diligence helps avoid common scams where malicious actors take advantage of unsuspecting users.</p><h2 id="header-4"><strong>What is Position Exchange?</strong></h2><p>Position Exchange is a Decentralized Trading &amp; Exchange platform designed to provide a transparent, trustless, and fully on-chain trading platform.</p><p>With the core being an on-chain orderbook matching engine, Position Exchange helps traders to have full control over their orders while reducing transaction costs and remains the same trading experience in a Centralized Exchange. It is built for EVM blockchains and is completely permissionless.</p><h2 id="header-5"><strong>What does Position Exchange offer?</strong></h2><ul><li>Position Exchange’s Orderbook matching engine - The Core</li><li>On-chain Futures Trading</li><li>DEX with the On-chain Orderbook</li><li>On-chain Derivatives Products &amp; DeFi</li><li>POSI &amp; PTX</li><li>POSI Chain</li><li>Mobile Apps</li></ul><p>With the vision to become a door of DeFi, Position Exchange aims to become the first exchange of choice with the best UI/UX while remaining transparent and trustless.</p><p>Join Position Exchange <strong><a href="https://position.exchange/" rel="noopener noreferrer nofollow">here</a> </strong>and state some thoughts about your experience.</p>

What is Decentralized Exchange? How it works?

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