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Lately, there has been a shift from centralized to decentralized exchanges due to the various ill practices of centralized exchanges. This article explores why everyone in crypto is suddenly pushing for the wider adoption of decentralized exchanges.<img src="https://cdn-images-1.medium.com/max/1000/0*RZlvvCK5_IWpzKpn.png" />Decentralized Exchanges: Why Are They Suddenly Popular?<h3 id="understanding-decentralized-exchanges">Understanding Decentralized Exchanges</h3>Decentralized exchanges allow cryptocurrency users to exchange tokens, buy on-chain assets, and execute transactions without using a third party or central entity. The idea behind decentralized exchanges started with atomic swaps based on hashed locked time contracts, or HTLC, developed by Tier Nolan in 2013 and popularized by Litecoin founder Charlie Lee.Using atomic swaps, crypto holders could send and receive cryptocurrencies without using an exchange for the first time in a secured transaction. HTLC uses cryptographic keys shared only after fulfilling the transaction criteria to execute the exchange automatically. Projects like Stellar later allowed users to exchange tokens without a central entity using HTLC.A new range of exchanges like Bancor and Uniswap based on AMM followed the HTLC revolution. With AMM, exchanges, or crypto DEXs, anyone can provide liquidity to a pool in multiple tokens to facilitate transactions and exchanges between these tokens.AMM became the model for modern decentralized exchanges due to its efficiency and adaptability. The best-decentralized exchanges on several blockchains today are AMM-based. Users who want to transact on AMM-based crypto DEXs need a Web3 wallet, the tokens for the exchange, and a stable internet connection.<img src="https://cdn-images-1.medium.com/max/1000/0*TLdp8KMcj7OvhwFo.png" />Understanding Decentralized Exchanges<h3 id="the-problems-with-centralized-exchanges">The Problems With Centralized Exchanges</h3>Even though decentralized exchanges have always existed, there has always been a stereotype that connecting wallets to such platforms will expose the user to outright danger. Some users think AMM-based DEXs are reserved for developers, who should be the sole users of such DEXs. Some of the best decentralized exchanges, like <a href="https://bit.ly/3PSVkdQ" rel="noopener noreferrer nofollow">Pandora</a>, are open and accessible to everyone. Yet people have always loved the experience of centralized exchanges.Centralized exchanges are, however, vulnerable to hacks targeting their hot wallets. There is also the likelihood of a breach of user privacy based on the information provided during KYC and AML procedures and the possibility eventual collapse due to human mismanagement.The misconduct of the founders or directors is yet another centralized exchange problem that often has the biggest impact and is most likely to lead to bankruptcy. Examples of such a sudden collapse include the QuadriggaCX collapse and the recent FTX debacle. There is hardly a thing with a more destructive tendency for investors and the entire crypto space than greedy founders. Some of these founders turn custody businesses into pyramid schemes or use customer funds for personal gains.As for the hacks, centralized exchange hacks are also disastrous, with hackers moving millions of customers’ funds from the exchange’s hot wallet. Nearly all centralized exchanges today have experienced one or two hacks. When MtGox was attacked, for example, $460 million of user funds were stolen. The exchange was the biggest at the time, accounting for 70% of the global crypto transactions.Data breaches have not been quite an issue, but leaving user data on personal data on a central server is not decentralized and could lead to breaches. Hackers have always targeted centralized platforms to steal information which is then resold on the dark web. Compromised data can lead to impersonation or put the true owner of the identity information at risk of other phishing activities.<img src="https://cdn-images-1.medium.com/max/1000/0*ge10dxbZSdyT65yz.png" />The Problems With Centralized Exchanges<h3 id="the-shift-in-perspective-from-centralized-to-decentralized-exchanges">The Shift in Perspective From Centralized to Decentralized Exchanges</h3>While centralized exchanges have the largest user base, the problems stated before make them inefficient to a large extent. As more users become victims or learn about cases of failed centralized exchanges, the search for a decentralized solution has been growing in leaps and bounds. The growth has also compounded due to word of mouth from those who have experienced decentralized exchanges.Aside from providing a truly decentralized experience, decentralized exchanges offer products such as yield farming to help users generate passive income while building a sustainable infrastructure. Crypto DEXs like <a href="https://bit.ly/3PSVkdQ" rel="noopener noreferrer nofollow">Pandora</a>, for example, offer <a href="https://bit.ly/3I2YJVC" rel="noopener noreferrer nofollow">stablecoin yield farming</a> with reasonable APY and less risk since you can take back your money anytime.Pandora also provides a fair ecosystem that rewards users through experience points for <a href="https://bit.ly/3I95F3H" rel="noopener noreferrer nofollow">executing hash rate eligible transactions</a>, <a href="https://bit.ly/3WsUUNV" rel="noopener noreferrer nofollow">upgrading DroidBots</a>, <a href="https://bit.ly/3WOOdFG" rel="noopener noreferrer nofollow">Trading NFTs on PandoMarket</a>, <a href="https://bit.ly/3I68S40" rel="noopener noreferrer nofollow">buying tickets</a>, <a href="https://bit.ly/3Q1RNKs" rel="noopener noreferrer nofollow">unlocking staking slots</a>, and <a href="https://bit.ly/3I64hyC" rel="noopener noreferrer nofollow">opening PandoBoxes</a>. Earning these points shows that a user is doing more with Pandora, and users earn EXP for staying active.<img src="https://cdn-images-1.medium.com/max/1000/0*gJPWunqImy3YJXtM.png" />The Shift in Perspective From Centralized to Decentralized Exchanges<h3 id="the-twitter-banter-on-decentralized-exchanges">The Twitter Banter on Decentralized Exchanges</h3>Crypto Twitter was one of the first places where the discussions about the urgency of decentralized exchanges began. After the FTX debacle, crypto users across the globe Tweeted endlessly about the best DEX and how to get started on them.Some users were already familiar with DEXs, but a handful needed to learn what experiences on some of the best DEXs like <a href="https://bit.ly/3PSVkdQ" rel="noopener noreferrer nofollow">Pandora</a> could mean for their growth and finances. Most experts shared a step-by-step guide with links on how to use decentralized exchanges and store funds safely on hardware wallets while interacting with these exchanges.After learning about DEXs on Twitter, users went further to research the most reliable and affordable exchanges. Those interested in stable earnings also started to research DeFi instruments like the <a href="https://bit.ly/3PU1yKq" rel="noopener noreferrer nofollow">Pandora NFT Securities</a>. Notably, simple Tweets and comments on crypto Twitter contributed to a shift in perspective from centralized to decentralized exchanges as users learned from one another and tried out new platforms.<img src="https://cdn-images-1.medium.com/max/1000/0*gDkYX4qaw0aBmqQ8.png" />The Twitter Banter on Decentralized Exchanges<h3 id="conclusion">Conclusion</h3>In summary, centralized exchanges will continue to play the onramp and offramp role between fiat and cryptocurrencies in the foreseeable future, but decentralized exchanges remain the best and most reliable platfoms. Simple misbehavior by managers at the third party controlling centralized exchanges could see innocent users losing millions of dollars in assets stored on the exchange.Decentralized exchanges do not hold user funds. The funds are instead stored in a wallet that can be backed up by a hardware wallet and accessible only after connection with the decentralized exchange. The chances of a compromise are therefore minimized in a decentralized exchange. These and other benefits like decentralization, and privacy protection, are some of the reasons for the sudden shift towards decentralized exchanges.These contents are for general information purposes only. They are not investment advice, a recommendation, or solicitation to buy, sell, or hold any digital asset or engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the crypto asset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your crypto assets, and you should seek independent advice on your taxation position.<blockquote>Stay financially strong with Pandora — your favorite DeFi companion! *Telegram Group DEX: <a href="https://t.me/PandoraCommunity" rel="noopener noreferrer nofollow">https://t.me/PandoraCommunity</a> *Telegram Channel DEX: <a href="https://t.me/PandoraDigitalNews" rel="noopener noreferrer nofollow">https://t.me/PandoraDigitalNews</a> *Telegram Group Launchpad: <a href="https://t.me/Pandora_IDO" rel="noopener noreferrer nofollow">https://t.me/Pandora_IDO</a> *Telegram Channel Lauchpad: <a href="https://t.me/PandoraIDO" rel="noopener noreferrer nofollow">https://t.me/PandoraIDO</a> *Twitter: <a href="https://twitter.com/Pandora_DEX" rel="noopener noreferrer nofollow">https://twitter.com/Pandora_DEX</a> *Facebook: <a href="https://www.facebook.com/PandoraDigital.DEX/" rel="noopener noreferrer nofollow">https://www.facebook.com/PandoraDigital.DEX/</a> *Instagram: <a href="https://www.instagram.com/pandora_dex/" rel="noopener noreferrer nofollow">https://www.instagram.com/pandora_dex/</a> *Medium: <a href="https://medium.com/&#64;pandora_digital" rel="noopener noreferrer nofollow">https://medium.com/&#64;pandora_digital</a> *Discord: <a href="https://discord.gg/pandoradigital" rel="noopener noreferrer nofollow">https://discord.gg/pandoradigital</a> *Reddit: <a href="https://www.reddit.com/r/pandoradigital/" rel="noopener noreferrer nofollow">https://www.reddit.com/r/pandoradigital/</a> *Blog: <a href="https://news.pandora.digital/" rel="noopener noreferrer nofollow">https://news.pandora.digital/</a> *Partnership: <a href="https://partner.pandora.digital/" rel="noopener noreferrer nofollow">https://partner.pandora.digital/</a> *Official Dapp: <a href="https://bit.ly/3z8azHT" rel="noopener noreferrer nofollow">https://pandora.digital/</a></blockquote>

Decentralized Exchanges: Why Are They Suddenly Popular?

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