Dottle doodle doo and we are back with

another episode by dot daily about the

polkadot ecosystem today we will be talking
about polkadex so lets get into it

Lately the world has been changing at the speed of light. As we

are making more and more technological advances in every eld,
the way people conduct nancial transactions evolved, as well. A
strong need for a nancial system that would preserve capital and
generate wealth for people all over the world lead to the birth of a
decentralized nancial system. DeFi marks the new era of
transferring nancial system from the traditional at system to the
decentralized one.
In the past few years, especially during the COVID 19 pandemic,
the blockchain market flourished with many decentralized
exchanges and protocols. The cryptocurrency trading community
has also grown quite signi cantly, as major companies now accept
cryptocurrency as payment. El Salvador even went as far as to
adopt Bitcoin as an of cial currency alongside the US dollar. Still,
DeFi needs to attract a lot more users to gain mass adoption, as it
still loses to the centralized solutions. The modern user has to
settle for a compromise instead of a perfect product, no matter
whether the choice is centralized or decentralized trading
platforms. But Polkadex is a new fully decentralized peer to peer
orderbook based crypto exchange that has combined the bene ts
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of both centralized and decentralized exchanges so crypto
enthusiasts get the best of both worlds.
But before we explain what Polkadex is, it is preliminary to gain a
better understanding of cryptocurrencies so let’s get into details.
Cryptocurrency markets can be broadly divided into two
categories: centralized (exchanges that always feature the
orderbook) and decentralized (can be with or without the
orderbook). Each of these markets come with their own merits and
demerits. Although the decentralized markets are superior to the
centralized ones, they also have their own short comings. And we
are going to explain each market in detail, their merits and
demerits, and how Polkadex tries to solve all the problems related
to crypto markets by combining the bene ts of centralized and
decentralized exchanges.
So, without any further ado let’s begin the video. But before we get
started, make sure to smash the subscribe button and hit the bell
icon to never miss any interesting video from us. Having said that,
let's get into the video.

Content
Centralized Markets
These are the markets where buyers and seller can offer prices at
which they are happy to buy or sell assets on the exchange,
forming the list of future orders. They are also called Orderbook
markets. The trade is executed if there is a match between one
user’s buy order price and another user’s sell order price. This
matched price then becomes the asset’s new market price.
Orderbook markets enjoy a wide range of bene ts but at the same
time have some disadvantages on some important aspects. The
main advantages of centralized exchanges are user experience
and low latency.
Centralized exchanges are usually the most user-friendly, as a big
part of their audience is newcomers to the crypto industry. Hence,
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the design is more intuitive, and the platforms are easy to navigate
even for traders buying crypto for the rst time. Moreover, users
can convert their at into crypto directly on the exchange.
Latency means the time that it takes to place or edit an order in the
orderbook. Centralized exchanges are fast and can process a
transaction in only about 20 milliseconds.
The main disadvantages or question marks in the trading
experience on centralized exchanges are security and KYC.
Being a digital currency crypto must be resistant to hackers and
malicious people. As a trader or simply a cryptocurrency holder,
you want to be sure that your funds are always safe and will not just
vanish in the thin air for any reason. There are two risks here: the
exchange getting hacked because its security was not top-notch
and founders of exchange running away with your funds. While
the latter can be eliminated by choosing a trusted exchange, the
security issue of centralized exchanges does not have any real
remedy yet.
Hence, to keep your crypto on a centralized exchange you have to
fully trust the team behind the exchange and accept that your
funds are always at risk. It is a very big ask from the user and many
traders’ resorts to moving their funds back and forth between the
exchange and cryptocurrency wallets every time they want to
trade. Such activity comes at a cost, as traders have to pay the fees
for each transfer.
Another limitation of centralized exchanges is a KYC (Know Your
Client) procedure. Each market participant has to go through a
thorough process of submitting personal information including IDs
to assure data security. While the traders might be comfortable
sharing their data for KYC for a good cause, they don’t have full
information about its further use. As a user, you de nitely don't
want your personal information to be leaked on the Internet or
your data to be used for various malicious purposes without your
permission. Now that you fully understand what centralized
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markets are let us jump to the decentralized markets which are
going to be main point of our focus for the rest of the video.
Decentralized Markets
Decentralized exchanges emerged not so long ago to solve the
limitations of centralized competitors. These markets depend on
passive market making and are controlled purely by supply and
demand or AMM model (Automated Market Maker). Some of the
well-known examples of such exchanges are Uniswap, Balancer
and Sushiswap.
AMMs allow permissionless and automatic ways of trading digital
assets and use liquidity pools instead of a traditional market with
buyers and sellers. Liquidity Providers (LPs) are users who supply
their crypto tokens and for a liquidity pool. In this case prices of
tokens are determined by a constant mathematical formula.
Decentralized exchanges are open for trading 24/7 and do not rely
on the traditional interaction between buyers and sellers. They are
the embodiment of initial crypto ideas: no single entity is in control
of the system, and anyone can build new solutions and participate.
As a user, you trust the code instead of trusting the company.
Users of decentralized exchanges can forget about the risks of
hacks and non-transparent KYC processes. Trading on a
decentralized exchange, users need only to connect their wallet to
execute the swap between cryptocurrencies of their choice. Funds
are not kept on the exchange but move directly to and from the
wallet, so security is not compromised at any point of the trading
process. As the funds always remain with the user there are fewer
risks involved and the whole system stays very secure.
Decentralized markets are a great solution to the disadvantages of
centralized exchanges if not all the negative properties of such
markets. However, decentralized exchange users suffer from a
wide range of limitations of their own such as price shocks,
slippage, frontrunning and arbitraging.
We know all these terms are sounding confusing to you right now
but let us explain them and you will have a clear mind.
Price Slippage happens when the user places a trade that is larger
than the liquidity available in the market. Using a simple analogy, if
you are trying to buy more apples in a market with limited supply,
the price of one apple will increase. On the other hand, if we don't
allow the seller to increase the price of the apples, then the seller
is losing value by providing apples to the market and has more
incentive to just hold on to his apples. Similarly, the AMM
increases or decreases the price of an asset to protect the LP in
case of mass buy or sell events in the market. This is outlined in the
Uniswap model though limits for price slippage tolerance. The
higher the slippage that you are ready to tolerate the easier your
swap will go.
Arbitrating: we all know crypto currencies are traded on
hundreds of different exchanges, and sometimes, the price of a
coin or token may vary on one exchange to another. That is where
the classic Wall Street strategy of “arbitrage” comes in. Crypto
currency arbitrage is a strategy in which investors buy a
cryptocurrency one more exchange and then quickly sell it on
another exchange for a higher price. Capturing the arb means
taking advantage of the price difference on two different
exchanges. For example, if one exchange is selling Bitcoin for
$53,000 and another is selling Bitcoin at $53,400, an arbitrageur
can purchase Bitcoin on the rst exchange, transfer the purchased
BTC to the second exchange, and sell it a higher rate. Since there
are over 300 spot market exchanges selling crypto assets like
Bitcoin at slightly different prices, there are countless crypto
arbitrage opportunities. This explains why traders are increasingly
looking for ways to ef ciently identify these opportunities and
capitalize on split-second price differentials across multiple
exchanges.
Frontrunning is an issue related to the blockchain and not the AMM
pool directly. Ethereum-like blockchains priorities transactions
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with higher gas fees. As blockchain is transparent anyone in the
network can see other transactions in the queue. Imagine that
someone in the network notices that you are buying a lot of asset X.
Likely that after your transaction the price of the asset will increase
due to increased demand. Seasoned traders can execute their
transaction before yours by setting higher gas fees for their
transaction. In this case, your swap price will go up and you will
end up purchasing the asset at a higher price than you originally
intended.
High transaction fees are inevitable for exchanges based on the
Ethereum network. Users are often spending over $100 to execute
a swap transaction, hence, DEXes are becoming a less attractive
option for smaller traders.
All in all, traders who use decentralized platforms don't have any
other choice but to agree with the risks. Currently, there are no
platforms that can prove they eliminated the mentioned issues in a
decentralized environment.
What is Polkadex?
Polkadex emerged as a cryptocurrency to solve all these problems
with the current crypto exchanges. Polkadex is a non-custodial
fully decentralized peer-to-peer orderbook-based cryptocurrency
exchange for the DeFi ecosystem that combines the bene ts of
centralized and decentralized exchanges into one.
What problems does Polkadex solve?
One of the main issues plaguing decentralized markets built on
Ethereum is the crazy gas fees. This issue demotivates millions of
users from using DeFi protocols. Polkadex’s Polkapool xes this by
offering swaps without any gas fees.
Polkapool not only introduces free swaps but also eliminates front
running, a phenomenon in which wealthier traders cut in line and
therefore get ahead of other traders by opting to pay higher fees.
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Free swaps and extremely fast transactions on the Polkadex
completely eliminate the possibility of Front Running.
So how does Polkadex manage to solve all these problems?
Now you might be thinking how Polkadex manages to solve all the
problems related to decentralized networks, well it is because it
uses a unique architecture combining multiple technologies like
blockchain, parachain, TEE, IPFS, and other blockchain
technologies.
Polkadex Orderbook consists of four fundamental parts:
• The native blockchain Polkadex Network
• The Intel-invented Trusted Execution Environment tech
applied to crypto for the rst time
• The Orderbook engine that maintains the high-performing
orderbook and matches trades on it
• IPFS as the exchange’s insurance policy
Polkadex Token
The token of Polkadex is PDEX, with a limited supply of only
twenty million tokens, PDEX supply is designed to fluctuate at
times thanks to the automated burning mechanism that will bring it
back to the max amount using a network regulated, automatic
system of token burns. Currently, only around 15% of the total
PDEX is in circulation, the remaining tokens will be distributed and
allocated after the Mainnet launch.
PDEX can be used by the users to:
• Pay and get discounts on transaction and trading fees
• Participate in Polkadex IDOs
• Participate in on-chain governance of the network
• Become a validator of the network by staking
• Nominate validators and collators of the network
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That brings us to the end of our video thanks
for watching dottily like comment subscribe
and until next time a dottle doodle doooo to
ya !!.