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Show Notes

Hey there, this is Ryan on Episode 1 of Ledger of Record. Ledger of Record is brought to you by lore, the first natural-language block explorer enabling anyone to be a voyager for on-chain data. Start exploring now at Lore.so!

Today, we're going to be talking about the difference between centralized and decentralized exchanges.

First, let's define what we mean by a centralized exchange. A centralized exchange is a platform that allows users to buy and sell cryptocurrencies using traditional, fiat currencies. These exchanges are called centralized because they are controlled by a single entity, typically a company. This means that all transactions on the platform must go through this entity, and the company has complete control over the platform and its users and usually the assets.

Decentralized exchanges, on the other hand, operate differently. Instead of being controlled by a single entity, they are built on top of a decentralized network like the blockchain. This means that transactions are processed directly between users, without the need for a central authority to facilitate them.

One of the main advantages of decentralized exchanges is that they are more secure than centralized ones. Because there is no central authority controlling the platform, it is much harder for hackers to target the exchange and steal user funds. Decentralized exchanges also offer greater privacy and anonymity, since users do not need to provide personal information in order to use the platform.
However, decentralized exchanges also have some drawbacks. Because they are built on top of decentralized networks, they can be more complex to use and may not offer the same level of liquidity as centralized exchanges. This is why you have seen the majority of user adoption take place on centralized exchnages like Coinbase, FTX, and Binance (Im not making recommendations, rather giving examples)

The one really cool thing of DEXs is being able to see a transparent overview of the key metrics.
For example I am looking at a Dune dashboard covering Polygon DEXs - I can see with full transparency that the past 7 day trading volume is about 270M, daily volume per dex, marketshare breakdown, # of users, txn count… you get the point.

https://dune.com/hildobby/Polygon-DEXs

This is really important for retail investors to have trust in the things they are investing in with their hard earned money and creates a more trustless process in a space that is in dire need of more trust and accountability

If you have other topics you want me to breakdown or want to be interviewed on Ledger of Record email me at podcast@shuttlelabs.xyz

See you next time on Ledger of Record