Decentralized Exchange

A DEX is usually a matching service or brokerage that functions mostly by code and has few, if any real actors. DEX's usually operate a matched bargain platform. Unlike a CEX, which can act as a broker / custodian, the DEX facilitates trading only. The digital pairs do not include fiat. Many operate on the Ethereum platform. They may also offer other services to improve liquidity such as lending.

The key risks are smart contract risks and governance risks. DEXs require more RDD than a CEX. DEX are growing rapidly because of their speed, anonymity and lower transaction costs. However this presents challenges when things do go wrong.

Governance risk (3)
Is the DEX regulated?
3.39 A regulated (by a government agency or independent community actor nn) are deemed lower risk.
Does the DEX have a CoinMarketCap rating > 7
3.41 Third party verification of DEX helps reduce the time of risk
Does the DEX state who its fiat bankers are?
3.42 Confirmation of regulated bankers provides assurance of validity of the enterprise
Are the controllers / owners of the DEX in the public domain?
3.40 Having knowledge of the owners and controllers can help ascertain governance risks such as abusing powers of control.
Liquidity risk (7)
Does the DEX state what its leverage policy is?
7.49 Knowing the leverage. risk of the exchange can help determine exposure tolerance
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No financial advice

These global standards, best practice guidance and risk due diligence questions are an attempt to make DeFi a level playing field. They are not intended to provide any investment advice. Claims made in this website do not constitute investment advice and should not be taken as such. In the meantime, it would be very useful if the jurisdictional regulators would start working together and treating these new financial related projects as a different form of instrument. The Howey Test (1946) was designed in an era of deeds of title and paper bearer certificates. DeFi can be humanless and profit is not always the motive for using protocols. TradFi Derivatives for example are based on underlyings of real assets like the fair value of incorporated companies whose value is derived from fiat currencies which are themselves derivatives on an underlying like gold or a printing machine. Fiat is seen to be a real asset which it clearly is not. The new DeFi world matches actors with agendas. Most of the time the agenda is to do things better and faster. Defi enables everyone including the bankless and unserved members of the community to transact without having to understand how to use Excel or have an MBA from an elite university or be able to able to decipher the millions of pages of legal text opinions as to whether a bitcoin is a currency, a security, a commodity, a derivative, an underlying, a valueless number, type of gambling or something that will just go away. While we wait for a consensus by the old guard, the new guard will create their own computer based standards. Our aim is to turn these standards into bots or smart contracts that do all of this behind the scenes. Image a world where the community agree on how to transact and just do it without a parental overseer who is always a bit behind the curve...

API

You can grab this data (=importdata(api)) for free. The full data set is here at

/api/?data=all&format=[csv|json]

If you have a key you can grab completed rddqs for the most current relevant actor services at

/api/actors?data=all&format=[csv|json|html]&key=[*]

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