If you’ve been for a while into the crypto field, sure thing you know what CEXs (centralized exchanges) are. Historically, centralized exchanges date back to the inception of digital currencies. Due to their ease of use, user-friendly interface, and the convenience of trading across multiple blockchains, centralized exchanges remain popular today. These exchanges make it easy to trade tokens because they offer easy fiat to crypto conversions, as well as high volumes of trading.

Nonetheless, CEXs centralized nature allows exchanges to keep full control of their users’ assets. As well, they are prone to cyber-attacks and demand KYC.
DEXs: Challenges for DEXs to Overcome to Become Powerful Competitors to CEXes

What is dex (decentralized exchange)

it is a platform that provides the ability to exchange one cryptocurrency for another, provide liquidity for other exchanges, as well as engage in staking and farming.
Decentralized exchanges are those with no central third party. It means that no one controls the operations of the exchange.

On centralized exchanges, a company manages the order books, user accounts, and everything else involved. Contrary, on decentralized exchanges, these details are handled by smart contracts, which execute functions automatically.

decentralized exchanges risks

Decentralized Exchanges (DEX) Risks That You Can’t Ignore
The introduction of decentralized exchanges changed many conventional precedents in the crypto landscape. With the introduction of decentralized exchanges, crypto holders could now move over the centralized exchanges by taking complete control of their assets. However, the rising use of decentralized exchanges has been responsible for radical growth in attention towards DEX risks apart from their advantages.
Doubts about Decentralized Exchanges
The use of decentralized exchanges has definitely presented a new array of possibilities for the DeFi sector. At the same time, people are also wondering about concerns like “are decentralized exchanges safe” for the right reasons. The issues pertaining to market access and discrepancies in methods for individual and institutional investors to access decentralized exchanges are some prominent mentions.

At the same time, the involvement of centralized third-party entities in the working of decentralized exchanges also presents questions. Furthermore, the role of blockchain in empowering decentralized exchanges to facilitate trading has also come under scrutiny. Even if blockchain can support the development of decentralized exchanges, it is important to look out for notable DEX risks before participating in the market.

Fusotao Protocol Tackles DEX Challenges

"Fusotao Protocol is a verification protocol for order-book based matching systems, using the paradigm of "execute off-chain, verify on-chain". Assemble values of Web3 by creating a new paradigm of DeFi, founders can build their own DEXs based on Fusotao, and communities can earn rewards by trading on the DEXs or directly share transaction fees through staking tokens for the DEXs backed by Fusotao Protocol. The FXDX to be launched backed by Fusotao Protocol will be the first order-book based DEX in NEAR ecosystem."
Fusotao Protocol is an application chain with an off-chain matching engine that addresses the centralized bottleneck issues with existing relay protocols. Backed by Octopus Network, Fusotao leverages two core components to guarantee the order of transactions and the fairness of matching - a blockchain application chain and an off-chain matching system.

Leveraging a custom and optimized implementation of Sparse Merkle Tree, the orderbook is encoded into the Tree and its root hash is stored on-chain leaving the entire Tree to matchers. Verifiers simply have to verify the order execution result by validating the Merkle proof and the matching procedure with its root hash and origin command. Once verified, the accounts can be mutated and the updated root hash stored on-chain.
Fusotao Protocol aims to solve the problem of scalability and matching performance on centralized cryptocurrency exchanges by delegating trading activity off-chain, without giving up security guarantees, including the non-ownability of user funds and the full fungibility of the underlying assets. An Open, Reliable, and Fast Infrastructure for DEXs

What Exactly Is Fusotao Protocol

Fusotao protocol is simply a second to none, secure, open and fast verification protocol for an order book matching system. An substrate-based application chain (appchain), Fusotao holds user assets and verifies matching transactions from off-chain exchange services. This open source protocol has equally integrated as an application chain on the framework to hold users assets and verify the matching transactions from offchain- exchange services, as a community driven platform , this protocol has also scaled using paradigm of execute off -chain, verify on-chain which was powered by the decentralized infrastructure of the fusotao ,trust free ordered - based matching system with zero cost gas and ofcourse low latency can be built. Through the application of off chain matching, the process of order submission , order matching , certificate generation , and other processes runs on a centralized server , which made possible for all platform userrs to enjoys thesame fast and user friendly trading experience as CEXs. Fusotao protocol has in place a stall plan to to implement & execute this by providing a user-friendly order-book-based DEX with zero-cost gas, low latency, and high security. Recognizing this potential, the core team of Fusotao Protocol had assembled a professional team of budding entrepreneurs and seasoned investors to create an all-encompassing blockchain based metaverse trading platform. Since crypto currency is designed for mainstream adoption, our platform will be a stop-shop for clients that intend to earn huge returns on investment Fusotao Protocol team has created a user-friendly system that incorporates both traditional markets and the blockchain based assets.

Fusotao Protocol aims to solve the high costs of zk

Fusotao Protocol is an ambitious Substrate-based verification protocol for DEXs which is currently in the process of launching as an Appchain in the Octopus Network.

Using the execute off-chain and verify on-chain paradigm, Fusotao DEX tooling has similar capabilities to zk proof technology in significantly lowering transaction fees. However, compared to zk DEXs, Fusotao has found a way to reduce proving and verification costs.
While not a DEX itself, Fusotao provides an infrastructure for DEXs that allows them to combine the efficiency of a modern CEX in a trustless manner with the decentralized capabilities of a DEX — while avoiding high fees, high latency, and over-exposed trading activity.

TAO Token

TAO is the native utility token of the Fusotao platform in which the platform practically depend on , this token definitely controls most of the transactions on the platform.

Analysis of TAO Vesting & Distribution Of Token

As it's known that TAO is the utility token of the Fusotao ecosystem with 100 million supply which was been bisected into various allocations which was been distributed in the diagram below,

Fusotao’s Mission

Fusotao’s immediate mission is to support founders in building their own order-book-based DEXs by using their matching engine and verification protocol. Any developer or founder can build their DEX using open-source Fusotao technology.

Fusotao Protocol has a definite aims to solve the pending issues associated with scalability and matching performance on centralized cryptocurrency exchanges by delegating trading activity off-chain, without giving up security guarantees, including the non-ownability of user funds and the full fungibility of the underlying assets. The blockchain application chain acts as the verifier, while the off-chain matching system acts as the matcher and prover. The application chain holds users' assets and verifies matching transactions from the off-chain client, which is used to execute orders and prove them through its novel Matching Verification Sub-protocol.
Leveraging a custom and optimized implementation of Sparse Merkle Tree, the orderbook is encoded into the Tree and its root hash is stored on-chain leaving the entire Tree to matchers. Verifiers simply have to verify the order execution result by validating the Merkle proof and the matching procedure with its root hash and origin command. Once verified, the accounts can be mutated and the updated root hash stored on-chain.

Final Words

Decentralization is undoubtedly a major trend in financial markets all over the world. The arrival of DeFi has changed the way people and institutions perceive finance. Starting with the introduction of cryptocurrencies to the arrival of decentralized exchanges, we have been witnessing many radical improvements in financial technology. As the world gears up for decentralized exchanges, a clear impression of DEX risks becomes imperative.

You need to understand how decentralized exchanges can present the risks of security, liquidity, and front-running trades. In addition, you can also discover other risks such as limited functionality for trading and problems with scalability. The understanding of risks associated with decentralized exchanges can provide vital insights for identifying possibilities for improvement. Learn more about decentralized exchanges and how to address the risks associated with them.
The blockchain application chain acts as the verifier, while the off-chain matching system acts as the matcher and prover. The application chain holds users' assets and verifies matching transactions from the off-chain client, which is used to execute orders and prove them through its novel Matching Verification Sub-protocol.

FOR MORE INFORMATION ABOUT Fusotao Protocol, PLEASE CHECK OUT THE LINKS BELOW:

Web: https://www.fusotao.org/
Telegram: https://t.me/fusotao
Twitter: https://twitter.com/FusotaoProtocol
Dicord: https://discord.gg/WDwB4X8Kdz
Medium: https://medium.com/fusotao-protocol
Greenbook: https://www.fusotao.org/fusotao-greenbook.pdf

Author:

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