STEEM Decentralized Exchange - The Sky Is The Limit Now
Introduction
I'm still going through the whitepaper and pondering the implication/application of this new technology on the STEEM blockchain. My goal is to simplify for you what it is, what it means and how it's going to make a difference for you on the long run.
Today, I'm going to be talking about the decentralized exchange aspect of the SMT whitepaper.
More than Social Media
A lot of people are on steemit.com because of the social media aspect of the STEEM blockchain. In fact, a lot of new comers get confused because people have a hard time separating the two. Steemit.com is the website while STEEM blockchain is the technology that enables it.
SMTs introduce a new aspect to the STEEM blockchain: tokens
Tokens will be used to bootstrap and sustain apps, communities and websites. The successful tokens will get a price on the market. Now we need a way for people to trade those tokens for STEEM in a fast, secure and decentralized way.
A decentralized exchange(DEX) allow for buying and selling without having to comprise your private keys and without being worried by hacks.
Because of the unique features that will be outlined below, we will have a completely new class of users to our ecosystem: TRADERS.
How the Traders Will Add Value
Traders will add value to the STEEM token since it is going to be the main pair of the system. Whenever STEEMs are exchanged for SMTs, the STEEM will be locked up in the smart contract until the SMT is sold. All that STEEM being locked up will reduce the supply of available STEEM on the market and increase the value of the STEEM.
Traders will also have an incentive to hold on to STEEMPOWER since it is going to be their bandwidth. If they desire to create trading bots, then they will need bandwidth and STEEMPOWER to sustain them.
Traders will also be in direct contact with what's going on in the STEEM market and let the word out to other traders...allowing the free flow of information to go to traders everywhere.
Side-note: For those who thing there is already too much going on steemit.com, word on the street is that a major overhaul of the front-end is in the work. Also, I wouldn't be surprised if the decentralized exchange would occurs on a completly different website or a subdomain of steemit.com...such as dex.steemit.com
How The STEEM DEX May Become The Main DEX of Crypto?
No Fees
In the normal world of DEX or any exchange for that matter , their lifeblood is fees. Fees, for traders, are like termites eating their profits. But they tolerate them because they are part of the game. Usually, the more liquidity an exchange has, the more they are willing to tolerate higher fees.
The Steem DEX will have NO FEES on transaction. It will be bandwidth limited like any other transactions based on STEEMPOWER. This creates another source of demand for locking STEEM out of the market.
Unique Assets, Gateways and Bridges
There are several assets that SMT users and creators will have access to by way of the Steem DEX: STEEM, SBD, SMTs, and Simple Derivatives (IOUs). These neighboring assets can increase the visibility and network effect of all created SMTs. STEEM is the gateway token for assets issued on Steem, staying relevant by acting as the bandwidth usage measuring stick across Steem’s SMTs.
With the introduction of IOUs, we are opening the door for exchanges to create their own tokens to act as a gateways and bridge between the fiat and crypto. IOUs of Ether, Bitcoin and other will be available for those who want to trade on a no fees, fast and secure exchange.
The major issue that most business face when launching a new market on an exchange is the lack of liquidity. THE SMT/STEEM market will have the automatic market maker that will allow for automatically bootstrap those market. I doubt that it will be the same for simple derivative IOUs.
Conclusion
I'm super excited for STEEM to have a decentralized exchange. I can imagine website and business built on top of the exchange, acting as bridges and gateway to the STEEM ecosystem. Point of Sale system can be opened, credit cards, etc.
The sky is the limit now.
We will soon need all exchanges to be decentralized as China (or another country) creates their legal tender and closes websites (what are now exchanges) that deal in BTC, ETH, DASH and other soon to be illegal coins.
We need a new exchange. The bitcoin of exchanges. One that has no owner, no location and can't be shut down. I think bitshares is close but way too complicated for adoption to take place. Though it has gone up a lot since regulation hit some asian country recently.
Needs to be
"Hey send me $50 in steem."
"What's your address?"
"@cryptoctopus."
"Did you get it?"
" Yeah, thanks."
Public, anonymous (as many accounts as you want), free (if possible).
@sponge-bob,
Yeah I got your point! You mean exchanges build on top of the block chain technology! Yeah that's the most important thing also! We can't let stupid country regulations to ban exchanges! I mean exchanges, not ICO (it needs regulations)
One more thing, I want to buy STEEM via direct credit card payments! I hope STEEM dev team will think about it as well!
Cheers~
Via CC means Fiat to Crypto. That is where the governments have their noses always poking about because that is where we give them control. I am 100% off banks, debt, taxes, and outside the system.
Leave the fiat to coinbase and let crypto be exchanged for crypto.
@sponge-bob,
"Leave the fiat to coinbase and let crypto be exchanged for crypto."
Here problem again, until I write this comment we all are depend on fiat currency! We have very limited usage of CC! Yeah it will change, but I fear Fiat will be behind everything as it does!
Anyway, I respect your view and personally I need to see the same future as well!
Cheers~
Future. The dollar is dying and no longer necessary for oil purchases. Russia, China and any other major player out there are willing to play with new poker chips like Yuan and Gold.
The dollar will be done away with. (unless the US can get a war started)
The "New Dollar" will be crypto and all will be duped into using it (cuz they did such a nice job fupping duck the paper one).
Then exchanges will be allowed to trade only in "Legal" crypto like the YuanCoin, USDcoin, etc. (which will all be centralized).
Right now we need to educate people on what is a crypto, why we need our keys in our possession and why a centralized cyrpto is NOT crypto. A centralized block chain will need bail outs just like the banking system did.
This is what is happening to the US dollar ^^
The petro dollar is indeed becoming unnecessary and it looks like especially China is starting to show its influence on the global market. However I do have my doubts that they will ever succeed making a centralized crypto successful, but we should keep our eyes open! Unless people are staying in oblivious ignorance...we're gonna have some great times ahead of us. With what the blockchain is able to provide for us the whole infrastructure is gonna change, exciting times :D!!
@sponge-bob,
Indeed "a centralized cyrpto is NOT crypto." I also fear for that! They are trying to faking people by saying "Hi, this is the crypto"! But we are still trapped and attached with fiat! Yeah it might change, but not a very easy thing to do! Anyway now we live in the era of crypto!
Cheers~
I agree about direct credit card purchases for STEEM ...
Bitshares does still sound like the best option by far. It's just like you said, it needs a more friendlier approach for its users. Maybe when EOS arrives it will do just this. BTS still remains my #1 by far, with all it stands for.
BTC is not an illegal coin, if you pay the government ... "License = corruption"
If you pay the government, in taxes you mean. But what about keeping the crypto not converting it back into fiat? Than they can't make you pay anything...
Crypto should be an investment for the future. Sadly it's currently still more of an exchange market to make a quick buck...
This will change soon, don't stay with anger in you heart or you will look like old :p
But yes i agree in the fact that we can scale more with the gouvernement than without at the moment.
Lol, I can get that vibe coming off from that comment, but there was no anger there at all xD Perhaps a little frustration though ;)
And this is not something the government has control of. They can't close a blockchain. Even if they make laws forbidding it, people can choose to disobey those laws.
This is jaw-droppingly exciting!
I'm already thinking of ways to implement SMT with a business and it looks like there's more to come.
I think you've got it wrong, @cryptoctopus, the sky is not the limit... I'm pretty sure there's NO limit to this :)
Steem On!
Hello @cryptoctopus
Just like I said in your previous post Last week, the SMT is going to open a whole new chapter for the Steem Universe.
A DEX will be awesome and I believe that it is better for it to be Integrated to Steemit.com just like the Market.
The idea of a No Fees has already given the DEX a huge headstart.
Steemit is growing at a fast pace, I no longer know what to expect, Everything is happening.
Shared on Twitter
@ogochukwu
Steem is growing. Itegration that doesn't cost $700 dollars per bitcoin (oops misquoted price) and then added fees on top (Yes, Blocktrades - YOU) would be nice.
Hello @hebrew
I checked out your blog and loved what I saw, can't believe I have not found you earlier.
@ogochukwu
Thanks @hebrew
If BTC were to become worth half a million, the fees alone might cost just that xD
Thank you very much, , i like you
Your are the best @hebrew
i like your comment @hebrew.
Whoever gets to completing an easy to use decentralized exchange will win.
All the exchanges are getting screwed with KYC and AML requirements and we need a solution now!
Perhaps I'm not understanding, but if IOUs are created, what entity is on the hook for making the IOU whole? If an IOU cannot be made whole, what parties will feel it? Further, how is liquidity created and maintained? Is liquidity maintained through the IOU mechanism?
Asking genuinely for my understanding. I really like where Steemit is going with ICO and token creation, but I can't wrap my head around the DEX.
Have you tried bitshares DEX? It shouldn't be too different. Basically, it's an exchange on the blockchain. Will all those tokens flying around, you need a way to exchange those tokens back to STEEM.
The IOU will have to be a promise from a third party. Let's say paypal wanted to have a USD IOU on the blockchain, the PAYPAL.USD token would be as valuable as the trust people have in PAYPAL to fulfill their promise.
That's helpful, thank you. And no, I haven't tried BitShares, but I have traded on WAVES's DEX. It was very quick but I didn't really understand how I got the tokens I traded for so quickly (the WAVES UI/UX is not that intuitive to me so it's more my limitation than the tech).
So from my understanding, there is still a party that is responsible for payment. Liquidity is provided for through a third party. So similar to a centralized exchange, you are still exposed to balance sheet risk in IOU. I think I need to research this more because I had envisioned that a true DEX you wouldn't have balance sheet risk at all. Again, maybe I'm not understanding correctly, but I appreciate you trying to help me.
The solution that bitshares came with was their pegged asset such as BitUSD and others to avoid those risks. But there is no perfect system. IOUs are much less volatile (tether) than their countpart that are decentralized (BitUSD, BitCNY, etc.)
Yes, yes, agreed.
This is incredible.!! Thanks for making it easier to grab but I'm not fully understanding this yet. @cryptoctopus please would you mind answering my dumb question?
After all these, are we still going have the steemit platform running?
Hi! steemit.com is the social media website and it runs on a technology called "the steem blockchain". SMTs, decentralized exchange, etc. They are all added features of "the steem blockchain". Steemit.com will still run and be a social media for as long as the eye can see.
This is a great vision and makes a lot of sense. We have already a very well working internal market on Steemit.com and once we have SMT tokens a separate steem based exchange would certainly add value.
Damn, it could be a real game changer in all the whole crypto world! I'm rrally glad to be a part of this revolution.
I think everything that you offer us, will go to us only for good. Thank you.
Congratulations @cryptoctopus
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