Decentralized exchanges have indelibly changed the way that cryptocurrencies are traded. But in the grand scheme of things, the technology that’s driving these platforms is relatively young… meaning it’s inevitable that teething problems have emerged.
Some of the heavy hitters that dominate the market at present are known as non-orderbook markets. While it’s tantalizing and somewhat romantic that these platforms are controlled purely by supply and demand, it often results in some unexpected downsides.
There’s one glaring disadvantage that we don’t need to mention too extensively — high swap fees. We currently live in a world where it can cost hundreds of dollars to execute a small number of seemingly straightforward transactions on the best-known decentralized finance protocols. For the DeFi sector’s true potential to shine, these transfers need to be cheaper and faster than anything a centralized rival can provide.
Annoyingly, one of the things that makes cryptocurrencies so exciting can also stand in the way of these assets being practical