Thread by @sassal0x

0/ #DeFi Spotlight #2

Today, I’ll explain the types of DEXs in the world of Ethereum. There are 5 types:

*Off-chain order book (0x Relayers)

*On-chain order book (EtherDelta)

*Peer-to-peer (Kyber, AirSwap)

*Automatic market making (Uniswap)

*Child-chain (Gluon Plasma)

1/ First up is @0xproject.

0x is an open protocol for building DEXs. Developers build ‘relayers’ on top of the 0x protocol (such as @RadarRelay). 0x relayers have off-chain order books with trades happening on-chain and can also opt-in to share liquidity with each other.

2/ The original EtherDelta had an on-chain order book with on-chain settlement. It was the first widely used Ethereum-based decentralized exchange but due to everything happening on-chain, it was wildly slow and inefficient.

3/ Next, we have @KyberNetwork and @airswap. AirSwap uses off-chain trade negotiation and on-chain settlement whereas Kyber Network performs on-chain trade matching for instant settlement.

4/ @UniswapExchange uses a ‘constant market maker model’ to guarantee token liquidity. The exchange is entirely on-chain and each token has its own smart contract & liquidity pool. Liquidity providers earn 0.3% per trade proportional to the liquidity they’ve provided to the pool.

5/ Child-chain exchanges live entirely inside a child (or sidechain) such as Plasma. A user only initiates an on-chain action when they want to exit the sidechain. There is a DEX Plasma variant called ‘Gluon Plasma’ that you can read about below.

ethresear.ch/t/gluon-plasma…

6/ Want to learn more about DEXs? Head to the decentralized exchange section of @ethhub_io (and if you want to add something, simply submit a pull request)!

github.com/ethhub-io/ethh…