AirSwap is a New York and Hong Kong-based decentralized cryptocurrency exchange that launched its token trader on February 1 of this year. Through blockchain technology, AirSwap enables users to trade ERC20-compliant tokens on the Ethereum blockchain. AirSwap is a decentralized exchange with a peer-to-peer protocol. This means that users have the ability to discover and negotiate with counterparties in a safer and more intuitive environment.
Just as the crypto world operates in a fully decentralized manner, so should crypto exchanges. Centralized exchanges are antithetical to the ethos of blockchain, making them more susceptible to hacking. A proper decentralized model can address this, along with many other issues inherent in centralized exchanges.
The AirSwap team has developed a decentralized exchange to solve two major problems with exchanges: hacking and front running.
How Decentralizing Protects Users From Hacking
With all the news about hacks of exchanges around the globe, this is a reality that requires a foolproof solution. Centralized exchanges hold users’ currency, crypto and fiat. If these exchanges get hacked, users’ holdings are likely in danger. AirSwap tackles this problem by decentralizing wallet access to its platform, putting users in control of their own assets. Indeed, users will never have to make deposits on the AirSwap platform. As AirSwap’s co-founder Michael Oved explains, “Funds on AirSwap are not held in a centralized account and therefore cannot be hacked.” Users hold their own funds and AirSwap facilitates the trades users are looking to make.
No More Order Books, No More Front Running
Another key differentiating factor of AirSwap is that the platform provides an alternative to blockchain order books, which are susceptible to front running by the operators of the order books or the miners that mine the transactions onto the blockchain. Rather than rely on order books, AirSwap uses a peer-to-peer trading model. AirSwap matches users through an Indexer protocol, providing a discovery mechanism for users to choose whom they want to trade with and then have a dialogue with the chosen counterparty for negotiation. In addition to the discovery and negotiation process, AirSwap also includes an Oracle protocol that provides real-time market data for traders, which is discussed in depth in AirSwap’s whitepaper.
What Does This Mean For The Future?
“We believe that there will be a liquidity migration from centralized exchanges to decentralized exchanges when it comes to token trading,” AirSwap’s co-founder Oved said. With the recent negativity surrounding centralized exchanges, it is only a matter of time before liquidity starts migrating over to decentralized exchanges. That said, one must closely examine the technologies offered by the various decentralized exchanges in the market. AirSwap’s approach stands out, as it offers a solution with its peer-to-peer protocol, with the added bonus of users not having to pay fees. It seems that AirSwap just may be the future of decentralized exchanges.