The Problem

The problems HYEX will address

Global interest in cryptocurrency skyrocketed throughout the first half of 2021. Reminiscent of the enthusiasm of 2017, the global public has signaled their desire for a more equitable financial landscape a better access. Thankfully, the maturity of blockchain technology now presents willing participants with much more functional nuance than ever before. The promise of this growing functionality has lured many into this nascent industry with promises of financial freedom and inclusion. Nevertheless, both veteran and amateur industry participants still grapple with significant industry inefficiencies, increasing regulations, including the ability to easily convert assets across blockchains in a non-centralized way.

Poor Performance

Due to the necessity to execute orders via smart contracts, many DEXs suffer from higher latency. A transaction must first be registered and validated on the blockchain before it can be performed. At best, this takes seconds, but it might take up to several hours during times of significant network congestion. By the time a trader tries to execute against an order that appears in an order book, it may already be processed in the current block. This will almost always result in a failed transaction, but the trader will still have to pay the smart contract costs. This is problematic for traders who use a high-frequency trading algorithm.

Higher Costs

Because smart contracts control every part of a transaction on an exchange, DEXs may claim to be decentralized. Updating order book pricing on an order-book- based exchange like Ether Delta requires invoking a smart contract and paying a charge. This implies that, even if no actual order execution occurs, frequent changes to limit orders, stop-loss orders, and other similar order book entries may be necessary for a fast-moving market result in a very high expense.

Some DEXs try to reduce this cost by adopting complicated layer 2 solutions to handle order book updates, or by simply centralizing order book administration entirely, however, both solutions are only compromises that do not solve the underlying problem.

While nowhere near as detrimental to the industry as outright scammers, unfair launches nonetheless hamper blockchain's ability to facilitate financial inclusion. Many new projects now opt for large allocations to private sale rounds, effectively locking the individuals that most require financial access out of the investment process. The private entities which receive these disproportionate allocations often receive preferable rates due to their outsized shares of the project. Subsequently, these entities can sell their tokens at a lower price while remaining in profit. This situation benefits the few at the expense of the many. This process is akin to the current Wall Street environment and does little to convince individuals of the powerful differentiating force of the blockchain.