By now, most of you have heard of decentralized exchanges. In their simplest form, they are easy to understand. When users do not have to pay any fees to exchange between currencies, they will do so more.
What is usually less clear for the average Crypto enthusiast or investor is what makes one decentralized exchange different from the large group of others that already exist. Sometimes, the difference between platforms is as simple as looking at what Crypto coins they support and on the other side of things, what Crypto coins they do not support.
Following this, another simple method to use to differentiate between these platforms is to look at the underlying asset they use to facilitate transfers. Kyber Dex uses its proprietary Kyber Network Coin, while many others use Ether, which is where the original concept of a DEX seems to have come from. Because of this reliance on Ether, as we go further in our discussion, it may become clearer that most decentralized exchanges are not free.
The newest on the scene is Stellar X, which, like Kyber, is based on the native coin of its network. Since it was one of the first Cryptocurrencies, most Crypto investors are already somewhat familiar with XLM and its vision of being the support coin for the future of international banking. Overarching this is the grander vision of being the world’s bridge between traditional currencies and Cryptocurrencies.
If you already know this, then you may find yourself speculating on the possible connection between this vision and Stellar’s creation of its own DEX. First, Stellar X has already compared itself to Robinhood, which is a well-known U.S. financial company that is trying to position itself as the go-to place for fee free Crypto trading.
Second, it should be noted that StellarX was not explicitly created by the foundation that oversees the Stellar network. Rather, it was created by a company called Interstellar, which is an outside company with the goal of improving the Stellar network.
As of now, since Stellar X has been live since last Friday, it could be helpful to delve into how it is positioning itself in an already crowded space, despite limited data on the subject.
In short, straight from the mouths of its creators, Stellar X is being positioned as “the most popular place to trade in the world.” While admitting that this is perhaps not an intelligent goal, at face value, the Stellar X team goes on to try to explain how it can possibly be achieved. To begin, they lay out an argument as to how Stellar X is literally the only free exchange in existence.
As we know, traditional stock exchanges of any kind, charge some kind of fee or else, by conventional wisdom, they will not be able to stay open. Stellar X’s next point of contention goes back to our reference above to decentralized exchanges not actually being free.
Crypto exchange titans like Ethereum based, decentralized exchanges have to charge fees because of the underlying asset they are based on. If not, then the Ethereum network would not support them. Related to this, platforms like the Kyber network have to do the same because they support ERC20 tokens, which come from the Ethereum network. As these facts are widely known, they are not really ground breaking.
After this, however, the Stellar X teams goes on to something which some Crypto investors might believe is a bit more controversial.
While it is widely supported, Robinhood Crypto is not really a free platform.
According to Stellar X, it appears to be one on the surface, due to expert marketing, but in citing the research of Jason Yum, who is a professional research analyst, they argue why this is not the case.
In short, if Yum’s claims are true, then Robinhood is profiting off of selling trader data to traditional trading firms who are interested in following the flow of the Crypto market.
As a result, if you believe any of his points have any value, you might do well to stay away from Robinhood altogether, especially if you also want to protect your personal data.
Following this, it should be made clear that protecting your personal data is also not something that is native to Stellar X.
By all appearances, based on what they are built to be, all decentralized exchanges are able to do this in a better way than traditional exchanges. Therefore, allowing customers to retain data sovereignty and therefore anonymity, is not something that makes Stellar X unique.
Even so, trades with them are free, until proven otherwise. In the end, if anything, this is exactly why you should give Stellar X a chance. Most decentralized exchanges charge you something. Stellar X does not.
By: BGN Editorial Staff