How are Automated Market Makers Accelerating the Growth of Decentralized Exchanges?
Decentralized finance (DeFi) is one of the major movements of the fintech industry that have been transforming conventional financial services. The advent of DeFi has significantly altered the way trading activity used to occur. In the past, centralized exchanges (CEXs) had a monopoly over the digital asset space. The catastrophic collapse of many renowned CEXs aggravated the need for a paradigm that supported end users’ dominion over their cryptocurrency. This gave rise to DEX Trading Platform Development.
Decentralized exchanges can be implemented in multiple ways. Broadly, one of its popular categories makes use of an on-chain order book that records all the orders. Another utilizes an off-chain order book where orders are recorded probably in a centralized ecosystem while transactions are settled over the blockchain. The former is overly expensive while the latter is less decentralized. The failure of either of these mechanisms in one way or another led to DEX development regulated by AMMs (Automated Market Makers).
