While both CEXs and DEXs have laid the groundwork for the vast majority of crypto users worldwide to seamlessly buy, sell, and trade digital assets, increased scrutiny from government and financial regulators is impacting more widespread adoption to an extent.
To address this imminent roadblock and overcome the challenges surrounding CEX and DEX use, Orion Protocol has introduced a decentralized automated market maker (AMM) solution titled Orion Pool. This new initiative assists users worldwide with leveraging the respective benefits of CEXs, DEXs, and swap pools from a single user interface.
Overcoming The Hurdles Of CEXs and DEXs
The emergence of centralized exchanges (CEXs) and decentralized exchanges (DEXs) have played a significant role in the unprecedented growth of cryptocurrencies. However, as the crypto market surpasses major milestones like $2 trillion in total capitalization, governments and regulators alike are expressing greater unease.
Whether in response to the threat of cryptocurrencies or an abundance of concern for retail investors, policymakers are busily debating and implementing measures designed to control the economy growing in parallel to their country’s fiat currencies.
With complex KYC, AML, and other financial regulations in place, the majority of the CEXs are encountering greater resistance in certain jurisdictions, whether from running afoul of regulators or not observing stringent compliance collection. Lax internal controls at certain centralized exchanges, namely Binance, have drawn the ire of regulators, leading to a suspension of services in countries including the US, Japan, and Canada.
Recent regulatory actions by the Financial Conduct Authority (FCA) have prohibited Binance from operating within the United Kingdom. Following this, one of Binance’s European payment partners, Clear Junction, has stopped facilitating payments to the exchange. As a result, UK-based Binance users are left in the lurch without any options, at least for now.
Due to increased pressure from governments and regulators alike, every centralized exchange has tightened onboarding processes. This has forced users to undergo multiple KYC, AML, and other financial verifications each time they register an account.
Another concern with CEXs is that the platform (service provider) exerts ultimate control over a user’s digital assets, representing a genuine concern for custody-oriented users that understand the value of sole control over their private keys. That said, CEXs are still the go-to option for most new entrants due to ease of use user, multi-asset access, and more.
Decentralized exchanges (DEXs) emerged as a solution to some of the thorny centralization issues. Users can trade cryptocurrencies without ceding control of their private keys by creating a wallet on a DEX. Moreover, these decentralized venues don’t require formal account verification. Still, DEXs have their own set of difficulties, including complicated interfaces, no fiat support, and periodic liquidity issues, among others.
Orion Protocol overcomes these challenges via the Orion Pool and the Orion Terminal, aggregating liquidity from a cross-section of centralized and decentralized exchanges alongside swap pools. In doing so, Orion Pool users gain access to leading exchanges like KuCoin and Binance, irrespective of their location. Additionally, users can split order flow across multiple exchanges and liquidity sources, such as automated market-makers (AMMs), delivering efficient execution with minimal market disruption.
Powered by the ORN token and its proprietary Delegated Proof of Broker governance mechanism, Orion users can trade across the entire crypto market through a CEX, DEX, or swap pool using a single account. The platform has partnered with verified brokers and crypto exchanges, which trade on behalf of users, thus eliminating the need for traders to create multiple accounts or undergo several KYC and AML procedures.
As the only decentralized platform that allows users worldwide to enter the crypto ecosystem without legal or geographical constraints, Orion Protocol is leading efforts to draw in more significant numbers of the global unbanked population and crypto enthusiasts alike.