If you ever used a broker, trading app or a centralized exchange, chances are you’re not super happy with their services. After all, their job is to provide liquidity, meaning that they are always on the other side of your trade.
So… If they are on the other side of the trade it means that if you make money, they lose money.
Let that sink in.
The conclusion is kinda obvious… it’s in their interest for you to lose 🤯
Robinhood halting trading of certain assets because retail investors were making too much money at the cost of Wall Street just proves this sad point.
There is hope though! With the birth of decentralized finance (DeFi) we’re witnessing the creation of more transparent and fairer financial tools and platforms, including the decentralized exchanges (DEXes).
No more gread – liquidity is provided by the users and directly injected into protocol that you interact with when buying and selling assets on the DEX. You can actually make good money when providing liquidity to these platforms.
No more exclusion – anyone can use a decentralized exchange. You don’t have to ask anyone for permission. You don’t have to fill out hundreds of documents and list all your assets, revenues and liabilities.
No more unreliability – If you’ve been trading for a while you have to know the feeling when during a big market event that brings huge opportunities your exchange just freezes. There is nothing you can do, just wait in pain as the opportunity passes away… Decentralized exchanges don’t freeze, their code is distributed among thousands of computers and you can always execute a trade.
Even though decentralized exchanges bring a lot of benefits to the table there are some important issues and factors you have to be aware of when using them. We will cover these (and much more) in future articles. For now I encourage you to join our free Telegram group, you will find the link to it under this article.
06.08.2021, Piotr Borowiec