What are Instant Liquidity Exchanges and How to Make a Profit from them?

What are Instant Liquidity Exchanges?

Many of you might be asking what is the difference between this new form of decentralized exchange compared to its existing one. Traditional dex like what Newdex currently uses have order books. Order books are simply a list of orders that a particular exchange uses to record the interest of buyers and sellers. Instant Liquidity Exchanges do not use order books, it enables traders to trade directly with the pool making it easier, faster and less complicated. Newdex Swap is a new breed of decentralized exchange that belongs to liquidity pool exchanges.

The Advantage of Newdex Swap

Liquidity Pool Exchanges like Newdex Swap have many advantages over the order books type decentralized exchange. One advantage is guaranteed liquidity at every price level by removing the reliance on trade volume of the platform. Another advantage is being able to earn passively by being a liquidity provider, this can be done by, simply depositing digital assets into the liquidity pool and the smart contract manages the prices of these assets. Lastly, anyone can become a liquidity provider without needing to under KYC procedures.

How can users benefit from this new form of decentralized exchange?

Supporting the two different types of decentralized exchanges (DEX) presents some interesting opportunities for Newdex traders. First, traders can take advantage of price differences between the two DEXs. If there is a price difference between the traditional order book DEX market price and the Newdex Swap pool price, users can do arbitrage between the two. According to Wikipedia Arbitrage is the practice of taking advantage of the price difference between two or more markets and capitalize on their imbalance.

Final Thoughts

The Newdex Swap function debuted last April 2, 2020, which can be accessed using PC and in Dapp wallets. It provides Newdex users a quick and safe interface to seamlessly Swap EOS coins and EOS-based tokens. The new swap function gives users new ways to earn from their cryptocurrency holdings and allow them to do this without too much risk and exposure. Built on top of EOS one could expect transactions in this instant liquidity exchange will be faster, less expensive and less risky as it will not be exposed to latency issues that may result in opportunity cost and loss of value due to slow and expensive transactions fees.

Transparency disclosure

The above article is a commissioned work for Newdex. I was tasked to write an article about its Newdex Swap Instant Liquidity Exchange. Total creative freedom was given to me. All the information stated above came from my own research and based on my experience and knowledge. It has not been edited by Newdex or any of the aforementioned projects in the article.

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Anidel Silvano

Anidel Silvano

Blockchain/crypto enthusiast from the Philippines.