Otavio Costa, a Macro Strategist at Crescat Capital, a multidisciplinary asset management firm, has expressed concern about the state of the U.S. government securities liquidity index and its potential implications for the future of U.S. debt. He suggested that the U.S. is on the verge of experiencing its own ‘Bank of England’ moment prior to […]
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Bank of England, HM Treasury Respond to Digital Pound Consultation Amid Strong Public Interest
Amidst public interest, the Bank of England and HM Treasury have addressed key concerns regarding the digital pound, reassuring the public of stringent legislative measures for privacy and control, alongside the maintenance of traditional cash.
HM Treasury and Bank of England Respond to Public’s Digital Currency Concerns, No Final Decision yet on Digital Pound
The Bank of England and HM Treasury have unveiled their response to the public consultation on the potential introduction of a digital pound, following engagement from the public and industry experts. Over 50,000 responses were received, indicating the public’s interest in the future of digital currency in the United Kingdom.
Key concerns raised by the respondents centered around privacy and control of funds, along with the continued availability of traditional cash. The authorities have assured that robust legislative measures will be implemented to safeguard user privacy and control before the roll-out of any digital pound. This includes primary legislation to ensure that neither the Bank of England nor the government will have access to users’ personal data.
The digital pound is envisaged as a supplement to existing forms of money, not a replacement. Economic Secretary to the Treasury, Bim Afolami said, “We will always ensure people’s privacy is paramount in any design, and any rollout would be alongside, not instead of, traditional cash.“
Sarah Breeden, Deputy Governor for Financial Stability, underscored the importance of trust in all forms of money and pointed out that, “[i]t is essential that we build that trust and have the support of the public and businesses who would be using it if introduced.”
No final decision has been made to pursue the digital pound, also known as a central bank digital currency (CBDC). The ongoing work involves exploring the feasibility and potential design choices of a digital pound in the UK economy. This phase will focus on how the digital currency can provide greater choice, convenience, and innovation for everyday payments.
The digital pound aims to coexist with cash in a digital era, offering an alternative for everyday transactions. It would be issued by the Bank of England and designed to be convenient, widely available, and easily exchangeable with other forms of money. The proposed digital currency would be accessible through digital wallets and intended primarily for transactions rather than savings, without paying interest. Initial restrictions on how much an individual or business could hold are also part of the plan.
Before the launch of a digital pound, detailed legislative processes and further public consultations are planned. The proposed design of the digital pound has been generally well-received, but concerns about access to cash and control over personal data led to the commitment to introduce primary legislation for user protection. The future legislation will also prevent the government from programming the digital pound.
The Bank of England currently proposes a holding limit of 10,000-20,000 British pounds, though this may be subject to future reviews. The digital pound is expected to be accessible in several countries, barring those under sanctions. Experiments and further public consultations are planned to test the digital pound in real-world scenarios.
Would you be open to using the digital pound if it were available? Share your thoughts and opinions about this subject in the comments section below.
Bank Of England Reconsiders: Potential Freeze On CBDC Launch Raises Concerns
On January 25, the Bank of England (BoE) and HM Treasury published a response to the Consultation Paper regarding a ‘digital pound’ issued in February of 2023. The consultation paper sought the public’s feedback on introducing a UK central bank digital currency (CDBC).
Is The UK Ready To Introduce Their CBDC?
The BoE and HM Treasury consider that introducing a CBDC could provide people with an “additional choice of safe payment that is fit for the future,” unlock development opportunities for businesses, and make day-to-day payments more “convenient” while reducing costs for those who accept them.
The consultation response highlighted that the consultation marked the beginning of the design phase of the digital pound project and, according to the BoE and HM Treasury, the developing process of a CBDC and its platform will present lasting benefits for the digital economy of the country, regardless of the decision that is ultimately taken.
The consultation collected over 50,000 responses from the public, including individuals, businesses, and academia. The feedback illustrated some general concerns the respondents had regarding the digital pound.
Due to these concerns, the response by the BoE and UK Treasury determined that “it is too early” to decide whether to introduce a digital pound, as the feedback makes clear “that legislation introduced by the Government for a digital pound would need to provide protections to guarantee users’ privacy and control of their money.”
Respondents Concern Over A Digital Pound
The feedback received from the respondents brought forward two key concerns: privacy and the possibility of cash being replaced.
The response clarified that a digital pound would not replace cash, any existing form of money, or payment like debit and credit cards. However, it would complement physical money and other payment methods “as a new form of digital money for use by households and businesses for their everyday payment needs.”
To guarantee this, the response explained that “the Government has legislated to safeguard access to cash, ensuring that it would remain available even if a digital pound were launched.”
Regarding user privacy, the response acknowledged the importance of ensuring trust in a CBDC issued by the central bank is essential. Therefore, to guarantee that privacy is a core design feature of a digital pound, the following measures were made: the BoE and HM Treasury won’t have access to users’ data.
The BoE committed to exploring technological options to prevent the bank from accessing users’ data through its core infrastructure, and the BoE and UK Treasury would not program the digital pound.
The BoE and HM Treasury assured their commitment “to maintaining an open and collaborative approach throughout this design phase” by increasing both organization’s engagement with experts from the industry, civil society, academics, and technical specialists.
Lastly, the response confirms that experiments will be undertaken with companies “to test how a digital pound could work in the real world.”
The launch of the CBDC will be decided after the design phase culminates around 2025. If the decision to build a digital pound is taken, its introduction will come only after both Houses of Parliament have passed the relevant legislation.
Deflecting Blame — Bank of England Governor Bailey Accuses UK Retailers of Overcharging Customers
After the Covid-19 pandemic, many people believe the implementation of extensive stimulus measures and quantitative easing (QE) policies resulted in an overwhelming surge of inflation that has burdened millions across the globe. While certain individuals attribute this economic turmoil to the actions of central banks, Andrew Bailey, the governor of the Bank of England, firmly asserts that it is the retailers who are guilty of overpricing goods and services, consequently causing distress among countless families in the United Kingdom.
Bank of England Boss Andrew Bailey Pulls out the ‘Greedflation’ Accusation From the Bureaucratic Tool Box
Although central banks have often been accused of bearing the brunt of responsibility for the economy’s volatile boom and bust cycles, their leaders refuse to shoulder the blame alone. European Central Bank (ECB) president Christine Lagarde, for instance, attributes Europe’s relentless inflation to the impact of climate change. Meanwhile, in an interview with the BBC, Andrew Bailey, the governor of the Bank of England, contends that it is the retailers who are placing an undue burden on U.K. citizens.
In his interview, Bailey strongly emphasized that the burden of “overcharging customers” falls squarely on the shoulders of retailers, ultimately contributing to the unwelcome surge in inflationary pressures. “If you look at petrol prices, some sellers of petrol have possibly been charging too much for it,” Bailey insisted. When questioned about the potential timeline for a reduction in the benchmark bank rate, the governor of the Bank of England found it challenging to provide a definitive answer. Bailey stated:
I can’t give you a date as to when interest rates start to come down because that really depends upon what happens over the period of time ahead, but getting inflation down is the most important thing that we have to do.
Despite Bailey’s assertions, U.K. retailers are dismissive of the argument he presents, and Martin Scicluna, the chair of Sainsbury’s, the country’s second-largest grocery store, vehemently refuted the accusation, deeming it false. “To be very, very clear, we are not profiteering and we are not rip-off retailers,” Scicluna firmly stated.
This sentiment is shared by Alex Baldock, the CEO of Currys, an electrical retailer, who emphasized that the company has effectively managed to keep “a lid on price rises.” Moreover, the notion of “greedflation,” often propagated by bureaucrats and central bankers in an attempt to deflect blame from their own failed economic policies, garners limited support among people worldwide.
Within the United States, Democratic leaders are convinced that the surge in inflation can be attributed to nothing but unbridled corporate greed. Last year, Elizabeth Warren, the Democratic senator from Massachusetts, put forth the “Price Gouging Prevention Act of 2022” in response to this concern. However, this argument has faced extensive criticism.
Blogger Matthew Yglesias astutely pointed out the fallacy of “greedflation” last year, meticulously highlighting the plethora of inconsistencies and logical gaps within this theory when compared to actual facts, data, and rational thinking. Yglesias aptly remarked, “At the end of the day, though, only a very stupid person would think companies suddenly became greedy in 2021 after years of being non-greedy.”
What are your thoughts on Governor Bailey’s claim that retailers are to blame for rising inflation? Do you agree or disagree? Share your thoughts and opinions about this subject in the comments section below.
Stablecoins Cannot Function as Money Because They Have No ‘Assured Value’ — Bank of England Governor
Andrew Bailey, the governor of the Bank of England, has asserted that stablecoins “will need to have the characteristics of, and be regulated as, inside money” before they function as money. Bailey also described crypto as a “highly speculative investment” with no intrinsic value.
Stablecoins Purport to Be Money
According to the Bank of England (BOE) governor, Andrew Bailey, stablecoins can only function as money if they attain the characteristics of “inside money” and when they are regulated as such. Bailey also claimed the BOE had determined that stablecoins lack the “assured value” the public expects to see in digital money.
Bailey, who did not directly refer to the collapse of Terra’s stablecoin UST in 2022, suggested in his speech at the Institute of International Finance, that the public’s confidence in this type of digital money is “needed to underpin financial stability.”
The BOE chief also used his April 12 speech to explain how the central bank currently defines money. According to Bailey, if something is seen as a store of value or a payment method then such an asset will be seen as money.
As per the governor’s explanation, money can also be defined using terms such as inside money which is essentially commercial bank money and outside money which is in fact central bank money. Although their use as a payment method has grown, Bailey said unless they acquire the characteristics of money stablecoins will only “purport to be money at least as a means of payment.”
‘Highly Speculative Investment’
Concerning what he termed “unbacked crypto,” Bailey reiterated his assertion that such digital assets cannot function as money.
“For money to fulfil its function as a means of payment, it requires stability of value. This is clearly not true of unbacked crypto. It could be a bet, a highly speculative investment or a collectible, but note that it has no intrinsic value, so buyer be very aware,” the BOE governor explained.
Addressing the recent banking crisis sparked by the collapse of Silicon Valley Bank, the BOE governor stressed the need to “revisit the protection of inside money,” particularly in smaller banks.
What are your thoughts on this story? Let us know what you think in the comments section below.
HSBC Acquires Silicon Valley Bank UK — Sale Facilitated by Government, Bank of England
The British government and the central bank, the Bank of England, have facilitated a private sale of Silicon Valley Bank UK to HSBC, according to Chancellor of the Exchequer Jeremy Hunt. He stressed that “Deposits will be protected, with no taxpayer support.”
British Government Announces Acquisition of Silicon Valley Bank UK by HSBC
HSBC has acquired Silicon Valley Bank UK (SVB UK), the British subsidiary of Silicon Valley Bank (SVB) that was shut down by U.S. regulators on Friday. British Chancellor of the Exchequer Jeremy Hunt tweeted Monday:
This morning, the government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC. Deposits will be protected, with no taxpayer support.
In a filing with the London Stock Exchange Monday, HSBC stated that its U.K. subsidiary, HSBC UK Bank plc, is acquiring Silicon Valley Bank UK Ltd. for £1 (.22). The filing details that as of March 10, “SVB UK had loans of around £5.5bn and deposits of around £6.7bn.” Moreover, for the financial year ending Dec. 22, 2022, the filing states that “SVB UK recorded a profit before tax of £88m,” adding that the British subsidiary’s “tangible equity is expected to be around £1.4bn.”
HSBC noted: “The assets and liabilities of the parent companies of SVB UK are excluded from the transaction. The transaction completes immediately. The acquisition will be funded from existing resources.”
Noel Quinn, HSBC Group’s CEO, commented:
This acquisition makes excellent strategic sense for our business in the U.K. It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the U.K. and internationally.
“SVB UK customers can continue to bank as usual,” the executive clarified, adding: “We warmly welcome SVB UK colleagues to HSBC, we are excited to start working with them.”
In the U.S., the Department of the Treasury, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (FDIC) have taken measures to protect SVB depositors. They announced Sunday: “Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
What do you think about HSBC acquiring Silicon Valley Bank UK for £1? Let us know in the comments section below.
Bank of England Shuts Down Silicon Valley Bank’s UK Branch After US Regulators Close Parent Company
After U.S. regulators shut down Silicon Valley Bank (SVB) on Friday, the Bank of England has closed the company’s U.K.-based arm. The central bank explained that it intends to place the subsidiary into bank insolvency procedures.
Fallout From SVB Failure Prompts BOE to Close U.K. Branch
The ripple effect of the 16th largest bank in the United States failing has started to unwind after Silicon Valley Bank (SVB) was shut down by the U.S. Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection and Innovation (DFPI). California’s DFPI explained that the chaos at SVB started on Wednesday and by Thursday, customers attempted to withdraw billion in deposits via wire transfers.
SVB’s failure has now moved overseas and has affected the company’s U.K. subsidiary, prompting the Bank of England to step in and shut it down. On Saturday, SVB U.K.’s official Twitter page retweeted a joint statement from a variety of U.K. venture capital funds supporting the U.K. branch.
The Bank of England (BOE) said Silicon Valley’s U.K. branch will stop processing payments and is no longer accepting deposits. “The Bank of England, absent any meaningful further information, intends to apply to the court to place Silicon Valley Bank U.K. Ltd. into a bank insolvency procedure,” the BOE statement reads. “A bank insolvency procedure would mean that eligible depositors are paid out by the FSCS as quickly as possible, up to the protected limit of £85,000, or up to £170,000 for joint accounts.”
In a note sent to Bitcoin.com News, Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said the SVB U.K. arm was bound to fail.
“It was looking inevitable that the dramatic loss of confidence in SVB would also sweep its U.K. arm into insolvency,” Streeter said. “The run on the U.S. bank spooked customers banking with the British subsidiary, despite protestations that it was ringfenced from its parent. Once U.S. regulators stepped in to ground the mothership, attempts to withdraw deposits escalated, putting the bank in a highly precarious position,” the market analyst added.
The BOE statement on Friday noted that Silicon Valley’s U.K. branch will see its other assets and liabilities handled by liquidators, and recoveries will be distributed to creditors in that fashion. “[Silicon Valley Bank U.K.] has a limited presence in the U.K. and no critical functions supporting the financial system,” the BOE statement stressed. The Hargreaves Lansdown analyst explained that central bank rate hikes may be scrutinized more carefully before other financial failures follow SVB’s collapse.
“It’s clear that the rapid escalation in rates has taken the sector by surprise and the determination by the Fed to keep raising rates has brought fresh worries,” Streeter concluded. “Policymakers will now be monitoring this turn of events very closely, and now may be more likely to tread carefully with further rate rises, to ensure nothing else gets badly broken.”
What do you think this event means for the future of banking stability, both in the U.S. and abroad? Share your thoughts in the comments section below.
Bank Of England Will Scramble To Buy BTC Before It Hits $1 Million, Says Bitcoin Maximalist
Bitcoin expert Max Keiser has said that the Bank of England (BoE) will scramble to buy Bitcoin before the digital asset trades at million.
His comments come after Bank of England’s deputy governor for financial stability, Jon Cunliffe, warned that cryptocurrencies could spark a global financial crisis unless tough regulations are introduced. Although regulators in many countries have started putting policies in place to manage the rapid growth of cryptocurrencies, Cunliffe said this must be pursued as a matter of urgency.
Bank of England Warns Against Crypto
The deputy Bank of England governor has called for strict regulations on Bitcoin and other cryptocurrencies. According to the Guardian, Cunliffe has played a central role in monitoring cryptocurrencies over recent years as an adviser to the G20’s financial stability board and the central banks’ overarching advisory body, the Geneva-based Bank of International Settlements.
Related Reading | Bank Of England Seeks To Strengthen Cryptocurrency Regulations
In a speech on Wednesday, October 13, Cunliffe compared the growth rate of the crypto market, from billion five years ago to .3 trillion today, to the .2 trillion subprime mortgage market before the 2008 financial crash. He said there was a probability that financial markets could be rocked in a few years by an event of similar magnitude.
“When something in the financial system is growing very fast and growing in largely unregulated space, financial stability authorities have to sit up and take notice,” he said.
He also spoke about the majority of crypto-assets having no intrinsic value and could be worthless overnight. He stated emphatically how the crypto world is beginning to connect to the traditional financial system even though the space is still largely unregulated.
The banking chief added that there were “Financial stability risks currently are relatively limited, but they could grow very rapidly if, as I expect, this area continues to develop and expand at pace. How large those risks could grow will depend in no small part on the nature and on the speed of the response by regulatory and supervisory authorities.”
Related Reading | Bank of England Governor Still Isn’t a Fan of Bitcoin
His comments are similar to those of Bank of England Governor Andrew Bailey. In May, Bailey called crypto dangerous and warned that investors should be prepared to lose all their money due to the digital assets’ lack of intrinsic value.
Bitcoin Expert’s Response
Bitcoin expert Max Keiser responded to the Bank of England’s deputy governor’s recent warning about cryptocurrencies in a statement to Express.co.uk.
He said, “Bitcoin is designed to trigger a meltdown of the current fiat money banking system. This is a mathematically guaranteed outcome.”
BTC trading at over .8K | Source: BTCUSD on TradingView.com
Keiser implies that the BoE is grieving because Bitcoin killed central banks. “Bitcoin killed central banks. The Bank of England is in the second stage of the five stages of grief, the anger phase.”
He further pronounces that the Bank of England will eventually consider adopting Bitcoin.
“The bargaining phase will be their central bank digital currency stage and when that fails comes depression as the price tops £363,000 (0,000) and then acceptance with the Bank of England scrambling to buy Bitcoin before it tops £727,000 (million) per coin,” Keiser says.
Featured image by Proactive investors, Chart from TradingView.com
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Bank Of England Seeks To Strengthen Cryptocurrency Regulations
John Culifferthe, Bank of England’s Deputy Governor, discouraged crypto’s use in the UK’s finance system. He announced earlier that although cryptocurrencies are becoming more supported within United Kingdom’s financial system, they aren’t a significant threat.
However, he also recommended that enhanced regulations should be enforced as digital currencies constantly expand.
Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course
The bank stated in a publication that there is a need to regulate cryptocurrency at a local and an international level.
Earlier in July, the bank warned against cryptocurrency spillover into traditional markets. It also said about banks, institutional investors, and payment operators’ absorption of cryptocurrency for transactions.
Cryptocurrency Price Appreciation
While cryptocurrencies like Bitcoin, Ethereum, and Tron prices spiked at the year’s first half. Just briefly, it climbed to .5 trillion in value. Collateral backers for the Bitcoin protocol promised to provide another store of value while the storers struggled to yield, given its meager interest rates.
The cryptocurrency market is currently facing a decline | Source: Crypto Total Market Cap on TradingView.com
On the contrary, cryptocurrencies have very high volatility, and the digital currency market has dipped more than trillion in market value since May 2021. Bitcoin’s price has dropped from an ATH (All-Time-High) price of almost ,000 in April this year to about ,000 on Wednesday this week.
Financial Regulators Issue Warnings
Regulators have been giving frequent warnings about cryptocurrency. In particular, China has banned all digital transactions, declaring them illegal.
Related Reading | Shiba Inu Outranks Chainlink And Takes Place In Top 15 Crypto-Assets
However, Binance – the world’s biggest crypto exchange- was banned last month from the United Kingdom. Binance was among the numerous exchanges that didn’t register with the financial regulator, given that it couldn’t meet up with the anti-money laundering requirements.
Featured image from Pixabay, chart from TradingView.com
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Blockchain Entrepreneur Mykola Udianskyi Sold the LocalTrade Exchange and Focused on Developing Two Regulated Exchanges in England and Austria
In 2021, Forbes magazine published a ranking of the 100 richest people in Ukraine and the 59th place was taken by the crypto entrepreneur from Kharkov, Mykola Udianskyi. His fortune according to the magazine is estimated at $ 180 million. He was one of the first crypto investors in the CIS and today he is the founder of the digital holding Ehold, Bitcoin Ultimatum fork and many other projects.
As a reminder, Mykola acquired LocalTrade in September 2020 after the sale of the Coinsbit exchange in November 2019. Initially, it was planned to transfer LocalTrade under the jurisdiction of Montenegro and repurpose it for futures and OTC transactions, but later the entrepreneur announced the sale of the trading platform. Mykola Udianskyi decided to devote his time to other projects: he focused on the creation of regulated exchanges in the UK and Austria. The entrepreneur’s team is working on the launch of four new exchanges in England and the UAE, Ukraine and Montenegro are next in line this year. In addition, he recently launched the only available regulated exchange in India.
Currently, Mykola’s company is also working on the creation of a Digital Bank, the main feature of which is the simultaneous support of cryptocurrencies and their integration with the traditional banking system. The project is aiming for the implementation of innovative functionality that will make everyday calculations in cryptocurrency as simple as it is now through fiat.
Digital banking is one of the most important development areas in the cryptocurrency industry. Succeeding in this area will combine digital coins with conventional banking, which in turn will erase the line between fiat and cryptocurrencies.
New LocalTrade team and contractors
The new leadership of Local Trade has pledged to turn blockchain and digital finance into understandable notions and revolutionize this field. The head of the company is CEO Aaron Levi Yahal. The new top manager has vast experience in marketing and has supported many financial and cryptocurrency projects. His many years of practice have proven to us that the projects Aaron had a hand on all ended up achieving excellent results. Perhaps the most famous one is PureFi, where he holds the position of RegTech Strategist. This is a unique protocol (unparallelled in the market) that allows AML technologies to be implemented in DeFi.
Alexandra Buimister is the chief operating officer of the exchange. Alexandra has a very rich portfolio: she has international experience in the fintech and financial sectors, in addition, she is the founder of alternative banking services. Alexandra has experience in leadership positions in many global brands: BCA Research (Euromoney PLC), Forbes Latvia & Finland, Supreme Group, etc.
Aaron’s team has ambitious plans for the future of the LocalTrade exchange. In order to implement them, he turned to the time-tested SPACE IT Blockchain contractors. The latter is a leading IT company from the UAE.
The CEO of LocalTrade is confident in the high-quality execution of the technical component of his own ideas since he has already used the services of SPACE IT Blockchain several times and knows from his own experience what high standards are set within the company.
How to get the most out of DeFi?
According to the company’s management, they are planning on not only upgrading the platform, but they also want to create a fundamentally new product, which has no equal in the world. The community’s reaction to this news is overwhelmingly positive, traders can’t wait to test the updated product.
First and foremost, the team will focus on the security and usability of the updated platform. They intend on developing the FinTech industry, as well as integrate DeFi capabilities that will solve the existing problems through blockchain technology.
The implementation of DeFi completely removes intermediaries from the equation and puts smart contracts in their stead, which, in turn, create trusted protocols. In fact, decentralized finance almost completely eliminates the risk of losing funds due to fraudulent activities, since the user conducts all financial transactions through his personal wallet, the private keys of which are only with him.
The boom in decentralized finance came in the summer of 2020. The excitement in this area caused a huge increase in the prices of certain assets: the DeFi token YFI became an absolute record holder, which increased by 1280 times. Therefore, this branch of the digital economy is one of the most promising and important at the moment.
Although the DeFi topic is over a year old, it is still quite difficult to understand, especially for new crypto investors. On the Internet, there are a huge number of investment proposals in plenty of DeFi projects. However, the problem is that the overwhelming majority of market participants cannot conduct an objective analysis of each of them.
In order for non-professional investors to safely invest in this sector, LocalTrade is creating another product – Marketplace. Only verified DeFi projects will be included here, and users will be able to invest in them without restrictions.
DEX’s Launch
Towards the end of summer – early fall 2021, the LocalTrade management plans to launch a decentralized exchange (DEX). The fundamental difference between this service and its centralized counterparts is security and a guarantee of complete anonymity.
The fact is that DEX does not collect nor store any user data on its servers (IP addresses, time zone, screen resolution data, and other digital prints). On decentralized exchanges, there is no need to go through the registration process, let alone verification (KYC / AML). And, most importantly, DEX does not store user funds in their wallets, so clients are the rightful owners of their assets.
Disadvantages of DEX
Despite the many positive aspects, decentralized exchanges also have a number of disadvantages. Perhaps the primary weakness of DEX is the small selection of trading pairs and the lack of necessary liquidity in the least popular tokens.
Market makers and liquidity pools are responsible for trading cryptocurrencies on decentralized exchanges. In order to add a new trading pair to the exchange, you need to create a smart pool contract and lock in it a certain amount of an asset that provides liquidity.
Unoptimized smart contracts lead to various inconveniences:
- long transaction processing time,
- high commissions,
- increased likelihood of canceling the transaction without a refund by gwey (applies to DEX on Ethereum).
Solving the problem of sub-optimal smart contracts from LocalTrade
The LocalTrade team intends to eliminate this deficiency, for this they decided to use the orderbook model. With its help, it will be possible to add new trading pairs without the need to register a separate smart contract for it each time.
For the creation of the DEX protocol, the LocalTrade team focused on optimizing smart contracts, namely, increasing the speed of work and at the same time reducing commission fees. In the near future, performance will be significantly improved by reformatting the system architecture based on Layer-2.
Loss on the course at high volumes
Another problem that worries traders is the significant change in the rate during the processing of large volumes. LocalTrade has a solution to this problem as well: Traders will now set the maximum allowable price range themselves.
All of the above sounded like a fairy tale just a year ago, but now it is already a prospect for the near future. If you look at Aaron’s past and follow the further development of his projects, then we can safely say that the grandiose changes to LocalTrade that he talks about are only a matter of time. We just need to be patient and wait for the best blockchain developers to embody the ideas of Aaron Levi Yahal.
Image: Mykola Udianskyi and Binance founder Changpeng Zhao
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