Semi-Decentralized Exchange
The Semi-Decentralized Exchange is incorporated as a plugin for transferring digital assets between asset owners by Fintechee. Consequently, our white label now includes support for the Semi-Decentralized Exchange. Through integration with state-of-the-art blockchain and smart contract technologies, our semi-decentralized exchange plugin offers an exchange solution for our clients.
What is Semi-Decentralized Exchange?
Centralized Exchange refers to a platform facilitating the transfer of goods between merchants and consumers. In the financial industry, it serves as an intermediary solution for asset owners, whether individuals or institutions. When dealing with securities like stocks or futures, individuals must create accounts with financial institutions such as stock exchanges or specific over-the-counter (OTC) brokers. Similarly, for the exchange of digital assets like cryptocurrencies, individuals need to establish accounts with centralized crypto exchanges.
Centralized exchanges require a reputable endorsement, a task that proves challenging for newly established exchanges. Without a robust reputation, how can clients trust centralized exchanges to secure funds and manage their accounts?
Blockchain and Smart Contract provide an architectural framework for segregating accounts without relying on a centralized institution. To execute a transaction, a signature is essential, and without it, institutions cannot take any actions on your behalf.
The Semi-Decentralized Exchange operates on the principles of Blockchain and Smart Contract. Consequently, custodian accounts are entirely segregated. Prior to transferring digital assets to an unfamiliar party, users can establish an escrow account with the semi-decentralized exchange. Subsequently, assets are transferred to this escrow account. As the escrow account imposes a threshold requiring approvals from multiple signatures, neither party can transfer assets without obtaining all necessary signatures. This ensures a high level of security.
However, this business flow necessitates that all participants are consistently online to respond in real-time. Achieving such a requirement for all actors is not realistic and poses challenges for the smooth progression of the process.
Our Solution
We have reduced the threshold for the escrow account to streamline the process. In this mode, exchanges are authorized to sign proposals without the need for multi-sig, but they are required to have a slightly higher reputation. However, since all escrow accounts are segregated, the overall credit risk is maintained at a low level.
How does semi-decentralized exchange work?
We tested semi-decentralized exchange by our plugins.
