Bithumb is currently the world’s sixth largest cryptocurrency by daily trading volume. The South Korean virtual currency exchange announced Thursday that it would launch a decentralized trading platform. In recent times, there has been an increase in the number of decentralized exchanges (DEX) springing up around the world. Naturally, crypto-asset traders tend to prefer decentralized platforms to the centralized ones due to certain benefits. According to CoinMarketCap, Bithumb was trading over $347M USD worth of daily transactions at the time of writing.
How Bithumb Plans to Do It
To this end, Bithumb has collaborated with blockchain company One Root Network (RNT). RNT is popular for developing Ethereum-based decentralized token protocol, R1. Aside from that, the blockchain company already has a DEX, making it a good fit to support the South Korean exchange. In a joint press statement, the two firms explain that R1 separates order matching and order execution. Also, RNT claims that the protocol helps to improve the efficiency and security of DEX.
Why A Decentralized Exchange (DEX)?
There has been a growing interest among crypto-asset traders in DEX due to the benefits it offers. To put that into perspective, DEX allows users to trade P2P which happens through an automated system. Also, DEX doesn’t store the funds of its customers, but it only matches traders that are interested in trading. Most importantly, DEX doesn’t have a central wallet where they store digital currencies, thus ensuring that the platform is not vulnerable to cyber attacks. However, the downside of DEX is that their transactions tend to be slower than those of centralized counterparts.
The Role of One Root Network
According to a Bithumb official, the strategic partnership centers on technical support. In clarifying it, they pointed out that an overseas subsidiary of Bithumb will operate and manage the proposed Bithumb DEX. From the get-go, the exchange will only work with RNT in the area of technical support, where RNT will oversee all the necessary technical support. On why they are launching the exchange, RNT specifically stated that the project aims to help the popular traffic holder, Bithumb, develop its own DEX. In addition to building its own DEX, Bithumb will share transaction data and liquidity with R1 protocol users within the wider trading ecosystem.
Business Korea Gives More Insight
According to Business Korea, Bithumb is one of the world’s leading trading exchanges based on the number of transactions. However, most of its customers are Koreans. The business magazine noted that the latest move seems to be a strategy that the Korean exchange has adopted to open up its platform to more foreign traders, thus competing more favorably in the global market. The paper added that Bithumb’s arch-rival, Upbit, has already launched its DEX by investing in Allbit.
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