Between wallets, DEX, CEX and HEX crypto exchanges, newcomers to the cryptosphere sometimes get lost in a vast nebulous mechanism. The growing interest in cryptocurrencies and the changing needs of investors have led to the rise and diversification of exchanges, of which HEX is a part. Here are the good things to know about this hybrid model of crypto exchanges.
Crypto exchanges: the different existing structures
Crypto exchanges are probably among the most recurring terms in the market. New investors will quickly realize this without necessarily mastering the subject. Here is an opportunity to understand things better. Crypto exchanges are among the essential components of the cryosphere. These are the main tools for investing, trading or trading digital assets.
There are three types of exchanges so far: CEX (Centralized Exchanges), DEX (Decentralized Exchanges), and HEX (Hybrid Exchanges). CEXs are owned, operated, managed and controlled by a centralized authority. This type of platform holds the rights to approve transactions. On the other hand, CEXs have many advantages, including great liquidity, the speed of transactions and the possibility of recovering your account in the event of loss of identifiers.
DEXs, blockchain-based platforms, allow users to trade cryptocurrencies without a central authority. The transactions are carried out without any intermediary or third party being involved. These platforms are focused on peer-to-peer exchanges. DEXs operate via smart contracts, i.e. self-executing computer protocols that guarantee the reliability of a transaction. Security, privacy, and asset control are some of the major benefits of decentralized exchanges.
The basics of hybrid crypto exchanges (HEX)
Both CEX and DEX have undeniable advantages, but also have certain limitations. CEXs, for example, involve tracking KYC. This identification process can put off some investors who value their anonymity. On DEXs, the transaction speed sometimes leaves something to be desired, not to mention the often lower quality of the interfaces, which complicates handling.
That’s the whole point of HEX. Hybrid crypto exchanges indeed combine all the advantages of CEX and DEX in addition to filling their gaps. Simply put, users have full control of their assets on a hybrid exchange (like on CEX). This, without suffering the lack of user-friendliness and intuitiveness of DEX platforms. Investors also benefit from the privacy and security of DEXs.
Hybrid exchanges are designed to be more scalable and offer lower transaction fees. Hybrid platforms use blockchain technology to take advantage of the anonymity of DEXs, and work with an escrow system to overcome the hazards inherent in centralized exchanges. HEX sounds idyllic, but still have some downsides, including low trading volume.
Hybrid exchanges are relatively recent. Which explains why HEXes do not yet have the volume necessary to become essential platforms for buying and selling digital assets. But perhaps this model will play an increasingly important role in cryptocurrency in the future.
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