🤔Problem
Decentralised (and centralised) asset exchange, price formation, and resource distribution allocation mechanisms suffer from critical inefficiencies!
Last updated
Decentralised (and centralised) asset exchange, price formation, and resource distribution allocation mechanisms suffer from critical inefficiencies!
Last updated
Imperfect Price Discovery : FPLs, AMMs and CLOBs may not provide efficient price discovery mechanisms leading to less accurate asset price formation.
Cost and difficulty of use : Current Decentralised Exchanges and NFT Marketplaces are costly and difficult to create, customise, use and integrate for the non-crypto-native users.
Front running and MEV extraction : Traders, sniping bots, and miners can engage in sandwich attacks and can censor and replicate other transactions, exploiting the order of transaction inclusion in blocks.
Liquidity inadequacy and fragmentation : Numerous liquidity providers and market makers required to provide liquidity, which still remains fragmented across multiple pools, marketplaces and order books.
Slippage : Slippage is a common issue across various trading and price formation mechanism like FPLs, AMMs, Primitive auctions and traditional exchanges causing trades to execute at prices different from expectations. This can result from supply and demand imbalances and impact traders and investors by affecting profitability and introducing uncertainty.
Counter party Risks : Counter party risk, the risk of a transaction partner failing to meet their obligations can lead to financial losses and disputes in primitive auctions, traditional financial markets, and fixed price listings, especially if participants fail to deliver or pay as agreed.
Privacy, Security & Ownership Concerns : Public order books in traditional markets and centralised exchanges can compromise privacy, and fixed price listings may lead to ownership disputes. Automated market makers and order books introduce custody and security worries.
Lack of Trust & Transparency : Limited visibility into price-setting processes, centralized control and potential for market manipulation, users doubting the accuracy, fairness, or security of pricing algorithms and fund handling in AMMs and CLOBs .
