If you’re the sort of trader who likes to hold your own keys, you’ve probably heard of IDEX by now.
The Ethereum-based decentralised exchange (DEX) allows users to trade ETH and ERC-20 tokens in real time straight from their Ledger or Trezor hardware wallet. It also accounts for more than 40% of all DEX transactions.
But decentralised exchanges have plenty of problems
Currently, pretty much all DEXs are slow, clumsy, and lack the liquidity needed to gain a convincing user base. IDEX has been very successful overall, catering to more than 300,000 users and trades of over $2 billion. However, the cost of using the Ethereum network has meant that users have collectively paid some $6 million in gas fees. This has naturally caused a significant drop in its user base.
With a transaction volume of just over $400,000 over the last 24 hours from 516 users, IDEX is hardly in a position to topple Binance. However, today, the Ethereum-based DEX has revealed some of the new features of its upcoming Version 2.0.
IDEX 2.0 will come complete with a new UI/UX, off-chain matching engine, and layer-2 smart contract settlement system. Version 2.0 will build on IDEX’s current hybrid design but it will also support batch settlements of trades off-chain using Merkle root checkpoints.
This will allow the exchange to achieve unprecedented off-chain scaling with a fixed on-chain settlement cost. It will also remove the current bottleneck issues and drastically reduce gas costs.
Co-founder and CEO Alex Wearn stated: “DEXs don’t have to be slow, expensive, or limited in functionality. We’ve always envisioned a future where DEXs offer the same experience as their centralised counterparts.”
IDEX to redefine the DEX market
With IDEX 2.0, users will enjoy an open-source design that combines speed with security and scalability. IDEX claims that the new updates will make it the “only non-custodial platform to match the throughput and performance of centralised exchanges”.
For users who baulk at the word ‘centralised’, they needn’t worry. They can still plug in and trade straight from their hardware wallets.
IDEX is making this possible through its newly developed open-source design, called “Optimized Optimistic Rollup” (O2 Rollup). This, it claims, will bring scalable applications to public blockchains at last. It’s no secret that scalability has dogged the blockchain world over the years, with dApp usage down and fewer being created.
O2 Rollup will allow IDEX to provide high-throughput applications without using any proprietary technology. Every aspect of the system is cryptographically provable and solves layer 2’s hardest problem of data availability.
Introducing a new staking system
To keep the network secure and ensure the integrity of layer 2, IDEX 2.0 will debut a new staking system. In return for auditing the network, validators will be compensated with trade fees from IDEX plus additional incentives for those who uncover any issues.
The staking mechanism, IDEX affirms, will ensure that all parties work together to provide a fast, trustworthy, and transparent exchange.
“We’ve rearchitected our platform and laid the groundwork to handle hundreds of thousands of transactions per second and provide advanced trading features previously unavailable on DEXs,” Wearn enthused.
“The release of IDEX 2.0 closes the gap as we continue to innovate and deliver the best experience for our users.”
The key features of IDEX 2.0
The upcoming release of IDEX 2.0 will include several groundbreaking features, including:
- O2 Rollup, a new layer-2 solution that provides the exchange with an open-sourced way of deploying high-throughput applications
- Scalability to hundreds of thousands of transactions per second, with throughput levels matching centralised competitors (while remaining non-custodial)
- A new staking model to incentivise its stakeholders (including traders and market makers) for securing the network
- A true order matching system that allows for more advanced trading and removes the coordination problems on IDEX 1.0
The timeline for the release of Version 2.0 isn’t yet clear. But with these exciting new features, IDEX looks set to completely shift the panorama of decentralised exchanges, allowing them to become real contenders at last.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.