Popular science in the currency circle: What is the difference between decentralized exchanges and hybrid exchanges?

The difference between decentralized exchanges and hybrid exchanges is mainly reflected in: 1. Trading mechanism: Decentralized exchanges use smart contracts to match transactions, while hybrid exchanges combine centralized and decentralized mechanisms. 2. Asset control: Decentralized exchange users control assets, and mixed exchange ownership centralization and decentralization. 3. Privacy protection: Decentralized exchanges provide high anonymity, and hybrid exchanges require KYC in centralized mode. 4. Trading speed and liquidity: Decentralized exchanges are slower, liquidity depends on user pool, and hybrid exchanges are more fast and liquid in centralized mode. 5. Platform governance: Decentralized exchanges are governed by community governance, and hybrid exchanges are jointly governed by communities and centralized teams.

There are many differences between decentralized exchanges and hybrid exchanges, as follows:

• Trading mechanism
  • Decentralized exchange : Use smart contracts to match transactions, and transactions are conducted directly between users, and there is no centralized institution to act as transaction intermediaries. For example, in decentralized exchanges such as Uniswap, users exchange their crypto assets with assets in the liquidity pool through smart contracts, and the execution and settlement of transactions are completed on the blockchain.
  • Hybrid exchange : a trading mechanism that combines centralized and decentralized. It can not only use a centralized order book to match transactions like a centralized exchange to improve transaction speed and efficiency; it can also provide a decentralized transaction method, allowing users to trade on the blockchain through smart contracts.
• Asset Control
  • Decentralized exchange : Users' assets are always controlled by themselves, the private keys are kept by the user themselves, and the assets are stored in personal storage. The exchange cannot directly control user assets. For example, when trading on PancakeSwap, after the user connects to his own storage, the transfer and transaction of assets are authorized and operated by the user through storage.
  • Hybrid exchange : There are two options for users. If you choose a centralized trading model, the assets will be deposited into the exchange account and temporarily stored and controlled by the exchange, which is similar to a centralized exchange; if you choose a decentralized trading model, you can control the assets by connecting to digital storage like in a decentralized exchange.
• Privacy protection
  • Decentralized exchanges : Users usually do not need to provide personal information for registration and transactions. The transaction process is highly anonymous and protects users' privacy. For example, on some decentralized exchanges, users only need to use the storage address to conduct transactions without revealing their personal information such as name, ID number, etc.
  • Hybrid exchange : Since it takes into account compliance and centralized trading functions, when conducting centralized trading, users usually need to perform identity verification (KYC) and other operations, which will expose users' personal information to a certain extent. However, under the decentralized transaction model, users can trade relatively anonymously, protecting privacy to a certain extent.
• Trading speed and liquidity
  • Decentralized exchange : Trading speed is relatively slow, especially when the network is congested, the transaction confirmation time can be long. Moreover, liquidity may not be as liquid as centralized exchanges, because their liquidity depends on the liquidity pool provided by users, and some niche trading pairs may be insufficient in liquidity. For example, some decentralized exchanges based on Ethereum will see a significant increase in transaction fees and significantly slower transaction speed when the Ethereum network is congested.
  • Hybrid exchange : Under the centralized trading model, it has the characteristics of high liquidity and fast trading similar to that of centralized exchanges, and can meet the needs of users for large-value transactions and high-frequency transactions. In the decentralized trading model, liquidity and transaction speed may be limited by the performance of the blockchain network, but compared with purely decentralized exchanges, liquidity and transaction speed may improve due to their ability to integrate centralized resources.
• Platform governance
  • Decentralized exchanges : Usually adopt a community governance approach, and there is no single centralized organization to decide the development direction of the platform. Community members make decisions on major matters such as platform upgrades and rule-making by holding the platform's governance tokens or participating in community discussions.
  • Hybrid exchange : The governance model is relatively complex, which may include both the components of community governance, and a centralized operation team or organization plays an important role in it. For example, the exchange's operation team may adjust some of the platform's functions and rules, and will also refer to the opinions and suggestions of community members.

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