Decentralized exchanges are becoming rampant and very common as years go by because of their capability to issue customers a high degree of power over their virtual digital assets and a safer trading space than centralized exchanges.
Although, one major restriction of the DEXs is their inability to assist cross-chain and margin exchange. A multi-decentralized exchange network is constructed on cosmos, an interoperable and decentralized blockchain space.
The injective network allows DEXs to assist cross-chain trading and margin exchange, enabling customers to exchange virtual digital assets from various blockchain protocols in a single platform.
How Can DEXs Allow Cross-Chain Exchange?
One of the major challenges in allowing cross-chain trading on a DEX is the call to consolidate the various ledgers and order books of the blockchain protocols involved. Injective network addresses this challenge by utilizing what it refers relayers.
Relayers are decentralized knots accountable for fostering the exchange of virtual digital assets across various blockchains. They play the role of intermediaries, holding assets in escrow and influencing the trade of virtual crypto assets between investors and traders.
When a customer requires to exchange crypto or any other digital asset from one blockchain protocol for another digital asset on another protocol, they can request a DEX that operates on an injective network. The relayer will then receive the customer’s order and forward it to the proper blockchain protocol, which is compatible with it with a counterparty.
The relayer will also influence the exchange of virtual crypto assets among and between two participants, allowing the exchange to be executed. This procedure enables users to exchange virtual digital assets from various blockchain protocols in a single platform, overcoming one of the key restrictions of traditional DEXs.
Margin Exchange on DEXs
Margin exchange is a transacting plan that includes borrowing funds from a lender to transact with leverage. This action can enable investors and traders to make immense rewards but also involves the risk of more visible losses.
Cross-chain DEXs can utilize a decentralized borrowing and lending platform to foster margin exchange. Additionally, since DEXs support a more significant quantity of tokens than centralized platforms, customers can exchange leverage on a higher quantity of crypto assets.
The injective network allows DEXs to support margin exchange by issuing a decentralized borrowing and lending platform. This platform enables customers to lend and borrow virtual digital assets to each other, with an injective network as an intermediary.
When customers need to transact with leverage on a DEX that operates on an Injective network, they can borrow the digital assets they require from the borrowing and lending platform. They can then utilize these virtual crypto assets to transact on the DEX.
Supporting Structures of Multichain Decentralized Exchanges
ZKEX gears zero-knowledge proofs to ascertain the legitimacy of exchanges on its platform. On the trade, this cryptographic approach examines the originality of exchanges, ascertaining their integrity and security while holding any private records comprising the specifics of the exchanges or the parties’ identities.
Integrating zero-knowledge proofs enables the privacy and security of the platform and contributes to ensuring confidence and trust among its customers. Strategy Tokens are another structure of injective-based DEXs that allow traders to be involved in actively monitored algorithmic trading plans innovated by leading institutions representing shares in exchange vaults.