Problems Identified

There are still room for Traditional DEXes to evolve, limiting their potential for mass adoption. Below, we outline the three main weaknesses we have identified:

High Slippage

Automated Market Makers (AMMs) are a remarkable design in DeFi, but they do come with features that traders might be cautious about—High slippage. As liquidity providers deposit an equal value of two tokens into the liquidity pool to earn rewards, any changes in liquidity directly affect the prices offered, resulting in price slippage. This risk becomes more pronounced during periods of high market volatility or low liquidity, potentially affecting traders' profits and making them hesitant to use DEX platforms. Despite this, AMMs remain a valuable part of the DeFi ecosystem with room for further improvement.

Poor Usability

Many DEX platforms suffer from slow transaction speeds, expensive fees, and a lack of advanced trading features, making them less user-friendly compared to centralized exchanges.

Capital Inefficiency

Liquidity is very crucial for any trading platform. Traditional DEXes have struggled to attract sufficient liquidity due to liquidity fragmentation across different blockchains. This prevents retail and investors to access and leverage the full potential of their capital.