When it comes to crypto trading, two exchange models have dominated the landscape: Centralized Exchanges (CEXs) and Decentralized Exchanges (DEXs). Each model comes with its own set of advantages and challenges.

For example, CEXs are known for their intuitive interfaces and efficiency, but they often grapple with trust issues due to their opaque ‘black box’ operations, a concern in an industry often plagued by Fear, Uncertainty, and Doubt (FUD). In contrast, while DEXs offer self-custodial trading and greater transparency, they aren’t as efficient, present a steeper learning curve, and require strong vigilance to protect against frauds and scams.

Our fix: Hybrid Exchange (HEX)

Our solution to these challenges is the Hybrid Exchange or HEX. This new exchange model merges the strengths of both CEXs and DEXs, providing users with a trading experience that’s secure, efficient, and user-friendly. But to fully understand its architecture, it’s important to know how these two primary exchange models work.

The Efficiency of CEX

Trading on a CEX is highly efficient - thanks to its centralized off-chain matching and risk engines. Your funds are held in central custody, and secured by conventional methods such as username, password, and Two-Factor Authentication (2FA). However, this centralization brings about inherent risks. If the exchange fails, your funds could be in danger.

The Security of DEX

On the other hand, when you trade on a DEX, you have full control of your funds, which only you can access with your private key. This significantly reduces counterparty risk. Transactions on a DEX are transparent and immutable, thanks to their on-chain nature. However, this very feature of being on-chain can lead to both trading and capital inefficiencies.

CEX + DEX = HEX

Our HEX model is a step forward, combining the best features of both CEX and DEX. It provides a hybrid platform that ensures enhanced security without compromising on efficiency.

For starters, your account on our HEX model is protected by a blend of CEX and DEX security measures, including username, password, 2FA, and private key.

To build a high-performance platform, we integrate the off-chain trade efficiency of a CEX with the on-chain settlement and margin management of a DEX. This integration offers a seamless trading experience that leverages the strengths of both systems.

Another key feature of our HEX is its sophisticated risk engine that operates both off-chain and on-chain. We ensure on-chain privacy through zero-knowledge proof (zk-proof) Validium, and mitigate counterparty risk with segregated custody. This dual approach ensures that our HEX provides a secure and robust trading environment for all users.

Our Hybrid Exchange (HEX) marks a significant milestone in the world of crypto trading. By combining the efficiency of CEXs with the security of DEXs, we are pioneering a platform that addresses the shortcomings of both dominant exchange models.