In the previous article, we outlined the vision of AAX – to create a trusted exchange for digital asset trading with our values of integrity, security and performance at the core.
Today we’ll discuss why a fair and trusted exchange is even needed – after all, aren’t blockchains supposed to be decentralized and trustless?
Before going into that debate, let’s step back into history and look at why people have exchanges in the first place.
Why exchanges exist?
Exchanges for various assets have existed for a long time before the emergence of stocks and securities market. In the last century, stock exchanges have developed into more sophisticated and larger enterprises though they are still nowhere near from being foolproof. Now, cryptocurrency exchanges are about to lead a new wave of innovation in exchanges.
Before going into the features of crypto exchanges, let’s understand some of the fundamental benefits of exchanges:
Efficient transaction: Exchanges pool investors who wish to buy or sell together saving traders a lot of time in finding a trade counterparty. Without it, finding the suitable buyer or seller can be a very time-consuming and tedious process. The LSEG (London Stock Exchange Group) technology powering AAX executes users’ orders with ultra-low latency ensuring fast execution.
True price discovery: One of the core functions of an exchange is to enhance liquidity by getting investors who want to buy or sell together quickly. Simply put, an exchange facilitates true price discovery as demand and supply are more easily matched. AAX is designed with LSEG technology to bring the latest matching engine offering ultra-low latency which accommodates exceptionally high throughput. This feature (amongst many others) attracts market makers, and the abundance of market makers pledges stable supply of cryptocurrencies at competitive prices and facilities true price discovery.
Trade with trusted counter-parties: Traders not keeping their word is a nightmare. The presence of an exchange enforces traders to fulfill their obligations. Traders cannot back out of an agreement simply because they want to, or even worse, take off with the assets without settlement. The stringent KYC and AML processes of AAX provides a secure and trustworthy market. It is a top priority of AAX to effectively screen users to build a trusted community of traders and enable a fair trading environment for all.
Embracing the challenge: Building a fair cryptocurrency exchange
It is fact that crypto exchanges have a long way to reach maturity, and this is an inspiration for AAX to continue to strive towards creating a fair exchange. AAX is the world’s first digital asset exchange powered by LSEG Technology which is a proven financial market technology solutions provider for over 40 markets. LSEG Technology has laid a strong foundation for AAX to deliver the above-mentioned benefits (and many more) of an institutional grade exchange for all.
Now that we understand the need for exchanges in the traditional financial market, in our next post we will discuss why a fair and trusted exchange is needed in trading blockchain digital assets.
To find out more about AAX or to pre-register please visit www.aax.com