I decided to create this article to show my experience as a developer on blockchain space regarding centralized exchanges. With my view, I will try to promote fair transparency on blockchain space and bring some solutions or at least some discussions.
I am a developer passionate regarding developments on Decentralized Finance (DEFI), which are occurring on Ethereum space.
The decentralized finance is the way to go to promote transparency and a fair place for traders, and the best place for small projects trade their utility token targeting world users. Being decentralized exchanges one of the most target techs to being developed.
Decentralized exchanges do not have problems regarding hacking because crypto assets only leave your wallet when the trade is made, this normally is done automatically for smart contracts like 0x or Kyber Network. Decentralized exchanges do not do wash trade and not fake volume. They can fake volume on Ethereum network doing lots of
transactions, but that will cost gas and can be easily proved looking at transaction records, which in turn decreases the benefits of doing it at large scale.
Despite the large benefits of decentralized exchanges, team projects keep looking to be listed on centralized exchanges and pay large listing fees for it, because they think the costs will be covered with the additional eyes of being listed on a "big exchange", and have tickers listed on Coinmarketcap or Coingecko. They pay what they think can bring value to their project as a "marketing investment". Instead of some teams create products to help the blockchain industry, they are spending valuable resources on wash trade volumes in the hope of getting eyes on their utility token.
Coinmarketcap is trying to solve this problem creating an alliance of fair exchanges and Coingecko listing correct volumes and add notices of fair data volume. But they can solve this problem on other way and more effective in my point of view, they can start to promote small DEX's by starting listing by aggregated data, the volume occurring on 0x trades (just an example). This is already done by 0xtracker fetching data directly from the blockchain, there is no third party to provide data, all the data necessary is already there on the blockchain waiting to be analyzed and tracked correctly, without wash trade. This will enable small projects to be listed instantly only based on the activity on the 0x smart contract and based on social activity or any valuable metrics. I believe when that happens, listing fees charging by some exchanges will decrease because they will not be needed anymore. Why projects will pay to exchanges to get volume if they are already listed on the most important trackers and have plenty of trade options.
Using directly the data already on the blockchain could be a solution to promote more transparency on crypto space and help teams spend the resources where they need to be spent, helping the blockchain industry with solutions for the people.