StarkWare has launched a demo of StarkDEX, a new decentralized exchange engine that will offer enhanced scalability. The project is the result of a collaboration with 0x, a leading decentralized exchange protocol, and this major partnership means that StarkDEX has the potential to become a high-profile project. Here’s how StarkDEX works, and how it will make progress during the next few months—and how the partnership will benefit the 0x project in a larger sense.
StarkDEX was primarily designed with scalability in mind, which means that its main feature is its ability to handle a high volume of crypto trades quickly and inexpensively. According to StarkWare, the StarkDEX engine can handle about 550 trades per second. This is nearly a 200-fold improvement over current Ethereum-based DEXes, which can only handle about three trades per second. StarkDEX achieves its high performance by initially batching trades and handling them off-chain; later, it verifies the trades on-chain all at once.
In order to do this, StarkDEX relies on ZK-STARKS, a type of zero-knowledge proof that allows transactions to be verified even when transaction data is not entirely known. Zero-knowledge proofs are often used by privacy coins like Zcash, but Starkware mainly uses ZK-STARKS for scalability. ZK-STARKS are specifically designed to offer scalability, transparency, and lean cryptography. Additionally, they do not rely on initial trusted setups, which improves security and decentralization in various ways.
At the moment, StarkDEX is in alpha: it is running on the Ethereum testnet, and it is working with live trades from Binance. This means that StarkDEX is just a simulation right now, but by the end of the year, StarkWare plans to launch a mainnet version that will be able to handle real trades. StarkWare is also planning to launch its own exchange, StarkExchange, following the mainnet release. Several other decentralized exchanges could also come to rely on the StarkDEX engine in the future.
StarkDEX was created in collaboration with 0x, which is one of the largest decentralized exchange protocols in existence. Matt Taylor of 0x has noted that StarkDEX will become an important part of 0x’s sidechain—a tech stack that also includes 0x Mesh and a coordinator system. 0x is built on top of Ethereum, but its sidechain will provide a secondary network that improves its scalability, liquidity, and security. Basically, StarkDEX and other projects will collectively provide 0x with features that Ethereum itself cannot.
This means that StarkDEX could go a long way toward improving Ethereum- and 0x-based DEXes, which are an extremely valuable part of the blockchain ecosystem. Decentralized exchanges provide anonymity and freedom from trading restrictions. Furthermore, DEXes offer excellent protection against attacks and thefts because they do not store user funds. StarkWare’s innovative new engine will make Ethereum-based DEXes even more attractive than they already are—and it will allow those exchanges to compete with other popular DEXes to the best of their ability.
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