NEO's First Decentralized Exchange Switcheo Posts $2 Million Trading Volume in First Week

  • NEO's first decentralized exchange (DEX) recently went live, and reportedly saw a $2 million daily trading volume during its first week
  • The platform, Switcheo, has trading pairs with NEO, GAS, and its own SWH token.
  • Switcheo's developers plan on implementing cross-chian functionality.

The NEO blockchain recently saw its first decentralized exchange (DEX) go live. The platform, Switcheo, comes after its initial coin offering (ICO) raised about $8.5 million, and reportedly already saw a $2 million 24-hour trading volume in its first week.

Decentralized exchanges are nothing new, as platforms like EtherDelta and Idex allow users to trade Ethereum’s ERC-20 tokens without having to rely on a centralized company controlling their funds. Switcheo is, however, the first decentralized exchange working on the NEO blockchain, with NEP-5 tokens.

The project’s whitepaper reads:

“Centralized exchanges fall into two categories: those that accept fiat currencies (government-backed currencies), and those that do not. Switcheo will initially not accept fiat currency transfers and will first work towards a ​multi chain decentralized cryptocurrency exchange​ platform where users may perform trades of virtual tokens and assets trustlessly (i.e. without the need to trust a centralized third party).”

Switcheo whitepaper

The platform lets users to trade over 20 different cryptocurrencies, with trading pairs being based on NEO, GAS, and its own Switcheo (SWH) token. The token is currently trading at about $0.026 and is similar to Binance’s BNB. It can be used for trading fee discounts, and is subsequently buned. While Switcheo doesn’t charge any fees on deposits and withdrawals, its maker taker fee is capped at 0.5 percent.

The platform’s developers have big ambitions for the future. Per their whitepaper, they plan on implementing cross-chain functionality. The document reads:

“With the increasing popularity of projects developed on the NEO Blockchain, Switcheo will strategically start trading NEP-5 Token contracts for the NEO Blockchain first, before moving on to QRC20 Tokens (QTUM). Using the dynamic call functionality of the NEO blockchain, users will be able to list and buy tokens the moment they are available for transfer on the blockchain.”

Switcheo whitepaper

According to data from a blog post detailing the developers’ experience running the platform, Switcheo is now the fourth largest DEX, behind Ethfinex, Idex, and Cobinhood. While Switcheo is so far NEO’s only decentralized exchange, there are more to come. Projects like NEX and Aphelion are set to be launched in the future.

Blockchain-Enabled Chinese Yuan Could Increase Governmental Oversight, Investor Argues

The Chinese government has been closely studying blockchain technology in order to determine whether the immutable distributed ledger can be used to streamline routine business processes.

However, Chinese authorities have expressed concerns regarding the use of cryptocurrencies in financing illicit activities and potentially disrupting the country’s $12 trillion economy by facilitating capital flight.

People’s Bank of China Considering Blockchain-Based Yuan

While China’s government has attempted to restrict transactions involving cryptocurrencies, the People’s Bank of China (PBoC) has reportedly been conducting research to determine the feasibility of launching a blockchain-based Chinese yuan (CNY) since 2014.

This, according to Dovey Wan, a founding partner at Primitive Ventures, a “market cycle agnostic” investment firm which has invested undisclosed amounts into various cryptoasset projects such as ZCash (ZEC) and DFINITY.

Wan, who earned her Masters in Information Systems from Carnegie Mellon University, wrote in a blog post published on CoinDesk on May 17, 2019 that the digital yuan, or Renminbi (RMB), initiative may potentially allow the Chinese government to exercise greater control over the nation’s local and international economy.

M0 Versus M2

As explained by Wan, digital fiat currencies allow financial institutions to more effectively create credit flows which increase M2, the broad money supply. Meanwhile, blockchain-based digital currencies impact a base currency measure, referred to as M0.

Blockchain-enabled digital currencies could potentially allow central banks to “bypass commercial banks” in order to directly control money creation and supply channels. This would structurally centralize the central financial institution’s power and role in formulating monetary policy, Wan argued.

Chinese Government Will Most Likely Use Permissioned Network

According to Wan, the PBoC is looking at various types of network design for a digital, blockchain-powered RMB. She believes that it will most likely be a permissioned network in which the nodes will be managed by major Chinese financial institutions, including the PBoC.

This indicates that transactions involving a digital yuan would only be seen by Chinese banks, and not the nation’s citizens.

Blockchain-Powered Currencies Enable “Better Coordination Paradigm”

One of the main reasons for using blockchain technology, Wan noted, is to take advantage of “a better coordination paradigm” when compared to “traditional currency supply management, which is heavily dependent on bookkeeping,” Wan wrote.

Moreover, Wan thinks blockchain’s immutable nature and private-key cryptography can prohibit users from entering fraudulent transactions and also prevent users from counterfeiting currency notes.

A blockchain-based yuan could also assist the Chinese government in more carefully monitoring the spending history of the nation's residents. This would allow the government to "accurately assess creditworthiness" and detect illegal activities such as money laundering and tax evasion, Wan noted.