We consider that there are different levels of decentralisation for DEXes, from the fully decentralised exchange, where everything is indeed decentralised: non custodial wallets, no KYC, order books, matching engine, fully open source code, etc., to the least decentralised where only one component is.
In our review of DEXes outside Ethereum, Blocknet finished second on the Twitter poll.
Blocknet sits in the high end of the DEX spectrum: every part is decentralised, your funds are always under your control, there is no matching engine (instead Blocknet relies on peer to peer trading via atomic swaps), the code is open source and there is no KYC.
What is Blocknet?
Blocknet is a protocol which is focused on blockchain interoperability. Its goal is to connect all blockchains so that they can communicate and work together. The team behind Blocknet has developed a suite of tools to execute this vision and has released their first dApp, BlockDX, Blocknet’s Decentralised exchange.
The project is open sourced and has a governance mechanism which funds the development of the protocol. Blocknet is a Proof of stake blockchain with a mechanism of masternodes (the Service Nodes).
BlockDX, the Decentralised Exchange dApp
BlockDX is the first dApp of Blocknet. It is the decentralised exchange which offers trustless trading for the following reasons:
Your funds always remain under your control: you trade from your Qt wallets.
The trading is done peer to peer via atomic swaps. This is the most secure way to exchange cryptocurrencies.
Open source code and order books.
No KYC or account creation: you do not need to comply with KYC rules and you don’t even need to create an account or give an email address.
BlockDX is a software to be downloaded and ran on your computer. To use BlockDX, you will need two Qt wallets of different supported blockchains.
BLOCK is the utility token of the Blocknet protocol.
When people interact with the Blocknet network, they pay fees in BLOCK. These fees are paid to the Service Nodes which power the technology to enable interoperability of blockchains through the Blocknet network. They perform the host of other blockchain data and provide oracle services. The more the Blocknet protocol is used, the higher the fees paid to Service Nodes. To run a Service Node, 5,000 BLOCK is required (at $1.41 per BLOCK, it represents an investment of $7050).
Inflation Staking reward
There is also a block reward to secure the Blocknet network as the Blocknet blockchain is PoS (Proof of stake). This inflation reward is paid to stakers in BLOCK.
To fund its development, Blocknet relies on super blocks which are mined every month. Contributors can submitted their proposal for future development of the platform in terms of dev, marketing, etc and Service Node vote through a governance mechanism and allow funds to accepted requests.
What we do like
No paperwork: no need to create an account or KYC, you connect your wallet to the exchange and you trade.
The tech: every component of the DEX is decentralised.
The development: the team is dedicated and actively developing the protocol for many years now. Blocknet’s Github has over 20,000 commits.
The governance mechanism: if you are willing to become a Service node provider, you can take an active role in Blocknet’s governance.
The Blocknet community: Community takes a very important place in the success of a project and Blocknet has definitely built one with over 21K Twitter followers and 4,900 Discord users.
What we don’t like
For non tech savvy guys, Blocknet is a very complex protocol to understand.
Complexity vs Usability: “The higher the complexity the lower the usability”. To trade via BlockDX, you have to download BlockDX and have two different Qt wallets connected in your computer. This is not easy to setup for the majority of non tech savvy people.
Blockchain data: you are also required to download all the blockchain data of the assets you are trading. It is required as you trade from your computer.
Trading volume: As it is difficult to setup your computer to trade via BlockDX, trading volume is very low. Indeed BlockDX serves a niche of the crypto market: tech savvy people willing to trade peer to peer with maximum security and no KYC. Majority of crypto users do not require this.
No Ledger/Trezor integrations: we would like to see these two wallets integrated to the DEX.
Blocknet tech is robust but currently too complex for the average user. You can have the best tech but why bother if nobody is actually using it?
Going forward, we hope that the protocol will work much more on usability.
And hopefully the team has already started: they released a first glimpse of the Lite MultiWallet, this wallet will not require to have the full history of blockchain data to trade via BlockDX.
Thanks for reading
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