While it seems like everything else in our world is getting decentralized, cryptocurrency exchanges remain stubbornly the opposite. The most popular services are operated by a single authority that controls every token on the platform. Decentralization would be ideal, but so far the drawbacks have prevented mass adoption.
The Neon Exchange (NEX) wants to take the best features from centralized services and bring them to a decentralized exchange. Upon launch, NEX users will have access to fast and secure transactions, advanced buy/sell features, and cross-blockchain trading that includes worldwide fiat purchasing. And because NEX itself is largely decentralized, users will have full ownership of their tokens.
NEX is very much a work in progress at the moment, but its feature set already has the crypto community excited. The development team recently held an AMA session on the /r/NEO subreddit to answer some of the most popular questions from the community. Below are some highlights from that Q&A, and a look at what the future has in store for NEX.
Why NEX is Better
NEX will be the only decentralized exchange using an off-chain matching engine. This service takes most of the heavy lifting off the blockchain, performing computationally expensive operations like order matching without taxing the network. NEX team member /u/unignorant says the engine makes trading “just as performant as today’s centralized exchanges” while supporting cross-chain trading “that has long been a pipe dream for decentralized exchanges”.
NEX is a registered European security, which is a huge bonus for investors. Things like insider trading and market manipulation that often happens with cryptocurrencies are explicitly illegal for securities. NEX as a company will also be subject to extensive audits, creating a more reliable atmosphere that’s closer to traditional stock investing than the untamed crypto world.
NEX also offers more generous revenue sharing than most other exchanges, all thanks to staking. This model lets users commit to storing an amount of their NEX safely in a smart contract for a given amount of time, anywhere from a day to two years. Anyone who does receives a share of fee revenue while staked. The earnings rate starts at 25% and increases linearly up to 75%, almost twice that of competing exchanges that offer similar fee-sharing models.
NEX Growth Plans
NEX is going after two types of users: serious traders who need fast, smart tools, and mainstream users looking to buy altcoins with fiat. The team believes NEX can organically capture both groups with its planned set of features. Over 100,000 people have already signed up with the service, and the testnet hasn’t even been completed.
The combination of off-chain matching and decentralization will self-sell the NEX exchange to more experienced crypto users. Actually owning their tokens and keeping keys private without having to give up power trading tools is something no other service comes close to offering.
The mainstream group isn’t currently being targeted by any exchange (except perhaps Coinbase). If NEX can deliver on its promises of cross-chain transactions and trustless coin buying via fiat, new users won’t hesitate to try the exchange out.
NEX, Neo, and Fiat
NEX has several unannounced banking partners that will facilitate worldwide fiat-cryptocurrency trading in the coming months. Users will be able to buy NEO/GAS via bank account, then immediately trade those for other tokens on the Neon Exchange. The feature is set to go live with the full testnet in Q2 2018.
This fast fiat-crypto conversion could be a game changer for the entire cryptocurrency ecosystem. With NEX’s quick access to fiat trading, users will be able to swap fiat currency for cryptocurrency regardless of where they live or which blockchain the coin is built on. Businesses can accept any currency they like, and users can pay in the coin of their choosing, all without leaving the NEX interface.
Support for Mobile and Hardware Wallets
The NEX interface is currently only available as an extension for Chrome. The team confirmed that apps for both iOS and Android platforms are planned, and if everything goes smoothly they could be released by Q3 2018. This will depend on how fast the project itself grows as well as the speed in which NEX API tools are adopted by third-party wallets.
Hardware wallet support was also brought up in the AMA. It was confirmed to be part of NEX’s roadmap, though no timeline was mentioned. Ledger will be a priority due to its popularity with the NEO community.
NEX and U.S. Residents
One of the drawbacks to the early stages of NEX is that it’s unavailable to residents of the U.S. Due to legal reasons, the team is working mostly within Europe at the moment. They are looking into acquiring the right licenses to open trading within the U.S.
The NEX token will be listed on other exchanges at some point in the near future. U.S. residents will be able to buy the NEX coin through these services, even if NEX itself won’t be available in the country.
Roadmap and Whitepaper
The Neon Exchange whitepaper is due to be updated soon. At the time of writing, it hasn’t been changed, but the roadmap details are still clearly spelled out on the paper and the NEX website. The full product is expected by the end of 2018, with several major usability milestones staked out along the way.
Q2 includes the launch of the matching engine on a NEO testnet, along with a trading interface, v1 of the web extension dapp API, support for ERC-20 tokens, plus the ability to buy and sell NEO, GAS, and RPX through partner banks. The testnet will be a “complete product” during this quarter, as well.
Q3 marks the beginning of full trading operations with the launch of the NEX mainnet. NEO, ETH, NEP5, and ERC-20 tokens will be supported, along with cross-chain conversion for other coins. Advanced trading features will arrive by Q4 2018, along with full cross-chain trading support for BTC and LTC.
NEX and the Future
NEX is aiming for a wide audience with its features. Seasoned crypto users will appreciate the blend of security and speed in a trustless decentralized environment. Newcomers and businesses will find seamless cross-chain trading makes everyday crypto transactions an effortless reality. If things go well, NEX could even be the catalyst that gets the general public using digital currencies.
The team itself is committed and confident about the service’s future. When asked why anyone should invest in NEX over other exchanges, /u/unignorant had this to say:
NEX will be the first usable, performant, and cross-chain DEX. Out of all the [competing exchanges], none of them are using an off-chain matching engine, which quite simply means none of them can do what we are doing.
Q2 and Q3 2018 will be exciting times for NEX. Keep an eye on this exchange, it could be a game changer.