Overview
QUANTA's fast and secure digital asset exchange seeks to provide liquidity to the illiquid market of decentralized exchanges. In contrast to other projects that build a decentralized cryptocurrency exchange ("DEX"), QUANTA seeks to enable the exchange across any blockchain. As such, it is not limited to the exchange of ERC20 tokens (like Kyber and 0x) or NEO tokens (like NEX). Let's have a look if this project has the potential to become the ICON of decentralized crypto exchanges.
The problem
Decentralization is the common denominator of cryptocurrencies and many blockchain projects. In fact, it is the underlying vision that has fueled the growth of the entire sector for years. Despite the remarkable achievements in this area, the majority of digital assets are still exchanged on centralized ecosystems. On the one hand, the four biggest centralized exchanges OkEx, Huobi, Binance, and Bitfinex account for 64% of all the trading volume. On the other hand, the trading volume on the biggest decentralized exchanges totals 0.4%. One major reason for this lies in the fact that existing decentralized exchanges are illiquid and slow, which renders them unusable in comparison to centralized exchanges.
Central problems competitors face
The majority of existing decentralized exchanges are built upon a specific platform, for instance, Ethereum (such as 0x, IDEX, and Kyber) or NEO (such as NEX). This, however, limits them to the exchange of tokens that are using this particular platform. In the case of ETH-based exchanges, only ERC20 tokens can be traded. The mentioned exchanges are also dependent on the block time of the underlying platform. This inbuilt latency does not enable them to compete with the transaction speed and trading volume of centralized exchanges. At the moment, ETH is able to handle around 13 TX/s. As such, it is not the most viable solution for real-time trading - a fact ETH-based DEXs currently struggle with.
At the same time, existing decentralized exchanges face the same limitations in regards to scalability as the blockchains they are built on top. However, the largest challenge existing decentralized exchanges are confronted with is low liquidity. This is the major reason why professional and institutional traders alike depend on centralized exchanges.
The solution
QUANTA provides liquidity to the market by developing a fast and scalable public blockchain for the exchange of digital assets across any blockchain.
Pros
- QUANTA's cross-blockchain trading functionality could build up some considerable hype around this project
- Proof of concept is 15x faster than ETH block time => allows near real-time trading
- Based on a projection of its proof of concept, QUANTA will initially reach 500k orders per second [compared to 13 TX/s of ETH-based DEXs). Limit lies at 5 million orders per second
- QUANTA's DEX provides better protection from hacks than a centralized exchange; users retain custody over funds
- High level of independence thanks to own blockchain (not dependent like Kyeber/NEX on ETH/NEO to scale)
- Much better scalability than ETH-based DEXs
- Ability to compete with centralized exchanges in terms of speed
- Independent on liquidity pools from investors such as other DEXs
- Community of more than 250,000 interested traders/investors (according to website)
- Team (from eBay, Google, Paypal, and Netflix) has experience in building systems with billions of requests/TX per day
- First exchange wallet to support fully decentralized keys
- Potential use cases outside of crypto (for instance betting, gaming, etc.)
- Linear scalability; Waves, 0x, Kyber, and NEX do not provide linear scalability
- Token holders receive fee distributions + trading-based earnings
- Wallet provides bank-grade security
- QUANTA will support ICO fundraising on its own platform => instant trading after ICO
- Acceptably professional-looking design of the DEX interface
- In the past, ICO's of decentralized exchange projects have performed very well
Cons
- Binance could become a huge competitor if/once they launch a decentralized version + Binance already has the necessary liquidity, which would be a massive advantage
- Providing liquidity will be the biggest challenge for the project
- QUANTA seeks to provide liquidity through three pillars (community, technology, partnerships). This crucial aspect is not well enough addressed in the whitepaper. It is an aspect that could potentially lead to the sudden demise of the project, so one would expect more details and a better strategy. No liquidity => no trades and therefore no success of a DEX
- Only near real-time trading (1 sec block time); (shouldn't be too much of a problem though)
- No details on the amount of fees per trade
- Cross-chain trading will be accomplished by transferring tokens from an external blockchain and exchanging them with QUANTA's QDEX (1:1); it is not specified when this exchange takes place => are traders protected from price volatility of the QUANTA token if orders are intentionally executed at a later time (for instance through a stop-loss)? This key issue is not addressed
- Not very detailed future roadmap (6 upcoming milestones though)
- No team member with experience in developing blockchains or crypto-related applications; only crypto enthusiasts, miners, and traders. Could be a central issue
- No crypto advisors
- Small team of 6 and advisory board of 3. Not all team members full-time
- Hard cap of 60M QDEX tokens (total supply is 400M tokens) => they are only selling 15%. ICO investors won't be particularly fond of this. No info on hard cap in Dollar. This will be the determining factor if QUANTA is a good investment opportunity
- 40% of tokens reserved for community rewards, which is a lot. Community tokens will be released over the course of 20 years (which is unrealistically long in the crypto universe)
- Sign-up, marketing, and referral incentives ("airdrops") could lead to a drop in price if not locked properly
- Major grammatical errors in the whitepaper
Verdict
QUANTA tackles the daunting issues decentralized exchanges are facing at the moment. In combination with their cross-blockchain trading functionality, this project is destined to receive the attention of crypto enthusiasts and investors alike. If token metrics are beneficial to investors, QUANTA has a high chance of gaining enough traction to become a successful ICO. However, the long-term success of QUANTA's DEX depends to a great degree on the team's ability to provide liquidity. This is a major challenge of the project, which is why investors may wish to see a more detailed strategy that addresses this particular issue before investing.
This is not financial advice. I'm just sharing my opinion. Always do your own research.