Centralized crypto exchanges have long dominated the market, offering users a convenient way to buy and sell cryptocurrencies. However, the traditional centralized model has a number of drawbacks, including security vulnerabilities, the potential for manipulation, and dependence on a single entity. To address these issues, a new wave of crypto exchanges, known as distributed crypto exchanges, have emerged to introduce decentralization and create a more secure and transparent trading environment.

In past articles, we wrote about the innovative nature of the product that diva.exchange is developing – a fully distributed exchange for exchanging any digital assets. How diva.exchange’s project differs from other similar digital asset exchange service providers, where its innovation lies, and what prospects diva.exchange has in the growing and evolving digital asset market.

How diva.exchange solves the problems of centralized crypto exchanges

DIVA is software that each user runs on their local system. There are no DIVA software functions in the cloud. All users together form the DIVA software, creating a fully distributed system.

A brief summary of the key objectives that diva.exchange is working on:

a) uncompromising privacy protection for all users;

b) complete distribution of the system for optimal protection against technical abuse (e.g. asset theft, unauthorized user access);

c) maintenance of trust between system participants only on the basis of proven algorithms;

d) system participants generate revenue through the operation of system components;

e) outstanding user experience due to the user interface, allowing people to achieve their goals conveniently and quickly.

Let’s see what it looks like in practice: concrete steps

1. Protecting the privacy of DIVA-network members and establishing trust within the network

To ensure that user data and activities in the network cannot be misused, private user data does not leave the local system. The individual local DIVA nodes are linked together by the network and exchange data through the network. The network is fully anonymized, and the traffic is fully and repeatedly encrypted. This network has been given the common name “I2P” (see articles here and here ).

When a user wants to access the Internet anonymously through I2P, their traffic is routed through a series of intermediate nodes before it reaches its destination.

Each node in an I2P network knows only the previous and next nodes on the route, ensuring that no node can link the source and destination of the traffic.

The I2P network uses end-to-end encryption: data sent over the network is encrypted multiple times at the source and finally decrypted only at the destination. As data passes through each node along the route, each node strips off one layer of encryption and only the final node can decrypt the data sent by the source.

2. Distributed nature of diva.exchange network

The main and most important advantage of DIVA is that it is a distributed network without a single center.

The DIVA software uses the specialized blockchain “divachain” which is publicly available. This blockchain uses a variant of the so-called “Byzantine Fault Tolerance” as a consensus algorithm. This consensus algorithm is reliable and energy efficient, but it does not scale very well (in concrete and simplified terms, this means that as the number of participants increases, the performance or speed of the system as a whole decreases). We wrote about this in detail in our last article.

In addition, the “stake” algorithm was implemented specifically to address trust issues in “divachain”. “Stake” can be translated as “interest in something”. Participants in the system gain a “stake” through active participation in the whole system. The more constructive technical effort an individual system participant contributes (e.g., by keeping its own node online), the greater the “stake” they receive. The “stake” algorithm is part of the “divachain” source code, and of course, every change to the “stake” is stored in the blockchain.

3. Income opportunity in the diva.exchange network

When digital assets are exchanged on the diva.exchange network, there may be transaction fees. For example, two users exchange Bitcoin for Tether. To do this, the two users use the DIVA ring infrastructure for the most cost-effective pricing (called “order book” and “order processing” in technical jargon). Thus, both users must be members of the same ring and have a “stake” greater than zero. Using the infrastructure, both users a very small commission will be deducted from their assets during the exchange, and this commission is received by other ring members. Thus, “stake” sooner or later leads to income from the commission of completed transactions within a ring.

DIVA’s near future

What the future holds for DIVA and whether it will be able to offer the best solutions to meet the needs of its members. The answer lies in diva.exchange’s ability to solve the problems of existing crypto exchanges, both centralized and decentralized.

For example, DIVA solves one of the key problems of decentralized exchanges – the scalability problem. To solve the scalability problem, DIVA has implemented a so-called ring structure. Simply put, the participants of the system form ring with a smaller number of participants, let’s say 23 participants. Each of these rings now functions as an independent high-performance network. In general, the network consists of any number of rings that are loosely connected. This could also be understood as a fully distributed system backed with federation technology to improve scalability.

Participants in the system can simultaneously participate in multiple rings, and join and leave other rings at any time. This mutual penetration, including ”stake” transfer and verification between rings, greatly enhances the competitiveness and resilience of the entire DIVA software.

Conclusion

The future of distributed exchanges promises to transform the financial landscape, democratizing finance and giving users unprecedented control over their assets. As technology advances and the DiFi ecosystem grows, exchanges will continue to improve, offering increased security, improved scalability, and seamless cross-chain trading. Diva.exchange has been one of the pioneers in the development and proliferation of distributed exchange technology.

THIS IS DIVA.EXCHANGE

The non-profit association diva.exchange, Switzerland, uses a barrier-free and collaborative approach to create free banking technology for everyone. Open source technology ensures the privacy of all participants in the financial system of the future. The blockchain-based system is fully distributed. Everyone can participate in diva.exchange.

Diva.exchange is committed to the belief that only commercially free technology can reliably protect user privacy.

Collaboration with the scientific community plays an important role in the development of diva.exchange. The results of diva.exchange research is constantly being validated by academic institutions and publicly presented at specialized conferences.

LEARN MORE ABOUT OUR WORK

All technical information is available at: https://github.com/diva-exchange/

I2P beginner’s guide and installation guide:https://www.diva.exchange/en/privacy/introduction-to-i2p-your-own-internet-secure-private-and-free/

All videos are here: https://odysee.com/@diva.exchange:d/

Introduction to I2P: https://en.wikipedia.org/wiki/I2P

Testnet of diva.exchange: https://testnet.diva.exchange

CONTACT US

Twitter: https://twitter.com/@DigitalValueX

Mastodon: https://social.diva.exchange/@social

If you still have questions you can always find us on Telegram: https://t.me/diva_exchange_chat_de (in English, German or Russian)