FAQ

  • Q0
    Why?
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    Why?
    We believe the future of how we exchange digital assets should be different from the current system based on centralized exchanges. The current system requires trust, giving up custody of funds and is tightly controlled by regulators who demand exchanges to deny access to many in the first place. Exchanges are falling victim to this system themselves by being shut down or banned by regulators, which leaves markets being dominated by very few. We are on a mission to change this.
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  • Q1
    How?
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    How?
    With OpenDEX, an open and decentralized exchange network where funds stay in user control at all times and liquidity is globally accessible by anyone. No account, no KYC, no personal data, no discrimination and an incentive scheme to drive liquidity.
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  • Q2
    What?
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    What?
    We at Exchange Union are building xud, the software for a decentralized exchange network called OpenDEX. It brings market makers, exchanges and individual traders worldwide onto a single trading network and liquidity pool. Revolutionary in concept, OpenDEX is designed to address one of the most challenging reasons why decentralized exchanges didn't take over yet: lack of liquidity.
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  • Q3
    What is Exchange Union?
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    What is Exchange Union?
    Exchange Union is the organization building XUD, the Exchange Union Daemon. It is the reference implementation powering OpenDEX, a decentralized exchange built on top of the Lightning and Connext networks. It aims to solve the ever-lasting problem of liquidity isolation by bringing individual traders, market makers and exchanges onto the same network to form a single global liquidity pool.
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  • Q4
    What is XUD?
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    What is XUD?
    XUD stands for 'Exchange Union Daemon' and is the software we are building at Exchange Union. It is the reference Implementation of OpenDEX, a decentralized exchange built on top of the Lightning and Connext networks.
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  • Q5
    What is OpenDEX?
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    What is OpenDEX?
    OpenDEX is a decentralized exchange built on top of the Lightning and Connext networks. It is not a legal entity and not a product, but (similar to the lightning network) a set of protocol specifications maintained by an open community. Learn more at OpenDEX.network.
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  • Q6
    Which technology is OpenDEX based on?
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    Which technology is OpenDEX based on?
    OpenDEX is described as layer 3 exchange, orchestrating atomic swaps entirely on layer 2 via payment channel networks (the Lightning and Connext networks). This makes trades fast (milliseconds to seconds) and scalable (thousands of trades per second) while keeping the security characteristics of the underlying blockchains. OpenDEX is NOT a blockchain itself and there is no single blockchain it is tied to. Learn more at OpenDEX.network.
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  • Q7
    Why open source?
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    Why open source?
    We believe in an open and decentralized future where companies and individuals can verify what software does. On top, XUD is a complex software; therefore, having peer-reviewed work is especially important. Open reviews, audits, and tests are the best way to meet the high quality and security standards which we strive for. This also gives everyone the opportunity to create their own products and build on top of Exchange Union’s technology (Open Source License: AGPL-3.0), something that we highly encourage.
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  • Q8
    Can I trade on OpenDEX without being a market maker?
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    Can I trade on OpenDEX without being a market maker?
    Yes. BUT, in all transparency, it is not the most convenient option yet. The setup requires some technical expertise and command-line knowledge and there is no graphical user interface for XUD yet. We encourage technical traders to give it a shot, for all others traders we recommend to use OpenDEX-enabled exchanges as gateways to trade on OpenDEX. Under the hood, they interact with the OpenDEX network and abstract the complexity that comes with it into a nice user interface for traders. These exchanges are centralized, but usually self-custodial, meaning traders stay in control of their funds at all times.
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  • Q9
    What is XUC?
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    What is XUC?
    XUC is the token of Exchange Union and is used as liquidity incentive for market makers to provide liquidity on the OpenDEX network. It has been designed to reward the work and capital that is needed to "transfer" liquidity from major exchanges onto OpenDEX. In the early stages of the network, market makers receive our XUC token as a subsidy for providing liquidity on the network when demand, and thus profits, are still low. Subsidies decrease over time, similar to Bitcoin's block reward subsidizing miners in the early years when network fees are not high enough yet to pay for all occuring costs. Learn more in the XUC menu section.
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  • Q10
    How do existing digital asset exchanges benefit from OpenDEX?
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    How do existing digital asset exchanges benefit from OpenDEX?
    OpenDEX solves the major pain point of most exchanges: the lack of organic liquidity. Exchanges run XUD with a set of tools to use the network's liquidity to offer to their users in turn. In practice, these are mostly OTC-style exchanges, hedging their user trades on OpenDEX and controlling exposure of different assets. To put it short: no more worrying about liquidity for exchanges. Examples of exchanges using OpenDEX can be found here.
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  • Q11
    Doesn’t that kill arbitrage?
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    Doesn’t that kill arbitrage?
    Not at all, OpenDEX has arbitrage built-in at its very core. Arbitrage is used as a long-term financial incentive for market makers to do their work and use capital to transfer funds from major exchanges onto OpenDEX. Market Makers offer orders on OpenDEX with a premium and constantly update these based on the current market price. When a order on OpenDEX gets filled, they execute a counter trade on a major exchange to lock in profits. Arbitrage acts as incentive in OpenDEX to do something useful: provide liquidity.
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  • Q12
    I’d like to code for Exchange Union. How do I go about it?
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    I’d like to code for Exchange Union. How do I go about it?
    We’d definitely love to hear from you. Usually we'd like to see some contribution (Check this and this) before we talk about hiring.
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  • Q13
    When will OpenDEX go live?
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    When will OpenDEX go live?
    OpenDEX is live on Mainnet. It goes without saying that, just like with all new cutting-edge technolgy, we are constantly working on improving stability and usability. We recommend to start with our simulation network and with smaller amounts on mainnet.
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  • Q14
    How does Exchange Union benefit from all of this?
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    How does Exchange Union benefit from all of this?
    Exchange Union benefits in future from a healthy XUC token usage and value which is derived by the quality of the services Exchange Union provides. Since the network is decentralized, Exchange Union organization does not generate any revenue by collecting fees when assets are traded on the network. XUC is largely responsible for funding development.
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