A University of California, Berkeley, blockchain group is reportedly teaming up with KyberNetwork, a digital asset platform, to research ways on building a better system for decentralized exchanges.
The comprehensive research partnership was announced yesterday by the group, called Blockchain at Berkeley, followed with a statement that these two groups (UC Berkeley and KyberNetwork) will be focusing on the different aspects of trading like strategies, sustainability, and diversity, more specifically on the early-stage exchange model of KyberNetwork.
Making a plan that will last for three months, the two groups aim to determine potential problems, as well as coming up with solutions for them, according to a released statement.
“We see the power of [decentralized exchanges] to influence adoption of the technology by mainstream users. Berkeley students, energetically focused on innovation and creative problem-solving, are an excellent group to help extend KyberNetwork’s ideas and creative energy,” Loi Luu, Kyber’s chief executive and co-founder, said.
As of the moment, the order book model is used by centralized exchanges to get rid of risks. However, their decentralized counterparts do not.
According to the same press release: “The exclusion of order book in KyberNetwork’s model means that the calculated price of these tokens have to be very precise in order for the exchange to stay competitive while keeping the risk of reserve depletion low.”
To find a solution for this, KyberNetwork stated how important it is to maintain a central reserve for the exchange, as well as closely monitoring its inventory’s value and making sure prices are accurate.
As for the actual project, four parameters will be considered: token process, how long the reserve will take to make, lock-up times for contributors of the reserve, and how many tokens each user can have transactions with simultaneously.
“The partnership between Kyber Network and Blockchain at Berkeley connects students, faculty, employees, researchers, engineers and thought leaders to develop and exchange ideas, undertake joint inquiries and research, inspire people to act on key findings and transform concepts into reality in measurable ways,” the statement follows.
Loi Luu also said back in August that decentralized trading platforms are a good alternative, mainly because centralized exchanges find it impossible to handle large numbers of users. However, as of the moment, these decentralized alternatives are still aren’t as user-friendly as centralized ones, and may encounter difficulties in amassing funds because of a small volume of users.