EtherDelta runs on the Ethereum smart contracts, written in a solidity programming language, and that trade orders are executed on the Ethereum blockchain. Once trade orders are executed, it is irreversible and cannot be modified in any way. EtherDelta provides 2 core functions that are essential for the operations of a decentralized exchange.
- Users have complete control of their funds.
- To use EtherDelta, users need to integrate their digital wallet into EtherDelta account.
- Their funds will be moved into the Ethereum smart contract which is pooled together using distributed ledger technology. A distributed ledger technology enables anything that has values (money, land, copyrights etc.) to be recorded without the need of a third party.
- In this case, it can distribute value and is responsible for handling records for those who are using the Ethereum smart contracts. By using the technology of a distributed ledger, users of EtherDelta are able to make deposits and withdrawals of their funds at any point in time without the need of a third party.
- On-chain and off-chain servers for trading
- Newmarket orders can be stored on-chain (in Ethereum smart contracts) or off-chain (in a third-party server).
- First, a user makes a new order to buy or sell their Ethereum based tokens on an EtherDelta “off-chain” server. This user is called a “Maker”.
- Then, another user can look up these orders on an EtherDelta “off-chain” server. If they wish to execute these orders, it will be done through the EtherDelta “on-chain” smart contracts.
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