For many people in the crypto world, especially those in the PLU and MBRS commmunity, Etherdelta is our home. It is where many of us first acquired our shares and traded to bring new members to the network. While Etherdelta is not the most streamlined trading platform out there, its peer-to-peer smart contract design is worth mentioning in the space of blockchain. For better or for worse, the site’s many quirks are the result of an attempt at a new way for people to trade without a central mediator. While some of these eccentricities have meaningful impact, others can be confusing or can be downright annoying if you don’t understand what is happening or how to get around it.
So if you are going to be using this smart contract peer to peer exchange – here is a quick read to help you navigate the terrain.
Before I begin, if you are unsure about any of the basics of how to use Etherdelta while reading,
- Their official how-to: https://www.reddit.com/r/EtherDelta/comments/6hrxjw/etherdelta_guides_for_first_time_users/
- Our in-house article on it: http://www.tokenverse.com/knowledge/tutorials/
1. On Etherdelta you have a wallet, on an exchange you get an IOU.
As you probably know, when you deposit a token at an exchange, the exchange takes your token and gives you an IOU that you can then go and trade with other people. Before digital assets and smart contracts, you had to entrust your asset with an entity that could promise both people would get what they agreed to. And of course, the drawback for that opportunity to trade with other people is that you have to pay a fee and grant them temporary guardianship of your assets. Beside the added cost of trading institutions bring, you have added risk. Think Mt. Gox in 2013..
So instead on Etherdelta, you sign a smart contract on Metamask to access the exchange and trade. The funds that you deposit never go to a centralized Etherdelta pool but rather an account tied exclusively to your Metamask. Not only do you not have to hand over your tokens to a broker, you have full control of the funds in that escrow account unlike the deposit account in an exchange. It sucks to jump through hoops to take out your funds and it’s even worse when a transfer freezes when you need it.
Also, instead of logging into any website and having to provide credentials to access your funds, you just have to launch your Chrome browser and Metamask client. Whatever account you have will sync with the platform.
2. On a exchange you fill the lowest orders first when you buy into the market – on Etherdelta, you fill only the orders you click on.
Most of the time, this won’t have much of an effect since buyers will want the lowest and sellers want to get the highest price.
However, the smart contract instead of auto-fill means that:
- if you and a buddy want to exchange tokens on the platform, you can set the price and seek out that particular contract.
- This is a nice feature if you want to help someone in at a lower price or at higher price but without the sticky issue of trust.
- However that also means for whatever reason, a seller/buyer may discriminate between orders beyond the basis of pricing.
- REMEMBER – Execute buy and sell orders only at the price point you want –
- do not think that there will be any AUTO-FILLING up to the set rate.
- This can be confusing for those accustomed to the ways of the big exchanges. If you assume you are buying everything up to a high price point, you may be very unhappy when you find out you only bought the higher price point and nothing below it.
3. Smart contract duration versus buy-sell orders.
You’ll notice when you start putting orders in that they all have the same set time limit on Etherdelta. The buy/sell will cancel automatically given everything else stays the same once the blocks expire. I am not exactly sure how long that takes. On an exchange however, you have much more freedom to determine your buy/sell strategy. It’s something some programming on the part of the Etherdelta team could achieve in the near future.
4. While most exchanges readily display historical trade data, Etherdelta does not keep trade history beyond a short time frame on their web app.
To do that you have to search your wallet address or the address of the tokens being traded. Again this is another feature which I think hinders the average trader today as it is cumbersome and misleading- but which may become commonplace in the future. The obvious advantage of the Etherdelta platform here is that all trades are public commons.
I’ve have not had any issues with token lost or any of that business, so I think the increase in transparency outweighs the current risk associated with the lack of a central authority for some instance of a freak accident. Also think Mt. Gox…
–>The page I am referring to is: https://etherdelta.github.io/trades.html
5. In an exchange, the funds you place in orders are inaccessible – on Etherdelta, you can set multiple orders with the same funds.
On Poloniex, Livecoin, Bitfinex, or one of the other large exchanges out there, once you set a buy or sell order, those funds are put in escrow to fulfill the transaction as shown above. You can always put more orders out to make order sheet look like it has more or less demand but you have to do it with more funds. There’s a lot of logistical reasons for this but also because it helps to determine the actual demand of the market with only the funds available.
However on Etherdelta, if you have say 1 ETH, you can put in multiple orders all going up a price range from say 0.005 to .008. It would look to another viewer that there is more people wanting to buy at a wider price range than there actually is. What actually happens when someone sell, you say 0.005 MBRS for your ETH. If you run out ETH, all your other orders automatically void themselves. If you have only some ETH left, the rest of the orders will automatically readjust to the funds you have left but still remain open.
Likewise, if you remove the funds from your account back to your Metamask wallet, all orders are nullified automatically – no cancellation required.
6. The Security is solely in your hands.
While it’s true that exchanges can have hack and fraud risks, it could be less safe in our hands if we don’t know what we are doing.
Since the funds are always in our hands, there is no one to blame if you get hacked, forget your password, or lose your backup. We’ve seen headlines of people losing their million dollar bitcoin wallet. If you trade on Etherdelta, you better have your Metamask wallet secured as much as possible. Copy your recovery phrase so you can reboot your wallet on any device. Write down your password and store it away.
Don’t mess around here fellas. Don’t cry over spilled milk here. Get yourself a couple buckets and drink your milk over it.
Finally I am adding here some Etherdelta resources for any of those interested:
–>Obviously the go to place for those new
–>Made by a contributor in the community
–>Used to see all your personal token balances
–>As mentioned above, use this to view trade history
–> Use etherscan.io to view any blockchain transactions
–>To look up smart contracts for ERC20 tokens
–>Review basic information
–>Check health of network
There’s certainly some other quirks I did not mention to keep the post brief but please let me know if there was anything else you encountered that you thought was quirky or others should know about. Thanks for reading – I hope this post was helpful to your trading.
And of course, just a reminder that MBRS are trading on Etherdelta.
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