What does the company/project do?
NEX is a decentralized exchange which is built on the NEO blockchain. Trades on NEX are executed by smart contracts that run on the blockchain, without a third party being responsible for them. In order to trade, users need to deposit tokens on a smart contract address. Given the design of the platform and the scalability of NEO, NEX could potentially process up to 100,000 trades per second, which means it is fully scalable. Just as other exchanges NEX charges a taker fee between 0.13-0.25% depending on the user volume on the platform.
What are the tokens used for and how can the token value appreciate?
The NEX token supply is fixed with 50 million tokens of which half will be sold to the public in an ICO. Token holders will receive dividend payments from exchange fees that the NEX exchange collects from users of the platform. The more users will use NEX for trading cryptocurrencies, the higher the dividends for toking holders will be. Higher dividends will eventually let the value of the token appreciate. NEX tokens are registered as a security in Liechtenstein. The project has a particular focus on compliance issues and collaborated with a number of law firms on the topic.
How advanced is the project?
The development progress of the NEX team is already very significant before the ICO actually started. We can assume that trading on NEX should become possible within the next months. A lottery for participation in the ICO required registration until the end of March 2018. The lottery winners were announced in April. Only winners of this lottery can participate in the public token sale which is taking place from September 3 to September 14. Participants of the ICO can acquire NEX tokens with NEO or GAS.
NEX is founded by a bunch of City of Zion developers. City of Zion is an independent group of developers directed at supporting the NEO ecosystem and is funded by the Neo Council.
All five co-founders are also co-founders of City of Zion and hence contributed to the NEO ecosystem through City of Zion. The co-founders are Fabio Canesin, who has a Master from Universidade Federal do Rio de Janeiro, Fabian Wahle, who is a PhD from Eidgenössische Technische Hochschule Zürich, Ethan Fast, who has a PhD from Stanford, Luciano Engel, who has a degree from Universidade Federal de Santa Catarina and Thomas Saunders, who has a Bachelor form University of Minnesota.
The advisors of the NEX exchange are the two NEO co-founders Da Hongfei and Erik Zhang.
One of the distinguishing features of NEX is that cross chain trades are possible. This means that users could for example trade NEO with ETH on the NEX exchange. This feature requires a cross chain browser extension which is also developed by NEX. From a technical perspective orders are matched off-chain while the fulfillment takes place on-chain.
Strength and Opportunities
Just as any other decentralized exchange NEX reduces the risks of hacker attacks, in which users can collectively lose their tokens. A particular strength of NEX compared to other decentralized exchanges is that NEX will allow trading with Fiat currencies such as the USD.
NEX has the advantage that City of Zion is very popular among the NEO community. This means NEX has the large NEO community behind them, which is significantly larger than most communities of other coins when they are performing their ICO. Also the whole ICO process is very transparent with NEX disclosing the ownership structure of the NEX tokens that will not be sold during the ICO. Among the unsold tokens 40% are allocated to NEX founders, which are vested over two years, while 28% were acquired by the NEO Council and another 21% were acquired by other private investors.
Weaknesses and Threats
Investors need to take into account that NEX is not the first decentralized exchange on NEO, since with Switcheo another decentralized exchange already exists. Also there are further decentralized exchanges that run on Ethereum. One of the major difficulties that exchanges face is to gain a sufficiently large volume, which gives liquidity to the exchange so that traders can get the best prices when they are trading cryptocurrencies. This means that NEX will need a certain user adoption before it becomes interesting to trade on the platform.
If you were not among the lucky winners of the lottery, you will not be able to participate in the NEX ICO. Nevertheless investors are able to purchase the token as soon as NEX hits the exchanges. The circumstances look favourable that the token will perform strongly after the ICO.
* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.