NEWDEX Review

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Reviewed: 31 January 2019
Newdex was among the first decentralised exchanges (DEX) to be built on the EOS ecosystem. Newdex uses EOS as a base trading pair to allow trading between almost all existing EOS tokens, with new tokens being added to the website at a constant rate. No non-EOS based cryptocurrency tokens have been added as of yet. Newdex describes the way it operates as ‘matching off chain, dealing on chain’ meaning that all transactions are visible on the EOS blockchain, however, their entrusted account does not run a smart contract. Therefore all their orders are processed on a hidden, off-chain server.
Unlike a centralised exchange such as Coinbase or Binance, no deposits and withdrawals are necessary, as trading is done directly from your wallet. Scatter is supported by Newdex, as are wide variety of mobile wallets.
References
Name NEWDEX
Platform
EOS
Token of interest
Category
Users 24h
1400
Users 7d
Overall rating:
17 / 25
User experience
★★★★★
Token integration
★★★☆☆
Team
★★★★☆
Community
★★★★☆
Security
★☆☆☆☆

How to use

  1. Install (or access) Scatter (https://get-scatter.com). The desktop version is recommended. Alternatively, download one of many supported mobile wallets supported by Newdex.
  2. Set up a new EOS account (or use your existing one by importing private keys).
  3. Fund the account with EOS, either from another account or from an exchange
  4. Sign into the Newdex website, select a trading pair, and choose to either buy or sell your tokens. Set the amount you want to sell/receive using either a limit order or a market order. Confirm the transaction in your wallet and wait a few moments for your new tokens to arrive in your wallet.

Functionality

Newdex will have an interface familiar to anyone who has used a cryptocurrency based exchange before, with the layout being very similar to binance in particular. After signing in on the front page, you can click your EOS account name to view your balances, alongside the value of token stacks in EOS, and an evaluation of the EOS value of your entire account. This screen will also list your resource usage, such as your remaining RAM, CPU, and NET. A checkbox can be clicked which allows you to hide token pairs that you don’t hold, or token stacks that hold a value of less than 0.1 EOS (trades worth less than O.1 EOS are not allowed on Newdex.) which makes it easy to search for the specific pairs you want. All pairs are also listed on the main page of the website, and the main page also has a search box for finding specific pairs.

Trading is usually very fast, with the tokens you traded for usually appearing in your EOS account before you get the chance to check it. However, periods of slowdown are not uncommon on Newdex, and it can occasionally take up to half an hour for your funds to appear in your account. During this time, the funds you sent to the Newdex wallet have left your account, leaving you feeling anxious as you wait for your new funds to arrive.

TOKEN MECHANICS

Newdex does not have a token associated with the website. However, Newdex does have exchange fees, meaning that all profits goes towards the team behind Newdex. While this is normal in the exchange space, many exchanges built on EOS (as well as non-EOS based exchanges such as binance) use a native token to reward the community for using the site, usually by reducing exchange fees. While this isn’t necessarily a point against Newdex, as tokens can often be associated with market manipulation and exit scams, the lack of a native token may be a disappointment for some users.

Issues

The largest two issues with Newdex are heavily intertwined with each other, and are related to the security of the exchange. In September 2018, Newdex was attacked by a user depositing fake EOS tokens to the exchange, allowing the user to steal real EOS tokens, alongside BLACK, IQ, and ADD tokens, marking a total loss of 11,803 EOS worth of tokens for Newdex. The fact that Newdex was attacked marks the first issue for the Dapp, but the reason why Newdex was able to be attacked with fake EOS tokens is related to the second issue with Newdex.

Transactions on Newdex are not verified by a smart contract, but rather, off chain solutions are used for token matching. It is unknown what kind of off-chain database is used, or if there is a degree of human oversight on transactions. The lack of a smart contract was what allowed the attacker to use fake EOS tokens to trick the Newdex system. The lack of a smart contract also means that the funds are kept in a single entrusted account protected by a single private key, as the account also uses the same private key for both the Owner and Active keys. If the Newdex EOS account private key is compromised, it would be easy for the hacker to drain funds from the account, which will have to have its funds frozen in order for Newdex to prevent a loss. Luckily, as Newdex does not store its users funds, so long as the exchange is not robbed mid-trade the user’s funds should be safe. Considering how popular Newdex is, however, trades are likely to be happening at all times. Factoring in users who deposit their funds for hours or days at a time in order to set market orders, it becomes apparent that any hack on Newdex will cause at least some users to lose their funds, which will require Newdex to refund them. However, the lack of a smart contract does mean that the user does have to trust Newdex will send them the funds, meaning that Newdex is not as decentralised as it appears. The purpose of crypto based solutions is to allow for financial transactions that require little to no trust, which Newdex does not allow for. Newdex also lacks a Github page and a Whitepaper, and its twitter rarely updates, meaning all information on the exchange has to be found through the help sections on the website itself, or by finding posts made by knowledgeable members of the community.

Sources: https://cryptovest.com/news/fake-eos-creation-robs-newdex-exchange/

https://www.reddit.com/r/eos/comments/9f8oki/psa_newdex_is_not_a_decentralized_exchange/

Final Verdict

Newdex is a fine exchange in its own right, and a useful Dapp for the EOS ecosystem. The website is constantly updated with new pairings and small quality of life features, making it a reliable place to visit if one wants to trade a wide variety of tokens, including brand new ones. The lack of a native token also means that the site doesn’t reward users and investors, but the lack of a token may not be a bad thing depending on one’s point of view.

However, its status as a decentralised exchange is somewhat misleading, as the off chain solutions have proven to be easily abusable without a smart contract. While the exchange hasn’t been hacked in recent months, until a smart contract is implemented or the security is updated in some other fashion, Newdex is always at risk of suffering further attacks. While Newdex is ahead of the game in terms of the variety of trading pairs, marketing, and user experience, it will have to revamp itself in order to remain competitive with decentralised exchanges utilising smart contracts being built on EOS, not to mention other innovative trading platforms such as Bancor X.

User experience
★★★★★
Token integration
★★★☆☆
Team
★★★★☆
Community
★★★★☆
Security
★☆☆☆☆

Disclaimer

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