Decentralized exchanges (DEXs) are cryptocurrency platforms that function without a centralized authority or control. We always see a decentralized crypto exchange spring up every time exchange is breached. Although these decentralized exchanges have their advantages, it can be tasking to find the best one for your transactions. concurrently, it is expedient to have a deep dive into decentralized exchanges.
All DEXs seek to perform the same transaction as their centralized alternatives without centralized control that executes the trade.
Pros of Decentralized Exchanges (DEX):
- There is a reduced risk of server downtime since their servers are spread out across the globe.
- DEXes are practically immune to attacks by hackers
- They do not need a third party’s services to control your funds, but you are always in total control of your money.
- DEXes doesn’t require you to give out your personal information
We shall explore the significant decentralized crypto exchanges, their pros and cons, and what you stand to gain in the post. These decentralized exchanges follow no particular order. Here are some major DEXs with their Pros and Cons
Uniswap decentralized exchange
Uniswap is an open-source, automated liquidity protocol that is built on the Ethereum blockchain. It only allows the trading and listing of ERC-20 tokens. Since the launch of Uniswap’s V1 in 2018, it has become Ethereum’s most popular automated market maker.
The Uniswap protocol supports a decentralized marketplace of trading pairs. Each of these trading pairs is made up of reserves of two tokens equivalent to each other. However, all the pairs are controlled by a separate Uniswap Smart contract. This model permits anyone to become a liquidity holder for any given pair of tokens.
Due to some security challenges, the Uniswap team has launched Uniswap V2, an upgrade to the V1 with more features. The Uniswap V2 offers key optimizations like price oracles, flash swaps, etc. Uniswap V2 facilitates approximately $200 million in liquidity and more than $60 million in 24-hour volume.
The Pros of Uniswap Dex
- Low trading fees
Uniswap charges users a flat fee of 0.3% per trade, which is a lot less than most decentralized exchanges.
- You can easily list your coin.
You can launch your project directly on Uniswap instead of going through a vetting process.
- You can quickly get started on the platform.
Uniswap does not need you to go through a lengthy KYC process. It means that there is a reduced chance of your details falling into the wrong hands.
The Cons of Uniswap DEX
- Presence of fake coins
Uniswap allows people to list their coins without any vetting process, so some people list fake coins and scam people on the Uniswap liquidity protocol. It would be best if you were very careful when using the Uniswap DEX.
- Transaction failure
When swapping coins on the Uniswap platform, your transaction can fail; and it’s due to three reasons. You might have paid too little gas fees, whereas your transaction took longer than the hard deadline coded into the transaction. The second reason is that the maximum price you are willing to pay per token may have been exceeded before your transaction is complete. The third and final reason is that there might be insufficient funds in the pool.
This is a decentralized exchange that runs on the Binance Smart chain. In an interview, the CEO of Binance (Changpeng Zhao) said, “Binance DEX is a decentralized exchange developed on top of Binance Chain, with low latency, high throughput, low fees, and UX similar to current centralized exchanges. Oh, and you hold keys to your funds yourself. No need to deposit your funds at an exchange.”
Upon launch, the original ERC-20 Binance exchange tokens (BNB) were burned and replaced with BEP-2 format tokens on the Binance chain. Elected validators manage the network. These validators charge fees for their services as a way to incentivize honest maintenance. There are fewer nodes on the Binance chain compared to Ethereum. This means that Binance DEX can confirm transactions within seconds.
There is higher liquidity on Binance DEX compared to most other DEXes. The reason is that the model closely resembles Binance’s highly successful centralized version.
The Pros of Binance.org Dex
- Good reputation
Binance DEX is a popular cryptocurrency exchange, mostly because of the wide acceptance of its centralized version. The platform also has a familiar interface and UI, which are very good for testing your trading strategies.
- Low fees
The trading fees for non-BNB trades are 0.1%, while the trades paid in BNB have a fee of 0.04%. This is half the fee you pay on Binance.com.
- Highly secured
The Binance DEX does not hold user funds, and traders have full control of their private keys. Binance chain uses Byzantine Fault Tolerance (BFT) and Proof of Stake (PoS) consensus mechanism to validate transactions. The blockchain implements anti-front running mechanisms to ensure the integrity of its trades. It also supports the Ledger Hardware wallet which makes your coin most secure.
The Cons of Binance Dex
- There is only one order option on the platform.
- Binance DEX has a small number of crypto pairs and low liquidity.
- It is not suitable for fiat users.
- Trading fees
Although they charge a flat fee of 0.2% for both takers and makers, it is slightly higher than the trading fees for other DEXes.
- It supports only TRC-based tokens.
Sushiswap is a fork of Uniswap DEX which is built on Ethereum and allows the trading o ERC-20 tokens in a non-custodial ecosystem. The trades on Sushiswap are executed through an Automated Market Maker and it aims to diversify the AMM market.
- The daily transaction volume and activity on Sushiswap is increasing.
- Some additional features shall be recognized on Sushiswap that are not available on Uniswap.
- Sushi entitles its users with the governance rights to make the platform more adaptable.
- Sushiswap has fewer repositories on GitHub.
- Sushi has a limited trading history.
The Kyber Network is an exciting project that promotes the fast and seamless exchange of ERC-20 tokens and Ethereum without registration. It is based on the Ethereum protocol and has gained rapid development and growth in a short time because of its inspiring objective. The objective of the Kyber Network is to provide the users with a new kind of decentralized exchange system.
There is no doubt that decentralized exchanges can address the faults present in a centralized exchange, but DEXes still have their flaws like lack of liquidity and high costs involved in modifying trades. Hence, Kyber Network was incorporated to provide a DEX that keeps everything on the blockchain and uses a reserve system instead of an order book so that high liquidity can be provided at all times. Now, let’s have a quick look over the Pros and Cons associated with Kyber Network-
- A lot of altcoins are listed on the Kyber Network.
- Trading can be done without an order book.
- The trading fee is low.
- No registration is required.
- It does not accept fiat currencies.
- It is not friendly for beginners.
- It offers a minimalist user experience.
- It does not offer trading in non-Ethereum tokens.
Founded in the year 2017, Nash was originally recognized as a Neon exchange. This exchange allows the users to make investments, execute trades, and complete payments via digital assets with Nash having no control over the funds of the users. Nash’s main product is DEX which competes directly with other platforms with its robust speed and functionality.
- The trade execution on Nash happens very fast in comparison to other DEX.
- Nash security standards are very high and the organization makes complete compliance with the jurisdiction in which they work.
- NEX is the native currency of Nash that can be staked by the users for earning dividends.
- No listing fee is charged by Nash for the projects to get on board with the exchange.
- Nash community size is not extensive but it is on the verge of the rise with the increasing popularity.
1inch is a popular decentralized exchange aggregator. It compiles various DEXes into a single platform so that the users can find the best swapping routes across all the platforms. To find the best deal for swap, the user needs to look at every exchange and 1inch solves this problem. It helps the users to escape the hard labor and time in finding the best DEX manually.
- 1inch has launched its AMM known as Mooniswap.
- 1inch provides instant governance to its users.
- 1inch is non-custodial.
- Various cryptocurrency wallets are supported
- The user interface is clear and intuitive.
- It does not support fiat. The deposit can be made only via crypto.
- Understanding 1inch might be difficult for beginners.
Demex is founded by Switchceo and has been labeled by the crypto community as one of the most innovative DEX in the market right now. It is equipped with powerful trading tools to help professional derivative traders.
- It s one of the DEX to offer derivatives.
- It will allow high-leverage trading.
- The trading user interface is sleek and easy to understand.
- It will support a diverse range of markets.
- The platform will allow the use of isolated margin as well.
- This DEX is yet to be launched at its full strength.
DEXes are certainly gaining market shares against their centralized alternative. However, these articles cover a few of the operating DEX platforms. Although the centralized exchanges are still dominating, due to better liquidity, DEXes is on course to lead the market with time.