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.
IDEX is a decentralized cryptocurrency exchange based on Ethereum and offers an extensive range of ERC-20 trading markets. The platform has employed smart contracts which is an instrument that helps the users to manage their private keys. The Meta Mask Wallet integration makes it possible for the users to manage their funds without entering their private key as a safety precaution. The peer-to-peer trading ecosystem is also offered, which is a very competitive feature. Although it provides only crypto-to-crypto trading, hence, fiat deposits are not accepted.
IDEX has established goodwill of a safe and secure platform. IDEX cannot access the client’s funds unless they have signed a cryptographic permit to do so. Let’s have a look at some of the Pros and Cons associated with IDEX-
- It offers a wide range of tokens/assets.
- It has a user-friendly interface.
- The security features are robust and reliable.
- MetaMask integration.
- Impressive customer support options.
- The users can trade only ETH and ERC-20 tokens,
- The platform is not user-friendly for beginners.
- It does not support fiat currency trading.
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.
It is a DEX platform that allows the buying and selling of TRC-based tokens through a more straightforward user interface. All the trading pairs are against the TRX, which is the base currency. You can seamlessly purchase TRC-0 & TRC-20 cryptos on TronTrade DEX.
The TronTrade platform aims to become the safest and most user-friendly and reliable DEX for TRC-10 & TRC-20 tokens.
- Good support team
They have a good support team available to help users scale through any hurdle encountered on the platform.
- They have a useful and user-friendly user interface.
- It is highly secured.
BitShares (BTS) is a unique and incredible decentralized exchange because it is not just an exchange but much more. The founder of this BitShares- Daniel Larrimer, has described it as a bank, ledger, network, community, currency, company, and a DPoS (Delegated Proof of Stake) blockchain. The description of the platform as stated by the founder is correct because users of BitShares not only get to have a cryptocurrency exchange when they sign-up, but a plethora of financial tools like SmartCoins, dynamic accounts, custom tokens, a reserve pool, and named accounts rather than illegible addresses that are used on Ethereum and Bitcoin. All these elements falling within the scope of a single platform makes it a unique decentralized exchange.
BitShares is also user-friendly, and there are lots of reasons behind that. For example, the signing-up process is straightforward and convenient for the users as there is no need for uploading any scanned documents or passing additional verification via mobile devices when creating the account. The user interface is also fascinating and easy to understand, with all the necessary features adequately placed. For better analysis, let’s have a look at the pros and cons associated with BitShares-
- The trading fees, as well as withdrawal fees, are low.
- It is part of an emerging BitShares environment.
- A useful set of financial tools.
- Analysis tools are basic-level.
- Very Less Liquid and Not many coins listed
- Customer service is limited.
The list of Decentralized exchanges seems to be endless as more keeps coming up. We hope that these four have given you an overview of the processes involved in DEXes. There are reasons why DEXes are gaining popularity in the crypto space today.
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.
- Top 10 Best Reliable Ethereum Wallet - January 22, 2021
- 5 Cryptocurrencies That Will Explode in 2021 - January 9, 2021
- 5 Golden Rules to Print Money on the Crypto Market - January 5, 2021