We can definitely anticipate that by the second quarter of 2022, there are so many potentials Decentralized Exchanges (DEXs) have to offer after the largest DEXs, Uniswap, hit a trading volume of $50 billion in January last year. As of the time of this writing, the industry has more than 100 decentralized exchanges that have sprung up, while we still expect more.
Since the introduction of Bitcoin in 2009, centralized exchanges (CEXs) have served as the gold standard for cryptocurrency trading, as an all-in-one platform that allows users to trade cryptocurrencies. Decentralized exchanges, on the other hand, have been a preferred choice for many crypto enthusiasts, providing crypto users with a permissionless trading ecosystem, allowing anyone anywhere in the world to trade cryptocurrency with ease.
With the introduction of decentralized exchanges, it is now possible for any interested stakeholder—regardless of regulatory restrictions—to get access to the Decentralized Finance (DeFi) market, without the need for time-consuming KYC procedures or third-party interferences. This third party is now replaced by a public or distributed ledger called the blockchain.
Because of this, a number of new decentralized trading platforms have emerged in the previous year, some of which have been developed using pioneering blockchains like Ethereum, while others have emerged using Polkadot and a host of other smart contract enabled networks.
If you’re looking for the finest DEX for cryptocurrency trading, you’ll find it in this article, where we’ve done the hard work of combing through tons of options, and we have come up with a list of streamlined suggestions for you. Here are the top 5 exchanges globally;
Uniswap is one of the most established and largest decentralized cryptocurrency exchanges in the market, and it is developed and managed by the startup with the legal name known as Uniswap Labs. The open-source platform makes use of the Automated Market Maker (AMM) protocol to execute cryptocurrency trades on its platform. It is based on the Ethereum blockchain and accepts tokens that are designed using the ERC-20 standard on its platform.
The exchange was created in 2018 by Hayden Adam, and it has attracted a number of prominent venture capital firms, including Andreessen Horowitz and Union Square Ventures ever since its inception. It has its headquarters on the East Coast in the Greater New York Area.
The Uniswap’s governance token ‘UNI’ was introduced in September 2020, so far, more than 150 million UNI tokens have been distributed, with 66 million units being claimed in the first 24 hours of the first token release. This demonstrates the aim for Uniswap to evolve into a crypto environment that is operated by the community.
The exchange platform differs from other DEXs in that it uses a pricing model known as the Constant Product Market Maker Model (CPMMM).
Binance Smart Chain’s PancakeSwap decentralized exchange is the protocol’s most active exchange, having the greatest trading volumes of any decentralized exchange. Its operations were started in 2020 by a group of developers who remain anonymous to date.
The exchange supports many BEP20 tokens and offers crypto trading using the AMM model for matching orders. It also offers low trading costs, farming (LP tokens), and staking (Syrup pools), among other features for its users.
PancakeSwap is popular among cryptocurrency exchanges due to the competitive fees available to its platform users. Several opportunities and innovations are highlighted in the PancakeSwap roadmap and plan, which indicate the exchange’s hope to implement in the future, with sure possibilities of it getting some more credibility in the process. The utility token is the CAKE token.
Decentralized margin trading, compared to its counterparts in the centralized exchange sector, was the motivation for Antonio Juliano’s building of the exchange in 2017, providing the same services and features as centralized exchanges, making it one of the most popular in the digital currency ecosystem.
As a pioneer in margin and derivatives trading, dYdX is an open-source decentralized exchange that is managed by a community that determines the governing process on the platform. It functions on the Ethereum-based layer-2 protocol, StarkEx, and its operation is also structured around low trading fees. These unique offerings distinguish it from the vast majority of decentralized exchanges operating in the industry today.
With the financial technology industry growing at a rapid pace over the past few years, dYdX is attempting to make the trading process easier and more straightforward by leveraging the advantages of blockchain technologies. Despite the high quality of its products, the exchange has one of the lowest costs/ trading fees in the industry.
Powered by the Binance smart chain (BSC) network, Biswap operates as a decentralized exchange platform, fulfilling orders through the use of AMM technology. Resident on the BSC network, it is the first DEX to offer a unique, three-tiered referral scheme, as well as the lowest platform transaction fees available.
Biswap provides its customers with the opportunity to exchange BEP-20 tokens, for liquidity in exchange for passive income, to stake tokens in Farms and Launchpools, and to earn referral commissions.
The Biswap ecosystem relies on the utility token BSW, which has a large user base. In addition to being able to exchange BSW tokens, you may also benefit from a wide range of other features.
By implementing a weekly token burning process, Biswap continues to reduce the overall supply of BSW tokens, which results in a rise in the value of the token in the long term and for its sustainability.
Osmosis (OSMO) is one of the first decentralized exchange (DEX) initiatives to be connected using the Interblockchain Communication Protocol (IBC). It is a blockchain with a decentralized exchange application that enables users to supply liquidity, swap, and natively stake the tokens of other blockchains in the Cosmos ecosystem.
It carries out the function of an automated market maker (AMM) protocol in the Cosmos environment. AMMs are typically pools of digital assets governed by a smart contract, which are used to facilitate decentralized trade through the use of blockchain technology.
Osmosis, in contrast to other AMMs which are built on smart contracts, makes use of the free and open-source Cosmos SDK. There are two main goals of Osmosis:
- To enable developers to build and deploy AMMs
- To innovate liquidity pools through the use of governance mechanisms and interoperable tools for building AMMs.
Osmosis’ native token, OSMO, is used as a means of payment and general functioning on the platform.
As a result of Decentralized Exchanges being non-custodial, the responsibility is on users to ensure that their coin is safe. There’s a high chance of making a mistake, which could lead to the permanent loss of valuable data or funds. If you lose or forget your wallet’s private keys, for example, that might pose a problem, as there are no IT department or customer care phone numbers that can help you get back in.
Although there’s also a higher prevalence of cryptocurrency frauds such as pump and dump, rug pull, and fraudulent tokens since DEX platforms are unregulated, however, the top DEX platforms on our lists are extremely safe as they have the same security as the Ethereum blockchain. Since they are decentralized, there is no central server to hack, gain access to users’ funds or KYC information as in the case of identity theft.