A decentralized exchange (DEX) is a part of the DeFi ecosystem that enables trading cryptocurrencies without an intermediary. Unlike centralized exchanges (CEX), DEX does not lock funds in the exchange wallet and gives users complete control over their funds.
Centralized exchanges legally require customers to go through a KYC procedure. A DEX, on the other hand, does not require any identification. Users can easily connect to any wallet and start exchanging tokens on the platform. Read more about CEX and DEX in this article.
Despite Decentralized Exchanges being a new phenomenon, there are several options already available. Here are the five most popular decentralized exchanges in 2021.
Top 5 Decentralized Exchanges
Powered by the Ethereum network, Uniswap is one of the most popular DEX in the DeFi ecosystem that allows trading ERC-20 tokens. It is a token standard for Ethereum based tokens.
Due to its popularity and no listing fee, Uniswap has become the first choice for several new Ethereum-based projects. Since its launch, the platform has seen tremendous growth and recently touched a daily trading volume of $337 million.
On Uniswap, users can trade 15,000+ ERC-20 tokens or become a liquidity provider on the platform by staking cryptocurrencies supported by the Ethereum blockchain. Through staking, you can earn rewards in the UNI token, which is the native currency governance token of UniSwap.
There are currently two active versions of Uniswap: V2 and V3. While Uniswap V2 charges a fixed trading fee of 0.3% on the transaction value, Uniswap V3 has a variable fee of 0.05%, 0.3%, and 1%. The transaction fee depends on the liquidity pools. Apart from the transaction fee, the platform charges a network fee.
Uniswap has a minimalistic design with a beginner-friendly user interface. Trading on Uniswap is quite simple. Connect an ERC-20 supported wallet such as MetaMask to start trading tokens.
Curve finance is an Ethereum based DEX that is specifically for swapping stable coins. It is one of the top Ethereum based DEX in terms of trading volume. Curve Finance allows anyone to add liquidity in its liquidity pools and earn rewards in the form of fees. Few of the most popular stable coin pools include USDT, USDC, DAI, BUSD, and TUSD.
CRV is the native currency of Curve Finance. It serves as a governance token and gives voting rights to holders for the future development of the platform.
The UI of Curve Finance might seem overwhelming for the crypto newbies as it looks more like a website from the early 90s.
PancakeSwap is a DeFi platform built on Binance Smart Chain. It facilitates the trading of BEP-20 tokens on its platform, a token standard for Binance Smart Chain-based cryptocurrencies.
Due to Ethereum’s high gas price and network congestion, the platform saw massive growth and has reached a 24-hour trading volume record of around $13 million.
The platform was developed by anonymous developers and governed by its native CAKE token holders. Apart from trading tokens, PancakeSwap offers features like yield farming, staking cryptocurrencies in its various syrup pools, and a game-like experience through its prediction markets and lottery feature.
PancakeSwap doesn’t charge any withdrawal fees. Each transaction has a fixed trading fee of 0.2%. The platform’s transaction fee is the lowest amongst other decentralized exchanges.
PancakeSwap is developed using the source code of Uniswap and offers a clean and minimal UI. It is easy to use for beginners.
SushiSwap is an Ethereum powered decentralized exchange developed using Uniswap’s source code. With a daily volume of around $180 million as of June 2021, it is currently the second most popular platform on the Ethereum blockchain.
SushiSwap is a decentralized protocol developed by an anonymous developer known as Chef Nomi. The platform has its native token known as SUSHI, which allows the token holders to propose changes and vote on proposals submitted by other token holders. SUSHI also acts as a rewarding token for liquidity providers within the platform.
ShushiSwap has enabled support for multiple blockchains, increasing the availability of various cryptocurrencies while allowing lending, staking, and farming tokens on its platform.
The platform charges a 0.3% exchange trading fee. Apart from this, the Ethereum wallet collects a gas fee.
SushiSwap offers a UI similar toUniswap. Swapping tokens and staking crypto in liquidity pools is also made easy.
1Inch is a unique DEX that scrapes other exchanges. It redirects user trades through the platform that offers the best price and minimum fees for a transaction. 1Inch offers multiple features like token swap, creating limit orders, yield farming, and more.
Since the platform supports multiple blockchains, it has thousands of tokens available for trading. To find the best possible prices, 1Inch scrapes over 50 liquidity pools on Ethereum, 20 pools on Binance Smart Chain, and around eight pools on Polygon.
One of the main advantages of 1inch is that it doesn’t charge any transaction fees. However, Ethereum and the platform selected by the users may collect payment. Users can use 1Inch’s Chi Gastoken to reduce the gas fees on Ethereum.
Using 1Inch can be a little complicated for beginners because of the multiple platforms it supports. However, it is worth giving it a go.
Due to its user-friendly interface, regulations, and security, most users still prefer centralized exchanges. However, the growth and development of blockchain platforms and DeFi created a room for decentralized exchanges allowing peer-to-peer trading of cryptocurrencies without involving any centralized entity. Decentralized exchanges are slowly and steadily gaining momentum, emerging with a whole new approach to trading.
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