Having a list of decentralized exchanges (DEXs) is definitely very useful as they can help us exchange digital assets without depending on a centralized platform. There are many other reasons to use decentralized exchanges that we will cover in this article.
Although decentralized exchanges didn’t have a good start, they have evolved and now we have a large number of platforms offering decentralized solutions to users. In this post, we will share with you a list of decentralized crypto exchanges that you can start using.
What are Decentralized Exchanges?
We have all heard about decentralized exchanges such as Binance, Coinbase or KuCoin, but few investors have heard about decentralized exchanges. Binance, Coinbase and KuCoin (among others) are centralized platforms. But what does it mean?
When we deposit funds on any of the above-mentioned platforms, we rely on the exchange in terms of custody. We are not the owners of our assets. This is similar to what happens with a bank account right now.
If we deposit our funds in a bank account, we know that the money is ours, but the bank could eventually freeze our account due to “regulations” or “compliance” issues. The same can happen with centralized exchanges. We believe the funds are ours, but we might not have access to them if the exchange decides to do so.
Cryptocurrencies allow us to have full control of our assets. We talk about Bitcoin and other types of digital currencies. If we hold our virtual currencies in a wallet to which we have the private keys, then we are the owners of our funds.
This is why using centralized exchanges goes against the decentralization spirit of virtual currencies. They should be decentralized and we should rely less on centralized financial institutions. This is where decentralized exchanges make a difference.
Decentralized exchanges make it possible for users to have access to trading, buying and selling virtual currencies (among other things) without having to rely on centralized solutions. Everything is handled through decentralized platforms thanks to smart contracts that get executed as soon as some conditions are met.
Over the last few years, we have seen how decentralized exchanges expanded all over the world and on different blockchain networks. In the future, there could be more decentralized exchanges and new solutions for users that want to keep their coins under control.
Order Book vs Liquidity Pools
When we trade using centralized platforms and exchanges, we rely on order books. These order books represent all the selling offers and all the buying offers. When an investor places a market order, they take the liquidity that is present on the order books. The larger the liquidity in the order book, the more stable the price of that asset becomes and the more difficult it is for whales to move the price of a virtual currency.
Decentralized exchanges (those that became popular nowadays) do not use order books. They rely on liquidity pools to provide liquidity to traders that want to swap one coin for another one.
These decentralized exchanges that use liquidity pools are known as automated market makers (AMMs) and they do not require order books. Although we will not go into the details of how AMMs work, we should say that when a person exchanges currency A for currency B, they take liquidity from the pool of currency A and B. The price of both currencies changes according to supply on the liquidity pool and demand from investors.
List of Decentralized Exchanges on Ethereum (ETH)
There are different blockchain networks that are now supporting decentralized exchanges. Two of these blockchain networks include Ethereum and the Binance Smart Chain. In this section, we will focus on the list of decentralized exchanges that run on top of the Ethereum network.
Ethereum is nowadays the second-largest blockchain network in the world after Bitcoin (BTC). It has offered solutions for several years now and it has a vibrant community of developers. In the future, new solutions could be added to the Ethereum network that would make it more efficient and easy to use.
Ethereum has also become the largest network for developers and companies to launch their solutions. We are talking about decentralized applications (dApps), smart contracts and decentralized finance solutions (DeFi). Decentralized exchanges are one of the many parts of DeFi projects.
On the Ethereum network, only ERC-20 coins can be traded. In order for investors to get exposure to non-ERC-20 tokens, developers have created synthetic currencies that represent other assets.
Let’s start with Uniswap. This is perhaps the most popular decentralized exchange in the cryptocurrency market. At the same time, the cryptocurrency of this project (UNI) is now among the largest in the world.
This platform is not operated by a company such as Binance and it works at all times through smart contracts. Uniswap expanded over the last years and it also offers a wide range of other services.
Today, users can exchange any type of ERC-20 tokens using Uniswap and interact with the platform using a wallet such as MetaMask. Due to the success of this platform and the fact that it is open-source, it has been copied by other projects that offer similar services.
In addition, users do not have to deposit their funds on the platform (unless they interact with pools). Users that want to exchange one currency for another one do not have to rely on third-party security solutions. They can simply do it through their wallets.
The UNI cryptocurrency is now one of the largest in the world and it has even been among the top 10 largest. According to CoinGecko, UNI has a market valuation of $9.8 billion and it has a price per coin of $18.89. This makes it the 11th largest digital asset in the world and the largest DeFi coin in the market.
Sushiswap is another AMM platform that makes it possible for users to buy and sell virtual currencies in a decentralized way. In order to offer its solutions to traders, Sushiswap works with liquidity pools and smart contracts in order to reduce human intervention and make the whole process more decentralized.
Users that hold the SUSHI token can also have a voice in the governance of the SushiSwap platform. Users can propose changes and also vote on other proposals submitted by other investors and SUSHI holders.
The platform was created in 2020 and it was a copy of Uniswap. The company expanded by offering users SUSHI tokens to lock up their funds in a pool on Uniswap. Sushiswap also has different farms that make it possible for users to earn rewards.
Users that maintain liquidity in the pools receive some of the fees from traders. When an investor performs a swap (exchange between two currencies) some of the fees paid get distributed among liquidity providers depending on the funds they hold.
SUSHI is also among the top 100 cryptocurrencies in the world.
In our list of decentralized exchanges, we have added Kyber. The Kyber Network is a blockchain platform that enables users to exchange tokens without relying on intermediaries, as every single project in this list of decentralized exchanges.
The Kyber Network is a project that can also be integrated into different platforms such as wallets, DeFi platforms and dApps. In this way, the Kyber Network has the possibility to reach a larger number of users from all over the world.
In a similar way as other crypto projects, Kyber works with the Kyber Network Crystals (KNC) token. This can be used through the KyberDAO decentralized autonomous organization. In this way, KNC token holders can vote on different proposals and improve the whole network.
The project was launched in 2018 after a successful Initial Coin Offering (ICO) in 2017. Now, the Kyber Network connects liquidity from different sources in order to make it possible for users to trade different ERC-20 tokens in just a few simple clicks.
dYdX works as a decentralized borrowing and lending platform that runs on top of Ethereum and offers users lending and betting solutions. This decentralized margin trading platform wants to bring trading tools that can be found on traditional trading platforms to blockchain-based networks.
Traders that want to have access to advanced trading tools and strategies (for example, using margin, trading options and derivatives) have to rely on centralized solutions and exchanges. This is certainly going against the decentralization idea and goal of the cryptocurrency market.
This is why dYdX is sharing these solutions to users that want to do margin trading, options trading and derivatives in a decentralized way. Other platforms that are offering similar solutions include Compound or MakerDAO, but dYdX focuses on advanced trading solutions.
SushiSwap or UniSwap do not have these advanced trading tools. You would also not find these trading tools on another large list of decentralized exchanges on the Binance Smart Chain. Most of the platforms rely on currency swaps without advanced trading tools.
List of Decentralized Exchanges on the Binance Smart Chain (BSC)
As we have covered the list of decentralized exchanges on the Ethereum network, we now can focus on the list of decentralized exchanges on the Binance Smart Chain. There are similar platforms as on the Ethereum blockchain, but of course, with different names.
One of the advantages of the Binance Smart Chain is related to the fast transactions and the lower fees compared to Ethereum. However, the Binance Smart Chain is much more centralized than Ethereum.
PancakeSwap is the largest decentralized exchange and AMM running on the BSC. The project was launched in 2020 and it has been growing over the last few months. It had a very positive impact on the BSC and it became the flagship project on that network.
The way in which it works is very similar to Uniswap on the Ethereum network. Users can exchange BEP-20 virtual currencies in a fast and easy way without having to be worried about large fees.
At the same time, users can easily use their MetaMask wallets to get access to this platform. Additionally, users can deposit their funds in pools and earn CAKE rewards. CAKE is the native token of this platform and one of the largest DeFi coins in the crypto space.
Liquidity providers are also rewarded with LP-tokens to earn extra rewards using farms. PancakeSwap has added a wide range of liquidity pools and it is now one of the largest DeFi projects alongside Uniswap and SushiSwap.
ApeSwap is another AMM running on the BSC and it became one of the fastest-growing projects on the crypto ecosystem. In just a few weeks after being released in 2021, it was able to get a market valuation of several million dollars (above $100,000,000).
This platform was created from PancakeSwap and it has offered users higher returns than PancakeSwap. Although there are not so many liquidity pools compared to PancakeSwap, the project has been growing at very fast rates and the BANANA token was able to reach a larger number of investors.
ApeSwap has also released another token called GNANA for those users that want to have even larger exposure to this project. Users on this platform can also participate in lottery prizes, provide liquidity to different BEP-20 tokens and earn BANANA rewards for staking their coins on different pools.
PantherSwap is one of the newest AMM to be launched on the BSC network. This yield farming project is similar to ApeSwap and PancakeSwap, however, the name is different and the pools are also different from previous projects.
Alongside ApeSwap, PantherSwap is one of the fastest-growing projects on the BSC. This can be seen in the number of daily active users, value locked in their pools and transactions processed.
Due to the fact that this is a growing project, the rewards offered to users are higher than on other platforms such as ApeSwap or PancakeSwap. PantherSwap is also offering staking, liquidity providing, yield farming, token offerings and many other solutions.
Compared to other platforms, users that want to enter staking on the PantherSwap platform have to pay a 4% deposit fee where 1% of these funds gets burned and 3% goes to PANTHER (token) holders that stake their coins on the platform. This is one of the reasons why we added this project to the list of decentralized exchanges.