2020 was the year of the DeFi, and by extension, the plantation of DEXs (Decentralized Projects). 2021 is expected to see them bloom. What is a DEX, you ask? Short for a decentralized exchange, a DEX is a kind of cryptocurrency exchange that enables direct, peer-to-peer transactions on its platform. Unlike conventional exchanges (like a Binance or Bitfinex), a DEX does not hold its users’ funds for its users. In terms of security, therefore, it is vastly superior, as the transactions occur between user wallets and not a central pool.
The world saw its first Decentralized crypto exchange in 2014, with NXT Asset Exchange. Since then, the space has exploded with several unique projects featuring interesting takes on the subject, and quite frankly, giving centralized exchanges (CEXes) a run for their money. While there are several challenges that DEXes must overcome – particularly in terms of speed of operations, and even liquidity, the future is bright.
The emerging composability, optimized usability, and heightened liquidity have all fortified the DEX ecosystem. On that note, let’s explore the top 10 DEX platforms that deserve your attention and consideration. Volume numbers specified here are based on a 30-day timeframe as of 16 March 2021.
The Best Decentralized Exchanges / DEXes for Crypto Trading
Number of users: 438K+
Volume: $825.42 M
UniSwap was one of the most stirring DeFi developments in 2019 and continues to count amongst the best decentralized exchanges. It is a trustless and permissionless interface that allows anyone to create or swap any 2 Ethereum assets in the market, against an underlying liquidity pool.
Uniswap itself establishes prices & exchange rates and facilitates you to trade rapidly with its protocol through the use of Ethereum contracts. Hence, you don’t need to find a counterparty.
Liquidity givers earn 0.3% of the trading fee every time an ERC20 pair is used. At the moment there are no protocol fees. Though, a 0.05% fee can be levied in the future.
Number of users: 4.99K+
dYdX allows you to rent, entrust and make wagers on the prospective prices of crypto money.
dYdX is directed to carve further developed trading tools on the Ethereum blockchain.
The dYdX protocol is accessible to everyone, to be built upon–with users’ assets managed by smart contracts instead of people.
It is the most prominent decentralized margin trading forum with a maximum of over 150,000 ETH (worth over $30 million at the time) confined in its smart contracts( November 2019).
In April 2020, it hit a milestone – more than $500 million was traded on the platform. Each maker gets paid to trade – 0.025% of the fee (or 0.00%, according to the contract).
Major supported coins:
#3 Dodo Exchange
Number of users: 2.35K+
Volume: $76.05 M
DODO is an on-chain liquidity provider which leverages the Proactive Market Maker algorithm (PMM) to provide on-chain and contract-fillable liquidity for everyone.
The exchange also has a circulating stock of its own coins – 99,406,891 DODO coins, to be precise and a maximum allowance of 1,000,000,000 DODO coins.
Dodo supports over 40 pairs, including a whole bunch of stablecoins such as USDT, USDC, SushiSwap, ShuttleOne, Kine, Dai and more.
#4 1INCH Exchange
Number of users: 45.7K+
1inch exchange is heavily relying on its DAOin the case of fees and rewards. 1inch is also an ERC-20 token that governs 1inch’s DEX aggregator and liquidity protocol.
1INCH token holders can decide the price impact fee, the swap fee (for the liquidity protocol) and the governance reward. 1inch does not charge any fees for swapping tokens.
Number of users: 41.5K+
Sushi Swap produced over $1 billion in liquidity in four days and came to be called a “vampire protocol” due to its intention of sucking Uniswap’s liquidity and migrating it to its ecosystem.
SushiSwap, since its launch on Aug. 2,2020, inducted the $SUSHI token as a reward for users who staked liquidity tokens into a few specific Uniswap liquidity pools.
Users who placed their liquidity into the Sushi tapped Uniswap liquidity pools, had their liquidity pool tokens held in a smart contract that would migrate over to SushiSwap. They had three days to decide if they wanted their Uniswap LP tokens to be turned into SushiSwap LP tokens.
On Sep 9, SushiSwap Migrated over $800 million in liquidity funds.
Number of users: 54,300+
Balancer works similarly to other top decentralized exchanges like Uniswap (UNI) and Curve (CRV). However, Balancer offers additional features, including the ability to bundle up to eight tokens into pools. It has a variable exchange fee depending on the pool.
Balancer (BAL) is its automatic market maker (AMM) protocol that decreases the cost and slippage between trades of different cryptocurrencies. Balancer is a decentralized replacement for the traditional market-maker, a 3rd party entity that gives liquidity to traded assets.
This top decentralized exchange has many tokens available to trade. They include: Ethereum (ETH), DAI, MKR, USDC, REP, BTC++, WBTC, WETH, BAT, SNX, ZRX, LINK, DZAR, UMA, LRC, REN, LEND, KNC, COMP, OCEAN. The Exchange also has several tokens without pools such as tBTC, ANT, cUSDC, cDAI, imBTC, pBTC, sBTC, sUSD, PNK, AS, T and RPL.
Number of users: 5.2K+
Kyber Network is a decentralized, blockchain-based protocol that facilitates the exchange of tokens without an intermediary and provides liquidity for decentralized finance (DeFi) applications.
Kyber Swap is Kyber Network’s DEX project that uses a native token – Kyber Network Crystals ($KNC) – for governance and a claim on trading fees.
Kyber is slated to soon launch Katalyst – a tokenomic upgrade that introduces the KyberDAO – a means for users to govern protocol fees and earn ETH for participation. This liquidity protocol incentivizes Reserve Managers to contribute to an aggregated pool of liquidity
At the time of this writing, this top decentralized exchange has been integrated with more than 100 applications and powers KyberSwap, Kyber Network’s decentralized exchange (DEX). Kyber Network is governed by the holders of its native Kyber Network Crystals (KNC) token through KyberDAO, a decentralized autonomous organization.
Number of users: 7.37K+
A contender for the title of best decentralized exchange, Curve’s trading platform is organized by a mathematical feature that’s designed to let stablecoins trade for one another at the best possible price. This feature is known as a bonding curve.
Bonding curves are employed by other DeFi cryptocurrencies, like the decentralized exchange Uniswap for example. But unlike Uniswap’s bonding curve, which is focused on serving a great variety of cryptocurrencies, Curve’s bonding curve is concentrated only on stablecoins.
In practice, this means that Curve’s bonding curve enables larger amounts of stablecoins to be traded with less change in their relative prices.
Introduced by Russian physicist Michael Egorov who has been playing with DeFi protocols since 2018, since its launch in January of 2020, Curve has become a leading player in the DeFi ecosystem.
Egorov defines it as an exchange designed for stablecoins and bitcoin tokens on Ethereum Blockchain. It is simply a protocol that is focused on giving users a platform to swap a few specific Ethereum-based assets. Curve is an automated market maker (AMM) protocol as it uses market-making algorithms to reinforce the liquidity of its markets, unlike traditional DEXs. This protocol offers a decentralized platform, allowing users to earn returns on their cryptocurrencies and to trade various altcoins.
In order to attract users to lock their coins in the first place, Curve offers them a return on their coins, as well as a proportion of the fee from trades. This return is produced when Curve supplies the locked funds to protocols like Compound or yEarn, which in turn lend the coins out to users.
Number of users: 54,300+
By letting you directly convert currency tokens instantly, Bancor saves you the hassle of using an external tool like Coinbase to exchange currency. It is a blockchain protocol that saves users the trouble of exchanging them on cryptocurrency exchanges like Coinbase.
BNT is the Bancor Network Token, which is the primary token used within the Bancor network. As of February 2021, BNT is the 109th most valuable cryptocurrency by market cap, with an aggregate value of around $212 million, with one BNT trading at $1.88.
Another best decentralized exchange contender, Bancor consists of a series of smart contracts that manage the on-chain conversion of tokens. The protocol makes it effortless and quick to convert tokens without having to go through an exchange. The protocol’s smart contracts manage the liquidity pools that connect various tokens available in the network.
The major token used on the network is the “Bancor Network Token,” BNT. Currently, Bancor and Uniswap are the frontrunners for this new DeFi trend.
#10 0x Protocol
Number of users: 54,300+
Daily Volumes: $36.8+ M
0x protocol works similarly to SWIFT, but for operating decentralized exchanges for trading digital tokens and assets that run on the Ethereum blockchain. Built on the foundation of Ethereum token standards, 0x protocol acts as the key infrastructure layer for the burgeoning number of financial applications and instruments that are on-boarding the blockchain technology stack and are getting traded in digital forms.
As loads of the world’s financial value is getting tokenized with every passing day, the requirement to trade such digital assets and tokens in a secure and efficient manner is growing. With its clearly defined message formats and smart contracts, 0x protocol attempts to fill up for the need.
There’s no dearth of top DEX projects in the market. Though they might seem to be all set to be an individual league, some of them are still works in progress, having security concerns or low liquidity. Nevertheless, they seem to make the future of decentralized exchanges dazzle.
Do check out our other curated lists on all sorts of crypto coins as well:
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.
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