A Review of the Top Decentralised Exchanges

We all know that investing in the central stock markets comes with certain risks and that the process of investment can be quite a tedious hassle with numerous middlemen involved. Decentralised currencies are the complete opposite of the mentioned. Although crypto markets are volatile, truth is at the very core of their being; they are functional, sustainable, scalable and secure. Mmroe especially, solutions are constantly being developed and introduced to address any hurdles that may arise. On that note, Decentralised Exchanges p commonly referred to as DEXs are a solution to centralisation, and they function in a way that allows an investor to maintain control of their keys and trade numerous digital currencies with minimal risk of hacking or theft.

Throughout this article, we will discuss important points relating to decentralised exchanges, highlight the top-rated DEXs and detail additional information we deem important.

What Is a Decentralised Exchange (DEX)?

A decentralised exchange, or DEX, is a peer-to-peer marketplace for crypto trading. Unlike centralised exchanges like Coinbase or Binance, DEXs have no central authority controlling your funds. Instead, trades occur directly between users (peer-to-peer) on the blockchain.

Some key benefits of DEXs are:

• You remain in control of your private keys and funds. No risk of the exchange being hacked.
• Increased security. Since you remain in control of your funds and private keys, there is no central point of failure. Your coins are not at risk of being hacked or stolen.
• Anonymity. DEXs typically only require an email to get started and do not perform KYC verification. This allows you to trade anonymously without providing personal details.
• Less risk of manipulation. Without a central authority controlling order books and trade matching, there is less opportunity for price manipulation and insider trading.

However, DEXs have downsides too:

• Slower trading. Transactions have to be recorded on the blockchain, so trades can take a while to complete.
• Complex interfaces. DEXs can be confusing for newbies to navigate.
• Limited options. Fewer coins and trading pairs are available compared to big exchanges.

Overall, DEXs offer an exciting alternative for crypto enthusiasts looking to avoid centralised control. While the technology is still developing, DEXs aim to make digital asset trading more open, borderless and secure for people across the globe. The future is decentralised!

Difference between decentralised exchanges and centralised exchanges

Decentralised exchanges are different from the Coinbases of the world. On a decentralised exchange (DEX), there's no central authority controlling your funds or dictating which coins you can trade. Everything is peer-to-peer, meaning you are in complete control of your private keys and crypto. Furthermore, users can trade any ERC-20 token or other crypto that's listed on the exchange without waiting for listings or delistings - and since trades happen directly between users, DEXs, therefore, have lower fees than centralised exchanges.

In light of the mentioned, the downside is that DEXs tend to have lower liquidity, so trades may take longer to complete or have higher price fluctuation. The user experience also isn’t as friendly or easily comprehensible. However, for crypto purists, and enthusiasts, the benefits of decentralisation outweigh these drawbacks.

Some of the top DEXs in the market are Uniswap, PancakeSwap, and SushiSwap. On Uniswap, for example, anyone can add a token to the exchange by creating a liquidity pool. Then other traders can instantly start exchanging that token.

If you value control, choice and community over convenience, a DEX is most probably what you are in need of. However, for beginners - a centralised exchange is probably easier to start with. Once you get the hang of it, you can immerse yourself, explore the world of decentralised finance, and learn even more about what it is about and where it is heading.

Uniswap: The Top Decentralised Ethereum Exchange

As expressed above - Uniswap is a popular decentralised exchange (DEX) built on the Ethereum blockchain, which allows one to trade ERC-20 tokens - fungible tokens produced on the Ethereum network. In contrast to the well-known non-fungible tokens (NFTs), a fungible token can be exchanged for another token. ERC 20s are also tokens made with smart contracts that may be used with other goods and services that can be created by developers using the ERC-20 standard.

These tokens are a representation of anything that is not unique in and of itself but can be transferred, such as an asset, right, ownership, access, or cryptocurrency without the presence or interference of a centralised intermediary.

To get started, you'll need an Ethereum wallet like MetaMask to connect to Uniswap. Once connected, you can trade any ERC-20 token for any other ERC-20 token. The interface is simple to use - just select the tokens you want to trade from the dropdown menus and enter the amount. Uniswap will show you the expected exchange rate before you confirm the trade.

Fees on Uniswap are typically lower than centralised exchanges because there are no listing fees or middlemen. However, during times of high network congestion, gas fees for trading on Uniswap can be expensive. It's best to trade when network activity is lower to get the most out of your trades.

Uniswap uses an automated market maker model to facilitate trades. This means that anyone can become a liquidity provider by depositing their tokens into a liquidity pool. In return, liquidity providers earn a share of the trading fees. This model helps ensure there is always enough liquidity for traders to swap tokens.

According to developers at Bitai Method, If you're looking for an easy way to trade ERC-20 tokens without creating an account on a centralised exchange, Uniswap is a great option. However, be aware of the risks of trading on a decentralised platform, like temporary losses from front-running bots or failed transactions with no way to reverse them. For larger trades, a centralised exchange may be more suitable.

SushiSwap: A Fork of Uniswap Taking the Lead

SushiSwap is a decentralised exchange (DEX) that launched in 2020 as a clone and alternative to Uniswap, improving on its predecessor’s design. SushiSwap aims to diversify the AMM (automated market maker) space and provide more features for users.

Like Uniswap, SushiSwap is built on Ethereum and allows you to trade ERC-20 tokens with low fees. However, SushiSwap charges a 0.3% fee on trades compared to Uniswap’s 0.3% fee. The lower fees attract more traders and liquidity providers to the platform.

Additional Features

SushiSwap has incorporated additional features not found on Uniswap, these include:

• Yield farming: Users can earn SUSHI tokens by providing liquidity to pools. The rewards encourage more activity on the exchange.
• NFTs: SushiSwap has launched NFTs (non-fungible tokens) that provide benefits like reduced fees, governance rights, and a share of revenue.
• Governance: SUSHI token holders can vote on proposals to determine the direction of the exchange. Users have more control and input into the platform’s development.

Due to its lower fees, extra features, and community-driven model, SushiSwap has gained significant popularity and now rivals Uniswap. Furthermore, it has grown to become the second largest DEX on Ethereum, with over $3 billion in total value locked on the platform.

PancakeSwap: The Top BSC-Based Decentralised Exchange

PancakeSwap is currently the top decentralised exchange on Binance Smart Chain (BSC). Launched in September 2020, this exchange makes it easy to trade BEP20 tokens without registering an account or verifying your identity. For those who don't know what BEP 20 tokens are - The most popular Ethereum token standard, ERC-20, is extended by the BEP-20 token standard on the BNB Smart Chain (BSC). It functions as a set of guidelines for tokens that specifies how they can be used, who can use them, and other usage restrictions. It is interoperable with both Ethereum's ERC-20 and BNB Beacon Chain's BEP-2 because of their similarities.

Low fees

Transactions on PancakeSwap cost a fraction of the fees on Ethereum-based DEXs. On this platform, Swaps and liquidity typically cost under $0.50. Such low fees are possible because BSC has much lower transaction costs than Ethereum.

Large Selection of Tokens

PancakeSwap offers over 200 BEP20 tokens for trading, including major coins like BNB, BUSD, and CAKE. Additionally, new tokens are added all the time through the exchange’s automated listing process. Here you can find both well-known and obscure tokens on PancakeSwap.

Yield Farming Opportunities

PancakeSwap incentivises liquidity providers through yield farming. By adding your tokens to PancakeSwap's liquidity pools, you can earn CAKE, PancakeSwap's governance token. The APRs for some pools have been over 100% at times and it is because of such high yields that many users are attracted to PancakeSwap.

Limitations

Although PancakeSwap is a popular DEX, it does have some cons we can't be oblivious to. The biggest one is that it only supports BEP20 tokens on BSC - you can't trade ERC20 tokens or tokens from other blockchains. PancakeSwap also has a basic interface, lacking some advanced features on centralised exchanges.

Overall, PancakeSwap is a solid choice if you want to trade BEP20 tokens with low fees and no KYC requirements. The DEX has become a staple of the BSC ecosystem, with many new projects launching on PancakeSwap. If BSC continues to grow, PancakeSwap is poised to remain the dominant DEX on the chain for the foreseeable future.

So there you have it — a quick review of some of the best existing decentralised cryptocurrency exchanges. Even though the market is still developing, DEXs are quite promising as a viable alternative to centralised exchanges.

Through these exchange platforms, you can now access a variety of digital assets without giving up control of your money or your personal information. Furthermore, your keys and coins are entirely under your control. The options and interfaces are becoming more robust and user-friendly. Choose one of them and give it a try if you've been interested in decentralised exchanges but aren't sure where to begin. Who knows? You might ultimately come to like the DEX experience. Evidently, Decentralisation is the future, and the future is now.

Cryptocurrency