DeFi: The Top 5 DEXs
|— DEXs, or decentralized exchanges, are much easier to grasp than you might think.|
— A type of cryptocurrency exchange, DEXs provides full transparency because there is no central authority (such as a bank) controlling all your assets.
— Each transaction is securely recorded within the network at which point, it can’t ever be changed.
— In this feature, we’ll take a look at how you can safely and comfortably navigate all the popular DEXs and stay ahead of the competition.
— We list and explore the Top 5 DEXs in the market and examine the differences between Swaps, Aggregators and Order Books.
Just got in the world of DeFi and wondering what are the top DeFi DEXs, which ones to use and how to choose them? we’ve got you covered. Fasten your seatbelts!
You’ve heard the term DEX (decentralized exchange) tossed around a lot lately, but like a lot of us, you’re still scratching your head. Listen, some people talk about DEXs all day long, and they don’t even know what the heck is going on.
Let’s crack this egg once and for all because we promise, DEXs are so easy to figure out, you’ll be talking like a pro by tomorrow morning.
Down to business: what is a DEX?
A DEX, or decentralized exchange, is a cryptocurrency exchange that operates in a decentralized manner, without a central authority. Let’s say you download a DEX app to your phone and purchase a small amount of Bitcoin. Your transaction is then stored securely on a tamper-proof, shared digital ledger.
Each of these types of transactions is recorded within the DEX, which is a decentralized peer-to-peer network. You can purchase coins from fellow users on the same platform. hold on to your goods and participate in swapping and staking. All this right from your phone.
Keep in mind, since there is nobody controlling your money, DEXs are 100% non-custodial. (If you want to be a DeFi pro, this is a term you need to know.) Non-custodial exchanges mean that you and only you are in control of your crypto’s. You get to be your own gatekeeper and have full control of your digital wallets and private keys.
In short, the beauty of DEXs is that there is no central party in control of your finances. Hence, decentralized finance and the golden opportunities for financial freedom around the world.
Safety first, always DYOR!
Picking out a solid DEX to invest in takes a little bit of research on our parts. Sorry guys, there’s no shortcut here but to DYOR (do your own research!) What we can share are a few bits of wisdom to help guide you on your DEX journey.
For instance, get to know the lingo and what it all means. You’ll start with TVL (total value locked) which measures the total value of the tokens locked within a specific protocol. The higher the value locked up, the better.
Other important factors include token price, market cap and the number of unique active wallets. Just a quick glance at a chart like this one will help you make informed decisions.
How centralized exchanges (CEXs) differ
Let’s do a 180 here. You know everything I just told you about DEXs? Imagine the complete opposite. The key difference between centralized and decentralized exchanges is if someone else is in control of your funds. AKA, the middle man. In the case of the CEX, it’s the actual platform that is the middle man.
To demonstrate, Kraken and Coinbase are some examples of crypto CEXs. When you buy crypto using your hard-earned cash, you don’t actually own any of it. Why? Because you don’t have the private keys for any of your funds. Not to mention all your transaction data is kept on a central server.
We are trying not to sound too nit-picky here, but CEX users can’t exchange crypto (known as swaps) or fiat currencies with one another and where is the fun in that?
The different types of DEXs
No DEX is created equally, and that’s quite honestly where the magic happens. There are a handful of exchanges out there but for the most part, three share the spotlight:
1. Swap Exchanges (AMMs or automated market makers)
Leading the brigade is the uber-popular Swap Exchange. So very 2021, you’re not a true crypto geek unless you have, like, 12 of these apps on your phone. These platforms let you trade tokens instantly with other users, and before you know it, you’ve made a swap!
Be warned though, you do have your own private seed (or password) that is linked to these accounts. So, make sure you keep your assets out in the cold. We can’t stress this enough.
2. DEX Aggregators
DEX Aggregators are another type of popular exchange. Their edgy technology lets traders monitor the order books of all the DEXs in one place. Why settle on one price for crypto when you can get it cheaper elsewhere, right? That’s the beauty of aggregators.
3. Order Book Exchanges
The last DEX category on our list is the Order Book, the OG of trading. If you’ve ever traded in the past, you’ll know all about this. Order book-based DEXs echo the traditional trading model and organize trading pairs by their prices.
Behold the top 5 DEXs (in our humble opinion)
In no particular order, here are our Top 5 DEX picks of the month:
You’re not doing crypto right if you don’t visit this token swap site at least once a day. Para is the talk of the town. It is a super handy DEX aggregator that broadcasts the best prices from several DEXs on the Ethereum blockchain.
The leading DEX on the Ethereum protocol, UniSwap, charges a super low flat fee for trades, just 0.30%. It also has the awesome feature of listing new coins as they launch, giving its users easy access.
The Bancor platform was among the first to pave the way for dApps (decentralized financial applications) and token swaps. Bancor works differently than other DEXs. Its trades are made using its own liquidity pool, rather than matching buyers with sellers.
Curve is an innovative DEX designed for efficient stablecoin trading. It runs on Ethereum and provides liquidity for stablecoins. Moreover, it boasts low fees, keeping its users loyal.
One of the biggest and most popular DeFi protocols, Pancake runs on BSC (Binance Smart Chain) and uses Liquidity Pools as well. PancakeSwap rewards users who stake its native BEP-20 token called CAKE. (Yum.)
To our Ledger users: Did you know you can access your favorite DEXs through Ledger Live? You can navigate securely and with utmost peace of mind, straight from your Ledger Nano Wallet.