Decentralized exchanges, which eliminate intermediaries between the seller and the buyer, are becoming more and morePopular. We will talk about the advantages and disadvantages of some DEX platforms.
DEXs are mainly used to trade ERC-20 tokens and most of them operate on the Ethereum blockchain.
What is a decentralized cryptocurrency exchange?
The DEX exchange is more correctly called a platform, or a trading service.
Its distinctive features are as follows:
</p>- works on a peer-to-peer system;
- does not store client funds;
- does not require personal data of users for registration;
- support the anonymity of transactions;
- conducts funds directly from wallet to wallet;
- controlled automatically;
- is open source;
- does not have its own servers.
This is a blockchain software with the function of selecting a suitable offer for a registered application.
The advantages of such services are:
</p>- No risk of hacking: Such services are not of interest to fraudsters, since they do not actas a virtual safe for digital coins.
- Lack of verification. DEX-exchange clients do not leave any personal data when entering.
- Lack of a single center for management and security, which can slow down the deal.
- Equal opportunities for all participants in a peer-to-peer p2p network.
- Out of reach for regulators and tax authorities.
But such trading services have an important drawback: they are not suitable for trading.
The smart contracts that run the service do not support margin trading, stop losses. Here you will not see analytics, charts, sales history and order books.
Consider a list of the best decentralized exchanges for 2021.
EtherDelta
The exchange opened to users in June 2017of the year. The founder and head of the development team was Zach Coburn, who previously launched several successful DEX services for esports. The project was implemented with Zach's money, so funds were not collected through the ICO, and the platform does not have an internal token.
EtherDelta operates on the Ethereum network and trades ERC-20 tokens.At the beginning of March 2021, you can buy and sell almost 50 types of cryptocurrency, the value of which is pegged to ETH.The average daily trading volume is $2.8 million.The number of transactions isabout 15% of traffic in the Ether application network.
Features of the exchange:
</p>- It would be more correct to say that there is no listing, because users havethe right to independently add coins to the platform.
- Import of wallets registered in the network, with the help of which the registration process takes place.
- Zero commissions for takers and makers.
- Low withdrawal fees (0.0001 – 0.0003 ETH).to the accounts of miners confirming the execution of the contract.
- Low deductions per trade (0.3%). These funds go to the developers' wallets.
- There is no fiat deposit. If you receive messages about the need to fund your account with fiat money, then this is fraudulent spam.
But EtherDelta's strengths outweigh its weaknesses.
The disadvantages include:
</p>- Lack of technical support on the platform. In the event of a problem, users are forced to contact the developers via Twitter and Reddit. Sometimes you have to wait several days for an answer.
- The main language of communication is English, but there are also Chinese, French and Spanish.
- Works in limited browsers. To run the program on a computer, you need to install the MetaMask or Parity crypto wallet extension.
- A complex and not always logical interface, onwhich receives complaints from clients of the platform. To understand the functional features of the exchange, you need to delve into the video instructions of experienced traders.
Output:The EtherDelta platform is suitable for trading minor ETH forks by English-speaking users.
Uniswap
Non-custodial DEX service for exchanging ETH andtokens of the ERC-20 standard among themselves. It allows you to exchange ERC-20 tokens among themselves directly through web3 wallets. This does not require a deposit, and the withdrawal of funds is not reflected in the centralized register.
The exchange was founded in autumn 2018 by the Dutchdesigner Hayden Adam. The development was sponsored by the Ethereum Foundation, giving the creator a grant of $100,000. And a year later, the Uniswap project received the title of the best in the DeFi industry.
In May 2020, the protocol was updated to versionUniswap V2. The new protocol uses global liquidity pools for claimed user assets. It automatically connects the placed order to the most liquid pool at the time of the transaction and thereby increases its profitability. This model is called “Permanent sales market”.
The high turnover is facilitated by the presence of the internal UNI token (emission of 1 million). It is available for swap and margin trading with BNB, BTC, USDT and BUSDT on Binance
Advantages of the Uniswap decentralized exchange:
</p>- cheap price for gas;
- no listing fees;
- the source code is open and available on GitHub;
- displays analytics and control of quotes for traders;
- introduced the function of instant swaps for margin trading.
Output:Uniswap will appeal to small traders who want to try their hand at trading ERC-20 tokens.
Curve Finance
It is a decentralized market maker for tradingoperations with high efficiency stablecoins. The liquidity pool operates on the Ethereum blockchain and interacts with external protocols such as Compound.
Founder of the project, Russian Mikhail Egorov,registered a legal address in Switzerland. DEX-exchanger started its work in August 2020. Users were given the opportunity to deposit their funds into the liquidity pool with an estimated annual return of 50 to 200%.
The exchange uses an algorithm for calculating the selection of the exchange of some stablecoins for others.
The operation uses an internal tokenCRV platforms. It is issued by the exchange and the deposited funds are converted into veCRV, which is stored in the user’s account. Token holders can take part in voting on options for improving Curve Finance, commission levels and other operational issues. The more veCRV a member holds – the more significant his voice.
The presence of an internal token and its history is the weak point of the project.
To approve the decision, a quorum ofin 50% of CRV, the total volume of which at the beginning of 2021 is 3 billion tokens. At the same time, 30% belongs to the creator of the service Egorov and two anonymous investors and only 5% to the users of the exchange. 3% belongs to the developers, and the rest is planned to be given out to members of the Curve community.
That is, it is impossible to say that this exchange is decentralized. Now only its creator has the right to vote and it is impossible to collect a quorum.
But the site also has an undeniable advantage:high liquidity of assets and profitability. Members who bought CRV last fall (they were listed on Huobi, Binance, and Uniswap) and deposited them into their Curve Finance wallets received returns of up to 300%.
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