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Decentralized exchanges are the improvements of decentralized finance in blockchain technology, particularly the cryptocurrency ecosystem. The Decentralization of asset exchange protocol has led to an upsurge of decentralized exchanges. Some exchanges are built on the popular Ethereum blockchain. Other exchanges are built on less popular but highly efficient blockchains like Solana, Binance Smart Chain (BSC), and Polkadot.
What are these decentralized exchanges, and why are they called so? Decentralized exchanges (DEX) are blockchain protocols that permit peer-to-peer transactions between two or more participants. They are decentralized because the functionality of the smart contracts cuts off central authorities. We will look at the top decentralized exchanges and their features and benefits.
Since the launch of its decentralized exchange in 2018, the Uniswap protocol has provided a flexible exchange that has attracted the most daily traded activity among DEX users. The Uniswap interface provides for developers, traders and liquidity providers to earn, build and swap tokens.
A recently added feature of the Uniswap protocol which makes it desirable includes the recently released Permit2, a token-approval mechanism that integrates ERC20 and NFT swaps into a single router. To avoid the smart contracts mismatch with DeFi protocols, which inevitably leads to an oracle problem, Uniswap uses the TWAP price oracles. This proof-of-stake oracle creates gas usage and price delivery efficiencies.
With centralized exchanges losing credibility in the ecosystem, the reliance on decentralized exchange has never been more conspicuous. The effect of the growth of exchanges like DyDx is that users connect hardware or web-enabled wallets where they hold the keys. DyDx is a layer-2 protocol, a non-custodial decentralized cryptocurrency exchange that promises zero trading fees with up to 20X leverage on its trading platform. DYDX boasts of governance as its principal driver and protocol safety.
The layer-2 solution on which the dYdX exchange is built enables faster transaction speed, reduced gas costs, minimized trading fees, and lower minimum trade sizes (to avoid whale-transaction detection on the protocol).
Integral size is a custom-built DEX that aggregates orders of large trades on-chain and provides professional traders zero price impact and a 30-minute TWAP swap time for digital assets. Twap trading is the distinguishing feature of the Integral Size DEX. While trading large volumes is nightmarish using other DEXs, Integral SIZE retains 100 percent delivery at zero price impact.
With Integral SIZE, the MEV protection inherent in the price contract is to cut off the impact of arbitrageurs and front-running on price. This is very important for small orders. In large-volume orders, there is a simple, powerful, and professional interface which allows for 5-minute TWAP.
Curve Finance is a liquidity-matching decentralized exchange that deploys automated market makers to trade stablecoins. Automated market-making leads to the efficiency of price delivery and minimum slippage for the traded pairs. These pools are smart contracts. These smart contracts authenticate stablecoin swapping, the exchange of two or more tokens in the basket.
On the Curve Finance exchange, there is built-in support for major stablecoins like DAI, USDC, FRAX, USDT, and TUSD. Swaps among wrapped tokens like wBTC, wETH, and the wrapped staked Ether,stETH, are also enabled.
According to Coingecko, Pancake Swap, built on the BNB Smart Chain, has the largest trading volumes in the decentralized exchange. With Pancake Swap, users have access to a blockchain protocol with a significantly reduced transaction cost than protocols built on the Ethereum and Bitcoin blockchains.
By trading and swapping on the protocol or even providing tokens in Liquidity Pool, Pancake Swap users can earn the native token CAKE.
The Kine protocol is a multi-chain DEX that provides a peer-to-peer assets exchange between users in the ecosystem. On the protocol trades are executed with up to 100x leverage with cross margin, zero-slippage, guaranteed liquidity, and lower slippage for derivatives trading due to the robust community of users.
On the platform, users can connect their wallet and start the web 3.0 trading journey to enjoy a nominal gas fee at zero cost, with a fixed trading fee of 0.1% for every order executed. However, some trading platforms are exempt from these stipulated flat-rate fees.
KyberSwap is the foremost decentralized exchange aggregator. Traders have the best prices across the myriad of exchanges. As an automated market maker (AMM), liquidity providers can add liquidity to the available pools & earn fees from them.
How does DODO work? The DODO protocol deploys a Proactive Market Maker algorithm (PMM) to provide on-chain liquidity for every user. With this, DODO accepts tradeable assets for liquidity providers. At near-market prices, DODO aggregates liquidity pools to ensure efficiency and evenness in distributing liquidity.
On the Ethereum mainnet and BNB Chain, DODO provides the gasless swap option (zero-cost swapping). The effect of the PMM is the rapid decrease in liquidity when the price is at a far variance from the market price.
Perpetual Protocol DEX is an on-chain perpetual futures decentralized exchange with deep liquidity pockets. It provides a permissionless system to trade cryptos, build projects and earn from transactions.
The fallout of the FTX bankruptcy will create a bump in the value and dependence on the derivatives decentralized exchange since it offers traders zero counterparty risk or KYC. The protocol has a circulating supply of 90,775,000 PERP coins.
Apollox DEX's announcement of winding down operations from CEX focus on DEX reemphasizes the growth of permissionless and trustless decentralized exchanges. On Apollox DEX, users can trade Spot and Futures with low fees and deep liquidity and get APX in rewards.
With a 30-day trading volume of $16 billion, and a traders community of 40,000 users, Apollox provides one of the best-decentralized exchange experiences where users can explore trading, GameFi, and APX in the ecosystem.
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Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.
