DEXs, or decentralized exchanges, are peer-to-peer markets where cryptocurrency traders can conduct transactions without entrusting their cash to a third party. These transactions are made possible via smart contracts, which are self-executing agreements written in code. The initial DEX was very slow. A new generation of DEX rose to prominence in 2018. Instead of buyers and sellers, they utilize automated market makers, asset prices governed by permissionless protocols, and liquidity pools. Fast forward, decentralized exchanges have grown tremendously in popularity.
Uniswap launched UNI in 2020, a native governance token that allows for more community involvement and supervision. Holders of UNI tokens have the ability to vote on Uniswap project advancements, which decide the platform’s evolutionary path. UNI token holders can also use the token to support liquidity mining pools, grants, partnerships, and other growth-oriented efforts aimed at increasing Uniswap’s usage and reach.
The Automated Market Maker methodology was pioneered by Uniswap, in which users give Ethereum tokens to Uniswap liquidity pools, and algorithms set market prices based on supply and demand, matching bids and asks from users on a controlled exchange. Users can earn incentives while allowing peer-to-peer trading by supplying tokens to Uniswap liquidity pools.
The Stellar distributed ledger uses the XLM coin to facilitate cross-asset value transfers. In transactions involving several currencies on the XLM network, XLM can act as an intermediate currency. Stellar’s cryptocurrency is the lumen. With a maximum supply of 50 billion coins, there are around 22.5 billion coins in circulation.
Stellar’s main focus is on developing economies in the fields of remittances and bank loans to those who do not have access to traditional banking services. Individuals and institutions are not charged to use the Stellar network.
A distributed exchange method is supported by Stellar. This allows users to transmit payments in a given currency even if they have credits in another, while the network handles the currency conversion for them.
PancakeSwap is a Binance Smart Chain decentralized exchange for swapping BEP20 tokens. Users of PancakeSwap trade against a liquidity pool using an automated market maker (AMM) approach. Users’ money is put into these pools.
Users receive LP tokens in return for staking tokens in protocol liquidity pools, which they can farm to gain rewards in the form of CAKE, the platform’s native utility and governance token. The platform has recently launched a prediction market, anon-fungible token (NFT) marketplace, Initial Farm Offering (IFO) functionality, and a lottery system.
PancakeSwap also prioritizes interoperability by allowing users to deposit wrapped tokens. As a result, along with BNB and BUSD, a liquidity pool can incorporate digital assets like Ethereum and Bitcoin.
SushiSwap is the first decentralized exchange with a culinary focus. It was created by the pseudonymous Chef Nomi. SushiSwap is a source-code fork of Uniswap that includes important community-oriented features such as staking rewards and governance via its SUSHI token.
SushiSwap is essentially a clone of its predecessor, Uniswap, but with a focus on giving customers more customization. SushiSwap’s emergence emphasizes DeFi’s “decentralized” element, as it demonstrates how the DeFi community may dynamically adjust and pursue an activist agenda, redirecting its activities to competitors with more attractive economic incentives and more inclusive governance.
THORChain was established in 2018 during a Binance hackathon by an unidentified group of developers. THORChain is a blockchain technology that allows users to transfer digital assets between different blockchains for cross-chain liquidity. The THORChain DEX allows anyone to earn money by trading or to lend their digital assets.
The RUNE token was launched in 2019 with a maximum supply of 500 million and around half of that in circulation. The consensus technique used by THORChain is proof-of-stake, which means node operators receive RUNE tokens for safeguarding the network and validating swaps. RUNE is an Ethereum-based utility token that may be used for governance, staking, bonding, rewards, and trade. Users earn votes on governance initiatives and fees from trade by staking RUNE.
Curve is a popular AMM platform that provides a highly efficient way to trade tokens while keeping low fees and little slippage by only accepting liquidity pools made up of similarly behaving assets like stablecoins or wrapped versions of related assets like wBTC and tBTC. Curve is able to use more efficient algorithms, as well as the lowest amounts of fees, slippage, and temporary loss of any DEX on Ethereum, thanks to this strategy.
The Curve protocol began its road toward decentralized governance in August 2020, when it launched a decentralized autonomous organization (DAO) to coordinate protocol modifications. The majority of DAOs are governed by governance tokens, which grant token holders voting rights. The CRV token is in charge of the Curve DAO in this situation. The CRV token can be purchased or earned by yield farming.
Serum is a DEX platform based on Solana that allows traders to buy and sell coins. By being deployed on Solana, Serum can fully benefit from the speed and cost-effectiveness of transactions settled on its blockchain.
A decentralized orderbook operated by smart contracts is central to Serum’s design, with the goal of mirroring established exchanges by connecting buyers and sellers. This allows players to send orders to Serum with a wide range of pricing and order sizes, providing them complete control over their trading.
Serum also supports cross-chain trading, allowing traders to trade tokens created on other platforms such as Ethereum or Polkadot. Holders of Serum’s utility token, SRM, can get a 50% discount on trade fees, and stakers can vote and participate in the platform’s governance system.
Synthetix is an Ethereum-based protocol for the issuance of synthetic assets. Synthetic assets, often known as “Synths,” are financial instruments in the form of ERC-20 smart contracts that track and give the returns of another asset without requiring you to retain that asset. On Kwenta, Synthetix’s DEX, you can trade Synths, which include cryptocurrencies, indices, inverses, and real-world assets like gold. Synthetix’s native token, the Synthetix Network Token (SNX), is used to provide collateral against Synths that are issued. Synths track the values of the assets represented via decentralized oracles, which are smart contract-based price discovery protocols, allowing you to keep and exchange Synths as if you owned the underlying assets.
DEX has gained popularity over the years, and many are still being launched. Smart contracts are used by DEX to allow traders to execute orders without the need for a middleman. The top 8 DEX you should consider buying include Uniswap, Thorchain, Synthetix, Serum, Pancakeswap, Sushiswap, Stella, and Curve.