Recent events have shown the unpredictability and unreliability of centralized exchanges. It was a nightmare for investors when FTX collapsed. They left without giving back the money of their investors.
But now decentralized exchanges (DEX) offer protection for crypto investments. DEX uses blockchain-based smart contracts that process transactions without a mediator.
It also provides more privacy for investors like you! Since your personal information is not shared with a centralized exchange. And tamper-proof smart contracts secure your transactions in DEXs. Additionally, decentralized exchanges have lower transaction costs, known as slippage.
Now the question is, how do you find the best decentralized exchange? Of course, you can always read crypto newsletters. But to make things easier, we have already sorted you with a list of the top 7 decentralized crypto exchanges in 2023.
Top Decentralized Exchanges in 2023
There are a lot of companies claiming that they are the best DEX crypto. But it can be so overwhelming to determine the right one. So, here is the list of the top DEX crypto sorted from the best of the best!
1 – dYdX
Antonio Juliano, a former Coinbase engineer, established dYdX in 2017. And it quickly captured investor attention with $87 million in funding. It’s not difficult to see why because it boasts an impressive array of margin trading and endless options available to all.
This exchange is unique in that it is the first of its kind to prioritize crowdsourced liquidity. When traders deposit collateral to initiate a leveraged trading position, they borrow funds from a liquidity pool made up entirely of the crypto deposited by other traders.
- + Easy-to-use interface
- + Low fees and no gas costs
- + Quick transactions
- There are not many trading pairs available
- Only crypto is accepted for deposits and withdrawals.
- Trading between fiat and cryptocurrencies is not supported.
Uniswap was created in 2018 and runs on top of the Ethereum blockchain, the second-largest cryptocurrency project by market capitalization. It supports all ERC-20 coins and wallet providers like MetaMask and MyEtherWallet.
It uses TWAP pricing oracles to avoid smart contract incompatibilities with DeFi protocols and oracle issues. This proof-of-stake oracle improves gas usage and price delivery efficiencies.
- + You can earn crypto with liquidity mining
- + Both KYC and AML are not required.
- + Low transaction costs (between 0.1% and 1%)
- – The platform faces a risk of fake coins due to the ease of adding new coins.
- – High gas fees
- – It can be overwhelming for beginners
3 – Balancer
Balancer was first developed on the Ethereum blockchain with an innovative approach to determining prices. You can determine its prices by using an automated market-making mechanism.
And this decentralized exchange comes in two parts: one for traders and one for liquidity providers. Users like you can own a part of the platform using the investment fund.
Like other DEXs with automated market-making mechanisms, Balancer offers liquidity pools where users can deposit their crypto assets to help manage the ecosystem, particularly the price. Additionally, they use BAL, the platform’s native token, to govern it.
- + Liquidity pools are available to everyone.
- + A lot of tokens are supported (about 100).
- + Lower gas fees
- – The platform doesn’t support fiat.
- – Transaction fees may become expensive because the people who provide liquidity can choose to set higher fees.
- – Crypto beginners find it hard to understand the platform and how to connect another wallet
4 – DODO (Ethereum)
DODO is a cryptocurrency exchange that works on both Ethereum and BNB Chain. It has a special algorithm called the “Proactive Market Maker Algorithm.”
This algorithm has better liquidity and price discovery than other automated market-making mechanisms (AMMs). Trading with DODO gives you the confidence that new assets and small projects have a chance to join and thrive in the crypto industry.
Moreover, DODO’s SmartTrade provides a decentralized liquidity aggregation service. It is done by routing and comparing liquidity sources to find the best swap rate for token trading.
Lastly, this DEX also allows Crowdpooling, which avoids bot interference by providing liquidity markets for token distribution. The pooling function also allows customers to design their market-making tactics.
- + It can work with a variety of blockchain networks.
- + Customized AMM mode offers high liquidity.
- + The UI is simple to use and navigate.
- – Staking is only an option for DODO token.
- – The platform doesn’t support fiat.
- – Low trading volume
5 – PancakeSwap
Although initially built on the Binance Smart Chain, PancakeSwap has recently integrated with the Ethereum blockchain, providing users access to more coins and greater liquidity.
PancakeSwap uses the automated market-making model for decentralized cryptocurrency trading on the Binance Smart Chain. By depositing their cryptocurrency assets into liquidity pools, liquidity providers can generate liquidity for the DEX.
PancakeSwap is a popular exchange for discovering new cryptocurrencies thanks to its easy listing process. However, if you prefer established tokens, this might not be the right exchange for you. Nonetheless, investing in lesser-known cryptocurrencies can potentially yield significant returns in the future.
- + The ecosystem is made more valuable by additional products such as liquidity provision, farming, staking, perpetual futures, and farming.
- + Low trading costs and high liquidity.
- + The rewards are plentiful including NFTs, lottery tickets and more.
- – Only 15 cryptocurrencies are supported; on Binance Chain, it only works with BEP20 tokens.
- – It doesn’t support fiat currency.
- – No customer support
6 – Curve Finance
When launched on the Ethereum blockchain, Curve offered many advantages to users. One of the main benefits is the DeFi composability feature, which lets users spend their investments on other apps in the DeFi ecosystem.
The network also uses its native currency, CRV, to encourage governance and incentivize users. Yield farming and direct purchases are two ways users can earn CRV tokens. You can earn CRV tokens as a reward by depositing your assets into a liquidity pool.
- + Curve’s transaction fees are low in DeFi due to its liquidity pools and automated market maker.
- + Users can choose their own gas fees and transaction time.
- + Those who stake CRV can generate a passive income of more than 3% APY.
- – It doesn’t support fiat currency.
- – Curve Finance’s platform is supported by stablecoin pools tied to stable assets like the US dollar.
- – In case of a failed peg that results in lower prices, liquidity providers may prefer to hold onto the unpegged stablecoin instead of the normal split.
7 – SushiSwap
SushiSwap was started as a clone of UniSwap, which has open-source code that lets anyone make their DEX. The founders of SushiSwap used this to copy and implement UniSwap’s code to launch their platform.
Even though SushiSwap uses UniSwap’s code, it has unique features, like a program that finds liquidity providers. Users can also participate in governance decisions through SushiSwap’s native token, SUSHI.
- + Almost 100 ERC20 trading pairs are available on the platform.
- + Low transaction costs
- + Because fees are proportionate to deposits, more deposits yield higher returns.
- – Can be hard to use for newcomers
- – High gas fees
- – The exchange’s security is a matter of concern.
Centralized vs. decentralized Crypto exchanges
Decentralized exchanges (DEXs) and centralized exchanges (CEXs) are the two different kinds of platforms that make it easy to buy digital assets. However, the two have distinct differences.
And first, we will talk about centralized exchanges (CEXs). CEXs are under the control of an organization. And one of their primary benefits is that they allow you to convert their fiat currency, such as USD or EUR, into cryptocurrency.
However, to use a CEX, you must first undergo a KYC (Know Your Customer) verification process. You must provide personal information like your ID and address. Although KYC policies aim to prevent cyberattacks and safeguard assets, the centralized nature of these exchanges makes them vulnerable to being hacked.
CEXs were the first type of exchange to appear, so they are where most crypto transactions happen. Still, centralized exchanges have problems, like security problems, which is why DEXs has gained popularity among crypto investors.
While CEXs are under the control of an organization, DEXs operate on smart contracts and computer protocols that execute, manage, and document transactions under specific conditions.
Decentralized exchanges offer greater autonomy and flexibility to users with no KYC requirements. You can trade directly from your connected wallets. And it allows you to maintain control over your assets, making it a safer way to trade crypto.
But the inability to exchange fiat currency for crypto is a significant disadvantage of DEXs. Yet, the best DEXs offer several advantages, like access to a vast range of coins, anonymity and privacy, and lower fees.
Advantages of Decentralized Crypto Exchanges
- You can trade without providing personal details(No KYC) to prevent identity theft.
- DEXs has a vast coin selection that lets traders and investors choose and profit from new cryptocurrencies.
- Decentralized exchanges typically have lower trading fees due to reduced exchange involvement and risk, as tokens are not held as a middleman.
- Top DEX for crypto are often also platforms for DeFi that lets traders stake their tokens in liquidity pools supporting the exchange’s operations and earning interest on their crypto.
Disadvantages of Decentralized Crypto Exchanges
- In decentralized exchanges, you must remember their crypto wallet keys and passwords or lose your assets forever.
- DEXs are less convenient for non-crypto holders since you can only use it to transfer between digital assets, not to on- and off-ramp using fiat currency.
- Decentralized exchanges frequently experience liquidity issues due to low trading volumes, making it challenging to find buyers and sellers.
In cryptocurrencies, decentralized exchanges (DEXs) are becoming increasingly popular. It is because DEXs have numerous advantages, including privacy, lower fees, and access to a wide range of coins.
So, staying updated with the newest DEXs emerging as the cryptocurrency industry grows is important. The seven decentralized exchanges reviewed in this article are among the top DEX for crypto in 2023.
Each has special features, advantages, and drawbacks. So exploring your options is crucial, like reading crypto newsletters and picking the one that best meets your requirements.
With the right knowledge and strategy, decentralized exchanges can be a valuable tool for any crypto investor.