Top Decentralized Crypto Exchanges in 2023

Top Decentralized Crypto Exchanges in 2023 1536 1024 Crypto Rand Group
Top Decentralized Crypto Exchanges

If you’re looking for the best decentralized exchange to trade your cryptocurrency, you’ve come to the right place. The crypto landscape is constantly changing, and infrastructure technology is no exception. Today’s best decentralized cryptocurrency exchanges may not be there a few years from now, so always be on the lookout for newcomers with superior features.

What is a decentralized exchange (DEX)?

A decentralized exchange is a cryptocurrency exchange that does not rely on a third party to hold the customer’s funds. Orders are instead processed directly between users (peer-to-peer) through an automated process.

Decentralized exchanges are crypto exchanges that are engineered to work without a middleman or counterparty risk. A DEX’s aim is to be more trustless and secure than traditional cryptocurrency exchanges, which are centralized and typically require users to deposit their assets into the platform’s custody.

Decentralization makes DEXs¹ less susceptible to hacking and theft, as there is no central point of failure. In addition, DEXs are often built on top of decentralized protocols, making them inherently trustless. This means that users can always maintain full control of their private keys and funds all the time.

How do decentralized crypto exchanges work?

Instead of working with order books – like many traditional exchanges – DEXs usually work with the Automated Market Maker (AMM) model. This means that users can buy and sell cryptocurrencies without having to find a counterparty, and the trades are executed by an algorithm.

At the core of many DEXs are decentralized liquidity pools, which allow traders to fill their orders with tokens from other users on the platform. This process is automated using smart contracts, which allows trades to be executed quickly and securely.

Liquidity pools allow participation by users, allowing anyone to provide liquidity to the pool, which will be rewarded with fees from trades.

How do I use a decentralized exchange?

The first step of trading tokens on a DEX is creating a compatible crypto wallet (such as Metamask or Trust Wallet) and depositing crypto on it. This can be a stablecoin or the native token of the DEX’s blockchain. While you can swap any two coins listed on the DEX, you will need some native tokens, as these are used to pay transaction fees.

Once you have your wallet set up, you can search for a trading pair on the DEX and enter the details of your order. After selecting the cryptocurrency, you want to trade and the one you want to swap to, the exchange will show the rate at which the exchange will occur. You can either accept this rate or look for a better one on another exchange.

If you are happy with the rate, you can execute it with a click of a button. If this is the first time you are trading a token on this DEX, you will need to approve the token before the swap. This separate transaction allows the DEX to access your wallet and remove the tokens you want to exchange.

If you are swapping tokens with less liquidity and the trade does not go through, you might have to increase the slippage tolerance. After that, the swap should go through smoothly.

Once your order has been filled, you will receive the cryptocurrency of your choice in your wallet!

Decentralized Exchanges

The top 5 decentralized exchanges

Uniswap

Uniswap is a popular decentralized exchange running on the Ethereum blockchain and the Polygon layer 2 protocol. It was the first platform to use an automated market maker model, and it has since become one of the most popular DEXs in the industry.

Unlike traditional exchanges, Uniswap does not require order books or central servers. Instead, it uses an automated market maker (AMM) system to match buyers and sellers. AMMs are powered by liquidity pools, which are created when users deposit tokens into the pool.

When someone wants to buy or sell a token, they simply connect their wallet to the Uniswap interface and make the trade. It’s also one of the most popular decentralized exchanges, with over $2 billion worth of assets traded on the platform.

Kyber Swap

Kyber Swap is the first decentralized exchange to offer Multichain integration, serving 14 blockchains as of this writing. This is essentially combining a crypto bridge feature with a DEX to allow users to trade tokens from many different blockchains in one place.

Kyber Swap is integrated with over 100 blockchain projects, has processed over $10 billion in transaction volume, and has ambitious plans to rapidly expand its offerings. This makes it one of the few truly global crypto exchanges.

Their native token is called Kyber Network Crystals (KNC), giving holders access to special features such as discounted transaction costs, governance and more. KyberSwap is a great platform for experienced traders looking to trade multiple tokens on different chains.

Pancakeswap

Pancakeswap is a decentralized exchange built on the Binance Smart Chain. It was created to fill the gap left by Uniswap, which does not work on BSC.

It uses an AMM model and liquidity pools to provide users with a fast, convenient, and secure way to trade digital assets. Pancakeswap also has its own native token, called CAKE, which can be used to access special features on the platform.

The exchange also offers a staking service that allows users to earn rewards on their deposited tokens. In addition, Pancakeswap has a user-friendly interface, making it one of the best decentralized exchanges available today.

SushiSwap

Sushiswap is a decentralized protocol running on the Ethereum network. It was designed to be an improved version of Uniswap, offering users additional features such as staking and yield farming.

The platform’s main feature is its automated market maker (AMM) system, which keeps prices stable through liquidity pools and incentivizes users to deposit their tokens. Their native token, SUSHI, is the cornerstone of their innovative governance model, which gives token holders control over the platform’s development.

The SushiSwap exchange also offers an advanced trading interface and is one of the few DEXs that support lending, borrowing and trading on leverage, making it attractive to experienced traders looking for these features.

1inch

1inch is a decentralized crypto exchange aggregator that offers users access to the best prices across multiple DEXs. It uses its own algorithmic liquidity search engine to compare prices on different exchanges and find the best rate for each trade.

This unique feature makes 1inch one of the most cost-efficient DEXs in the market, and users can even save money by setting up their own liquidity pools. On top of that, 1inch also has its own native token (1INCH), which gives holders access to various benefits such as discounts on trading fees and lower slippage.

Best exchanges

How do I choose the best decentralized exchange?

Now you know some of the top decentralized exchanges out there, but how do you pick which one to use? Depending on the tokens you want to trade, not all of them will be available. If you regularly swap between multiple crypto assets, you will likely need to use more than one DEX.² Here are some features to consider:

Token selection

Naturally, you want to make sure the DEX you choose supports all the tokens you want to trade. If you want to trade between two tokens on different blockchains, you will also need to use a bridge, putting Kyber Swap ahead of the competition.

Compatibility

Make sure the DEX you want to use supports your crypto wallet. Most DEXs support web wallets, but if you use a hardware or mobile wallet, make sure it is compatible with the exchange’s protocol.

Trading fees and slippage

Compare the fees charged by different DEXs to find the most cost-efficient option for your trade. 1inch is an aggregator and will automatically compare several DEXs for the best deal. Also, check the slippage, as some exchanges with smaller liquidity pools may have large spreads that can affect your returns.

Security and safety

Make sure to choose a DEX with robust security measures and keeps user funds safe. You want to check for a history of hacks and other security breaches and any user reviews about the platform’s customer service. The best decentralized exchanges understand the importance of security and are continuously improving their safety features.

Liquidity and trading volume

Check the liquidity of the exchange you’re considering, as it will determine how easy it is to buy and sell your chosen tokens. Larger exchanges tend to have better liquidity and smoother trades, but sometimes lower fees can be found on smaller DEXs.

User-friendliness

Look for an exchange with a user-friendly interface and helpful customer support. Pancakeswap is a good example of a DEX that has made the effort to make its platform easy to use, while SushiSwap offers advanced features for experienced traders. Kyber Swap combines DEX functionality with a crypto bridge, which is also a great feature to look for.

Additional features

Both centralized exchanges and decentralized exchanges are constantly competing for dominance in the emerging field of decentralized finance. If you are interested in getting the highest possible return on your crypto assets, you need to compare options beyond the ability to swap tokens.

The best decentralized crypto exchanges of today offer governance for holders of their crypto tokens, margin trading, or the chance to participate in initial DAO (decentralized autonomous organization) offerings.

FAQ

Is Binance centralized or decentralized?

Binance is a centralized exchange. It does not have the same benefits as a decentralized exchange, such as increased security, privacy, and censorship resistance.

However, Binance offers some of the positive features of centralized exchanges, including low trading fees, access to many different tokens, the ability to deposit and withdraw fiat currency, an exchange account with advanced trading features, and more.

What is the safest decentralized crypto exchange?

Ultimately, the safest option is to use a decentralized exchange with proven security measures and a robust, verified smart contract protocol.

Some of the most popular and secure DEXs include Uniswap, KyberSwap, Pancakeswap, and SushiSwap. Each of these exchanges offers different features and advantages, and none have been hacked.

What is a liquidity pool?

Liquidity pools are one of the main pillars of decentralized trading. Decentralised exchanges allow crypto traders and other market participants to earn interest on their cryptocurrency assets by depositing them in a liquidity pool. In return for this service, the crypto exchange shares a portion of the transaction fee from each token swap with liquidity providers.

Which crypto is most decentralized?

Bitcoin is the most decentralized cryptocurrency. It was designed to be a peer-to-peer electronic cash system, and its distributed ledger technology ensures that all transactions are secure, transparent, and immutable.

The Bitcoin network is powered by miners around the world who verify transactions on the blockchain in exchange for rewards in Bitcoin. This consensus model makes Bitcoin more secure and decentralized than other cryptocurrencies.