Decentralized crypto exchanges (DEXs) provide an online marketplace that facilitates the buying and selling of digital assets without being subject to regulations for intermediaries, or needing custodial protection.
These characteristics make decentralized counterparties resistant to hacking attacks and increase users’ level of privacy, as well as charging lower fees than centralized counterparties.
dYdX
dYdX stands out from traditional exchanges by not requiring users to deposit assets; rather, its trust-minimized architecture keeps funds secure in individual wallets for maximum safety and reduced hacking risk. Furthermore, there’s zero wait withdrawals offered as an added convenience feature.
dYdX provides both spot and derivative trading. It currently supports over 60 cryptocurrencies – some that may be hard to locate elsewhere – with plans to add more assets in the near future.
dYdX allows its community members to take an active role in governance and staking via airdropping its DYDX token – providing an incentive for participation in voting processes on its platform.
The dYdX team recently unveiled Version 4 of their protocol, which will consist of a new Layer 1 blockchain without cross-chain bridges to connect to other Ethereum networks – increasing security while decreasing gas fees.
Uniswap
Uniswap is a decentralized automated market maker (AMM) protocol that serves to replace order books by providing liquidity for token exchanges. Uniswap employs a constant product formula and liquidity pools as reserves against which traders trade; its constant product formula ensures the ratio of tokens to stablecoins remains constant regardless of trading volume, helping reduce high spreads for illiquid assets common on traditional order book exchanges.
Liquidity providers create liquidity pools by depositing pairs of tokens in a specific ratio to form an initial reserve against which traders can trade. They then earn trading fees that are distributed based on their share in the pool; anyone can become a liquidity provider, further decentralizing and democratizing token exchange processes.
Uniswap uses smart contracts on Ethereum blockchain to facilitate trustless token swaps without central intermediaries, enabling users to engage in peer-to-peer token trading for increased transparency and accountability.
PancakeSwap
PancakeSwap is a decentralized exchange that allows users to trade and stake tokens. It features yield farming, lottery pools, buying/trading NFTs as well as hosting various events including Initial Farm Offerings (IFO).
PancakeSwap makes depositing token pairs into liquidity pools easy! Just click Liquidity > Add Liquidity, select your pool of choice or create one yourself and deposit tokens; once deposited you’ll receive FLIP (LP token) representing your stake in that pool.
Participate in the platform’s lottery, which runs several times daily and offers you the chance to win NFT rewards. Each lottery session lasts six hours. CAKE, the platform’s native token, offers significant investment potential by being used for decentralized governance, reward allocation, participation pools participation, voting power influence platform decisions.
Coinbase
Coinbase is an established cryptocurrency exchange platform that enables users to sell and purchase crypto assets. Available in over 100 countries, Coinbase features an intuitive user interface designed for both novice traders as well as more experienced investors alike, supporting both popular assets such as Bitcoin and Ethereum as well as lesser-known NFTs.
Coinbase meets stringent compliance and security standards and is registered with FinCEN to operate as a money transmission business in the US. Furthermore, Coinbase’s tiered maker-taker fees structure rewards users who add liquidity to markets with reduced fees than those taking it away from it.
Coinbase stores users’ assets offline wallets that are more resistant to threats such as hacker attacks. However, in order to open an account they still require identity verification; although some individuals can choose to skip this step as it could increase fraud and theft risks. Koinly recommends users seek independent legal, financial and taxation advice in order to determine how this website pertains to their specific circumstances.
