Cryptocurrency values putting more control in the hands of users. The original ideal of crypto is that there is no central authority managing or maintaining the value of currency. While Kraken is one of the oldest cryptocurrency exchanges around, it’s not a decentralized one. Decentralized exchanges (DEX) best fulfill crypto’s core goal of fostering financial transactions without banks, brokers, or payment processors. Through decentralized exchanges, peer-to-peer transactions can occur, without a third-party to verify the trade.
And it’s for this reason that decentralized exchanges are so popular. It’s estimated that $217 billion in transactions flowed through DEX in the first quarter of 2021. However, not all decentralized exchanges are built equal. Here are three of the best ones for 2022:
UniSwap
UniSwap lets users convert any ERC20 token to any other ERC20 token. The UniSwap DEX doesn’t rely on buyers or sellers to create liquidity, focusing solely on token-swapping. This leaves the total value locked (TVL) on UniSwap at $7.76 billion. In terms of TVL, UniSwap has fallen behind Curve, which has a value of $19.8 billion. Still, UniSwap remains one of the top DEXs, maintaining its reputation as the preferred place for most new Ethereum-based project launchpads.
UniSwap has over 5,500 tokens available for users to trade, and charges a 0.3% fee for swapping tokens. It’s easy to use as well; you just need to connect the DEX to a wallet like MetaMask, choose the two assets you want to swap, and the amount you wish to trade.
SushiSwap
SushiSwap is a decentralized exchange that harnessed the open-source code of UniSwap to create its own market. Developed by the pseudonymous Chef Nomi, SushiSwap uses automated market maker smart contracts that run on the Ethereum blockchain — letting trades exchange cryptos and earn yields in the form of SUSHI tokens, the native currency of the DEX.
When you buy SushiSwap, you receive SUSHI as a governance token, which means you can use it to vote on the future of the protocol. SUSHI serves as an incentive to plonk cryptocurrencies into the protocol like a loyalty token, and can be traded on secondary markets or held for speculative purposes. Like UniSwap, SushiSwap charges a 0.3% fee for trading any of the 1,400 tokens available on the platform. There are currently no withdrawal fees for SushiSwap, but users would need to pay gas fees for transferring assets to an external wallet.
PancakeSwap
Unlike the previous two exchanges, PancakeSwap runs on the Binance Smart Chain. This difference allows PancakeSwap to run cheaper and faster than SushiSwap, from which it copied its codebase. PancakeSwap allows users to directly trade 290 supported BEP-20 tokens and dApps at a 0.2% trading fee per transaction. As PancakeSwap is a fork of SushiSwap, most of their features are similar.
One thing that sets PancakeSwap apart is its lottery function. Users can buy one ticket with 10 CAKE every six hours, and win a jackpot (50% of the entire pool) if the four-digit number combination on their ticket matches the winning ticket exactly. PancakeSwap exhibited a lot of growth since 2020, and even burning CAKE tokens amounting to $72 million last year. Burning tokens reduces the overall supply in circulation and temporarily boosts an asset’s price — by 15% in this case.
Overall, crypto investors should consider looking into decentralized exchanges for trades, especially if they’re interested in better and immediate liquidity.
Susan Paige is a prolific female writer known for her insightful analyses on business news, particularly focusing on the stock market, cryptocurrency, and related topics. With a keen eye for trends and a knack for distilling complex concepts into accessible pieces, she captivates readers with her expertise and clarity.