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The year 2020 has been filled with a lot of economic uncertainty as a result of the coronavirus pandemic.
The fast-spreading viral disease affected every aspect of the world economy including our favorite cryptocurrencies.
The impact, however, has seen a great twist since the black Thursday market crash in March and Bitcoin’s 3rd halving event.
In the heat of the pandemic, the question of the potential of cryptocurrencies to serve as a store of value filled the air.
Therefore, this situation caused an increase in these coin’s trading activity on exchanges. These trading activities took place on cryptocurrency exchanges.
Cryptocurrency exchanges in simple terms are online platforms where cryptocurrencies and digital tokens are bought and sold.
There are primarily two types of exchanges namely;
- Centralized Exchanges and;
- Decentralized Exchanges (DEX)
In this article, we would focus on the top 6 decentralized exchanges in the first half of 2020.
Before then, let’s look at the key differences between a centralized exchange and decentralized exchanges
Why the World is Favoring DEX over CEX
One of the key features of blockchain technology is the peer to peer decentralized mode of confirming transactions that run on it.
The promise of independence and the elimination of a central authority monitoring transaction is why blockchain is loved.
DEX gives users a closer experience to this independence than centralized exchanges.
Decentralized exchanges are generally known to be safer than Centralized exchanges.
Also, a user’s private keys are stored on Centralized exchanges and can lead to loss of funds when the platform is attacked.
It is noteworthy that Centralized exchanges have recorded over 56 cyberattacks in the past decade as reported by the Wall Street Journal. Exchange hacks are still one of the most prominent fears plaguing the cryptocurrency space.
However, with Decentralized exchanges, users are in charge of keeping their private keys thus making it less favorable for hackers to target.
The account creation process on centralized exchanges takes a long time with a likely stressful Know your customer (KYC) requirement.
DEX does not require any stressful account creation or verification process
Another great feature users benefit from decentralized exchanges is the low trading fees on the DEX platforms.
Users, with their acceptance of decentralized exchanges, have shown that trading fees are an important factor in choosing a platform to trade with
Decentralized exchanges are not 100 percent perfect. They have their own flaws particularly with respect to slow transaction timing.
The described advantages of decentralized exchanges has made them see increased adoption in 2020
The Favored Decentralized Exchanges
There are dozens of decentralized exchanges listed on CoinMarketCap with many more coming up everyday.
While our list comes in no particular order, the following DEXs have been chosen taking note of the following factors;
- Average Liquidity
- Web Traffic, and;
- Number of Markets
The average liquidity takes on the range 0 – 1000 and highlights each DEX based on their liquidity. The higher the Average liquidity, the better the exchange.
The web traffic factor is also measured based on a 0 to 1000 rating. It shows the web traffic to each exchange’s platform as curated by various web traffic sources.
Lastly, the number of markets shows an indication of the number of tradable markets on the platform.
The more the number of markets, the better the exchange. Based on these, the exchanges are outlined below.
IDEX is a non-custodial exchange based in the United States of America.
The exchange integrates with any custody solution and allows users to trade with one another without giving up control to a third-party custodian.
IDEX combines the speed seen in centralized exchanges with the security of decentralized exchanges.
Other features include;
- Access to trade analytic tools
- Community trust
- Secured smart contract provisions
There are 180 markets on IDEX as at press time. IDEX has an average liquidity of 46 and it commands web traffic of 709.
The Waves decentralized exchange boasts to be the world’s fastest decentralized exchange.
Users can trade all of the waves based token including Waves, wBTC, and wETH.
The exchange is favored because of its;
- Multi token provisions
- Secured trading platforms
- Blockchain backed funds transfer feature
Waves exchange has an impressive liquidity rating of 62, a 622 traffic ranking, and the number of markets on the platform is 35.
The platform temporarily shut down in December 2019 and relaunched with new hybrid features.
The company claimed to combine centralized features for enhanced user experience.
3, Binance DEX
Backed by a highly innovative parent company, Binance DEX has grown in ranks over the years. The DEX offers its customers;
- A unique dual-chain architecture
- Fast transactions
- A highly competitive trading fees
Binance DEX dual-chain architecture empowers developers to build custom made decentralized apps and digital assets on one blockchain.
As at press time, Binance DEX commands a web traffic of 646, a 17 point liquidity, and favors 85 tradable markets.
Bisq exchange is an open-source, peer-to-peer desktop application that allows you to buy and sell cryptocurrencies.
With the Bisq exchange, users can exchange fiat currencies using cryptocurrencies such as Bitcoin without compromising identity.
Bisq exchange uses Tor routing, local computing, and personal wallets to ensure that no single component of the software is centralized.
Bisq exchange’s core features include;
- An open-source network of developers
- Prioritizes user’s privacy
- Ease of use of its platform
Bisq exchange, however, ranks low in liquidity capped at 19.
It also has a lower number of markets compared to the other ranked decentralized exchange at 21.
Web traffic rating is 528.
Bancor is an on-chain liquidity protocol that enables automated, decentralized token exchange on the Ethereum network and across blockchains.
Via Bancor’s secure platform, users can easily exchange ERC20 tokens for the exchange’s native Bancor Network Token (BNT).
Bancor decentralized exchange has the following unique features;
- Cross-chain conversions
- Internal Constant Reserve Ratio (CRR) promoting instant token conversions
- Offers its users competitive staking reward
Although Bancor has zero liquidity, it comes off as one of the DEXs with the most tradable markets currently at 90.
The exchange has an average web traffic of 500.
The Uniswap exchange offers a fully decentralized protocol for automated liquidity provision on the Ethereum network.
Uniswap uses a simple formalized equation to create unstoppable liquidity for thousands of users and hundreds of applications.
Uniswap empowers developers, liquidity providers, and traders to participate in a financial marketplace that is open and accessible to all.
Users on the Uniswap decentralized platform enjoys;
- Unique exchange offerings
- Access to tools to create new markets
- A transparent transaction interface
The exchange has a web traffic of 665, supports 45 markets but with zero average liquidity.
Final Word on the Profiled DEXs
The six (6) decentralized exchanges described above represent a fraction of the entire decentralized exchanges there are.
While user preferences differ, these six DEX have been chosen based on the ease of use of their platforms.
To trade on these decentralized exchanges, more in-depth research should be done.
This is important because the exchanges have different modes of operation, as well as technical features that users must get acquainted with.
This article, however, shows a summarized feature to watch out for in choosing a DEX of interest.
Check them out and ensure to leave a comment.
Benjamin Godfrey is a blockchain enthusiast and journalist who relish writing about the real-life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology.
His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based media and sites. He uses his skills in reporting current trends in the blockchain ecosystem, writing comprehensive and insightful guides, reviews, and opinion articles with the aim of bringing information and a new perspective to readers.
A writer who relishes diversity and thoroughness with about three years of experience in the blockchain and finance ecosystem. Godfrey graduated from the University of Benin where he bagged a First Class (BSc Agric). His future ambition involves helping governments develop policies that will integrate blockchain technology in agriculture as a means to guarantee Food Security. Benjamin Godfrey is a lover of sports