Up until now, the majority of cryptocurrency deals happen on centralized exchanges. Despite the risks of using third-party services, people often choose convenience over advanced security.
But is there an alternative way?
You can choose to use a decentralized exchange instead. Decentralized exchanges (or DEXs) are steadily gaining traction. On a DEX, you can trade your coins directly from your wallet and seal the deal with another person who is looking to buy what you have.
The Deal with Decentralized Exchanges
In an ideal world, we would all be trading cryptocurrency peer-to-peer, bypassing the intermediaries, and enjoying full anonymity, an advanced level of security, and no state regulations. At the same time, considering the current stage of development, it also means lower liquidity, an inferior user experience, and a lack of useful trading tools.
And even if you can turn a blind eye to how comfortable the crypto trading platform is, you won’t go far without liquidity. In the past year, the situation has gotten a little better. If you compare the trading volume of DEXs in 2019 to that of 2020, you’ll see that the numbers went up significantly. Thanks to aggregators, the volume of Ethereum-based DEXs is increasing and the fact that DEX tokens outperformed CEX tokens by five times in 2020 speaks for itself.
List of the Best Decentralized Exchanges in 2020
This year, a few more DEXs came into the spotlight. We picked ten platforms that could compete for the title of the best decentralized exchange in 2020.
- Has an app
- Template smart contracts that provide liquidity
- Dynamic prices based on the amount of each token in a pool
- 0.30% fee to trade
- Compatible with any ERC20 token
- Supports only ETH and ERC20
Launched in 2018 in Brooklyn, Uniswap calls itself an automated liquidity protocol and judging by the data from CryptoCompare, the name checks out. At one point its daily trading volume reached $25 million, although it might have been the result of the rising activity of scam tokens.
The Uniswap protocol has two versions: V1, the original one that was funded by the Ethereum foundation and used smart contracts written in Vyper and V2, the second iteration includes many new features and improvements.
For instance, you can only pair ETH with any ERC20 in V1, but V2 allows you to pair ERC20 directly with another ERC20 token. It also provides highly decentralized and manipulation-resistant on-chain price feeds. And in V2, smart contracts are written in Solidity.
2. Binance DEX
- A decentralized version of the mainstream exchange
- Runs on Binance Chain
- Near-instant transaction execution
- Periodic auction for matching orders
- Supports BTC
Although some people, including Vitalik Buterin, argue that Binance DEX is hardly decentralized, the daily trading volume of this DEX is way above the average DEX. As Changpeng Zhao himself stated, Binance DEX has all it takes to deal with the same trading volume as the original exchange, which is highly ambitious.
The matching on Binance DEX happens on the nodes and all transactions are recorded on-chain. The UI is similar to original Binance and it supports several crypto wallets so you can be sure this time you’re really in charge of your money.
- Runs on Ethereum, NEO, and EOS
- Simulates order books from Uniswap and KyberSwap
- 0.2% traders fee (takers)
- 0.15% for NEO traders using native token
Singapore-based decentralized exchange Switcheo went live in 2018. The creators of the DEX believe that their multi-blockchain approach, not typical for decentralized exchanges, helps them compete with centralized exchanges and their high trading volumes. And they do often top the list of the most well-performing decentralized exchanges along with Binance DEX and IDEX.
4. 0x Protocol
- Off-chain order matching and on-chain settlement
- Adjustable market makers fees
- Networked liquidity
- Variety of use cases for blockchain businesses
- No Bitcoin trade
0x is an open source protocol that enables decentralized exchanges on the Ethereum blockchain and allows for the trade of ERC20 and ERC721 tokens. Just like that, anyone can become a matchmaker. The principal difference of 0x Protocol is that it executes off-chain order matching but the trade itself takes place on the blockchain.
0x offers several solutions for companies that work with cryptocurrency: marketplaces for NFT trading, tradable cryptocurrency tokens for prediction markets, order book hosting, decentralized loans, and mechanisms for stable coins.
- Reserves system that helps with liquidity
- No order book
- Powered by smart contracts
- Popular with dapps, wallets, and exchanges
- No Bitcoin trade
Unlike 0x, Kyber uses smart contracts as well as reserves to enable cryptocurrency transactions between users and dapps. These reserves are the key to its high liquidity: they can be private, and set their rates themselves, or public. On top of that, there is a singular reserve controlled by Kyber.
Kyber does not use the order book model, and all transactions are executed on-chain via smart contracts. Wallets, e-commerce payments, exchanges, and other DeFi platforms can integrate Kyber and benefit from this top decentralized exchange.
- Hybrid model
- ETH token trade
- DAO structure with three native cryptocurrencies
- No Bitcoin trading
IDEX cryptocurrency exchange is a decentralized exchange for Ethereum tokens. It is slightly different from the others due to the fact that it runs on top of the Aurora DAO.
Aurora’s ecosystem includes several cryptocurrencies: IDXM, AURA, and Boreal, and each of them serves a separate purpose. You can stake IDEX’s AURA token or run an AURA node and get a percentage of the fees. IDXM (IDEX cryptocurrency) is a membership token that provides its holders with discounts on trades or even lets them trade for free. And finally, Boreal is a stablecoin that also enables p2p lending. IDEX users are encouraged to get the Boreal token if they want to receive a 5% discount on their trades.
However, the entire concept behind the IDEX exchange, despite many positive reviews and the highest market volumes, is a little controversial. One cannot affirm that IDEX is entirely decentralized, because it uses the model in which only the exchange itself can submit signed trades to Ethereum.
Nevertheless, it is still considered to be one of the best decentralized apps thanks to its arbiter system that brings in the speed, high volume, and advanced user experience that we’re used to with centralized exchanges.
- Biggest decentralized exchange on the EOS blockchain
- Multichain exchange: also supports the TRON blockchain
- Flexible trading fees
- ‘Matching and settlement’ on chain smart contracts
The exchange was initially launched on the EOS blockchain and supported a very wide range of EOS tokens. Later on, Newdex added the TRON blockchain too.
Once you log into the exchange with your wallet, you will be able to see your RAM, CPU, and NET, which is a much-needed feature when it comes to transacting in EOS. Transaction speed is relatively fast, although when the network is overloaded delays are also possible.
Newdex has deployed “matching and settlement on chain” smart contracts; all the order matching, settlement and order books are available on chain, transparent, tamper-proof, real-time checkable to everyone.
- Supports crypto to fiat trading
- DAO model with native BSQ token
- End-to-end encryption routed by Tor
- Wide range of payment methods
- Bitcoin trading option
- Only desktop app, no web version
Bisq is an open source bitcoin-to-fiat decentralized exchange that comes in the form of desktop software. As a legitimate and non-counterfeit decentralized exchange, Bisq doesn’t keep any Bitcoins or fiat currencies on its servers and asks no personal data from you. All trading data never leaves your computer (well, considering you’re taking adequate measures to protect it from malware). Basically, Bisq is a blockchain platform that connects the users that want to buy or sell cryptocurrency.
The interface, as it usually happens with such exchanges, is not the strongest side of Bisq. Although it’s intuitive enough, it is very basic. Other disadvantages include low volume and slow cryptocurrency transaction speed. However, it is one of the only decentralized platforms in the blockchain space that offers Bitcoin-to-fiat exchanges, so it might be worth it to wait a little longer.
- Open source fork of EtherDelta
- Token listing on request
- Tricky interface
- No Bitcoin trading
As cliché as it sounds, ForkDelta came into existence as a result of a fork. Apparently, some of the devs had disagreements with the new owners and built their own exchange, but this time, open source and more community-driven. The reason why we haven’t added EtherDelta to the list is because it’s not a platform for beginners due to its tricky interface and relatively high fees. On the other hand, blockchain old-timers seem to appreciate the platform.
But let’s get back to ForkDelta. There are no fees for cryptocurrency token listings, and they add new cryptocurrency daily. Despite the downfalls, it is a democratic exchange with the goal of building a strong community and the possibility of transforming into a highly competitive exchange.
However, at the moment, the interface of the exchange could be more straightforward, and you cannot trade Bitcoin, as well as many other popular cryptocurrencies. Additionally, the trading fees are not the lowest on the market.
- Still in beta
- Using ZK-rollups (one of the latest Ethereum scaling technologies)
- Off-chain request processing
- Supports multiple wallets
- Reduced gas consumption
Loopring is one of those projects that came to life thanks to a successful ICO campaign. After a few years in the making, it released four versions of the protocol one by one. Although the platform is still in beta, a lot of people have high hopes for the future of Looping’s DEX.
Right after the launch, a privacy expert found a major security breach within Loopring that could result in the loss of $5 million funds. On the bright side, the exchange reacted immediately and fixed the bug without sustaining any losses.