Top Decentralized Exchanges to Watch in 2021
Exchange is fundamental to finance, and has been since the days when traders swapped spices, seashells, precious metals, and other goods and services of value. Today, markets govern finance with many different purposes and in various formats, from the New York Stock Exchange (NYSE) to your cryptocurrency exchange of choice.
Decentralized exchanges (DEX) are material to the operation of the decentralized finance (DeFi) sector. They allow traders to borrow, lend, swap one token for another, and trade crypto for fiat.
DEXs are decentralized because they lack centralized decision-making authorities. Anyone who owns an exchange’s native tokens can actively and regularly take part in the governance of that exchange, with smart contracts executing votes, regulating token sales prices, and facilitating most other aspects of how a DEX operates.
Decentralized exchanges are fundamentally peer-to-peer marketplaces for trading cryptocurrencies. DEXs vary in many ways, such as in the array of services that they offer, the protocols that power them, the type of blockchains that underpin them, and the way that they look.
The following DEXs have garnered enough trader interest and accumulated sufficient liquidity to be taken seriously as DeFi projects to monitor in 2021.
Uniswap is a completely decentralized protocol for exchanging tokens that operates on the Ethereum Network. Those who provide liquidity to the Uniswap pool earn fees from every trade made on the platform. Most liquidity pools utilize the platform’s native UNI token.
Uniswap uses Automated Market Maker (AMM) smart contracts to regulate the price points for token exchanges. It is the most popular decentralized exchange, with a 24-hour trading volume of more than $401 million at the time of writing.
KyberSwap is the decentralized exchange for the Kyber Protocol, the leading liquidity protocol in DeFi today. KNC native tokens are used to govern the KyberSwap DEX, and also to payout fees to liquidity providers. The Kyber Network and KyberSwap experienced significant liquidity growth in 2020, and that trend could continue throughout 2021.
1inch Exchange aggregates liquidity from other decentralized exchanges. The exchange aims mainly to reduce slippage and provide the smoothest token exchanges by allowing users to access the liquidity from several DEXs through a single platform in real time. This DEX recently launched their native 1inch governance token. At the time of writing, 1inch Exchange has the third-highest 24-hour trading volume of all DEXs.
Curve is a decentralized exchange protocol with an interface that edges strongly on the old-school. Those who use Curve do so because they want to exchange stablecoins in particular. The greater price stability that stablecoins provide instills a measure of certainty in terms of the cost of trading on the platform. Curve has a 24-hour trading volume of over $61 million at the time of writing.
Bisq is a DEX that allows users to exchange their crypto for national currencies or other crypto without going through a registration process. The open source Bisq desktop application serves as the Bitcoin-based platform.
SushiSwap operates on the Ethereum blockchain. Its design is similar to that of Uniswap. Its native token, SUSHI, allows users to provide liquidity to the exchange to participate in the governance of SushiSwap. SushiSwap has a 24-hour trading volume of over $72 million at the time of writing, making it the second-most popular DEX according to CoinMarketCap.
dYdX is an “open trading platform for crypto assets”, serving as a decentralized token exchange. dYdX allows users to engage in 10x leveraged trading, borrowing crypto, and lending (to earn interest). It is a feature-rich exchange that has the backing of heavyweight investors such as Andreessen Horowitz and Polychain Capital.
IDEX brands itself as the “world’s most advanced cryptocurrency exchange”. It claims to combine the best features of centralized exchanges (transaction speed, a sleek and seamless user interface, a variety of order types) with the benefits of decentralization (self-custodied private keys, open-source smart contracts for enhanced security, and rewards for contributing to liquidity).
IDEX is built on the Ethereum blockchain and plans to grant access to a new batch of tokens (with corresponding fee-derived rewards) native to the “IDEX Multiverse” in late 2020.
The 0x Protocol is an open-source protocol that can power decentralized exchanges. It is the basis for DEXs like Matcha and Tokenlon. Though various cryptocurrency exchanges have used it successfully as their base protocol, it is designed to facilitate the exchange of other digital asset types, such as gaming assets.
Powered by the 0x Protocol, Matcha facilitates peer-to-peer token trading in a decentralized environment. It sources pricing information from an aggregation of other DEXs, including but not limited to Uniswap, Curve, Kyber, and Bancor. It aims to provide strong price offerings by giving users access to 17 different exchanges from a single location.
Synthetix is a decentralized protocol specifically for issuing synthetic derivatives. Its exchange, Kwenta, is one of the dapps offered by Synthetix. Those who want to build synthetic derivatives exchanges can use Synthetix as their foundation, and many have. At the time of writing, more than $1 billion are locked in smart contracts linked to the Synthetix protocol.
Also powered by the 0x Protocol, Tokenlon is an extension of the imToken Ethereum and Bitcoin wallet. The company recently announced the launch of Tokenlon 5.0, which will offer price aggregation and the release of LON tokens for governance as its primary innovations.
Balancer is a decentralized exchange enabling users to trade ERC-20 tokens and to earn passive income by providing liquidity to protocol. Liquidity providers also benefit by having their portfolios automatically rebalanced to maintain optimal asset allocations as a function of Balancer’s automated market maker (AMM) design.
At the time of writing, Balancer’s 24-hour trading volume is greater than $16 million.
Totle is an exchange that offers aggregation of multiple other exchanges to present users better exchange rates. In addition to cryptocurrencies, Totle allows users to trade in synthetic assets. It also offers every user insurance of up to 600 ETH in the case that a bug results in the loss of funds.
AirSwap is an Ethereum-powered, decentralized trading network that allows users to swap tokens from one peer to another. No middlemen means that AirSwap does not charge fees—one of the perks of decentralization—though it uses third-party escrow. It claims to allow users to swap “any token” thanks to its escrow service.
Bancor is a protocol that allows token exchanges and decentralized liquidity provision on the Ethereum blockchain and across other blockchains. BNT is Bancor’s native token which facilitates decentralized governance of the protocol and accrues value from swaps that occur on the network. The protocol boasts more than $160 million in liquidity at the time of writing.
The Decred Project is behind DCRDEX, a decentralized exchange that offers the benefits of peer-to-peer crypto trading—no KYC process, no fees, and blockchain-facilitated security through self-custody. It currently offers trading pairs for Bitcoin, Litecoin, and Decred tokens.
BurgerSwap is a decentralized exchange governed by automated market maker (AMM) principles. Built on the Binance Smart Chain, BurgerSwap has a 24-hour trading volume of more than $33 million at the time of writing. The exchange is structured in a way that users can eventually submit proposals for changes to the way the exchange is run, then vote on those proposals.
In the vein of SushiSwap and BurgerSwap, PancakeSwap embraces the trend of creatively-named decentralized exchanges. Built on the Binance Smart Chain, PancakeSwap uses CAKE and SYRUP tokens to ensure that it remains completely on-brand. At the time of writing, PancakeSwap’s 24-hour trading volume exceeded $20 million.
Radar Relay offers “wallet-to-wallet token trading” from Ethereum wallets. The app sources liquidity from 16 different exchanges to give users the best prices. At the time of writing, the 24-hour trading volume for Radar Relay sat just shy of $11 million.
JustSwap is an exchange protocol for tokens powered by the TRON operating system. Those looking to exchange TRC20 tokens may consider JustSwap, which has a 24-hour trading volume of over $6 million at the time of writing.
There are many decentralized exchanges in the DeFi space, and there is no telling which will rise up the ranks of popularity in 2021. We’ve presented a list of both those DEXs that have established a strong user base, as well as those who have unique purposes, interfacers, and concepts that are worth paying attention to.
Whether it is an idea as eccentric as BurgerSwap or liquidity market leaders like Uniswap, this smattering of decentralized exchanges should offer something for every type of DeFi trader.