Decentralized Exchanges (DEX) are the non-custodial type of cryptocurrency exchange with their self-sufficient platforms that allow the interconnection of different blockchain names and peer-to-peer crypto transactions. DEXs exist to disrupt financial institutions like banks and other physical financial storage/s having centralized and sole control over people's way of sending and receiving financial investments.
DEXs are divided into three (3) classifications depending on the way they conduct transactions; the on-chain order books, off-chain order books, and the Automated Market Makers (AMM). In the on-chain order book setup, every undertaking and/or order is recorded to the blockchain, making it to be practically the most transparent type of transaction that can be made. The issue lies within the repetitive recording procedure, making the clients pay a fee to write down every node in the blockchain. Off-chain order books, on the other hand, are often considered near to a centralized setup. Order and/or transactions are posted on a different platform rather than in the blockchain.
Usability-wise, the off-chain order books make it more convenient for users to rely on another network. The downside is that if the institution is a fraud, they can play with the investors' assets. Lastly, the AMM utilizes smart contracts and offers incentives to its clients to maintain stability. They allow digital assets to be traded by using liquidity pools rather than the conventional buyer and seller set. These AMM-based DEXs are most likely integrated with other digital wallets for a wider viewpoint over the crypto market.
Provided below are the top five (5) DEXs that is expected to drastically bloom in the current year:5. Stakenet – Stakenet is a trustless cross-chain platform that was built with its native cryptocurrency – XSN. It is an autonomous and future-proof platform that combines the Lightning Network and Masternode into a global blockchain for decentralized applications. Stakenet DEX is based on the Lightning Network, a second-layer solution that enables peer-to-peer off-chain transactions within a blockchain or between and among different blockchains. A Masternode on the other hand is a dedicated full node of a blockchain that resides around the world. The Stakenet project has furnished its Masternodes to be Lightning network ready. This design allows Stakenet users to experience the instant and virtually feeless transactions of cryptocurrency. To date, the Stakenet wallet, Stakenet's non-custodial multi-currency light wallet that features Stakenet DEX is currently in beta testing. This revolutionary wallet will allow Stakenet clients to conduct transactions over the Lightning Network without the need to download the full record of blockchains.
4. Serum – a decentralized exchange (DEX) built on the Solana blockchain that provides speedy and low-cost transactions towards its users. It is a project that was recently launched in August of 2020 and has gained remarkable popularity. Serum utilizes on-chain order books and AMM DEX. Serum's involves a program of giving its users the ability to trade custom cryptocurrency contracts, permitting them to assume positions on any product that Serum has to offer, even including cross-chain physically settled contracts which can also be tokenized for the blockchain.
3. Blocknet – the so-called "Internet of Blockchains", Blocknet is a decentralized network that connects blockchains, whether through cross-chain dApps or even using a protocol as a second layer to extend the blockchain functionality, Blocknet provides its developers the authority to establish applications that will secure digital transactions. Blocknet offers its lightweight and multi-asset wallet called the XLite. With the use of XLite, Blocknet's stakeholders can manage to buy, sell, and store cryptocurrencies. Connecting the XLite wallet to Block DEX will allow vast trading opportunities for Blocknet users. The Blocknet team recently announced that the project will partner up with Avalanche, an open-source platform for launching highly decentralized applications, new financial primitives, and new interoperable blockchains to power up Blocknet's chain interoperability with almost every other blockchain today. This strategic move by the community will pose numerous benefits such as the development of interchain dApps leveraging contracts on Avalanche, smart contract/Defi ecosystem integration of Blocknet technology, and many more.
2. Uniswap – founded by Mr. Hayden Adam, the Uniswap launched in November of 2018. Uniswap is an Ethereum-based DEX that removes the concept of order books and makes good use of the AMM setup. It offers a simple interface swap to any two Ethereum assets against an underlying liquidity pool. Uniswap has two (2) versions, with version one as an on-chain system of smart contracts on the Ethereum blockchain that implements an automated liquidity protocol based on constant product formula. The other one offers new implementation based on the same formula, with several highly remarkable features. Uniswap is a fully decentralized, open-source exchange platform that provides incentivized liquidity pools, waived listing fees, and affordable costing of any DEX. Its incentivizing system is directed towards people trading on the exchange to become liquidity providers. Uniswap users pool their money together to create a fund that is used to execute all trades that take place on the system. The Uniswap version two (V2) that offers many new features and improvements including but not limited to; price oracles, flash swaps, and ERC 20/ ERC 20 pairs, has caught the attention of many crypto fanatics, as it is continuously being acknowledged as one of the best DEXs that is actively available online.
1. SushiSwap – is an AMM DEX that currently resides within the Ethereum blockchain. SushiSwap launched in September 2020 as a fork of Uniswap. It aims to diversify and strengthen to AMM market by adding exciting features which will help improve its functions compared to what is currently being provided by Uniswap. The SushiSwap ecosystem offers exchange, liquidity pools, and staking which servers their respective purposes for the project's prosperity. The popularity of SushiSwap today has made it one of the top DEXs by trading volume both in CoinGecko and CoinMarketCap's listing and is expected to exponentially grow its value in the coming months.
The existence of DEXs has made it possible for people to conduct safer and secure financial negotiations online, compared to the simple framework of centralized exchange networks which makes them vulnerable to hacking incidents. It also waived the KYC/AML compliances and counterparty risks and has also given the unlisted tokens a chance to participate in the digital market for as long as there is a human being that is willing to invest and purchase such tokens. As the number of cryptocurrency and blockchain companies increases, we shall expect the rise in the number of DEXs and the improvement and adoption of the live DEXs to cater to these alternative coins.
Imagine these DEXes getting and working together by considering Partnerships with one another...
