No matter where you look within the crypto industry, you’re always going to come across the terms “centralized” and “decentralized” - they come with the territory. While you may not think about their true meaning at the start, sooner or later, you’re going to need to consider them. This is especially true if you find yourself looking for the best decentralized exchanges.
This is because both concepts are exceptionally important when it comes to trading and exchanging your crypto coins (or fiat money). Depending on the status of the exchange platform, there may be multiple different factors involved - everything from KYC procedures, all the way to customer support and wallet connections.
We’ll explore these concepts as they come, though. Also, if you want to avoid the hassle involved with DEXs, you can always use a centralized exchange, instead - give Coinbase or Binance a chance! Otherwise, here’s the list of decentralized crypto exchanges that we’ll be covering today:
Centralized VS Decentralized: What’s the Difference?
Before we get too deep into the best decentralized exchanges, it would probably be a smart idea to first cover the core differences between the two philosophies.
If you’re familiar with crypto and blockchain technology, you undoubtedly know that it’s all based and built on the concept of decentralization. As the term likely implies, a decentralized platform is one that has no single authority. Instead, all decisions made concerning it are influenced by votes from the community, at large.
This comes as opposition to centralization, and more specifically - centralized financial entities. Cryptocurrencies were created in 2009 (Bitcoin’s genesis block being mined on January 3, 2009), right after the Financial Crisis.
This isn’t a coincidence, either - one of the pillars of the crypto communities worldwide is the idea that decentralization will prevent potential future crises, while also emphasizing the “small guy” and removing the banks and other financial entities deemed predatory from the equation.
That is, admittedly, a very drastic stance to take. However, it’s one that many people around the world do sympathize with - it’s also why those same people turn to the best decentralized exchanges, as well.
So - with a decentralized platform, you’re able to remain anonymous, and things are much more transparent than with a centralized equivalent, since everything is run by the community of that platform itself. How does this information help someone understand DeFi exchanges?
Well, as mentioned at the beginning of the article, exchanges can be of two types, as well - centralized, and decentralized ones. Centralized exchange platforms are more-popular than their decentralized counterparts.
Why? Well, for starters, a centralized exchange is much safer. Specifically, most centralized platforms will require you to pass KYC verification in order to create an account on them. Once in, you’ll be able to rest assured that everyone else who uses that exchange have been "vetted”, too, and there are very few foul players that may try and participate in some sneaky business.
Furthermore, centralized exchanges are much better accepted among different regulators and lawmakers. While crypto is still an iffy topic in this regard, platforms that “play by the rules” have a much better shot of being ultimately accepted than those that are, well… Decentralized.
With that said, though… Why are people then looking for the best decentralized exchanges, still?
A portion of people who do so are, for a fact, trying to hide something, and believe that the increased anonymity of a DEX will allow them to do so. The vast majority of individuals, however, are simply interested in AMMs - Automated Market Makers. DEXs that have AMM functionality allow you to trade a wide assortment of different crypto tokens - no centralized exchange entity would offer so many options!
Then you have fans of anonymity who are simply looking for best decentralized crypto exchanges out of sheer principle, and people who have their own, specific reasons, too. Whatever the case might be, one thing’s for sure - DEXs are still as popular as ever!
Best Decentralized Exchange: Evaluation Criteria
What are the main features that you should be looking for within the list of decentralized exchanges?
Good question.
Evidently, some of the features that should be important to you are going to be the same as with any other centralized exchange platform out there. Fees, token (and coin) variety, ease of use, customizability, DeFi apps found within, and more.
You should also pay close and careful attention to the security side of things, too. Even the best decentralized exchanges can be prone to some security risks, due to their decentralized nature. These risks don’t necessarily come from some third parties, but rather, from other users and token creators that may reside on the DEX.
One thing that you do really need to pay close attention to is the transaction volume that passes through the DEX every single day (or some other set amount of time). Volume helps you determine just how popular that exchange is, and whether or not it’s worth looking into, in the first place.
Ready to explore some DeFi exchanges? Let’s get right to it!
1. Uniswap - The Most Popular Ethereum-Based DEX
Ranks #1 out of 7 Crypto Exchanges
- + The most popular DEX in the industry
- + AMM functionality
- + Simple to use
- - Does not support BEP tokens
- - High Ethereum gas fees
Uniswap is undoubtedly the most popular DEX on the market. It’s a name that no list containing the best decentralized exchanges could go without, for obvious reasons.
The exchange in question functions on the Ethereum blockchain. Meaning, users are able to trade and exchange ERC-20 tokens on the platform. The best part about Uniswap is that it functions as an AMM - an Automated Market Maker.
AMM platforms solve the issue of liquidity. They do so by offering users to swap tokens, instead of buying or selling them. Swapping removes the need for massive liquidity reserves, and while a specific formula is being upkept (more about it here), the trades are able to be executed.
This is a big deal! One of the major issues that many DeFi exchanges face is a lack of liquidity, in part due to their decentralized nature. And if there’s no liquidity, no trades are going to happen - following that, the DEX becomes obsolete. Not something that you’d need to worry about regarding Uniswap, though!
Another major benefit of the platform is that it has nearly 6000 different coins and tokens listed. If you’re looking for a very niche and specific altcoin, or a token for a new Ethereum-based project, chances are that you’ll be able to find it on Uniswap.
Speaking of which, anyone can list their tokens (projects) on the DEX. If you’ve just created some sort of a dApp, and want to list the token on Uniswap, you’re free to do so. This is both wonderful, and also very risky, too. Scammers may be able to list fake tokens on the platform, and if you’re not careful, you might be tricked into swapping your ETH or other valuable assets for these scam coins.
Fee-wise, Uniswap charges a 0,3% fee on each token swap that you might make. Naturally, you should also expect to pay some gas fees, granted that all of the exchanges happen on the Ethereum blockchain - this, however, has nothing to do with Uniswap itself. The aforementioned 0,3% fee is used within the liquidity pool (reserve) of the DEX.
All in all, Uniswap is very simple to use, offers a great fee model, and allows you to trade (swap) a huge number of different coins and tokens. Note, though, that all of these coins and tokens must be Ethereum-based - while you swap some wrapped coins, ones such as BNB are not available on the platform, due to it following a completely different philosophy, and being part of a centralized crypto economy.
2. PancakeSwap - The ‘Uniswap’ of the Binance Smart Chain
Ranks #2 out of 7 Crypto Exchanges
- + Very simple to use
- + BEP token support
- + Low transaction gas fees
- - Supports a small number of tokens
- - Can be a bit more complicated if you want to trade ERC-20 tokens
PancakeSwap is a clone of Uniswap. This isn’t even an insult or some sort of a call-out, either - the DEX in question has used Uniswap’s source code as its core design element. Meaning, if you were to use Uniswap for a long time, and would then come to Pancake, you wouldn’t really have a difficult time figuring out how everything works.
Naturally, you may question - if Uniswap is one of the best decentralized exchanges on the market, why would I be interested in a clone? Pretty simple, really - Uniswap operates on the Ethereum blockchain, while PancakeSwap is based on the Binance Smart Chain.
While the actual numbers are going to vary drastically, in the same way how Uniswap is considered to be the leader on Ethereum, PancakeSwap is usually the go-to exchange on BSC. It has managed to earn the trust of many BSC fans, and is generally viewed as a viable DEX for the chain in question.
Evidently, not all BSC fans are excited about PancakeSwap, though. With Binance being a centralized entity, and the Binance exchange promoting KYC as the optimal route for long-term operations, many deem it to be a much better idea to use Binance itself, instead of turning to a DEX that focuses on the BSC.
This, however, isn’t always the right way to think about it. You see, some tokens that are available on PancakeSwap won’t really be available on the Binance exchange. On top of that, Pancake does preserve decentralization, too!
Do you come looking for the best decentralized exchanges from an Ethereum-exclusive background? Worry not, since many ERC tokens can be converted to BEP ones, straight on the DEX in question! All that you’d need to do is use the Binance Bridge - this is not as straightforward as just trading ERC tokens on Uniswap, but also doesn’t involve any super-complex tricks, either.
Being a Uniswap clone does have some additional advantages, too. One of the more-notable of these advantages is the fact that PancakeSwap is very simple to use. This is true for complete newcomers, but even more so for those individuals who have used Uniswap before.
Lastly, regarding the topic of fees - PancakeSwap will charge you 0,2% on each transaction that you perform. That’s pretty good! When you combine it with the fact that BSC has much lower gas fees than those of Ethereum, you can probably see why PancakeSwap is often regarded as a very viable solution for wannabe crypto traders. Surely one of the best decentralized exchanges on the market!
3. 1Inch - An Aggregator of Decentralized Exchanges
Ranks #3 out of 7 Crypto Exchanges
- + A DEX aggregation platform
- + No fees for token swapping
- + Earning and mining support
- + Available on mobile
- + Robust security
- - Can be difficult to use for beginners
- - No direct credit/debit card transfer
- - Occasionally slow transactions
1Inch is one of the most-interesting and best decentralized exchanges on this list. This is firstly due to the fact that 1Inch isn’t even an exchange, in of itself. Instead, it’s a DEX aggregation platform.
What does that mean, specifically? Well, 1Inch aggregates different DeFi exchanges, and when you want to make a trade (or token swap), it finds the exchange with the best prices and fees for you. The process is automatic and quick, and from the user side of things, completely seamless.
It’s a rather unique idea, for sure! You don’t need to pick and choose a DEX for yourself, and risk overpaying on a trade or transaction fees. 1Inch takes care of the entire process for you!
This, accompanied with the fact that 1Inch also doesn’t have any fees that you’d need to pay them for finding a DEX with the best rates, is what makes the platform in question so attractive, and often named to be one of the best decentralized exchanges out there. Naturally, though, same as many other traditional DEXs, 1Inch also acts in a non-custodial manner, as well.
Many DEX platforms are non-custodial. What the term means is that they do not hold your assets - instead, you need to connect your own wallet to 1Inch (or any other DeFi exchange), and perform all of your transactions this way.
That’s generally considered to be a good thing! Since your crypto coins and token remain in your wallet up to the point of the trade, there’s much less room for scams and thefts to happen. Worry not - we’ll discuss the wallet question towards the end of our list.
At the same time, though, it’s worth emphasizing that 1Inch suffers from all of the same problems associated with other best decentralized exchanges, too - especially those that are based on Ethereum. The platform isn’t regulated, which can prove to be a huge issue in some time, when crypto regulations are finally set in stone.
On top of that, if you’re looking for a simple way to trade and save while doing so, well… 1Inch might not really be for you. Paradoxically, while the DEX aggregator does present users with the best possible prices for their trades, Ethereum is known for having some… Volatile gas fees. Depending on the time of the trade, the fees can definitely have a huge impact on your bottom line.
That aside, however, 1Inch still remains one of the best decentralized crypto exchanges (exchange aggregators), especially when accompanied by a top-tier cryptocurrency wallet. If you’re planning on trading crypto tokens for a long time to come, and are fixated on decentralized exchange solutions, 1Inch should definitely be a platform that’s on your list!
Did you know?
Compare Crypto Exchanges Side by Side With Others
All Crypto Exchanges may look similar to you but they're NOT all the same!
4. SushiSwap - A Custodial DEX
Ranks #4 out of 7 Crypto Exchanges
- + SUSHI governance token - available
- + Staking and farming functionality
- + A large number of tokens available
- + Cross-chain swaps
- + More opportunities to earn
- - Controversial past
- - Unfamiliar product terms
SushiSwap is undoubtedly one of the more well-known names in the DEX industry. If you’re looking into a list of decentralized exchanges, Sushi will often frequent such lists, close to platforms such as Uniswap and PancakeSwap - this list is no exception.
Part of the reason why this is the case is because SushiSwap is a clone of Uniswap, same as the aforementioned PancakeSwap. The differences, however, are noticeable - Uniswap is the original, PancakeSwap is dedicated to the Binance Smart Chain, and SushiSwap acts as a custodial DEX.
In this context, the term “custodial” refers to the fact that users are able to keep their crypto assets on the exchange. This has its pros and cons.
On the benefit side of things, it adds to the convenience of your trades. You don’t need to connect an external wallet to SushiSwap every time you want to make a trade. If you’re an aspiring day trader, and want to always be ahead of the curve, speed is the name of the game - SushiSwap provides you with just that.
On the flip side, though, this is a major security hazard to be aware of. With non-custodial exchanges, things are much safer - your assets never leave your wallet, and thus, you’re exposed to much smaller risk factors. If you want to be certain about the safety of your crypto tokens, Sushi might not necessarily be the ideal pick.
Still, however, the platform is considered to be one of the best decentralized exchanges. It offers the same fee model as Uniswap - you’d pay 0,3% for each transaction that you perform on SushiSwap. There are no deposit or withdrawal fees, either, if you don’t count Ethereum’s gas fees that are present with each transaction on the blockchain in question.
In addition to all of the features mentioned above, SushiSwap also supports yield farming functionality. You are able to stake $SUSHI tokens, and earn a passive income over time. Many DEX platforms these days offer similar functionality (yield farming, liquidity, farming, etc.), and it’s good to know that SushiSwap is one of them!
If you decide to become a liquidity provider on SushiSwap, you’ll be part of the group that receives 0,25% of that 0,3% transaction fee. The rest of the fees are transferred and given out to $SUSHI holders. Any way you look at it, the DEX truly does allow individuals to make a passive income over time!
In short, SushiSwap is definitely one of the best decentralized exchanges on the current market. While its custodial nature will definitely sway some potential users away to some centralized exchange options, crypto enthusiasts that are adamant about decentralization might find Sushi to be a viable trading solution!
5. MDEX - A DEX With Mining Mechanics
Ranks #5 out of 7 Crypto Exchanges
- + DAO platform
- + Supports a wide range of features
- + MDX governance tokens
- - A relatively-new platform
- - Might be difficult to use for beginners
MDEX is a decentralized exchange built on the Huobi blockchain. The platform has some significant differences from other projects discussed on this list of decentralized exchanges.
One of these differences is the fact that MDEX offers users mining functionality. You may stake your assets in order to mine tokens, thus providing liquidity to the project. This allows you to earn a passive yield, while also guaranteeing that the project remains active and good on the liquidity side of things.
MDEX also has different additional features, such as a fundraising program, DAO functionality, AMM features, and more. Users are able to use the platform for a variety of different reasons, not just trading their favorite tokens.
MDEX has also integrated Binance Smart Chain functionality, as well. This means that you’ll be able to trade BEP-based tokens on the DEX, which is a rare occurrence with a lot of the DEXs out there!
Fee-wise, MDEX charges the standard 0,3% fee on all of your transactions. This fee is then returned back to the platform, so that the mining economy would retain its beneficial features.
While not yet being a very well-known project, MDEX has already managed to establish itself as a DEX worth looking into, especially if you’re someone who requires advanced functionality with their trades. A great addition to a top-rated DeFi exchange list!
6. Curve Finance - A Stablecoin-Oriented DEX
Ranks #6 out of 7 Crypto Exchanges
- + A stablecoin-focused DEX
- + Allows users to earn interest on their assets
- + DAO functionality
- - Can be difficult to use for beginners
- - Mostly revolves around stablecoin swaps
Most of the decentralized exchanges on this list are aimed at different Ethereum-based token (ERC-20 token) trading. Others focus on the Binance Smart Chain, and all of the BEP-friendly tokens associated with it.
Curve Finance, on the other hand, is yet another exception - the platform is mostly used for trading and exchanging stablecoins (tokens that are pegged to the United States dollar, and based on Ethereum).
What does that mean, exactly? Well, in layman’s terms, you’ll be able to trade and exchange one stablecoin for another, in a decentralized manner.
Admittedly, “trade and exchange” might not be the best terms to use here. Instead, you would swap one stablecoin for another. This way, Curve Finance mitigates the potential issue of liquidity that other DEXs tend to face.
The platform is also considered to be a DAO - Decentralized Autonomous Organization. What that means is that Curve Finance has its own token, and that token is used for governance purposes within the platform. Users are able to purchase and hold the token, and then use it as a voting tool when it comes to making certain decisions regarding the ecosystem.
The only major downside of Curve Finance is that it’s not at all beginner-friendly. The style of the website is unique, sure, but that doesn’t help, either. You’re going to need some decent knowledge regarding things such as DEX functionality, yield farming, and crypto trading, in general, in order to really be proficient with the platform in question.
All of that being said, though, Curve Finance does deserve a spot on the list of the best decentralized exchanges. Surely a project worth checking out!
7. Compound - A DEX-Powered Lending Protocol
Ranks #7 out of 7 Crypto Exchanges
- + A DEX that allows you to tokenize crypto assets
- + Allows you to earn interest
- + Supports the major crypto coins and tokens
- - Can be complex to use
- - Not a traditional DEX
Compound is, admittedly, an odd pick in a list of the best decentralized exchanges. This is because the platform isn’t exactly a DEX, in the first place - instead, it’s a type of lending and borrowing protocol, working in the field of DeFi.
Why is it on this list of decentralized exchanges, then? Well, mostly because of the fact that some form of trade does happen on the platform - you are able to trade your crypto asset for some specific Compound token, and earn interest on it over time.
In some more-specific terms, Compound allows you to tokenize your select crypto assets, and lend them to other users of the platform. In doing so, you’ll receive an equivalent amount of Compound tokens, which will then earn you a passive income over time. The size of your earnings is going to depend on the asset that you tokenize, the general state of the market at that time, Compound’s rankings, and more.
It’s a true type of DeFi exchange! While you don’t trade assets directly with other users, asset tokenization still involves the trading process, with the prospect of profiting from it in the future.
That being said, users of the platform should keep in mind the fact that Compound isn’t as simple to use as, say, platforms such as Uniswap or PancakeSwap. Unlike the latter options, Compound offers advanced levels of functionality, and requires you to have some idea of how DeFi-driven tokenized asset lending and borrowing works.
On top of that, once again - it’s not really a traditional DEX. If you’re looking to try something new, and would rather earn passive interest on your assets instead of trading them, sure - Compound could be a viable option. If not, though, you’ll need to look for a more-traditional decentralized exchange.
A Word About Cryptocurrency Wallets
We’ve covered and discussed 7 different platforms in the list of decentralized exchanges above. Many of them are non-custodial, while others do offer crypto asset storage functionality.
I’m here to tell you, though - if you’re going to avoid a reliable and well-established centralized exchange platform, and turn towards a DEX alternative, it’s absolutely crucial that you use a reliable cryptocurrency wallet.
DEXs are prone to various security breaches and regulatory issues - this is old news. Custodial decentralized platforms are even more dangerous, though - the individuals behind the exchange could simply run off with your assets one day, and there would be no one to point a finger at, or blame.
When looking at different crypto wallets, you’ll quickly notice that, same as with the best decentralized exchanges, there are multiple options to choose from. Some of them are much better than others, though - if you want the best possible security for your assets, you need to look at the hardware wallet industry.
Here, the Ledger Nano X and the Trezor Model T will be your best choices. Both of the wallets in question are leaders on the market, for practically the same reason - they are top-tier choices for anyone who’s concerned about the security of their coins.
Ledger is often regarded as having made the best functionality and design choices out of all the different hardware wallets out there. The Nano X supports a wide list of different coins and tokens, especially as far as Ethereum’s concerned - if you have some specific ERC-20 token that you’re interested in, chances are that you’ll be able to store it on the Nano X.
Trezor, on the other hand, focuses firmly on the security of its users’ assets. The Model T supports far fewer coins and tokens than Ledger’s Nano X, but the wallet is still sturdy, well-made, and offers top-tier security features.
Sure, you could also choose to go with a software wallet, or even keep your cryptos in a centralized exchange, such as Coinbase or Binance. However, hardware wallets are always going to be the best choice, no matter the situation.
Conclusions
With the list of the best decentralized exchanges covered and discussed, what’s the conclusion here - are DEXs worth using, in the first place?
Well, if you’ve made it this far, chances are that you’re a fan of all-things-decentralized, and have found yourself a proper DeFi exchange from the list above.
That being said, though, if you’re still on the edge, do note that, in many cases, you’re going to be better off using a centralized cryptocurrency exchange platform, such as Binance or Coinbase.
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Table: Some general information about the Binance and Coinbase cryptocurrency exchanges
There are many reasons why that’s the case, too. Centralized exchanges are safer, tend to comply with regulations, and are often simpler to navigate through. Unlike with a decentralized exchange, for example, you’ll have no issues with submitting your tax information if you’re using a centralized platform!
If you're still adamant about using the best decentralized crypto exchange, though, do make sure to pair it with a top-tier crypto wallet. Your best options are either Ledger or Trezor - check them out!
With that said, I wish you the best of luck with all of your trading ventures to come!
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