4 Decentralized Cryptocurrency Exchanges to Use in 2022
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In our previous article on Medium, we explained what a cryptocurrency exchange was and its benefits.
If you are interested in trading crypto, read on to find out about an alternative to Coinbase, Gemini, and other standard crypto-exchanges — decentralized exchanges!
Decentralized exchanges represent a very important of the crypto-world because it operates very closely to what Satoshi Nakamoto envisioned for the future when he created bitcoin.
Why are decentralized exchanges important?
The first cryptocurrency Bitcoin was known for its peer-to-peer functionality. This meant when it came to transactions, no intermediaries or organizations would come between you and your money.
Cryptocurrency at the time of Bitcoin’s creation was revolutionary not just because it was a new kind of currency; but because Bitcoin was decentralized and not in the government’s control.
12 years later after Bitcoin, the cryptocurrency finds itself treated the same way as stocks, fiat currency and bonds are in centralized exchanges. Investors who want to participate in a non-traditional form of trading will find decentralized exchanges a viable option.
Here are three benefits of trading in a decentralized exchange
1.) You have control over your own crypto
Most cryptocurrency exchanges store your tokens (or money) in insured accounts and cold wallets, like a typical stock exchange would. When you trade cryptocurrency with a centralized exchange, you run a risk of losing your money due to security breaches.
If you’re comfortable with handling your own crypto, decentralized exchanges do not hold your tokens. You can usually only trade on a DEX from your own private wallet. Each wallet comes with a set of private keys that only you have access to.
2.) Decentralized exchanges do not need verification for trading
Another reason people prefer using decentralized exchanges; transactions are completely anonymous. When you use a centralized exchange, you will have to provide documents like identification, source of funds and questionnaire forms. Decentralized exchanges have no such requirements. You will be able to trade anonymously.
3.) Intermediaries — you won’t find any in a decentralized exchange
Decentralized exchanges do not need intermediaries for transactions to happen. This is because they use smart contracts, a technology that facilitates self-automated trading. This means you will not have to worry about the authenticity of an exchange — just the person you are trading with.
Now that you know what a decentralized exchange can do for you, let us look at….
4 decentralized exchanges to use in 2022
The largest decentralized exchange in terms of market cap, dxdy uses the order book system; the buy and sell orders are listed in records which is then used to determine market price. The order book system is the same concept that standard and centralized exchanges use for trading.
Visit the dxdy website and you can learn much more about their product line which
includes perpetuals, the place to trade your tokens or Hedgies, the exchange’s NFT collection of 4200 collectibles.
· Market share: 0.0022%
· Launch date: Apr 2019
· 24 h trading volume: $1,641,942,254
This decentralized exchange is known for its AMM technology. AMM technology is the ability to provide liquidity by having investors compensated for staking their token in the system.
In a typical centralized exchange, an investor’s money is tied up in the exchange in some way or the other. Decentralized markets don’t hold your money, so illiquidity is a main concern because it can result in slippage. Slippage is when large orders of a stock create huge differences in a token’s price from when you ordered it to when you buy or sell it. Traders can be more assured because with AMM technology, there’s better chances of stable prices.
· Market share: 0.0004%
· Launch date: Nov 2018
· 24-hour trading volume: $312,104,293
Created as a fork from UniSwap, Sushi swap uses AMM technology as well. In addition to compensating investors who provided liquidity with a portion of the trading fee, SushiSwap also offered its own token. UniSwap had to add its own token afterwards to remain competitive.
· Market share: 0.0002%
· Launch Date: Sep 2020
· 24-hour trading volume: $162,880,439
This exchange comes with the lowest fees compared to other decentralized exchanges. The transaction fee is 0.1 percent, out of which investors can earn up to 90% through transaction fee mining.
The exchange also offers up to $10 million in support for any project using the BNB chain, the system on which the Binance token operates. You can find the program on BiSwap’s website at Biswap — Freedom of exchange
· Market share: 0.0006%
· Launch date: May 2021
· 24-hour trading volume: $490,375,773