Top 5 DeFi Exchanges in the Market
DeFi exchanges (DEXs) are online platforms that facilitate transactions between cryptocurrency sellers and buyers. The transition from fiat finance to crypto finance is relatively new and requires solid solutions to boom. These groundbreaking crypto platforms have gained traction from across the world and played an important role in fueling the ongoing DeFi movement.
Some of the unique features of DeFi exchanges include:
They are non-custodial exchanges, which essentially means that the ownership of the underlying assets is never annulled.
Middlemen or intermediaries not required for the transactions.
Low trading fees.
Universally accessible. Requires little to no registration and verification.
Non-intrusive. User's data or background information is not collected. They just have to connect their wallet with the exchange offering complete privacy.
Let's take a look at some of the DeFi exchanges currently trending in the market.
Uniswap is one of the earliest decentralized protocols for automated liquidity provision on Ethereum. By employing smart contracts, it acts as a decentralized cryptocurrency exchange to swap or facilitate automated transactions between cryptocurrency tokens on the Ethereum blockchain. Currently, Uniswap exchange is the largest decentralized exchange and ranks fourth among the cryptocurrency exchanges in the world with an average daily trading volume of $220 million.
However, Uniswap comes with its own set of limitations.
The exchange rose to prominence within a few months of launching owing to the prospective Uniswap vision. But it faced a minor setback when the idea of offering decentralized community ownership via governance tokens became a necessity. The core design of Uniswap required some alteration for the full-fledged adoption of decentralized liquidity pools. Uniswap launched its native protocol token, UNI, to overcome the downfall. We have to wait and see how UNI tokens add to the efficiency of Uniswap pools.
Launched in 2020 with an ambitious vision of reviving Uniswap, SushiSwap is a community-run automated market-making (AMM) decentralized exchange (DEX) that runs on the Ethereum blockchain. For any given pair of tokens, SushiSwap creates markets using smart contracts. What set apart SushiSwap from its rival, Uniswap, was the initiatives for better engagement on the platform. This was made possible by offering rewards to network participants in the native token on the platform, SUSHI tokens. SushiSwap gave its predecessor a run for its money by integrating additional AMM features and played a huge role in making the DeFi movement a rage in 2020.
SushiSwap did improve the features of its parent protocol Uniswap and came to the forefront. Along with offering rewards and the power for governance through native tokens, this was made possible through the reduced commission charges for transactions. SushiSwap charges 0.3% commission for transactions made through its liquidity pools. Users are paid a portion of these fees back as SUSHI tokens.
1Inch Exchange is a DeFi exchange (DEX) aggregator. The platform sources liquidity from a number of different exchanges to limit the slippages on large orders. Since 1inch accumulates data from different exchanges at one place, users don't have to rummage all across the internet for the best prices.
1inch follows a multi-routing procedure called split trade to route swaps through more than one platform. While most of these happen on Uniswap, a small percentage happens on Balancer depending on their rates. 1Inch exchange displays the best deal for their swaps in the dashboard. It also offers users the feature to hide exchanges they don't want to trade with by simply clicking on the toggle button. In addition to swapping, users can move coins between different liquidity pools, trade via limit orders, deposit funds into lending protocols, and more on 1inch Exchange.
Kyber Network aggregates liquidity to enable speedy swaps for ether and ERC-20 tokens through its diverse set of liquidity pools called Reserves, which are smart contracts with a pool of funds. The initial coin offering of Kyber Network was in 2017. The differences between buying and selling prices are calculated to make money. Different parties control the Reserves with different prices and levels of funding. Rather than relying on order books to match buyers and sellers for the best deals, Kyber Network scans through the Reserves.
Kyber Network Reserve models are built in two ways:
For a one time deployment like the Uniswap V2 Bridge.
For any developer to deploy when they want to provide liquidity on Kyber like the FPR or APR.
The native token on Kyber Network is KNC (Kyber Network Crystals), an ERC20 token, which can be stored in any wallet with ERC20 support. It is used for the reward system and governance of the ecosystem.
One of the latest liquidity pool platforms to fortify the Uniswap protocol, KingSwap is a promising venture offering swapping, staking, and trading opportunities. KingSwap added community-oriented blockchain features to the protocol to make it more relevant for the times to come. Features like pool rewards and network effects are introduced to the protocol bringing more people to the world of decentralized transactions.
$KING tokens, the native tokens on KingSwap, are designed based on the High Yield Staking LP Token Model. They are distributed as rewards for liquidity mining and allow holders to participate and voice their opinions in the governance of the platform. The total supply of $KING tokens stands at 1 billion. The best part is the per-block rewards rate, which is set at 10,000 tokens and will be minted per block for the first 100,000 blocks. That is, during the hyper-yield pre-migration phase, a large portion is rewarded to early adopters and liquidity providers.
Another factor that sets KingSwap apart from counterparts is gamification to trigger the mass adoption of DeFi. The platform facilitates staking of KingSwap NFTs. Users can earn higher yields along with limited-edition digital collectables, tradable on OpenSea and Rarible using NFTs.
In the coming months, we will see more DeFi exchanges flooding the market than ever owing to the buzz around DeFi and cryptocurrencies. To stand out, these platforms will have to provide users with the benefits of a better price curve, contributor rewards, and fiat off-ramp improvements. KingSwap can be rightfully regarded as a better evolution of Uniswap for efficiently offering the above features. Strategies like pool rewards, incentives, and gamification with better usability have also won the attention of traders. Learn more about KingSwap here.