Welcome to another article from the Run The Chain Crypto Classroom. Today we’ll be discussing Top 5 DEX in the web3 space. The creation of cryptocurrencies is based on the idea that no central body is necessary for a financial system. Crypto is built on the concept that banks and governments can be replaced by a network of nodes and so, transfer ownership from these bodies to the people participating in the economy.
However, the creation of this network didn’t decentralize everything. Trading was still an issue as it required a central body (ie. an exchange) to manage an order book and allow people to complete trades. With this in mind, it became necessary for the crypto community to create a protocol that allowed users to trade different currencies without the need for this centralized exchange. Thus, the decentralized exchange was born.
What Is A Decentralized Exchange?
A decentralized exchange (DEX) is a trustless exchange that doesn’t require a central body. It generally uses what we call an automated market maker (AMM) in place of an order book. This allows traders to trade directly with one another through a smart contract and bypasses the need for a middleman. An AMM requires investors to put an equal value of both tokens involved in the trade into something called a liquidity pool.
People looking to trade a token will then input the token they’re looking to sell into the pool and receive back the token they wish to purchase. The pool will then adjust the price of each token so that an identical value of each token is still contained within it. Meanwhile, those who are staking their tokens in the pool will receive a passive income from each transaction.
There are different ways to create a decentralized exchange but the most popular is the AMM. It creates a decentralized eco-system but also gives consistent liquidity, even to tokens that do not have a high market capitalization.
Decentralized exchanges make up the backbone of the decentralized ecosystem. Unlike centralized exchanges, which require approval before a token is approved, DEXes grant unlimited access from developers to investors. This is why it’s so important to be up to speed on DEXes if you want to truly enter the crypto space.
Now, we’re going to look at five of the biggest DEXes on five of the biggest chains.
ETH: Uniswap ($UNI)
Uniswap is the largest decentralized exchange in all of crypto. Built on the second biggest crypto network (after Bitcoin), Ethereum, it currently has a daily transaction volume in excess of $1.5 billion. Although many traders take issue with high Ethereum fees on Uniswap, it has more than 1.5 million total users. While Ethereum remains the home of the biggest decentralized protocols, Uniswap will stay the king of the DEXes.
AVAX: Trader Joe ($JOE)
Launched in 2020, the Avalanche Network (AVAX) has seen a meteoric rise over the last year and a half. Trader Joe, the biggest exchange on the network, currently sees a daily trading volume of approximately $200 million. AVAX’s success as a smart contract platform is also demonstrated by Trader Joe, which currently has nearly $1 billion worth of value locked on the exchange.
Fantom: SpookySwap ($BOO)
Fantom is a layer-one blockchain that uses a consensus layer to support the creation of multiple execution chains. This allows the creation of a fast, open source smart contract platform for DApps. Spooky Swap is the biggest swap on the chain facilitating investment in any of the projects built on Fantom. Daily there are nearly a quarter of a million transactions totalling more than $200 million on the exchange.
Solana: Serum ($SRM)
Unlike the other exchanges on this list, Serum is not an AMM. Instead, it is a portal through which many different DEXes (some of them AMMs) built on Solana are accessible. Serum contains an on-chain central limit order book that allows different exchanges to share liquidity. Because Serum serves as a hub for so many different exchange protocols on the Solana network, it is responsible for a gigantic daily trading volume of over $500 million.
NEAR: Trisolaris ($TRI)
NEAR is a layer-1, community run blockchain built for developers to eliminate the barriers to Web 3. Launched in 2020, it runs in conjunction with Ethereum, Polkadot and Cosmos and allows for the exchange of information between different blockchains. Trisolaris is the largest exchange on the network and allows traders access to projects on Near. Currently seeing a daily trading volume of just $15 million, we see Trisolaris as part of an emerging new ecosystem.
Understanding DEXes is crucial to any significant crypto investor. Being able to use them will open up a whole new array of investment opportunities. While this is not in the slightest way an exhaustive list. These exchanges are a great place to start your crypto journey.