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The market for decentralised exchanges is growing at a rapid pace, with new players entering the fray and old DEXs going through extensive updates.
Due to fierce competition, DEXs will come and go which can make it hard to keep up with the latest developments. For that reason, here is today’s overview of the top 5 most promising up-and-coming decentralised exchanges.
0x Project (Ethereum blockchain)
The 0x Project is actually not a DEX, but rather a platform with an open protocol that serves as a base for many different decentralised exchanges to establish themselves on. By using their native ZRX token, they are providing the participating DEXs with a shared liquidity pool which means they can achieve much greater liquidity than what they could achieve on their own. Participating exchanges include Radar Relay, EthFinex, Paradex and Ocean X.
The 0x system combines off- and on-chain designs, maintaining the orderbook off-chain and executing trades on-chain. In fact, anyone can maintain an orderbook for the purpose of discovering demand and supply, and develop their own niche business models like margin trading specialists Dydx and Lendroid have done.
SparkDEX (Bitshares blockchain)
Launched in 2018, our very own SparkDEX was the first Bitshares portal in Hong Kong that served as the BTC and ETH gateway to the world’s leading decentralised exchange. Tying the DEX to our crypto remittances platform and incentive token Zephyr, trading fiat-pegged stablecoins is baked into the SparkDEX.
In contrast to many of the older DEXs – not on this list of up-and-coming DEXs – the SparkDEX provides an exchange-like user interface and experience that advanced traders are used to. Users on the DEX trade peer-to-peer at flat 0.2% transaction fees, withdraw and deposit without limits, and signing up does not involve any intrusive identity verification processes.
Basic requirements that any DEX should meet, in our opinion.
EtherDelta (Ethereum blockchain)
EtherDelta is one of the most popular decentralised exchanges for trading Ethereum based tokens. While its reputation took a severe blow in 2017 due to a DNS hijacking which made it necessary to suspend all trading activities, it has since recovered and is in full swing once again. However, on the homepage they do still remind users what the official URL for EtherDelta is and advise bookmarking it.
As a true DEX should, traders never give up custody of their own tokens. The system uses an off-chain orderbook together with a smart contract that acts as a decentralised trading engine to facilitate trade executions. Once both trading parties have deposited their funds into the smart contract, the tokens are automatically swapped between buyer and seller so that each party can withdraw the traded tokens into their Ethereum wallets. The only fees incurred are the Ethereum transaction fees and a 0.3% transaction fee for buyers.
Kyber Network (Ethereum blockchain)
The Kyber Network has a unique take on exchanges and runs without maintaining an orderbook. Buy and sell orders made by traders are immediately taken by the Kyber Network smart contract that uses a number of “reserve managers”. Reserve managers are registered with the Kyber Network, and hold a reserve of many different tokens for which they publish their exchange rate to the Kyber smart contract.
The network relies on the competition between reserve managers and traders using arbitrage opportunities to keep exchange rates set by the reserve managers at competitive rates. That way the project aims to provide its members with the best value when the network’s smart contract fulfils a buy order at the cheapest rate or a sell order at the highest rate.
Waves (Waves blockchain)
Built on its own blockchain, the Waves DEX is a particular favourite in the Russian ICO market, where its team is based. Ever heard of NEO being the Chinese Ethereum? Well, Waves is the Russian version of that.
Like on the Ethereum platform, Waves allows users to create their own tokens, for a variety of purposes such as funding business growth through an ICO, which are then made available on the Waves DEX for trading. They too have a clean and familiar user interface and have advanced trading mechanisms such as the Leased Point of Stake: enabling users to lend Wave tokens to a node in return for a planned pay out.
Before you decide which DEX to use for trading crypto, make sure the system you are using is truly decentralised and provides all the benefits that go with it. Some DEXs seem to fit the bill, but upon closer inspection turn out to be centralised exchanges masquerading as DEXs. The DeCe Scale illustrates this concept of what we call a pseudo-DEX.