DEXs are peer-to-peer (P2P) trading platforms that aim to diminish or do away with the need for centralized intermediaries by utilizing computerized smart contracts to carry out transactions. Once a rarity, decentralized exchanges (DEXs) are now ubiquitous and may be found on a wide range of blockchain networks. Different platforms can have varying degrees of sophistication regarding their infrastructure and overall design. The order books, liquidity pools, and other decentralized finance (DeFi) mechanisms offered by several crypto DEXs, such as aggregation tools for novel and experimental financial instruments, are all examples of DeFi developments. In this article, we’ll explore the variety of DEXs available and the features that set them apart.
Uniswap Crypto Dex
Uniswap is a forerunner in the DeFi industry and one of the largest decentralized exchanges by volume. Uniswap is a decentralized exchange that allows users to trade with one another through automated market makers (AMMs) and liquidity pools on the Ethereum blockchain. Tokens for trading on Uniswap are contributed by users and managed by AMMs, which are smart contracts. Uniswap’s AMM algorithm takes into account the supply and demand dynamics between the tokens in these liquidity pools to assist establish an effective price for the token during a deal. Tokens are supplied by liquidity providers (LPs) to Uniswap pools, and LPs get a fee for each transaction proportional to their pool share.
Uniswap unveiled its native governance token, UNI, in September 2020, allowing for increased participation and control from the community. Token holders in Uniswap have a say in the platform’s future by voting on proposed changes to the UNI token’s native project. The holders of UNI tokens can also use them to support growth-driven initiatives like liquidity mining pools, grants, collaborations, and other ways of increasing Uniswap’s accessibility.
GMX Crypto Dex
At present, GMX‘s multi-asset GLP pool supports trading in excess of $254 million. Users can borrow funds from a liquidity pool that includes BTC, ETH, USDC, DAI, USDT, FRAX, UNI, and LINK, rather than from a single corporation like many other leveraged trading services.
On the exchange, users can “go long” or “short,” or they can just swap tokens with one another. Speculators “go long” on an asset when they anticipate a rise in its value, and “go short” when they anticipate selling it at a lower price and repurchasing it at a higher one. Users of GMX have the option of using as little as 1.1x the size of their initial deposit in order to do a trade or as much as 30x in order to make a profit.
GMX is both a governance token and a utility token. Currently, it can be staked for a rate of interest of 22.95% on Arbitrum and 22.79% on Avalanche. Staking GMX can earn takers escrowed GMX (esGMX), multiplier points, and ETH or AVAX. Multiplier points reward long-term GMX stakes by increasing the interest rate on their holdings, while esGMX is a derivative that may be staked or redeemed for GMX over time. In addition, 30% of the fees collected from swap and leverage trading are converted to ETH (on Arbitrum) or AVAX (on Avalanche) and awarded to staked GMX holders.
Another feature of the GMX token is a reserve pool used to support a minimum exchange rate. It’s used to keep the GMX/ETH exchange rate stable by buying and burning GMX tokens and ensuring a steady supply of ETH rewards for staked GMX. Fees from trading on the GMX/ETH liquidity pair contribute to the fund’s growth; OlympusDAO bonds provide additional backing.
dydX Crypto Dex
dYdX is a DEX where you can buy, sell, and trade over 35 different cryptocurrencies in perpetuity, including Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), and Cardano (ADA) (ADA). Trading volume and market share wise, it is among the largest decentralized exchanges in the world.
Antonio Juliano, a businessman from California, started dYdX in August 2017. When it first opened its doors in July 2017, the exchange provided Ethereum layer-1 based margin trading, lending, and borrowing services for cryptocurrencies.
In August of 2021, the dYdX exchange introduced perpetual trading across margins. Cross-margin trading is a common way for traders to ride out periods of extreme market volatility without having to liquidate their positions.
The dYdX protocol was developed on top of Starkware’s zero-knowledge STARK Rollups and Ethereum’s smart contracts. The platform has redesigned its services three times to decentralize its components since it first entered the cryptosphere with a spot trading offering. Most of the dYdX exchange is based on trustless protocols, which can be freely extended by the public.
ApolloX Crypto Dex
ApolloX, a derivatives trading platform set to launch in 2021 as a combination of centralized (CEX) and decentralized (DEX) exchanges, provides a robust trading infrastructure, substantial liquidity, and extensive market depth for trading in perpetual futures. It’s the platform that allows broker partners to make money off of transaction fees as a percentage. The trading platform stated in 2022 that it would be switching to the decentralized ApolloX DAO.
Native support for DEXs and a brandable trading interface are only two of its many features. The exchange offers a very effective matching engine, solid security architecture, extensive API support, and the ability to pool and distribute liquidity. In June of 2022, the exchange had processed transactions totaling more than $160 billion. It features spot and futures trading, as well as a non-fungible token (NFT) lottery game, rankings, and trade bonuses.
Wallets, exchanges, asset management platforms, swap platforms, trading bot platforms, social trading platforms, media outlets, and institutional investors are all viable trading partners.
The Expansion Rate of Decentralized Markets
The total trade volume processed by DEXs in October 2021 was approximately $90 billion USD, with Uniswap and SushiSwap accounting for more than 80% of that total. Even though these two DEX platforms account for the vast majority of DEX trades, it is essential to be aware that each DEX protocol integrates AMMs in a somewhat different way, making them suitable for a wide range of users.
New protocols and supporting mechanisms for cryptocurrency exchanges are likely to increase at an ever-increasing rate as the industry develops. While the majority of DeFi transactions are still processed on the Ethereum network, the growth of DeFi infrastructure, such as DEXs, will proceed and spread to other blockchain networks in the future. All of these developments show that the DeFi market is developing and maturing.
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