5 Best Decentralized Exchanges in DeFi (2023)

When it comes to exchanging crypto, everyone uses centralized exchanges like Binance or Coinbase largely due to fiat conversion and ease of use. Despite all the benefits, there is always the risk of losing your funds in the event the exchange gets hacked.

To solve this massive issue, decentralized exchanges (DEXs) allow users to participate in trades while holding their private keys. As we have heard the popular phrase “Not your keys, not your coins”. That’s why many people hold their crypto in a cold wallet for safety.

Here are the Best Decentralized exchanges:

1. Uniswap

Uniswap is one of the most popular decentralized exchange (DEX) on ethereum. It allows users to swap between ERC20 tokens and pairs.

Also, on uniswap, anyone can become a liquidity provider for a pool by depositing an equivalent dollar value of each token in return for UNI tokens in the pool.

For example, if we want to provide liquidity for ETH-DAI, we can add 1 eth worth of DAI but also need to add 1 eth. In return whenever someone transacts on that pair, we will earn a fee in UNI.

Pros

• User-friendly interface.
• It has a completely transparent system.
• Supports ERC-20 tokens and pairs for trading
• Instant token listing.

Cons

• Only ETH tokens are available for trading

2. PancakeSwap

PancakeSwap is the newest Defi app / AMM that allows users to provide liquidity, exchange tokens, and engage in farming.

PancakeSwap is built on Binance Smart Chain. It is the Uniswap of the BSC network because currently, PancakeSwap has the largest volume and number of users on BSC.

Pros

• Binance Smart Chain transaction fees can cost just a few pennies
• User-friendly interface.

Cons

• A steep learning curve.
• Binance is not completely decentralized.
• Pancakeswap has suffered a DNS attack.

3. 1inch

The 1inch exchange is a DEX aggregator. 1inch provides the best possible exchange rate by splitting the order among several DEXs and private liquidity providers. Currently, it supports over 25 liquidity sources.

By default, smart contracts can’t access your ERC-20 tokens, and every single time a user has to approve the transaction manually which costs a fee. If Eth gas fees are high, you can pay 20-30 dollars for a single trade. To reduce these fees, 1inch has a feature called Infinity Unlock which allows users to permit its smart contract to spend their crypto.

Also, 1inch provides the ability to create limit orders, which is great for advanced users.

Pros

• User-friendly interface.
• No trading, deposit, or withdrawal fees.
• Users can place limit orders.
• 1inch Liquidity Protocol allows users to yield farm.
• Both ETH and BSC tokens available

Cons

• Although the “Infinity Unlock” feature is a great way to save on transaction fees and time but could potentially be a point of attack in the future.

4. Matcha

Matcha is a DEX aggregator built by 0x Protocol. To leverage liquidity, it usages the 0x Mesh and 0x API. And, gathers price information from Uniswap, Kyber, Oasis, etc.

Due to the price movement, sometimes users can face positive slippage in their trades. Unlike 1inch, Matcha always transfers positive differences to the userwhich can be extremely useful if you trade a lot on DEXs.

Pros:

• Clean and user-friendly interface.
• Users can place limit orders.
• No platform fees for trades.
• transfers positive differences to the user.
• Both ETH and BSC tokens available

Cons:

• It has different URLs for ETH and BSC for trading.

5. Bancor

The Bancor Network allows traders to swap ERC-20 and EOS tokens seamlessly. Currently, the network works on ethereum and EOS blockchain but it is designed to be interoperable with additional blockchains.

There are more than 10000 token pairs available to trade via Bancor wallet. Unlike other platforms, Bancor allows users to become liquidity providers for a pool by depositing only one of the tokens.

Pros

• Easy to use platform.
• Liquid providers can deposit only one token.
• Users can place limit orders.

Cons

• Gas prices are high