Trade without complications or requirements. This is the proposal of decentralized exchanges (DEX) that work through smart contracts created in a blockchain, and not through an order book.
As with centralized exchanges, to buy and sell on a DEX, users must deposit funds to have a balance to trade cryptoactives. Every operation takes place without intermediaries, through the automated execution of protocols, with transactions registered in blockchain. Know the operation of some of them.
Developed by Uniswap Labs, the Uniswap protocol is a system designed for exchanging cryptocurrencies (ERC-20 Tokens) on the Ethereum network. It has a set of smart contracts designed to prioritize user safety, without the need for intermediaries.
There are three versions of the protocol, V1 and V2 being open source and licensed under the GPL (public license). V3 is open source, with minor modifications. Together, the three add up to more than 30% share in the segment. V1, which on August 18, 2021 was ranked number one among the top crypto brokers, according to CoinMarketCap, had more than $2 billion transactions in a 24-hour period.
Like other decentralized exchanges, the difference between Uniswap and traditional exchanges is the automated market maker system (Automated Market Maker, or AMM), which replaces the order book.
AMM replaces buy and sell orders with a liquidity pool of two assets, which are valued against each other. That is, when one asset is traded for the other, the relative price of both changes and a new market rate is determined. In this dynamic, buyers or sellers negotiate directly with the pool.
In addition, Uniswap is fully public with no restrictions such as geographic location, asset status or age, among others.
Uniswap’s native token is UNI, whose maximum supply is 1 billion units. Currently, 587 million of them are already in circulation.
With transaction volume of more than US$1.1 billion in 24 hours (as of 8/18/2021), PancakeSwap was currently in second place, according to CoinMarketCap.
The exchange, created in September 2020 through a fork of Uniswap code, was built on the Binance Smart Chain, which made it the premier off-network platform for Ethereum.
It also uses AMM, dispensing with the order book and allowing transactions through liquidity pools, just like Uniswap, but at lower rates than its competitor.
Its native token is CAKE, which, although it has no supply limit, has mechanisms for burning units, in order to keep the supply balanced.
1inch Liquidity Protocol
The exchange creator of the 1inch token is a decentralized transaction aggregator (DEX) that connects multiple DEXs on a single platform. This allows users to find the most efficient trading options available across platforms.
The efficiency of this process comes from the DEX aggregators, which eliminate the need for manual verification and are its great advantage.
These aggregators are able to offer users better token trading rates than any single DEX in the shortest possible time. In addition, 1inch also released Mooniswap, their own AMM.
Raydium is an automated market maker (AMM) and Solana blockchain-based liquidity provider for the decentralized Serum exchange (DEX). But unlike other AMMs, it provides chain liquidity to a central limit order book, which means that deposited funds are converted into orders, which stay in Serum’s order books. This gives Raydium access to Serum’s entire order flow as well as its existing liquidity.
Its native token is RAY, which was released in February 2021 with 555 million units. 34% of them will be released as mining incentives over a three-year period. Another 30% is reserved for partnerships and expansion of the Raydium ecosystem.
Serum, created by FTX in August 2020, is one of the full-featured decentralized exchanges built on the blockchain Solana. Its popularity stems from its low cost and high speed in operations.
The network was started with two tokens: a discount and staking token, with limited governance rights, called Serum (SRM), and another that allows even more trading discounts called MegaSerum (MSRM). In early 2021, it announced four new tokens with solutions such as maps and streaming services. Today, Serum is a decentralized exchange and crypto ecosystem.
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