Decentralized exchanges (DEX) play an increasingly big roll in the cryptocurrency world, fixing the trust and security issues that have always been associated with third party services like cryptocurrency exchanges. Given the initial crypto ethos of decentralization, traditional exchanges have become the single point of failure that the creation of blockchain technology itself aimed to fix.
Thanks to the ingenuity and hard work of the cryptocurrency development community, we now have tools to trade cryptos in the same way we send and receive them: Without the need to trust or rely on any middlemen. Decentralized exchanges do not require the user to entrust their funds to a third party, thus fixing the problem associated with hacks, scams, and bankruptcy.
Although decentralized exchanges are a fairly new concept, there are multiple alternatives out there, so it’s important to choose the best DEX crypto can offer. We have compiled a list of five decentralized exchanges that are both safe and convenient. Take a look at our picks and let us know if we missed any! (this list is not organized in any specific order)
1 - DEx.top
DEx.top is a decentralized Ethereum and ECR-20 exchange incubated by Bitmain, one of the most popular mining companies in the space. Despite being a fairly new project, DEx.top features a dual-ledger system that ensures that trades are almost instant while still maintaining the ownership and transfer of funds completely decentralized.
DEx.top’s two-ledger architecture leverages a centralized ledger that is responsible for matching orders on the exchange with a smart contract ledger (Ethereum) that then transfers the funds accordingly. This clever system allows DEx.top to take the best of both worlds, combining the speed and convenience that centralized services provide and the financial control and security that can only be found through blockchain technology.
We have a great guide that shows how to use the DEx.top exchange step-by-step. Click here to check it out.
2 - OpenLedger
Based on the Bitshares network, OpenDex is an improved version of the Open Ledger exchange. It offers a fully decentralized trading system in which all transactions are processed by the Bitshares (BTS) Blockchain which can process up to 100,000 transactions per second (TPS)
OpenDex features a trading fee of 0.2% and a number of security measures that ensure your account remains safe (Decentralization, advanced encryption, 2FA, cold storage, rigorous access management). Additionally, offers over 50 coins, including Bitcoin, Ethereum, Litecoin, Dash and many others. It also allows users to trade fiat through stable coins like bitUSD or bitCNY
Although OpenDex allows users to trade assets that are not housed within the BTS blockchain, it does so through the use of proxy tokens. Users deposit their preferred coins which are then converted into Bitshares-based assets and deposited in the user’s associated Bitshares wallet/account. When withdrawing, these BTS assets are converted back into the original currency and sent to the user.
3 - Waves DEX
Based on the Waves Blockchain, the Waves DEX focuses on simplicity and convenience, featuring an intuitive and familiar interface that most users will have no trouble navigating. Available for Windows, Mac OS, Linux and web, the Waves Client is both a wallet and a decentralized exchange with other advantages like easy token issuance and leasing.
Like OpenDex, the Waves Decentralized Exchange also leverages proxy tokens to provide decentralized trading of cryptos like BTC, ETH and others as well as fiat.
4 - Bisq
Bisq, formerly known as Bitsquare, is the first decentralized exchange ever and has been around since 2014. Being the only of its kind so far, Bisq allows users to trade cryptocurrencies with fiat pairs like EUR, USD without the use of any proxy tokens or centralized/third party gateways. This feat is achieved through a clever system of multi-signature escrows and decentralized moderators.
To put it simply, once a sell and buy order are matched, the person selling the cryptocurrency deposits the coin into an 2-out-of-3 multi-signature escrow in which the key holders are the buyer, seller and moderator. Once this is done, the person selling fiat must transfer the funds through the designated payment method (bank transfer, etc) and sign off on a transaction from the escrow wallet into his own. Once the person selling fiat receives the funds, he then signs off on this transaction as well completing the 2-out-of-3 signature requirement.
If there are any issues with the transaction, the moderator then steps in and signs off on a transaction to either the seller or buyer, according to the proof provided by both parties. This same moderator receives a small security deposit previously provided by both parties, ensuring that they are incentivized to provide the best possible service.
Although the description above is grossly simplified, we have a great guide that covers both how this process works in greater details as well as how to use the exchange. Read guide here.
5 - IDEXLike DEx.top, the first item on our list, IDEX is also a decentralized Ethereum exchange features Ether and ERC-20 token trading. IDEX boasts some advanced features like limit and market orders, gas-free cancels, and the ability to fill many trade orders at once. IDEX has a 0.2% taker fee and a 0.1% maker fee and a standard gas-fee is also deducted.
IDEX ensures users' funds are kept in a trustless matter in a smart contract that is responsible both for storage and also for the trade settlements. While the trade settlement is done via the smart contract, the order matching process is centralized, allowing balances to be updated in real-time, while still allowing the trading itself to be decentralized.
IDEX also features its own reward token, AURA. This is an ERC-20 token that is used to reward traders for each trade executed (50% goes to takers; 50% goes to makers). 20% of the total 1 billion AURA supply has been allocated for this reward program.