Decentralized exchanges or DEXs enable users to buy and sell cryptocurrencies with each other without the need for brokers. Users associate their crypto wallet with a DEX, select the crypto trading pair of their choice, enter the amount and press the swap button.
In the first two editions of DeFi Deep Dive, we learned about the DeFi blockchain and the top five DeFi asset valuations.
In this edition, let’s discuss the top five decentralized exchanges. These are:
- Curve (CRV)
- Uniswap (UNI)
- Pancake Swap (Cake)
- Balancer (BAL)
Curve is a decentralized exchange liquid pool of etherium. It is specially designed for:
- Highly efficient, low slippage stable currency business
- Fee income for low risk, liquidity providers
Slipage is the difference between the expected price of a trade and the price at which the trade is performed.
Fees and other parameters are determined by the Curve Decentralized Autonomous Agency (DAO). All pool fees are 0.04 percent. Half of the fee goes to liquidators and the other half to DAO members.
- Total value locked up: $ 21 billion (approximately Rs. 1,58,569.45 crore)
- Mcap / TVL ratio: 0.06
Uniswap is a decentralized protocol for automated liquidity provision in Ethereum.
A big problem with regular exchange liquid resources is the “high spread”. Uniswap solves this problem by enabling everyone to become a market maker. Uniswap suffers high slippage for large orders because the price paid increases with increasing quantity.
- Total value locked up: $ 9 billion (approximately Rs. 67,958.33 crore)
- Mcap / TVL ratio: 0.8
Pancake Swap (Cake)
PancakeSwap is an automated market maker and yield farm of Binance Smart Chain (BSC). Although PancakeSwap is a fork of SushiSwap, it runs on BSC because it enables cheap and fast transactions.
PancakeSwap also offers yield farming, lotteries, and early farm offerings.
- Total value locked up: 7.7 billion (approximately Rs. 58,142.13 crore)
- Mcap / TVL ratio: 0.4
SushiSwap is a decentralized protocol for providing automated liquidation in Ethereum. It is a decentralized exchange and a decentralized debt market. It enables harvesting machines and stacking derivatives. Towards the end of 2020, Yearn.finance and SushiSwap announced a merger under which they would share development resources, but retain separate tokens and governance.
- Total value locked up: 5.5 billion (approximately Rs. 41,530.09 crore)
- MCap / TVL ratio: 0.2
Balancer is a non-custodial automated portfolio manager and trading platform. In a conventional index fund, the investor pays a portfolio manager a fee to balance the portfolio. In Balancer, investors collect fees from traders who balance their portfolios by pursuing arbitration opportunities.
- Total value locked up: $ 3 billion (approximately Rs. 22,652.78 crore)
- Mcap / TVL ratio: 0.05
- Statistics as of 10 December 2021 and closed round
- Source: CoinMarketCap, Messari, Future Money Wallet
- TVL = Total value locked
- Mcap = market capitalization
This is the third in a series of articles exploring DeFi, more to come next week.
Rohas Nagpal is the author of Future Money Playbook and chief blockchain architect for the Wrap Resources project. He is also an amateur boxer and a retired hacker. You can follow him on LinkedIn.
Cryptocurrency is an unregulated digital currency, with no legal tender and is subject to market risk. The information contained in the article is not intended to constitute financial advice, trading advice or any kind of advice or recommendation provided or approved by NDTV. NDTV will not be liable for any loss arising out of any investment based on any perceived recommendations, forecasts or other information contained in the article.