Top Decentralized Exchange (DEX)Platforms in 2024 — Ultimate Guide for Startups
The primary element acting as the core of decentralized exchanges is smart contracts. Smart contracts play a major role in any automation process in a decentralized platform. They facilitate the execution of the required action when pre-determined conditions are matched. Hence, decentralized platforms do not require an intermediary to regulate transactions between users and are highly secure.
Also, Decentralized applications have now extended their presence to the financial sector. For users who would like to trade or swap Cryptocurrencies without a commission fee, the ideal way would be to approach a DEX platform. Apart from that, DEX platforms enhance the anonymity of users. Before delving deep into more about DEX, here is a simple overview of it.
What are Decentralized Exchange Platforms?
Decentralized exchanges are cryptocurrency-swapping platforms for users who wish to buy, sell, or trade Cryptos without the intervention of a centralized authority. These exchanges are being ultimately developed to provide users with more control of their assets. Additionally, the DEX platform offers the need for trust to users in terms of security. These exchanges can be grouped into two types
AMM based DEX
Order book-based DEX
The first type, AMM or Automated Market maker is a protocol system designed to solve the liquidity problem. Here, the trade doesn’t have to take place between two users. Instead, the user trades against a pool of tokens which has many advantages. The users don’t have to wait to match a seller and can process quick transactions regularly. The important thing to note here is the liquidity pool feature which has an algorithm set to determine token price. Whenever a trader provides liquidity to the platform, he gets rewards as tokens. The best example of an AMM-based DEX is Pancakeswap.
The other type, the order book-based system operates quite similarly to the centralized exchanges except for the involvement of smart contracts. The usual process of matching and execution takes place in the DEX order book in an automated way. The order book contains the entire information on the token prices along with graphs and charts to determine the variations. The best example of an order book-based DEX is dYdX.
A new type of DEX, named DEX aggregator has made rounds too. These platforms have different sources of liquidity from various providers and also help to round up the best swap prices for the traders. The best example of a DEX aggregator is Paraswap, a trending platform in the market.
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