10 Best Decentralized Exchanges (DEXs) in 2024

Decentralized exchanges (DEXs) offer an anonymous and non-custodial trading experience. No account is needed; connect a self-custody wallet and immediately swap cryptocurrencies.

Unlike centralized platforms, there’s little counterparty risk when trading on reputable DEXs. This is because smart contracts and decentralized liquidity pools execute trades. These automated processes ensure that trades are carried out securely and transparently, reducing the chance of fraud or default by any individual party.

But what are the best platforms for DEX trading in 2024? This guide reveals the leading DEXs for Bitcoin, Ethereum, Solana, and other popular networks. Read on to choose a reliable and secure DEX with low fees and a great user experience.

Best Decentralized Exchanges for 2024: Detailed Reviews and Analysis

Detailed reviews of the best decentralized exchanges can be found below. I explore everything DEX traders need to know, including supported chains and cryptocurrencies, fees, security, user-friendliness, and core features.

1. Best Wallet – The Overall Best DEX With Multi-Chain Trading and Non-Custodial Storage

Look no further than Best Wallet when selecting a DEX. In a nutshell, Best Wallet is primarily a non-custodial wallet that supports over 60 blockchain networks and thousands of tokens. This includes everything from XRP, Avalanche, and Bitcoin to Ethereum, Cardano, Solana, and Arbitrum.

That said, Best Wallet also comes pre-installed with a native DEX that connects to dozens of liquidity pools. This means Best Wallet secures the best available price for the cryptocurrencies you want to trade. What’s more, Best Wallet doesn’t charge commissions or markups. The quoted exchange rate is the price you pay. This ensures cost-effectiveness and transparency.

No account or personal information is needed — DEX trades are executed instantly via smart contracts. The purchased cryptocurrencies are immediately added to the wallet balance. Best Wallet comes as a mobile app for iOS and Android, although a desktop version will be launched soon. Other features include staking, portfolio management, and token analysis.

Pros

• The overall best decentralized exchange
• Backed by one of the best decentralized crypto wallets
• Supports thousands of tokens on over 60 networks
• Comes as a user-friendly app for iOS and Android
• Traders get the best prices via external liquidity pools

Cons

• The desktop version is still being developed
• Does offer perpetual futures

Visit Best Wallet

2. Exodus – Trade Thousands of Cryptocurrencies Directly From a Secure Self-Custody Wallet    

Exodus is a trusted self-custody wallet that also offers decentralized trading. It comes as a native app for iOS and Android, plus desktop software for Windows, Mac, and Linux. Exodus supports thousands of cryptocurrencies, ranging from Bitcoin and Solana to BNB, XRP, and Ethereum. Custom tokens can be added from over 50 blockchains.

Exodus’ DEX leverages the aggregator model, meaning it obtains prices from external liquidity pools. It takes seconds to trade cryptocurrencies and exchange rates are transparently displayed before proceeding. There’s no requirement to leave the wallet interface either. The purchased cryptocurrencies are transferred to the Exodus wallet balance.

Another benefit is that Exodus connects to Trezor, a leading hardware wallet. This offers an additional layer of security compared to other exchanges, especially for those trading large amounts. Alternatively, Exodus is also compatible with decentralized applications (dApps) so you can interact with standalone DEXs like Uniswap and Pancakeswap. This opens the doors to staking and other DeFi offerings.

Pros

• Trade and store thousands of crypto assets in one safe place
• Available on multiple device types and operating systems
• Prices are obtained from leading liquidity providers
• Connects with popular dApps from multiple networks
• Trusted by millions of traders since 2015

Cons

• It isn’t open source like other self-custody wallets
• Doesn’t come with multi-sig or 2FA security

Visit Exodus

3. AlphaX – One of the Best Options for Trading Leveraged Perpetual Futures 

AlphaX has revolutionized the DEX industry; it enables traders to speculate on perpetual futures while remaining on-chain. This means traders can buy and sell leveraged digital assets without using centralized order books. The leverage limit is 125x, converting to $125,000 for every $1,000 staked.

What’s more, AlphaX supports some of the best cryptocurrencies to buy, including large caps like Bitcoin, Solana, Ethereum, and Cardano. Decentralized perpetual futures are also offered on meme coins. This covers everything from FLOKI and Shiba Inu to Dogecoin. Unlike many decentralized exchanges, AlphaX offers comprehensive trading tools and analysis features.

For instance, traders can execute market, limit, and trigger orders. The pricing chart integrates with TradingView, covering drawing tools and over 100 technical indicators. AlphaX offers a fully anonymous and secure trading experience. Safety features include two-factor authentication (2FA) and on-chain transparency via layer-2 networks.

Pros

• The best DEX for trading perpetual futures
• Supports a huge range of markets
• Enables traders to go long or short
• Trade cryptocurrencies with 125x leverage
• Offers a private and anonymous experience

Cons

• Likely not suitable for inexperienced traders
• Doesn’t support options trading

Visit AlphaX

4. OKX – Trusted DEX and Bridge Aggregator Connecting to 400+ Liquidity Providers

OKX, the popular spot trading and derivative exchange, is also one of the best DEXs in the market. It operates an aggregator model, meaning it connects with over 400 external liquidity providers. Traders get the most competitive prices in real time. This almost always works out cheaper than using a standalone DEX platform.

What’s more, OKX has also developed a cross-chain bridge. This supports over 100 blockchain networks, ranging from Litecoin, Bitcoin Cash, and Ethereum to Cronos, Dogecoin, and Zcash. This makes cross-network swaps seamless and cost-effective. For instance, you can instantly swap BONK (on the Solana network) for Pepe (on Ethereum) — or Mochi (on Base) for BNB (Binance Smart Chain).

OKX doubles as a non-custodial wallet with MPC (Multi-Party Computation) security. It comes as desktop software for Windows and Mac and a mobile app for iOS and Android. Browser extensions for Chrome are also supported. OKX is also a great choice for DeFi (Decentralized Finance) features, including staking and liquidity farming.

Pros

• Connects with over 400 DEX liquidity providers
• The best available rates are sourced in real-time
• Offers a cross-chain bridge for over 100 networks
• Doubles up as a non-custodial wallet
• MPC security offers a safe user experience

Cons

• Suitable liquidity won’t always be available on micro-cap tokens
• Doesn’t offer a browser extension for Firefox

Visit OKX

5. Changelly – A Beginner-Friendly and Anonymous Exchange Supporting 500+ Cryptocurrencies   

Changelly is one of the top decentralized exchanges for beginners. It offers a simple user experience that will appeal to first-time DEX traders. It doesn’t leverage automated market makers (AMMs) like other DEXs. Instead, Changelly aggregates liquidity from centralized and decentralized platforms. This hybrid model often results in industry-leading pricing.

Moreover, Changelly supports over 500 cryptocurrencies. This includes some of the best altcoins, including Stellar, BNB, Dogecoin, Cardano, Ethereum, and Chainlink. Bitcoin, and a full range of stablecoin trading options, are also supported. Traders can swap cryptocurrencies on any compatible chain. This doesn’t require a bridging tool, meaning fees are super competitive.

Instead, cross-network trades are conducted manually via wallet transfers. For example, suppose you’re trading XRP for Litecoin. You’d transfer XRP to Changelly, and provide the receiving Litecoin wallet address. The Litecoin will be transferred to the wallet once Changelly receives the XRP. Trading commissions cost 0.25%.

Pros

• One of the best crypto swap sites for beginners
• Trade over 500 cryptocurrencies from multiple blockchains
• No additional fees when making cross-network swaps
• Transparent trading commission of 0.25%
• Obtains liquidity from over 20 trading platforms

Cons

• Trades can take up to 40 minutes to complete
• Lacks advanced analysis tools for seasoned traders

Visit Changelly

What is a Crypto DEX and How Do They Work?

Decentralized exchanges allow users to trade cryptocurrencies. However, unlike centralized exchanges, such as Binance and Coinbase, trades are executed via the blockchain network using decentralized protocols. This means traders can remain on-chain, and swaps are facilitated by smart contracts.

In turn, decentralized exchanges never hold client-owned cryptocurrencies, which removes the counterparty risk. For example, consider that FTX filed for bankruptcy in 2022. Billions of dollars in customer funds were subsequently mishandled, resulting in significant and life-changing losses. These risks aren’t prevalent when using a decentralized exchange.

The DEX process is as follows:

• First, users connect a private wallet to the decentralized exchange. This removes the need to open an account, provide any personal information, or complete a KYC verification process.
• Next, the user decides which cryptocurrencies they want to trade. For example, suppose the connected wallet holds Ethereum, and the user wants to purchase Shiba Inu. This would require the ETH/SHIB liquidity pool.
• Ethereum is immediately swapped for Shiba Inu, and the purchased tokens are immediately added to the connected wallet.
• The user disconnects their wallet from the decentralized exchange, and the trade is complete.

Not only are decentralized exchanges a safer alternative to centralized platforms, but they’re also a great way to invest in new cryptocurrencies. This is because newly launched tokens often begin trading on decentralized exchanges before they’re added to mainstream platforms.

What’s more, there are many types of decentralized exchanges in the market. Some platforms offer a native DEX, meaning trades are executed without requiring third-party liquidity pools. Instead, native DEXs use the Automated Market Maker (AMM) model, so prices are dynamically updated based on volume, market capitalization, and other data metrics.

Some decentralized exchanges use the aggregator model. This means they obtain cryptocurrencies from external liquidity pools. This often results in more competitive pricing, as pools are chosen based on real-time exchange rates. There are also decentralized exchanges that offer leveraged derivatives such as perpetual futures, delivery futures, and options.

Types of Decentralized Exchanges: Which Option is Best?

Let’s take a closer look at the different types of decentralized exchanges. This will help you choose the best DEX for your trading goals and experience level.

Native DEX

Some decentralized exchanges offer a native trading experience. Uniswap is a great example of an Ethereum exchange. Uniswap is built on the Ethereum blockchain, so it supports thousands of ERC-20 tokens. Anyone can provide Uniswap with liquidity, allowing investors to earn passive income on idle wallet balances.

For example, suppose an investor holds Ethereum and USDC. They would add equal amounts of ETH/USDC to the Uniswap liquidity pool. Whenever someone uses that liquidity pool to trade, the investor receives a small percentage of the trading fees.

DEX Aggregators

Another popular way to trade cryptocurrencies is via DEX aggregators. Some of the leading examples include Best Wallet, OKX, and Exodus. These platforms partner with hundreds of external liquidity providers, including native DEXs like Uniswap, PancakeSwap, Jupiter, and Raydium.

Users fill out the DEX trading form, selecting which cryptocurrencies they want to swap and the amount. The DEX aggregator will immediately evaluate the best exchange rates from its partnered liquidity providers.

Multiple providers can be used for the same transaction if this makes pricing more competitive. For example, suppose you want to swap $5,000 worth of BNB for Chainlink. The aggregator might obtain $3,000 from one DEX and $2,000 from another.

Order Book DEX

A newer breed of decentralized trading leverages the conventional order book system. However, unlike centralized exchanges, order books remain on-chain. This model is particularly useful for trading derivative products such as perpetuals.

AlphaX is a great example. It’s an on-chain DEX that supports leveraged futures. Traders can go long or short with leverage of up to 125x. No account needs to be opened; traders simply connect a self-custody wallet and begin placing orders.

Cross-Chain DEX

Cross-chain DEXs are another option to consider. These are decentralized exchanges that support multiple blockchain standards, meaning traders can convert one cryptocurrency for another, even if they operate on different networks.

• For example, suppose you want to swap Bonk for Shiba Inu.
• These meme coins operate on the Solana and Ethereum blockchains, respectively.
• Cross-chain DEXs facilitate trades via bridging tools.
• Everything happens behind the scenes, meaning the DEX connects with Solana and Ethereum simultaneously and swaps the required tokens.

This offers a smooth and seamless user experience.

Non-Custodial Exchange

Non-custodial exchanges offer a similar user experience to DEXs. However, the process is slightly different. Changelly is a great example. Although Changelly is a centralized platform that operates off-chain, it still offers a decentralized experience for traders.

There’s no requirement to register an account or provide any payment details. Instead, trades are conducted via manual wallet transfers. For instance, let’s say a trader wants to swap Bitcoin for Avalanche. Changelly generates a unique Bitcoin wallet address. The trader must transfer the coins and wait for the blockchain to verify the transaction.

Then, Changelly automatically transfers Avalanche to the trader’s wallet. Cryptocurrencies are obtained from over 20 liquidity providers, including centralized and decentralized platforms. This often results in industry-leading prices and spreads.

Ranking the Best Decentralized Crypto Exchanges: My Methodology

CoinGecko data shows that over 850 decentralized exchanges are currently active. This can make it challenging to choose the right DEX.

My methodology explored the most important metrics, including security, supported networks, fees, liquidity, and security. I discuss these factors in more detail below.

Type of DEX

Traders should initially determine the type of DEX they want to trade on. For example, one of the most common options is to use an aggregator DEX like Best Wallet. Traders frequently get the best exchange rates, considering Best Wallet aggregates prices from hundreds of different liquidity pools.

Alternatively, you might want to trade on a standalone DEX that specializes in a specific network standard. For example, if you’re looking to trade meme coins on the BNB chain, consider PancakeSwap. Alternatively, if you’re more interested in Ethereum-based projects, check out Uniswap and SushiSwap.

That said, some DEX traders seek derivative products, especially those deploying short-term strategies. For example, scalpers and day traders can speculate on perpetual futures on AlphaX. Hundreds of leveraged markets are supported, and long and short positions can be entered.

Supported Networks

My methodology prioritized decentralized exchanges supporting the widest range of networks. This is ideal for diversification, as you can trade thousands of tokens from multiple blockchain ecosystems, all without leaving the DEX interface.

Once again, Best Wallet is a good option here. It supports over 60 blockchains, including Bitcoin, Ethereum, BNB Chain, Solana, Polygon, and Avalanche. Traders can buy and sell tokens from any of these blockchains at the best market rates.

Similarly, traders should also explore which specific tokens are supported. For example, Jupiter only supports cryptocurrencies from the Solana ecosystem. Conversely, AlphaX supports every crypto asset imaginable. This includes everything from Dogecoin and Aave to Ethereum, Filecoin, and Bonk.

Liquidity

Both centralized and decentralized exchanges need liquidity. However, liquidity sits at the heart of the decentralized exchange phenomenon. It’s important to note that liquidity levels represent a micro fraction of traditional spot trading exchanges.

• For example, consider that in the prior 24 hours, Uniswap, the largest DEX for Ethereum-based tokens, attracted $461 million in volume.
• In contrast, Binance, the biggest centralized exchange, facilitated almost $10 billion worth of volume over the same period.

As such, my methodology explored average liquidity levels when ranking DEXs. This is why aggregators were prioritized. As mentioned, aggregators partner with hundreds of different liquidity providers.

This means traders always have enough liquidity to trade, which translates to competitive pricing and wafer-thin spreads. It also reduces slippage risks. Conversely, DEXs with limited liquidity offer a subpar trading experience, leading to high slippage and volatile pricing swings.

On-Chain Only

I also prioritized DEXs that operate 100% on-chain. This means traders can buy and sell cryptocurrencies without centralized order books.

Trades are executed via smart contracts on the blockchain network, increasing security and transaction transparency.

Core Features

Another important metric when choosing a DEX is whether any notable features are offered.

For example, SushiSwap, which specializes in ERC-20 tokens, allows traders to deploy a dollar-cost averaging strategy. This means traders can buy their favorite cryptocurrencies frequently in smaller amounts. For instance, a trader might want to invest $300 into Shiba Inu every week. This averages out the cost price and reduces volatility risks.

Another top feature is decentralized exchanges that double up as non-custodial wallets. Best Wallet, OKX, and Exodus are good examples. They offer native wallet software for mobiles and desktops. This allows traders to buy and sell cryptocurrencies without leaving the wallet interface.

Anonymity

The best decentralized exchanges offer a private and anonymous experience. Unlike centralized platforms, users won’t be asked to open an account. Trades are conducted by connecting a self-custody wallet, ensuring personal details and ID documents will never be required.

This is a great benefit for traders based in countries where crypto trading is illegal or vastly restricted. DEXs are inclusive and never ask for the trader’s location.

How to Use a Cryptocurrency DEX: Step-by-Step Guide

Decentralized exchanges can be intimidating for first-time users. The good news is that once you know the basics, DEX trading is seamless. It rarely takes more than a couple of minutes to complete a trade.

I’ll now walk you through the step-by-step process, using Best Wallet’s DEX for the tutorial. However, the steps are much the same with most other DEXs.

Step 1: Get a Non-Custodial Wallet 

DEXs don’t have an account opening process. Instead, users must connect a non-custodial wallet. Now, Best Wallet is not only a DEX but it also offers a secure wallet app for iOS and Android. That said, some users prefer to keep wallets and DEXs separate for increased oversight.

Therefore, consider using the MetaMask wallet, which is trusted by over 100 million traders. MetaMask is free to download and it supports several networks, including Ethereum, BNB Chain, and Arbitrum. Visit the MetaMask website and choose the preferred device type. Options include a browser extension or a mobile app.

Next, open MetaMask and create a new wallet. Choose a password and write down the backup passphrase. Keep this somewhere secure and never share it with anyone. The backup passphrase provides remote access to the wallet should you misplace the password or lose the device.

Step 2: Get Some Crypto to Trade With 

Decentralized exchanges specializes in crypto-to-crypto trading. This means you need to fund MetaMask with some coins. This should be a coin from the network you plan to trade. For example, if you want to trade ERC-20 tokens, get Ethereum. Alternatively, get BNB if you’re interested in BNB Chain tokens.

MetaMask offers a fiat on-ramp within its wallet. So you can instantly purchase coins with a debit/credit card. However, a KYC process will be required. An alternative option is to buy coins from a Peer-to-Peer or P2P crypto exchange. Some platforms support anonymous trading, even when using fiat payment methods.

Step 3: Connect Wallet to the Best Wallet DEX 

You’ve now got some crypto coins stored in the MetaMask wallet. The next step is to connect MetaMask to the Best Wallet DEX.

Just click the ‘Connect Wallet’ button and choose MetaMask. This will trigger a connection request. Open MetaMask and approve the connection to Best Wallet.

Step 4: Complete the DEX Trading Form 

The next step is to complete the DEX trading form. First, select which crypto you want to trade with. This will be the crypto that’s currently stored in MetaMask. In our example below, I’ve selected ETH.

Then, choose which crypto you want to buy. You can search for the coin manually. Or, the safer option is to paste the contract address. You can get this from the project’s CoinMarketCap page. I’ve opted for WBTC in our example.

Next, type in the number of coins to exchange. Best Wallet immediately obtains the best market price from its partnered liquidity providers. For example, I’ve typed in 1 ETH and I’m quoted 0.042613 WBTC.

Step 5: Confirm DEX Trade and Disconnect Wallet

You can confirm the DEX trade once everything has been checked, including the cryptocurrencies being swapped and the amount. This will trigger another MetaMask notification. Open MetaMask and approve the smart contract transaction.

The cryptocurrencies will then be swapped. The purchased tokens will be added to the MetaMask wallet. This rarely takes more than a few seconds. Once the transfer is verified, disconnect MetaMask from the Best Wallet DEX.

Crypto DEXs: The Key Benefits

Those new to decentralized exchanges might not be fully aware of the key benefits. This section takes a closer look at the standout advantages of DEX trading.

Anonymous and Private Trading

The first benefit of decentralized exchanges is the private and anonymous experience offered. To understand why this is advantageous, let’s briefly consider the traditional process when joining a centralized exchange. Let’s use Coinbase for this example.

• First, users must complete an application form, including their full name, nationality, residential address, date of birth, and other personal information.
• Next, Coinbase will initiate a KYC process. This requires some documents, including a government-issued ID.
• Then, Coinbase will verify the documents before providing access to its exchange.
• Only then can you start buying, selling, and trading cryptocurrencies.

Now compare this to a no KYC exchange like Best Wallet. There is no account opening process, let alone requests for personal information or a government-issued ID.

Traders connect a non-custodial wallet to the DEX, choose which cryptocurrencies to trade, and wait a few seconds for the swap to execute. The trader then disconnects the wallet, and the process is over. This level of anonymity is rarely offered by centralized platforms, considering increased pressures from regulatory bodies.

Avoid Counterparty Risks

Another major benefit offered by decentralized exchanges is the removal of counterparty risk. This is because traders don’t need to worry about their cryptocurrencies being misplaced. As mentioned earlier, billions of dollars worth of cryptocurrencies were “lost” when FTX declared bankruptcy in 2022.

Had you been an FTX user at the time, some or even all of your cryptocurrencies might still be unrecoverable. This is a risk you take when using a centralized exchange, as cryptocurrencies are stored in custodial wallets. This means only the exchange has access to the wallet’s private keys, meaning you never really own those coins.

The experience is completely different when using a decentralized exchange. Crucially, DEXs never hold client-owned cryptocurrencies. Trades are executed on the blockchain via immutable and transparent smart contracts.

For example, consider a trader who wants to swap Solana for dogwifhat. The trader connects a wallet to the DEX, and a smart contract automatically converts Solana for dogwifhat via liquidity pools. The purchased dogwifhat tokens are deposited into the same wallet address. The DEX has no control over this transaction, meaning it can’t freeze or manipulate the smart contract. Ultimately, this gives you full control over your cryptocurrencies.

Inclusive and Accessible

Not everyone has seamless access to the crypto markets. In some countries, there’s a blanket ban on crypto ownership. This means centralized exchanges will not accept clients from those countries. This makes decentralized exchanges highly appealing. DEXs never ask for the trader’s country of residence, let alone personal information or ID verification.

This inclusive framework ensures that anyone, no matter where they’re from, can trade on decentralized exchanges. Similarly, some nationalities have restricted access to certain crypto products. For example, US and UK retail clients have limited access to crypto derivatives such as perpetual futures.

Decentralized exchanges are a great way to avoid this censorship. For instance, AlphaX offers hundreds of perpetual futures with high leverage limits. Anyone can join the platform, just connect a wallet and start trading. Perpetual futures are also offered by other popular DEXs, such as Jupiter, dYdX, and PancakeSwap.

Ideal for Investing in Newly Launched Tokens

Newly launched tokens offer the best chance of finding the next 1000x crypto. This is because the majority of new cryptocurrencies have a micro-cap valuation. This is often below $1 million, offering the perfect balance between high volatility and price potential for speculative traders. Crucially, new tokens are rarely listed on centralized exchanges.

On the contrary, they opt for decentralized platforms. Anyone can add cryptocurrencies to a DEX; the only requirement is to provide liquidity. As such, decentralized exchanges list thousands of undervalued tokens. This enables investors to get a first-mover advantage before they’re listed on more prominent centralized exchanges.

Transparency

One of the main drawbacks of using a centralized exchange is a lack of transparency. Especially when it comes to order books. Some analysts argue that even tier-one exchanges manipulate prices, meaning unfair trading conditions. There’s no way of definitively proving or disproving this theory. But what we do know is that order books are heavily centralized and opaque.

This is in contrast to decentralized exchanges. Every transaction, whether that’s a buy or sell order, is transparently viewable on the blockchain network. This includes the token amount, wallet address, timestamp, and other key metrics. This means decentralized exchanges offer a far more credible and trustworthy trading experience.

Cross-Chain Simplification

Trading cryptocurrencies from different blockchains used to be a cumbersome process. For example, centralized exchanges like Coinbase and Binance support some crypto cross pairs, such as LTC/BTC, ETH/BTC, and EOS/BTC. However, outside of Bitcoin and Ethereum, cross-chain trading is no easy feat.

• Let’s say you’re currently holding ATOM, but you want to purchase DASH.
• Centralized exchanges won’t offer an ATOM/DASH pair, considering almost non-existent demand from users.
• This means you’d need to sell ATOM for another crypto, such as USDT.
• You would then need to exchange that USDT for DASH.
• This means two trading commissions.

The same transaction can be completed in just one step when using a suitable DEX. Best Wallet, for example, supports cross-chain trading for more than 60 blockchains. This means you can immediately swap ATOM for DASH, with the transaction taking less than 60 seconds to complete.

Crypto DEXs: Drawbacks and Risks 

Decentralized exchanges solve many issues prevalent on centralized platforms. However, traders should also consider the risks. This section explores the main drawbacks of DEX trading.

Liquidity Issues

I mentioned earlier that DEX trading volumes are significantly smaller when compared to centralized exchanges. This results in liquidity issues, meaning executing trades at competitive prices can be problematic. Now, this is rarely an issue when trading large-cap pairs such as ETH/USDC, or SOL/BONK. However, trading micro-cap tokens can offer a subpar experience.

• For instance, suppose a newly launched token has $50,000 in DEX liquidity.
• A new investor purchases $10,000 in that token.
• That amounts to 20% of the overall liquidity, meaning just one buy order will have a significant impact on its price.
• Similarly, that trader will also influence the token’s price when they eventually decide to sell.

Limited liquidity also results in high slippage. This means traders must accept a worse-than-expected exchange rate to execute their buy or sell order. Don’t be surprised if slippage of over 10% is needed when trading micro-cap tokens.

Learning Curve for Beginners

We’ve established that DEX trading utilizes a completely different process from centralized platforms. Traders need a non-custodial wallet that’s funded with cryptocurrencies. Trades are then executed via smart contracts on the blockchain.

This procedure will likely be new to traditional investors who are used to brokerage accounts and order books. The key issue is that DEX traders with limited experience can make costly mistakes. For instance, they could trade the wrong token or transfer funds to an incorrect wallet address.

Network Fees

Decentralized trading is facilitated via the blockchain network. Each buy and sell order initiates a new blockchain transaction. This subsequently attracts network fees that must be covered by traders. Now, network fees can be competitive or expensive depending on the blockchain.

For example, Ethereum is known for high transaction fees when the network experiences busy periods. Traders were reporting fees of over $100 per transaction earlier this year. This is why many new token launches are opting for more cost-effective blockchains like Solana and BNB Chain.

Nonetheless, if network fees are too high, this can make DEX trading unviable for those on a budget. This is because transaction fees will eat into the profit potential.

No Access to Fiat Facilities

Decentralized exchanges only offer crypto-to-crypto trading pairs. For example, you can trade Ethereum against USDC. But you can’t trade Ethereum against USD or GBP.

This also means deposits must be made in cryptocurrencies rather than convenient payment methods like Visa, Mastercard, and PayPal. As such, first-time traders will need to obtain cryptocurrencies elsewhere before getting started.

Lack of Customer Support

Another drawback with DEX trading is the lack of accessible customer support. After all, decentralized exchanges operate autonomously, as buy and sell orders are executed through smart contracts.

This makes it challenging to obtain assistance if things go wrong. This won’t be the case when using a centralized exchange, which typically offers 24/7 support via live chat.

Conclusion

DEX trading will play a major role in the Web 3.0 era. Traders are no longer faced with counterparty risks on centralized exchanges. Instead, users can instantly buy and sell cryptocurrencies without the DEX ever touching their funds.

Overall, my top DEX pick is Best Wallet. It supports thousands of cryptocurrencies from over 60 blockchains, not to mention an anonymous experience. Best Wallet obtains industry-leading exchange rates from hundreds of liquidity providers.

Visit Best Wallet

FAQs

What are decentralized exchanges?

Decentralized exchanges (DEXs) offer an alternative way to trade cryptocurrencies. Trades are executed via smart contracts and liquidity pools rather than centralized order books.

Is Binance DEX or CEX?

Binance is a centralized exchange (CEX); trades are facilitated by traditional order books.

What is the biggest decentralized exchange?

The list of decentralized exchanges with the most volume includes Kine Protocol, Hyperliquid, Uniswap, Orca, and Raydium.

Can a DEX get hacked?

DEXs aren’t 100% safe – the underlying smart contract can be hacked. That said, leading DEXs have open-source contracts and are regularly audited.

Is CEX safer than DEX?

No, DEXs are safer than CEXs. They never touch client-owned funds and trades go through the blockchain network.

Is Uniswap a DEX or CEX?

Uniswap is a fully-fledged DEX. It’s the largest DEX for trading Ethereum-based tokens.

What is the downside of DEXs?

Some of the drawbacks of DEXs include limited liquidity, a lack of accessible support, and a required learning curve for beginners. Another downside is that DEXs don’t support fiat payments.

Do decentralized exchanges have KYC?

No, decentralized exchanges don’t have a KYC process. Traders aren’t even required to open an account – trading is done by connecting a private wallet.

References

1. What Are Automated Market Makers (AMMs)? (Chainlink)
2. Top Decentralized Exchanges Ranked by Volume (CoinGecko)
3. Decentralized Exchanges (DEX) Explained (Finance Magnates)
4. ‘Old-fashioned embezzlement’: where did all of FTX’s money go? (The Guardian)
5. FCA bans the sale of crypto-derivatives to retail consumers (FCA)