Decentralized exchanges will play a growing role of importance in the crypto space. Several DEXes on Ethereum are already making their mark today.
In terms of locked funds on these platforms, there is still a long way to go. There is also plenty of room for future competition in this space. Statistics are provided by DeFiPulse.
UniSwap Leads the Pack
The concept of a decentralized exchange is simple to explain. UniSwap embodies this vision perfectly. It is an on-chain protocol for token exchanges on the Ethereum blockchain. Rather than relying on order books, the protocol uses liquidity pools.
For the end users, this introduces a lot of benefits. A quick conversion between ETH and ERC20 tokens is always preferable. Those who supply liquidity can also earn fees. More importantly, everyone can create their own market as they see fit. It has proven to be a very popular DEX among the Ethereum crowd so far.
Today, roughly $85.6 million worth of Ether is locked in the protocol. That is a very healthy number, as the figure sat at just $44.19 million less than two weeks ago. An influx of fresh ETH has occurred in recent days, which may be tied to the increase in Ethereum price. That liquidity is always beneficial to DEXes.
Bancor Moves up
Many people think Bancor has to do with actually banking. That is not the case, albeit the confusion is somewhat understandable. When looking beyond the name, it quickly becomes apparent what the project is all about. Bancor is a protocol on Ethereum for a token exchange with custodial oversight.
Similar to UniSwap, it enables swaps between Ethereum and ERC20 tokens. There’s no order book, but rather pooled liquidity. An underpinning mechanism ensures liquidity and accurate prices. This information is sourced through a fixed rate with connected tokens.
It is also worth noting Bancor doesn’t charge fees for token swaps. That said, the Gas costs associated with this protocol can be slightly higher compared to other solutions. Today, over $10.91 million worth of Ether is locked through Bancor. A healthy figure, and a seep increase from the $4.5 million at the start of 2020.
Kyber is a Contender
The Kyber Network has flown under most people’s radar for several years. That’s unfortunate, as this on-chain liquidity protocol has tremendous potential. Token holders contribute liquidity to avoid the sue of order books entirely. Cutting out intermediaries is crucial when working with DEXes.
It is also possible for developers to integrate Kyber Network into their dApps. This creates an extra layer for users to explore. Beyond dApps, integrating this technology into wallets is also straightforward. Any business model involving token swaps of any sorts can leverage this technology for their specific purposes.
Accessing this protocol can be done through KyberSwap. It is a DEX on Ethereum with on-chain matching for all tokens issued on Etheruem’s blockchain. With over $4.47 million worth of Ether locked up, there is a genuine interest in this project.