What Is a Decentralized Exchange?
A Decentralized Exchange (DEX) is an exchange that allows you to trade cryptocurrencies directly with other users without the involvement of a third-party. The transactions are carried out Peer-to-Peer (P2P), which is one of the most highly-valued use cases of crypto.
Centralized Exchanges vs Decentralized Exchanges
A good DEX with solid liquidity, high trading volumes, and a solid user face offers some advantages over Centralized Exchanges (CEXs).
Privacy: Users enjoy a higher level of privacy as they don’t need to submit KYC to access the service.
Private Keys: As transactions are P2P, there's no need to deposit the crypto into a third-party account where you generally lose custody over your keys.
Censorship Resistance: DEXs are decentralized, they can't be controlled or shut down by a single central authority, making them somewhat resistant to censorship.
Top Decentralized Exchanges for Crypto Trading Ranked by Volume
Although there are many factors that contribute to making a good DEX, one of the best measurements is trading volume, as this reflects how much traffic the platform receives from traders. This post will provide you with a list of the best DEX crypto platforms by trading volume.
1. Uniswap
Trading Volume: $37.5 Billion
Share of DEX Volume: 64%
Uniswap is an open-source trading platform that is widely regarded as the most popular and successful DEX. Beyond providing the highest number of trading pairs on the market, it also offers an intuitive UI and several DeFi tools.
Uniswap is a go-to DEX for newcomers to the space, as its usability is only slightly less straightforward than CEXs like Binance. This DEX's success is reflected in its overall control of the market's trading volume.
According to data from The Block, Uniswap racked up $37.5 billion in trading volume in April, which accounted for over 60% of all DEX trading volume. Looking deeper into the data reveals that Uniswap has controlled over 50% of the total DEX trading volume monthly for over a year.
In March 2023, Uniswap saw its trading volume swell to $71 billion, which was its most successful month of year-to-date. Even though Uniswap has several direct competitors, it is undoubtedly the best DEX crypto platform by volume.
2. PancakeSwap
Trading Volume: $9 Billion
Share of April DEX Volume: 25%
PancakeSwap is a DEX built on the Binance Smart Chain (BSC) and has become very popular with DeFi users due to its reward farming applications. Its UI is easy-to-use, and even though its trading pair range is behind Uniswap, there are still plenty of options.
According to The Block, PancakeSwap's market share in terms of trading volume has seen a spike recently. In April, it saw just over $9 billion in volume, which accounted for around 25% of the total market share. That's a 10% increase year-to-date.
Furthermore, despite the fact we are only halfway through May, PancakeSwap has already clocked $11 billion in volume beating April by some margin. PancakeSwap's growing market share has developed in parallel with Uniswap's growth, suggesting trading volume is being drained from smaller DEXs.
3. Curve Finance
Trading Volume: $3.5 Billion
Share of April DEX Volume: 6%
Curve Finance is a specialized DEX that focuses on exchanging stablecoins such as $USDC and $USDT. The main objective of Curve is to offer low slippage and low fees on exchanges.
Curve uses an automated market maker (AMM) protocol based on liquidity pools and market-making algorithms. As a result, it isn't designed for P2P transfer like Uniswap or PancakeSwap.
Considering this is a specialized exchange focused on Ethereum-based DeFi trades, people looking to trade standard pairs such as $BTC/$ETH generally won't use Curve. However, among DeFi users looking to minimize stablecoin trading fees, it has carved out a decent slice of market share.
According to The Block's data, Curve Finance recorded $3.5 billion in trading volume in April, which was a considerable decrease from $19 billion in March and an even more significant drop from $25 billion in May 2022.
Curve's trading volume market share has been squeezed, dropping from around 10% in mid-2022 to just 6% in April this year. As you can see from the graph Curve's loss in market share correlates with PancakeSwap's increase.
4. SushiSwap
Trading Volume: $200-300 million
Share of April DEX Volume: <1%
SushiSwap is a DEX popular with DeFi users that was created following a hard fork of Uniswap’s open-source code in 2020. The DEX offers thousands of trading pairs and operates on the most notable blockchains, including Ethereum, The Binance Smart Chain, and Polygon.
The DEX has a standard UI that’s very similar to Uniswap and PancakeSwap. Beyond being a solid platform for trading, it's also a great tool for moving assets across chains.
In terms of earning, the platform offers three options:
Liquidity Providers: Adding liquidity to the smart contract earns the provider rewards.
Farming: Loaning tokens to the automated market maker generally earn more rewards than standard liquidity provision.
Sushi Vault: A semi-automated system that earns users passive rewards on deposited tokens.
Since its launch, SushiSwap has recorded a total trading volume of $62 billion, and according to CoinGecko data, it saw a total monthly volume in April of somewhere between $200-300 million.
5. DODO
Trading Volume: $2.2 Billion
Share of April DEX Volume: 4%
DODO is an Ethereum and Binance Smart Chain-based DEX that uses an order-book system that allows users to trade digital assets. Unlike many other DEXs, DODO uses a Proactive Market Marker (PMM) Algorithm, potentially offering trades with lower slippage and tighter spreads than Automated Market Makers (AMM).
The platform, which was launched in 2020, offers a range of novel features, including:
NFT Vault: Users can create NFTs using DODO and deposit them into the DODO vault, where they can be stored or fractionalized.
$DODO: The $DODO token gives users governance votes, access to crowd pooling, and dividends.
Trade Mining: Users can earn $DODO mining rewards by facilitating trades.
According to The Block's data, DODO had a trading volume of $2.2 billion, which accounted for just under 4% of the total market share.
DODO recorded its most successful month in terms of trading volume in November 2022, with over $6 billion. Interestingly DODO's best month occurred as FTX collapsed, creating FUD in the CEX sector.
Even though DODO is considerably behind the top three exchanges in terms of volume, it's worthy of a mention as it's still in development and offers some exciting features.
Sum Up
The best decentralized exchange platforms typically have the highest volume. However, this metric in isolation does not measure the complete viability of a DEX. Due to wash trading, volume can be distorted by bad actors to make a DEX or project look more popular than it actually is.
Volume metrics should be utilized in comparison with daily active users, and Total Value Locked (TVL) in the protocol.
