The Best Decentralized Exchanges for 2023
In our view, the need to move away from centralized exchanges and networks has never been so great. That’s why we think DEX trading volumes will explode in the coming years.
Here’s our top picks for best DEX’s to use in 2023.
#1 Gains Network
Top features:
- 38 crypto pairs – up to 150x leverage,
- 22 stocks – up to 100x leverage
- 10 forex pairs – up to 1000x leverage
- Zero funding fees
- Full privacy and custody of your funds with no KYC required
- Superior capital efficiency compared to perps exchanges
About Gains
Gains Network is one of the most advanced decentralized exchanges on the market. It was built on Polygon and developed from the ground up with security and privacy as top priorities. It is a non-custodial perpetuals exchange platform that supports up to 150x leverage on crypto and stocks, plus up to 1000x leverage for forex.
Yes you heard that right – it’s not just a crypto exchange. This level of diversity gives traders a ton of options and sets Gains in a league all of its own. Another nice feature? Zero price impact and zero funding fees due to the nature of the synthetic architecture and liquidity pools.
There are around 70 tradable pairs currently, putting the platform well ahead of competitor DYDX which supports 37.
In contrast to centralized perpetual contracts, gTrade applies an innovative method which takes the median value from different exchanges to provide a more accurate spot price for each given asset. The resulting accuracy gives traders a cleaner, more professional experience.
#2 DYDX
Top Features:
- Trade perpetual contracts & swaps with zero gas fees
- Earn interest by lending assets, or borrow at competitive rates
- Stop limit, stop market, trailing stop features for risk mitigation
- Total privacy with no KYC requirement
About DYDX
The dYdX platform was launched in 2019, and years of development have allowed it to emerge as one of the best places to trade. The platform is built on zero-knowledge rollup (zk-Rollup) technology, which powers dYdX’s perpetual smart contracts. This means users can expect zero gas costs, low trading fees and reduced minimum trade sizes. Users are able to enter long or short positions with up to 10X leverage on alts, and 20X leverage on BTC and ETH markets.
Recently, an influx of new trading pairs have added, which is a good sign the protocol is seeing growth in its user base. This is reflected in daily trading volume, which often approaches that of Uniswap.
The dYdX platform offers perpetual futures, along with margin trading, spot trading, borrowing, and lending. It is an intriguing and relatively low risk option for users looking to earn interest while lending out their crypto assets. All this is done without the need for intermediaries, and it’s wrapped up in a nice user-friendly interface. The addition of stop limits and trailing stops is a nice touch.
#3 GMX
Top Features:
- Multi-asset liquidity pool for low swap fees and zero price impact
- Liquidation protection due to aggregate price feed
- Attractive staking rewards where yield is paid in ETH, AVAX
- No KYC requirement
About GMX
GMX is one of the most exciting and innovative of the recently-introduced DeFi products. Users enjoy a fast, smooth and liquid trading experience that takes place fully on-chain thanks to the power of Ethereum L2’s Arbitrum and Avalanche.
The platform offers up to 30x cross-margin leverage on ETH, BTC, USDC, USDT, FRAX, DAI LINK and UNI. Mind that you will encounter some small borrowing fees, which are levied on an hourly basis.
Trading on GMX is bolstered by their multi-asset pool which earns liquidity providers fees from market making, swap fees, leverage trading, and asset rebalancing. The platform also employs an aggregate price feed to reduce risk of liquidations from temporary extreme price moves. Users can expect low swap fees and zero price impacts.
One of the main attractions toward GMX that sets it apart from competitors is that if you stake their native $GMX token, your rewards are paid out in ETH (if you’re on Arbitrum) or AVAX (if you’re on Avalanche). This reduces the risk of earning exchange tokens which are typically more subject to volatility due to market cap and unlock schedules.
#4 1Inch
Top Features:
- Best exchange rates through optimal transaction routing
- Huge variety of assets, wallets, and blockchains supported
- Zero gas fee swaps when using limit orders
- Excellent liquidity through DEX aggregator
- No KYC requirement
About 1Inch
When we think about decentralized trading, the platform that most often comes to mind is Uniswap. True enough, UNI consistently holds the highest volume throughput. However, the industry has matured since its humble beginning and one of the best innovations to date has been DEX aggregators.
The purpose of a DEX aggregator is similar to that of smart order routing, where stock traders submit orders through brokers and are matched with the best available opportunity throughout a range of different trading venues.
In the case of 1Inch, that means connecting a large number of decentralized platforms in order to minimize price slippage and find the optimal transaction route. While we’re on the topic of efficiency, 1Inch also employs the most advanced limit order system, allowing traders to swap assets with zero fees as a reward for providing liquidity.
The protocol is also operable across most major chains, including Ethereum, BNB chain, Polygon, Avalanche, Fantom, Arbitrum, and Optimism.
#5 Perp Protocol
Top Features:
- On-chain perpetual contracts with up to 10X leverage
- Excellent liquidity and zero gas fees
- Insurance fund for extreme cases such as a platform exploit
- No KYC requirement
About Perp
One of the biggest problems decentralized exchanges tend to run up against is a lack of liquidity. Perp Protocol solves that by enabling peer-to-peer transactions between various blockchain protocols. Perp is deployed on Optimism (L2) and was designed to facilitate buying and selling of perpetual contracts in a way that mirrors traditional exchanges.
There are a few things that make Perp unique. One is decentralized asset management. You can create your own fund and manage it through the platform’s smart contracts. This includes creating an investment portfolio based on your own set of parameters and assigning specific percentages to each asset in your portfolio.
Another huge feature is asset tokenization. You can issue your own token using Perp’s smart contracts, which will be automatically listed on all exchanges using the protocol (including those not based on Ethereum). Once issued, these tokens can be traded freely between users without any restrictions or additional fees imposed by third parties.
What is a DEX?
A decentralized exchange, or DEX for short, is an online marketplace that allows for peer-to-peer trading of cryptocurrencies. Unlike its centralized counterpart, which is controlled by a single entity and maintains custody over user funds, a decentralized exchange has no central authority. Rather than exposing all of your funds to counterparty risk, with a DEX you have the ability to trade directly from your wallet—no middleman required!
There are no third parties controlling how trades happen on a DEX; instead it’s users who conduct all transactions themselves by making deposits into their own accounts on each side of the transaction before sending funds back out again when complete. This removes intermediary fees—a benefit that comes with other perks like greater user privacy than traditional exchanges.
The advantages do come with some trade-offs. For example, decentralized exchanges require users to rely on a third party for liquidity, which makes executing large orders difficult in some cases (especially during periods of heightened volatility). Similarly, because DEXs don’t offer order matching or clearing mechanisms, it’s possible that trades might not settle as quickly as they would on traditional platforms.
While these drawbacks can be inconvenient at times (or downright frustrating), they’re worth putting up with if you value your privacy and security above all else.
Final Thoughts
Decentralized exchanges are set to gain popularity in 2023 and beyond, as more crypto participants opt to move funds away from centralized exchanges.
DEX’s are still in their infancy, and they’re far from perfect. But the old adage ‘not your keys, not your coins’ is more important than ever in a world where centralized entities can abuse customer deposits without disclosing their books.
In 2022 alone, billions of dollars were vaporized by trusted third party key holders in the crypto space. Public trust in this industry has taken a huge hit. Thankfully a solid framework has already been laid for the path forward.
There are three main pillars upon which the public exchange of cryptocurrency assets must rest to ensure its longevity well into the future. They are as follows:
The Three Pillars
Security — DEX’s are much more secure than centralized exchanges because they do not hold your funds. Instead, you hold your own private keys and trade directly from your wallet. This can prevent losses from hacks and other security incidents when an exchange is compromised.
Privacy — Many DEXs allow users to trade anonymously and without disclosing any proof of identity. Some also have privacy features like Tor integration for increased anonymity and coin tumbling services for getting around KYC regulations. Still, it’s recommended to always trade with a VPN as an extra layer of protection.
Freedom — Without KYC/AML regulations, users can access just about any asset worldwide and trade, swap, stake, lend or borrow it. This circumvents the geoblocking technique used by most centralized platforms and democratizes the investing process for all participants.
Every day in The Birb Nest, we teach our community about the various methods to custody their own funds and navigate the DeFi space. There’s never been a better time to join a group of professional full-time traders and experts with deep knowledge in maximizing investment opportunities.
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