With almost 34% of the DEX market choosing to trade via Uniswap or PancakeSwap, we are taking a look at some of the alternatives out there, and why looking outside the big two might prove valuable
Uniswap unlocked the gates to decentralized finance (DeFi) by offering its user-centric take on an automated market maker (AMM) in 2018; powered by the Ethereum ecosystem.
Since then, it climbed its way to the top of the DEX (Decentralized Exchange) tree in 2020. All was not well however, as high gas fees on the Ethereum network began pushing the average user to more affordable alternatives. Step forward Pancakeswap.
Leveraging the BSC (Binance Smart Chain) to reduce fees commonly seen on the Ethereum-based exchanges like Uniswap, and tapping into the craze for cute interfaces, it rapidly climbed in popularity and competed with UniSwap for liquidity domination.
While these two platforms have been battling it out for dominance, a new breed of decentralized exchanges and aggregators have been quietly building in popularity.
By offering greater pricing visibility, increased liquidity and enhanced yield generating potential, these new platforms are beginning to offer users a significant amount of choice when it comes to DEX and DeFi opportunities.
Price - DEX aggregators are able to source pricing data from a number of different DEXs to find the best possible price for a specific token or trading pair
Yield - Higher APY attracts more users, thus higher liquidity and lower APY over time. Looking to yield farm outside of the big two provides greater opportunities to make high APY for longer
Tokenomics - Some of the new DEXs are offering hard-capped token burning guarantees; meaning their native tokens will continue to rise in value due to their finite volume.
Arbitrage - Finding price deltas between DEXs and making profit on trading these differences
SushiSwap - SushiSwap is a popular UniSwap fork, and therefore built on the Ethereum network. It offers an automated market-making (AMM) model that allows users to trade, and earn yields in the form of trading fees and SUSHI tokens. SushiSwap’s native token is SUSHI, and this acts as it’s governance token.
Many UniSwap users began moving liquidity across to SushiSwap from launch. This was mainly because Uniswap had already completed certain key token distribution benefits that SushiSwap was able to continue supplying, making it a more lucrative choice. This is often seen as a benefit to new exchanges - i.e. they can offer greater rewards to users as they fight for market share.
1inch - 1inch provides DEX aggregation, as opposed to providing strictly DEX services itself. It collects and measures liquidity across numerous liquidity pools, trading platforms, and exchanges to find the best trade possible. BY being able to access the entire DeFi marketplace, 1Inch is able to reduce fees and slippage for users, whilst providing visibility of market positions.
Aggregation platforms like this provide excellent opportunities for arbitrage; effectively finding pricing differences between multiple exchanges and finding profit margins by trading these differences.
CoinSwap Space - The Binance Smart Chain (BSC) has offered a fresh perspective on DEX trading by significantly reducing fees, while increasing translation speeds. CoinSwap leverage the capabilities of this new chain in a unique way: not only is it handsomely rewarding its users and community through utility on its native token CSS, it also offers NFT (non-fungible token) marketplaces.
The CoinSwap team has also set out to dominate on tokenomics. The CCS token will have a hard-cap, meaning users earning and trading in CSS will continue to see scarcity and value increase as time goes on - as there is only a limited supply. Coupled with intentionally lower fees than other BSC competitors, we could see this platform make some significant growth over the coming months
ParaSwap is another aggregator which pulls together a number of popular DEXs (Decentralized Exchanges) and DeFi platform pricing data. Once again, one of the key benefits of this type of platform is the ability to leverage pricing differences across multiple networks to make a margin.
As ParaSwap acts as a middle layer between DeFi liquidity protocols and users, it is capable of delivering some of the fastest trades available right now across the Ethereum ecosystem.
Matcha is an aggregated trading platform powered by 0x. By aggregating liquidity across numerous decentralized platforms (currently, users can trade across 26 separate exchanges like 0x, Curve, and Uniswap) Matcha allows users to easily route orders and find optimal pricing.
Matcha is a great entry point into the DEX and DeFi ecosystems, as it provides users with a simple to understand and intuitive guide to each trade they make. This is really useful to gain clarity on things like detailed order review, estimated slippage, and transaction time estimations.
UniSwap and PancakeSwap continue to make headlines however, there are a number of platforms now available to those willing to seek them out, which could offer a lot more bang for your buck.
Whether that’s venturing deeper in the BSC ecosystem to find reduced gas fees, better yields and faster transaction times, or exploring the world of aggregators to find valuable price deltas and huge marketplace scale, there are many more opportunities now then there were even three months ago.