Trust in centralized exchanges has completely eroded after news of FTX’s bankruptcy. Crypto investors are returning to keeping their money in non-custodial wallets, much like our ancient ancestors stored money under mattresses. Liquidity and safety concerns have led to a significant rise in activity on decentralized exchanges.
DEXs are hot once again. And in this article, I’m going to show you the top 15 best decentralized exchanges in 2023. You will learn about the likes of Uniswap, Curve, dYdX, Balancer, and many others. But before we do that, let’s have a quick reminder about what decentralized exchanges are and how they work.
What Is a Decentralized Exchange?
A decentralized exchange (DEX) is a dApp that allows you to exchange funds and earn passive income by providing liquidity. Decentralized exchanges use a combination of smart contracts, and often, an Automated Market Maker (AMM) model in order to facilitate trading.
Some platforms may also support futures markets aside from classic trading.
The foundation of a decentralized exchange is an AMM. Traditional exchanges have an order book which manages buy and sell orders. These orders exist on a centralized ledger operated by the exchange itself. Users can access the orderbook by placing new orders.
A decentralized exchange that functions via smart contracts can’t have an order book. Instead, DEXs use smart contracts as ‘liquidity pools’ (LPs). Liquidity pools contain two equal halves of different crypto assets. Each halve has the same dollar value as the other, which allows the DEX to supply liquidity without ever creating an imbalance inside the trading pair.
Let’s say you’re trading Ethereum on Uniswap and have Tether (USDT) on your MetaMask account. What you would do is swap USDT for ETH, accessing the ETH/USDT liquidity pool (a smart contract you can look up on Etherscan or a DEX explorer). Uniswap will give you enough ETH to cover the dollar value of your USDT tokens.
AMMs allow smart contract-based liquidity pools to constantly have a 1:1 supply ratio. This ratio is supported by the constant product formula:
(X and Y represent the two crypto assets while k represents the constant product formula).
In some iterations of decentralized exchanges you may find that the platform has an order book. These dApps have an open and public order book that’s also based on smart contracts. The order book contains all open orders that investors have placed on the DEX. More often than enough, orderbook DEXs are used for supporting futures trading.
Types of Decentralized Exchanges
Three types of decentralized exchanges exist:
- AMM-based DEX
- DEX aggregators
- Orderbook-based DEX
The following sections explain how each type of decentralized exchange works.
Automated Market Makers
Automated Market Maker (AMM) decentralized exchanges are able to provide instant liquidity by storing crypto assets in smart contracts. AMMs are a great alternative to order books – a system in which each order must be matched for another order. Instead of matching orders, AMMs allow investors to instantly swap tokens by accessing liquidity from LPs.
AMMs are efficient when they are liquid and have a high TVL (Total Value Locked). A lack of liquidity can present various problems – mainly slippage. Slippage occurs when there is not enough liquidity at a certain price level, forcing investors to receive less tokens when trading.
The best thing about AMMs is that they allow investors to supply liquidity. In return, liquidity providers receive rewards with a flexible APY-based interest rate. Liquidity providing is done best when prices are stable, as large price swings lead to impermanent loss.
Order Book DEX
This type of decentralized exchange comes with a classic order book which you traditionally find on centralized exchanges. Such DEXs offer on-chain order books based on smart contact technology that hold data on orders opened by investors.
In some cases, a DEX might utilize an off-chain order book. Off-chain order books are private and faster. However, they also impact the scale of decentralization that a DEX has. In this model the blockchain is used only to settle trades.
DEX aggregators work by aggregating liquidity stored on various LPs all throughout the crypto market. For example, on 1Inch you have access to a list of trading opportunities sourced from various DEXs. As a DEX aggregator, 1Inch lets you find the most efficient liquidity pools – essentially minimizing slippage.
Top 15 Best Decentralized Exchanges in 2023
Decentralized exchanges have massively evolved over the past two years. The list below presents you with the top 15 best decentralized exchanges in 2023. Keep in mind that the DEX in this list are not ranked in any particular order.
Uniswap is a decentralized exchange (DEX) built on Ethereum that allows users to swap tokens without the need for intermediaries. Uniswap utilizes the AMM model to allow users to exchange tokens directly with one another, using smart contracts to facilitate the trade.
The AMM model allows Uniswap to execute trades without requiring an order book. When you want to trade tokens, you have to swap an existing crypto asset in your non-custodial wallet for another asset. The other asset is pulled from an existing smart contract liquidity pool containing two equal halves of each asset (forming a trading pair).
Learn more about Uniswap here
When a trade is made, the smart contract automatically adjusts the balances of the assets in the pool to reflect the trade, and the liquidity providers receive a share of the transaction fees as a reward. Each pool has a 1:1 ratio in terms of dollar value so that there is never a liquidity disbalance within the LP.
Uniswap has gained popularity as a platform for buying and selling tokens that are not listed on traditional centralized exchanges, and it has become an important part of Ethereum’s DeFi ecosystem. It has also caused the rise of yield farming, liquidity mining, and other ventures.
- Low transaction fees (0.1% to 1%)
- Holds most of the liquidity in DeFi
- Reputable DEX with no history of exploits
- Degree of decentralization in governance model is questionable
- No options to deposit or use fiat currencies
Curve Finance is a DEX that allows users to trade various types of cryptocurrencies and stablecoins on the Ethereum blockchain. It is designed to be fast, efficient, and easy to use, with a focus on providing high liquidity and low fees.
Curve works without an order book. You can simply swap tokens directly with the liquidity pool, which is managed by a set of smart contracts that automatically balance the supply and demand of the different tokens in the pool.
One of the main features of Curve Finance is its ability to support stablecoins, which are cryptocurrencies that are pegged to the value of real-world assets such as fiat currencies or commodities. This allows users to trade stablecoins with low volatility, making it an attractive option for traders looking to hedge against market fluctuations or for those who want to use cryptocurrencies as a means of exchange without the inherent price volatility of more speculative assets.
Curve’s focus on stablecoins also makes it a unique option for yield farming. Many yield farmers frequently deal with impermanent loss – a type of loss that happens due to volatility. If an asset drastically moves in value from the moment a yield farmer deposited his tokens to an LP, he may experience an opportunity cost. The impermanent loss stems from the fact that the farmer would have made more money if he simply held the token in his wallet.
Learn more about impermanent loss here
Overall, Curve Finance aims to provide a simple and efficient platform for trading a variety of cryptocurrencies and stablecoins, with a focus on high liquidity, low fees, and low slippage.
- Incredibly liquid due to focus on stablecoins
- Zero impermanent loss
- Low trading fees (0.04%)
- Supports many established L2 scalability solutions
- Might be difficult to use for beginners
- Focus on stablecoins pushes away high-risk yield farmers
dYdX is a decentralized exchange with an order book based on the Ethereum blockchain. The exchange facilitates cryptocurrency margin trading for various assets, including Bitcoin, Ethereum, Solana, Polkadot, and many others. dYdX represents an attractive alternative to futures exchanges like Bitfinex, BitMEX, and Binance. Those enjoying leveraged trading can do so with dYdX all while escaping centralization and 3rd-party custody.
The dYdX protocol is built on top of smart contracts that allow users to trade, lend, and borrow assets in a decentralized and trustless manner. It offers a range of financial products, including a token swapping platform for trading cryptocurrencies and a margin trading platform that allows users to borrow and lend assets to trade with leverage.
One of the key features of dYdX is its focus on security and transparency. The protocol uses advanced security measures such as multisig wallets and stringent auditing to ensure the safety of users' assets. It also provides a transparent and open platform for financial transactions, with all transactions recorded on the blockchain and accessible to anyone.
Overall, dYdX is a decentralized finance protocol that provides a secure and transparent platform for swapping tokens and trading cryptocurrencies with leverage on the Ethereum blockchain.
- Beginner friendly UI
- Supports perpetual contracts and leveraged trading
- Near-instant transactions
- Low fees and no gas costs
- Small list of supported cryptocurrencies compared to other DEXs
PancakeSwap is an AMM-based decentralized exchange based on Binance Smart Chain (BSC) – a smart contract ecosystem hosted by the world’s largest crypto exchange. PancakeSwap is the ideal option for those wanting to trade altcoins hosted on BSC. Due to its native blockchain, you can swap tokens and yield farm for ridiculously small fees.
PancakeSwap is the most dominant DEX on BSC. Aside from yield farming and token swapping, the DEX also features other products and services. The most notable product includes a lottery platform where you can buy tickets and have a chance at earning various rewards. These rewards include dollar prizes worth up to six figures.
The DEX also features a governance model backed by the native CAKE token. You can use CAKE to issue and vote on governance proposals, stake, and yield farm.
- Low fees thanks to BSC’s design
- Contains most of BSC’s DeFi liquidity
- Offers interesting features aside from token swaps
- Low transaction fee at 0.25%
- Possible impermanent loss when trading or staking
Balancer is a DEX on Ethereum that provides DeFi liquidity infrastructure. The protocol delivers improved functionality and more management features for LP creators. Users can also create gas-free transactions by signing messages.
Balancer uses an AMM model to provide investors with access to many liquidity pools and trading pairs. You can also create your own liquidity pools – which you can make public or private. You can even set a variable pool fee that’s managed by the LP owner.
The DEX utilizes a multitude of features that effectively contribute to better capital efficiency, lower gas costs, and better arbitrage opportunities. Moreover, Balancer Pools can contain more than two tokens – which isn’t seen on traditional AMMs.
- Increased customizability and management for LP owners
- Features three kinds of LPs
- Low gas costs
- Transaction fees can be high due to LP owners setting custom fees
DODO is a decentralized trading protocol for Web3. The DEX has more than two million users and an all-time volume of $103 billion. DODO supports Ethereum, BSC, Polygon, Optimism, Arbitrum, and numerous other L2 scalability solutions.
DODO utilizes a Proactive Market Maker (PMM) model that allows their LPs and market makers to provide supreme liquidity without requiring too much capital. DODO supports a wide variety of decentralized liquidity products and services.
You can buy any crypto token, be it fungible or non-fungible, on DODO with one click. The DEX’s PMM model will automatically provide you with a list of sources from which you can gather liquidity. This allows you to compare prices and get the best deal possible for your token swap.
DODO has gone through a series of audits processed by famous blockchain security companies such as Certik and PeckShield. Many crypto investing firms have also participated in building out DODO, including Pantera, Binance Labs, Coinbase Ventures, and CMS.
- Supports a large number of blockchain networks
- Customized AMM mode allows it to offer large liquidity
- Supports fractionalized NFTs
- Audited by world-renowned blockchain security firms
- Low trading volume compared to other DEXs
AirSwap is a peer-to-peer and DAO-focused DEX on Ethereum. The DEX is relatively new to the DeFi scene and features a novel design that protects you against the risk of price slippage, front-running, and counterparty risk.
Traders can directly discover other market participants and liquidity providers through a peer-to-peer network made of a combination of smart contracts and web protocols.
The DEX itself charges no transaction fees since it acts as a liquidity aggregator. You can swap for any token with AST, AirSwap’s native utility and governance token. You can also participate in the project’s DAO and governance portal.
- Charges no additional fees
- Highly decentralized DAO
- Claims to have low-risk of smart contract exploits
- You still have to pay fees for the liquidity sourced from other DEXs
- Still a new DEX that hasn’t been battle-tested
8. Sushi (SushiSwap)
Sushi, formerly SushiSwap, is one of DeFi’s oldest decentralized exchanges. Sushi started out as a protocol forked from Uniswap, reaching success by offering better yields and lower fees. But since its inception, the Sushi team has done an excellent job branching out and creating a product of its own.
Sushi uses an AMM model to facilitate non-custodial and decentralized cryptocurrency trading on Ethereum. The DEX has a governance protocol backed by the SUSHI token, which you can stake for extra passive income or use to issue governance proposals.
The DEX also supports cross-chain token swaps through its xSwap product. xSwap allows anyone to swap tokens between any blockchain network, ecosystem, or L2 solution. The feature currently supports Ethereum, Arbitrum, Avalanche, Polygon, Fantom, Binance Smart Chain, and Optimism.
- Commendable UX
- Low transaction fees
- Large selection of ETH DeFi tokens
- Undeveloped reward structure
KyberSwap is a decentralized exchange aggregator developed by one of DeFi’s oldest protocols: Kyber Network. The DEX pairs you with the best token prices in industry by constantly analyzing thousands of exchanges all across crypto.
The DEX utilizes the AMM model to deliver liquidity and allow investors to earn passive income by depositing crypto assets to LPs.
Users have customisable options such as selecting max slippage, determining transaction limit time, and selecting liquidity sources. You can also switch between multiple networks, including Ethereum, Solana, Fantom, BNB Chain, Avalanche, Polygon, Optimism, and many others.
- Access to nearly all liquidity in multiple DeFi ecosystems
- High rewards for liquidity providers
- Available on multiple blockchain networks
10. WX Network
WX Network is a decentralized exchange that allows you to easily buy, trade, and invest in crypto. Anyone can verify a token on the DEX and create their own liquidity pool. You can also promote your LP to receive more WX emission and increase its APY rate.
The main aim behind the WX Network is to help investors launch new DeFi tokens. The protocol has several features that make it possible to raise capital through decentralized crowdfunding. Moreover, the DEX stands out due to its unique UI.
- Low slippage rate
- Low trading fee (0.03%)
- Has its own blockchain network
- Unique user-interface
- Low number of extra trading features
Jupiter is an AMM-based DEX and liquidity aggregator that allows Solana investors to seamlessly and instantly swap tokens. The DEX has the widest token selection in the Solana ecosystem and allows you to search for the best token prices.
The team behind Jupiter has created the DEX with users in mind. Jupiter has a rich, but simplistic, user interface that’s easy to use and understand – even if it’s your first time using a DEX.
Jupiter uses smart routing to connect with all DEX markets and AMM pools in Solana. The DEX searches for the best route between liquidity pools in search of the best price. When swapping tokens, you can select between multiple routes. For example, you might get the best deal for a USDC/SOL LP by using mSOL as an intermediary token.
- Best DEX on Solana
- Aggregates liquidity from a large selection of LPs and DEXs
- Incredibly user-friendly interface
0x is a professional liquidity aggregator protocol built on Ethereum that supports a wide range of decentralized networks. The DEX uses smart order routing to split transactions across decentralized exchanges for the lowest slippage possible.
0x has access to all the popular decentralized exchanges. Some of these DEXs include Bancor, Uniswap, Dodo, Curve, Mooniswap, and Balancer. You also have access to 0x’s exclusive liquidity. The DEX offers open order books, professional market makers, and private liquidity pools.
The protocol also makes transactions cheaper by only processing settled transactions on Ethereum. 0x also has a unique type of operations that allows its relayers to generate interest in trades.
- Incredibly large liquidity
- Connects you to LPs from nearly all blockchain networks and L2 solutions
- Cheap transaction fees
- Complaints among API users
IDEX is a hybrid liquidity DEX that combines both order books and AMMs. The protocol features no failed transactions, no accounts, and no front-running, making it one of the most decentralized exchanges in crypto.
You can swap tokens on IDEX with minimal spread and deep enough liquidity to cover large orders. You can also place advanced types of orders such as stop-loss orders, limit orders, and more. And like on any other DEX, you can also collect fees for providing liquidity to IDEX.
IDEX’s advanced trading engine allows it to facilitate cryptocurrency trading with instant execution and high-throughput. You will experience almost no slippage, front-running or failed trades. In fact, the protocol claims to have had 0 failed trades since its launch.
- Has zero failed trades since launch
- Minimum spread, maximum liquidity
- Efficient trading engine
Bancor is a DEX that facilitates trading and staking with single-sided liquidity. Bancor is one of the earlier AMM-based DEXs to arrive on the DeFi scene. The protocol is recognisable for its low fees, impermanent loss protection, and great security.
Bancor is unique for allowing its users to avoid the pains of impermanent loss by staking tokens. You can stake the protocol’s native BNT governance token to avoid any kind of impermanent loss. You also boost your staking rewards when staking any asset along with BNT.
It’s also worth noting that Bancor has incredibly low token swap fees, which range from 0.08% to 0.75%. And of course, the DEX has a governance model which allows users to issue new governance proposals as long as they own BNT.
- Reputable DEX with a professional team
- Supports single-sided liquidity
- Features impermanent loss protection
- UI might be difficult to use for newbies
1Inch is yet another DEX aggregator built for Ethereum’s DeFi ecosystem. 1Inch’s aggregator algorithm allows it to facilitate secure and cost-efficient transactions all while sourcing its liquidity from multiple liquidity pools.
The DEX also features more advanced options for experienced traders. For example, you can place limit orders in order to execute a token swap once an asset reaches a certain price. The DEX charges no additional fees for sourcing your liquidity from other DEX networks.
1Inch scans the entire DeFi ecosystem while executing your token swap. You can pick and choose between different liquidity sources. You can also stake tokens, earn 1Inch token rewards, and vote on governance proposals.
- Supports wide array of cryptocurrencies and blockchains
- No transaction fees charged by 1Inch
- Amazing list of liquidity sources
- Gas fees are handled by other DEXs and may vary
Decentralized exchanges are highly important for the crypto industry as they facilitate permissionless and non-custodial cryptocurrency trading. Echoes of FTX’s collapse has led to a shift in trend, causing investors to move funds out of exchanges and into Web3 wallets. In today’s article, you have read about the top 15 best decentralized exchanges in 2023.
Decentralized exchanges come in three different forms: AMM DEX, Orderbook DEX, and DEX aggregator. All three have unique designs that allow them to supply liquidity at the lowest slippage rates, transaction times, and gas fees possible.
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