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WhiteSwap is a decentralized exchange platform that offers a secure and user-friendly environment for users to trade various digital assets. It is designed to provide fast and efficient trade execution, making it a popular choice among cryptocurrency traders and investors.
DEXs, or decentralized exchanges, are becoming increasingly favored among cryptocurrency traders as they eliminate the need for intermediaries. These digital asset platforms offer a range of benefits over traditional centralized exchanges, including heightened security measures and greater privacy. The popularity of DEXs has skyrocketed in recent years exactly due to these advantages.
Different platforms use different blockchain networks, but the most popular ones are Ethereum DEXs. As you can guess, they run on the Ethereum blockchain and use smart contracts to facilitate trades. In this article, we will take a closer look at Ethereum DEXs and their capabilities, advantages and challenges.
Benefits of decentralized exchanges
One of the main advantages is that they do not rely on a central point of control, which reduces the risk of hacking and other security breaches. This is because the trade execution is handled by smart contracts, which are self-executing and cannot be altered or tampered with. Additionally, DEXs do not require users to provide personal information, which makes them a more private option for trading.
Another advantage of DEXs is that they provide a more open and transparent trading environment. This is because all trades are recorded on the Ethereum blockchain, which allows anyone to verify the integrity of the trades. Additionally, DEXs are open to anyone with an internet connection and a crypto wallet. There is no need to use fiat currencies or provide phone numbers, emails or any personal information, including your name.
Despite these advantages, decentralized exchanges still face a number of challenges. One of the main challenges is scalability. As the number of users and trades increases, the network can become congested, leading to slow trade execution and high gas fees. Additionally, DEXs are still in their infancy, and many users may find the platform less user-friendly than centralized exchanges.
In conclusion, Ethereum-based decentralized exchanges hold immense potential in the realm of cryptocurrency trading. They provide users with heightened security and privacy, along with a more open and transparent atmosphere for transactions. Despite some existing challenges, DEXs have the capability of becoming a major force in the digital asset trading arena.
Ethereum decentralized exchange: how does it work
An Ethereum decentralized exchange (DEX) is a digital asset platform that allows users to trade cryptocurrencies without the need for a central intermediary. These platforms are built on top of the Ethereum blockchain, which means that they use Ethereum smart contracts to facilitate trades. Smart contracts are self-executing code that can be programmed to automatically execute trades based on predefined rules, without the need for a central intermediary.
DEXs are decentralized and built on the concept of peer-to-peer trading, which eliminates the need for a central intermediary, making the process faster, cheaper, and more secure.
The process of trading on a DEX begins with the creation of a smart contract that is programmed to automatically execute trades based on predefined rules. When a user wants to buy or sell a digital asset, they interact with the smart contract by sending a transaction to the Ethereum blockchain.
The smart contract then automatically executes the trade based on the rules that have been set, such as the price and the number of assets to be traded. The smart contract also verifies the authenticity of the transaction and the assets being traded, before executing the trade. There are no people involved in the preceding transaction, so there is zero risk of a mistake or scam.
In order to trade on a decentralized platform, you need to have an Ethereum wallet that holds the digital assets you would like to exchange (swap). The wallet is used to send the transaction to the Ethereum blockchain, which in turn interacts with the smart contract. Once the smart contract has executed the trade, the assets are transferred to the new owner’s wallet. Transaction fee and proceeding time depend on the network workload, and normally take $2-5 and 1–5 minutes.
How to correctly choose Ethereum DEX
When selecting an Ethereum decentralized exchange, it is vital to ensure a successful and protected trading experience. The overwhelming number of DEXs available can make it difficult to determine the most suitable option. To assist you in your decision, here are some critical elements to keep in mind:
- Security: Security should be a top priority when choosing a DEX. True decentralized exchanges are always safer than centralized ones, but the question is “Is that DEX real or fake?”. Ensure that the website fairly uses smart contracts. It would be perfect if they have been audited and are transparently available for review.
- Liquidity: Liquidity refers to the number of buyers and sellers on the platform and the volume of trades. A DEX with high liquidity will generally have a lower spread and higher trading volume. This means that you can buy and sell assets at a fair market price.
- Trading fees: Besides gas fees that are always the same on all platforms, there are also trading fees that can vary greatly between DEXs, so it’s important to compare fees before committing to a platform. Look for a platform that offers low trading fees and consider the impact on your overall trading strategy. For example, the WhiteSwap fee is 0.3%.
- Regulation: Some decentralized exchanges are subject to regulations, while others aren’t. It is better to use a platform, the work of which can’t be intervened by authorities.
- User-friendliness: Make sure the DEX you choose is user-friendly and easy to navigate. A good platform should have a clear and intuitive interface, which makes it easy to place orders and track your trades. Additionally, look for a DEX that has a responsive customer support team that can assist you with any issues you may encounter. This is not critical, but this is part of your user experience.
Overall, when choosing a DEX, it’s important to weigh all of these factors and do your own research to ensure that you’re selecting the best platform for your needs.
Ethereum DEX Limit Order
A limit order on an Ethereum decentralized exchange (DEX) is a type of trade that allows users to set a specific price at which they want to buy or sell a digital asset. When a user places a limit order, they are essentially setting a bid or ask price, and the trade will only be executed if the market price reaches that level. This type of order allows users to have more control over their trades, as they can choose the price at which they want to buy or sell, rather than relying on the market price.
When placing a limit order on a DEX, users can choose to set the price either higher or lower than the current market price. For example, if the current price of ETH is $1200, but you would like to buy the coin for $1000, you can place a limit order at a lower price. The trade will only be executed if the market price drops to that level. Similarly, if a user would like to sell an asset and the current market price is too low, they can place a limit order at a higher price. The trade will only be executed if the market price rises to that level.
DEX limit orders can serve as an effective tool for traders seeking to minimize risk or maximize profits. For instance, if an asset has gained in value, a trader can establish a limit order at a higher price, allowing for an automatic trade execution once the market price reaches that level, thereby realizing profits. Conversely, in the event of a decline in asset value, a trader can set a limit order at a lower price to safeguard against further losses through automatic trade execution at that market price.
Bad news is that limit orders are not available on most decentralized platforms today because they are technically hard to implement, adhering to the principles of decentralization.
Ethereum DEX Volume
The volume on an Ethereum decentralized exchange (DEX) refers to the number of digital assets that are being traded on the platform. It is a measure of the liquidity of the DEX, which is the ability of the market to buy and sell assets without causing a significant change in the price. A DEX with high volume generally has a lower spread, which means that the difference between the highest bid and the lowest ask is smaller. This results in more favorable prices for buyers and sellers, making it easier to trade in and out of positions.
Trading volume can be used to gauge the popularity. A DEX with high volume is likely to have more users and more trading activity. This means that there will be more buyers and sellers to match with, which can make it easier to find a counterparty for your trade. Additionally, high volume can also indicate that the DEX is more established and has a reputation for being trustworthy and reliable. The other side of the coin is that large exchanges often offer less profitable conditions. Sometimes, a DEX with relatively low trading volume can be good. You know what I mean, right?
Volume can also be used to measure the overall health of the market. A DEX with high-volume and steady trading activity is generally considered to be a healthy market, while a DEX with low-volume and little trading activity is considered to be a weak market. Low volume can also indicate that there are not enough buyers and sellers to create a liquid market, which can lead to higher spreads and more volatility.
It’s worth noting that when comparing DEXs’ volume, it’s important to compare the volume of the specific trading pair you’re interested in, and not the volume of the entire trading platform. Some may have a large volume, but most of it might be concentrated on specific trading pairs. Also, it’s important to check the volume over a period of time, as some DEXs might have a high volume, but it might be concentrated on short time frames, which can indicate manipulation or wash trading.
Why are Ethereum DEXs safe
Ethereum decentralized exchanges are considered to be a much more secure alternative to centralized exchanges, but it’s important to note that no platform is completely immune to hacking or security breaches. If we compare Ethereum DEXs with Tron, Polygon or any other, Ethereum looks better because the Ethereum ecosystem today is more developed and scaled than any other. Scaling = trust = safety.
However, DEXs still face challenges such as smart contract vulnerabilities, flash loan attacks, front-running and market manipulation. Smart contract vulnerabilities can occur if the smart contract code has not been properly audited, which allows hackers to exploit the vulnerability. Flash loan attacks are a type of exploit where a hacker borrows a large amount of assets, manipulates the market, and then returns the assets before the manipulation is detected. Front-running is another attack. Hacker uses their knowledge to execute their own trade before the original trade is executed. Market manipulation is a practice that allows an individual or group to artificially inflate or deflate the prices of assets on the market.
To ensure the safety of your assets on a DEX, it’s important to do your own research and select a DEX that has a proven track record of security, has been audited and has fair transparent smart contracts.
Ethereum DEX list
There are more than 30 Ethereum DEXs in the Coinmarketcap list, and even more are not included in the list. Let’s compare 4 of them.
| WhiteSwap | Launched in November 2020 | 0.3% fee | Good reputation | ★★★★★ |
| Uniswap V3 | Launched in May 2021 | 0.3% fee | Good reputation | ★★★★★ |
| Curve Finance | Launched in Jan 2020 | 0.04% fee | Questionable reputation | ★★★★ |
| SushiSwap | Launched in Sep 2020 | 0.3% fee | Questionable reputation | ★★★ |
The list is intended to provide users with a comprehensive overview of the top DEXs in the market, which can help users make informed decisions when choosing a website to trade on.
It’s worth mentioning that the list is not a recommendation to trade on a certain DEX, but it’s a tool that users can use to evaluate and compare the different DEXs available.
Additional links by Redex
FAQ
When choosing an Ethereum decentralized exchange (DEX), consider trading volume, liquidity, security, user interface and the list of supported assets (make sure the exchange supports the assets you want to trade). Trading fees also matter. Сompare the trading fees of different exchanges to ensure you’re getting the best deal.
There are DEXs with 0% fees (for example, Nomiswap) or close to 0% fees (for example, Curve). However, lower fees don’t guarantee better user experience. Most platforms have fees between %0.3 and %0.5.