The world has never been the same since the introduction of terms like ‘cryptocurrency’, ‘blockchain’, and ‘Bitcoin’. Since then, we have seen a lot of innovations in this space. One such trend that has up in the world of crypto over the past year (especially post BTC reaching new all-time high) is DeFi. These decentralized marketplaces have made a lot of progress in a short span of time, and bring a much-needed change that crypto traders have been looking for. But confused as to which DeFi marketplace is best for you? This piece brings you all the answers.
What is DeFi, and how is it Different from Native Cryptocurrencies?
DeFi is an acronym for Decentralized Finance, and it is a broad term used to describe all financial methods that include cryptocurrency and blockchain. It’s called decentralized for the simple reason that there’s no centralized control over the same, unlike traditional currencies.
DeFi is a little distinct from traditional native cryptocurrencies like Bitcoin as they can enable complex financial tasks such as lending and borrowing among other things.
What are DeFi Marketplaces?
DeFi marketplaces is a decentralized marketplace which means that there is no middleman involved. The basic idea is a lot similar to blockchain, where the user can download the software and get directly linked to everyone else using the software at that moment.
This way, the platform ensures a high level of transparency around the rules and working of the marketplace. Another feature of blockchain is its immutability, which means that once data is logged into a blockchain secured system, it cannot be deleted or revoked in any manner, and DeFi marketplaces also follow the same concept.
Simply put, if you love the idea of decentralization brought forth by digital currencies, why would you use centralized exchanges like Binance and Coinbase to trade them? That’s why, DeFi marketplaces are important.
Top 5 Defi Marketplaces based on Transaction Volume:
The following is a list of the top 5 decentralized marketplaces based on total trading volume concerning data from the last 30 days.
This is a digital exchange developed for swapping BEP20 Binance Smart Chain tokens. Enjoying a market volume of around $16 billion, PancakeSwap makes use of the automated market maker (AMM) model.
This way, users of the platform can trade against a liquidity pool. The platform allows users to deposit an amount of money into the pool, receiving LP or liquidity provider tokens in exchange for funds. The LP (Liquidity Provider) tokens are also called FLIP tokens.
Another protocol for Ethereum’s automated market maker, UniSwap enjoys a similar market value at $16 billion, like the PancakeSwap. Launched in the year 2018, the platform is termed as a relatively simple and smart interface for exchanging ERC20 tokens.
Similar to PancakeSwap, it has also formalized a model to create a liquidity pool of reserves. The platform serves as one open-source frontend interface for liquidity providers and traders alike. It could be said that it has been a pioneer in this space, and it recently launched UniSwap v3 to continue its leadership.
MDEX is one of the smartest exchange innovations of recent times. This automatic market-making decentralized exchange works around the basics of fund pools for its users. Enjoying a market volume of over $15 billion, MDEX functions around a mix-chain DEX model that is said to work around Ethereum and Heco Chain.
Operating as one hybrid platform, it combines the perks of low transaction fees from the Heco chain and utilizes the vast ecosystem of Ethereum.
Another fastest-growing DeFi marketplace in the list, SushiSwap is an Ethereum-based swapping platform that runs on Ethereum. The platform that enjoys a market valuation of some $77 million, seeks to incentivize a number of users to trade in crypto.
Keeping up with similar functionality like Uniswap and Balancer, SushiSwap also operates over liquidity pools to allow it to achieve the trade goals.
Said to be the first-ever democratized decentralized AMM, present over Binance’s Smart Chain, BurgerSwap values at around $51 million in terms of its volume. One of the most prominent and reliable platforms, BurgerSwap allows any user to create proposals allowing them to revise the transaction fees, block rewards, and make complete use of other such exchange parameters.
Defi run in the same way blockchain is used, there is no requirement for any middlemen, and the transaction data are not stored in one single system but on different decentralized systems. Defi currencies can be used for a large variety of purposes, including simple transactions similar to what a virtual currency like Bitcoin is used for. Unlike such digital coins however, Defi currencies can also be used for complex financial operations. Not to mention the fact that by using DeFi marketplaces, you’re sticking to the original vision of cryptocurrencies and blockchain tech.