Not All DEXs are Created Equal: Here’s the Math

Upshot: Uniswap and PancakeSwap have become household names in decentralized exchanges but a new crop of platforms are coming online with the promise of lower fees and more pricing transparency.

With gas prices making headlines throughout the first half of 2021, it’s worth taking a deeper dive into what your options are when trading across DEXs (Decentralized Exchanges). DEXs aim to allow the same scale as centralized alternatives, but without a central layer of ownership to execute trades. 

While Uniswap helped drive the first wave of DEX-mania, its popularity is waning. This is down to high gas fees, but also a number of competitors using aggregation or new lower fee networks to differentiate and draw users in. We’re going to explore some of the more popular instances of these DEXs, and look into some of the more compelling measures of each to compare them. 

What is driving this change in the Decentralized Exchange space?

DEX Aggregators – DEX aggregators search liquidity from different DEXs and offer users better token swap rates than they could get on any single DEX. They are able to optimize slippage, swap fees and token prices – often delivering a better rate for users. 

While Uniswap helped drive the first wave of DEX-mania, its popularity is waning.

They also allow users to target maximum return versus lowest gas fees for any transaction. When you add in the ability to compare pricing in real time between a huge number of DEXs, the opportunities for arbitrage trading are plentiful.

Binance Smart Chain (BSC) – Binance Smart Chain is a blockchain network built for running smart contract-based applications – rivalling the common ETH network. BSC runs parallel to Binance’s Binance Chain (BC), allowing users to get the best of both worlds: high transaction capacity of Binance Chain and the smart contract functionality of BSC. 

BSC has gained incredible traction in 2021 thanks to Ethereum’s congestion and gas fee issues. This has seen developers and staking investors begin to look for other options. The BSC community made the network even more appetizing to new users by lowering its gas fees from 15 Gwei, down to 10 Gwei in an effort to counter Binance Coin’s (BNB) huge price jump in February.

Taking a closer look at cross section of DEX options

Uniswap – Uniswap is a leading decentralized crypto exchange that runs on the Ethereum blockchain. One of the founding fathers of the DEX ecosystem, this exchange continues to 

be popular; despite the high gas fees being found across the ETH network.

Uniswap incentivizes users trading on the exchange to become liquidity providers (LPs): Uniswap users pool their money together to create a fund which is used to execute all trades that take place on the platform. 

Market Share: 16%

Fees: 0.3%

Avg. gas fees: $11.38

Trading Pairs: 856

PancakeSwap – PancakeSwap is a decentralized exchange built across Binance Smart Chain, providing a fast and inexpensive alternative to Ethereum. Similar to Uniswap, PancakeSwap allows users to swap between cryptocurrency assets by tapping into user-generated liquidity pools.

As Pancakeswap runs on the Binance Smart Contract network, users see lower transaction fees, alongside significantly lower gas fees. This has led to Pancakeswap rapidly moving up into second spot behind Uniswap as the leading decentralized exchange. It has also seen a massive rise in new projects seeking to ride on its coat tails, resulting in a significant number of potential trading pairs when providing liquidity. 

Market Share: 8%

Fees: 0.25%

Avg. gas fees: $0.05

Trading pairs: 15,265

SushiSwapSushiSwap is a popular Uniswap fork, built on the Ethereum network. As with Uniswap, it allows users to buy tokens and add to liquidity pools to earn yields in the form of trading fees and SUSHI tokens. 

As with many decentralized exchanges, Sushiswap provided leading APY rates at launch for it’s farming and staking pools, incentivizing Uniswap users across in droves to make the most of these offers. 

Market Share: 5%

Fees: 0.30%

Avg. gas fees: $9.98

Trading pairs: 496

1inch1inch  collects and measures liquidity across numerous liquidity pools, trading platforms, and exchanges to find the best trade possible. By giving users the ability to access the entire DeFi marketplace, 1Inch helps to reduce fees and slippage for users, whilst providing far greater visibility of market positions than any single DEX. 

Aggregation platforms such as 1Ince provide great opportunities for arbitrage; by finding pricing differences between multiple exchanges and generating profit margins by trading these differences. While excellent for finding individual tokens, the yield farming elements popularized on DEXs are more limited, and can be very pricey based on the number of transaction fees needed to be completed. 

Market Share: 3%

Fees: Varies based on trading

Avg. gas fees: Varies based on trading

Trading pairs: 319

CoinSwap Space – The Binance Smart Chain (BSC) has provided a refreshing new take on DEX trading by reducing fees, and increasing transaction speeds. CoinSwap makes the most of these capabilities by not only rewarding its users and community through utility on its native token CSS, but also offers NFT (non-fungible token) marketplaces.

As CoinSwap is a relative newcomer to the DEX space, its yield farming and liquidity staking APYs are extremely inviting. What’s also interesting is its native CCS token will have a hard-cap, meaning users earning or trading in CSS will see these tokens increase in value as time goes on – as there is only a limited supply. Add to this the lower fees than those seen across other BSC competitors, we might just see this platform make some significant growth over the coming year.

Market Share: <1%

Fees: 0.2

Avg. gas fees: $0.05

Trading pairs: 2785

ParaSwap

ParaSwap is another aggregator pulling together a number of popular DEXs (Decentralized Exchanges) and DeFi platform pricing data. As with 1Inch, one of the key benefits to this type of platform is its ability to search for pricing differences across multiple networks to make arbitrage margin. 

Market Share: 1%

Fees: Varies based on trading

Avg. gas fees: Varies based on trading

Trading pairs: 289

BlockchainMarket ShareDaily VolumeFeesAvg. Gas FeesTokensTrading Pairs
UniSwapETH16%$1,431,469,3500.30%$11.38282856
PancakeSwapBSC8%$662,524,5550.25%$0.0593615,265
SushiSwapETH5%$435,720,7530.30%$9.98392496
1InchN/A3%$284,319,692VariesVaries312319
ParaSwapN/A1%$20,035,090VariesVaries184289
CoinSwapBSC1%$11,354,1250.20%$0.051572,785

Sources: https://www.coingecko.com/en/dex & https://crypto.com/defi/dashboard/gas-fees 

Conclusion

Uniswap and PancakeSwap continue to make headlines however, other platforms across the aggregator and BSC ecosystem are providing much more value in terms of fees and/or pricing visibility. While the release of ETH 2.0 will seek to address many of the frustrations of Ethereum network-based platform users, it’s likely that while speeds increase, fees will continue to remain higher than BSC network platforms.

Ultimately, it depends on what you’re looking to achieve. If you are interested in making margins by identifying pricing deltas between multiple exchanges, aggregators are for you. If you’re not a whale and just want to buy speculative tokens, farm yields and earn APY through staking liquidity, you are more than likely going to be focusing your energies on BSC products such as PancakeSwap and CoinSwap; as the transaction and gas fees across these platforms are significantly less. As we can see from our comparison table, Uniswap is still a viable DEX, but only for those who have the capital to spend on fees and faster transactions. 

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