PancakeSwap, Uniswap, SushiSwap and More: What to Consider When Parking Crypto in a DeFi Exchange

Monday 26 April 2021, 7:52 PM AEST - 1 month ago

Decentralized finance (DeFi) allows strangers on the internet to earn money much the same way bankers do, by earning fees on financial services.

In most cases, people do that by providing liquidity. Those investors stake, or lend, digital currencies, not dollars or euros or yen, and they are lending the digital currencies to apps rather than to people or companies. One set of apps with the most need for liquidity and the heaviest flow of transactions is decentralized exchanges (DEXs), particularly automated market makers (AMMs) led by Uniswap.

But how does anyone decide which AMM is the right one for their funds?

This post is a starting point for each investor in the almost $60 billion DeFi market to begin doing their own research on which exchange to take part in. Joining a particular DeFi community can mean much more than just putting up funds. It can also mean participating in discussions, helping out new users, voting on governance decisions and even writing suggested improvements for a software protocols code base.

Its surprising that the industry has even reached this point. Not so long ago, there was doubt about how practical it was to decentralize cryptocurrency exchanges. Besides dealing with slow execution speeds, traders on DEXs were vulnerable to front-runners stealing their smartest trades.

And yet here we are. Decentralized applications that many CoinDesk readers will have heard of, such as Uniswap, Curve and SushiSwap, are all now in the top 10 decentralized applications as ranked by DeFi Pulse. Just on its own, Uniswaps worst week so far in 2021 was $5.8 billion in volume, usually coming in somewhere like $8 billion a week since mid-February, according to its own stats.

In fact, Uniswaps creator, Hayden Adams, just announced that his app had posted $10 billion in a week for the first time ever.

Once a sector is putting up numbers like that, th ...

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