Category: DeFi

Biswap is a DEX (decentralized exchange) platform enabling users to swap BEP-20 tokens on BSC, the Binance Smart Chain network.

It’s also the first DEX on BNB Chain with great features that challenge many popular BSC DeFi platforms, such as a three-type referral system and the lowest platform transaction fees (0.1% per swap). The platform provides liquidity mining, yield farming, and staking services.

What Is Biswap (BSW)?

Biswap is the first decentralized exchange platform on the BNB chain with a three-type referral program and the lowest transaction fee (0.1% per swap). Biswap’s key offerings are an AMM, yield farming, liquidity pools, an NFT marketplace, an IDO Launchpad, etc. It offers a unique Biswap NFT collection, enabling users to stake their purchased NFTs in NFT Staking Pool on Biswap and get up to 700% APR. Biswap’s Squid NFT World is the first NFT game on the market with a multi-reward pool where users are rewarded with BSW tokens and tokens of other projects.

Biswap DEX is committed to DeFi innovation through high-quality products and services and aspires to become the industry standard for DEX platforms and the market’s premier platform for token swaps. Biswap DEX facilitates the exchange of BEP-20 tokens on the BNB chain, ensuring greater performance and lower network transaction fees.

Its multi-type referral program enables users to invite friends and earn commissions from Biswap farms, launch pools, exchanges, and a lottery.

Biswap applies transaction fee mining, the process of rewarding the community using transaction fees. Unlike other exchange platforms, it returns up to 50% of the trading fee to users in the form of BSW, its native token.

To generate scarcity, BiSwap periodically burns a portion of its token supply. Here are Biswap’s deflationary mechanisms in place:

• Tokens are purchased back from the market using 50% of the trading fees and burned
• All the rewards from accounts with no referrer are used for BSW token burning
• Biswap Holder pool & Auto Compound pool performance fee of 1.9is used for token burning
• 5% of the trading fees are used for repurchasing the BSW tokens from the market and burning them
• 13% of all sales of lottery tickets
• 10% of BSW from NFT Sales Revenue
• 0.5% Royalty Fee from each sale of Biswap Robbies NFT Earn Collection
• 1% Royalty Fee from each sale of Squid NFTs Collection
• 15% from IDOs revenue.

The Biswap Roadmap includes multiple releases and aspects of the project’s further growth highlighted below:

• Multi-reward pool for BSW holders
• New innovative Launchpad system
• NFT Staking V2.0
• Personal user’s dashboard
• Daily tasks for users
• Limit orders
• Lending & Borrowing

Additionally, Biswap organizes trading competitions on its own platform, and to get a prize, you must use their Exchange and make multiple trades.

Biswap is also the first decentralized market exchange in the crypto space to integrate live support on its website.

Biswap Founders

Biswap was launched in 2021, with 27 team members listed on the website. All Biswap team members use pseudonyms and are displayed as comic avatars on the site. “EK,” the CEO, is said to be a crypto veteran with seven years of expertise. Almost every member of the Biswap team claims to have several years of experience in their field, but no specifics are given. Biswap makes no mention of any potential investors.

What Makes Biswap Unique?

First and foremost, Biswap differentiates itself by charging lower transaction fees than other decentralized exchanges. Biswap claims to charge only 0.1% in fees, compared to 0.25% on Pancakeswap and 0.3% on Mdex, Apeswap, and other BSC DEXs. As an incentive, 0.05% is returned to liquidity providers, and 0.05% is used for BSW token burning. Biswap retains the right to raise the fees in the future and add a team allocation. It does, however, pledge to keep the fees below the industry average.

Users can participate in transaction mining, which means they can receive up to 90% of the 0.1% swap fee, depending on the trading pair. They can also provide liquidity to liquidity pools and earn BSW farming incentives.

Biswap’s NFT marketplace, allowing users to buy NFTs with 4 other cryptocurrencies: BNB, WBNB, BUSD, and USDT, is another key feature of Biswap. Biswap also offers its own NFTs, known as NFT Earn, including an NFT Launchpad, NFT Boost, NFT Staking Pool, and NFT Level Upgrade. Users can purchase “Robi NFTs” and stake them to gain profit.

The Biswap lottery is another unique game where participants can win “large BSW rewards.” Each user can buy unlimited tickets, with 80% of the proceeds going to the prize pool.

Lastly, Biswap offers an IDO Launchpad, allowing other blockchain companies to use Biswap to launch their tokens. The DEX claims to have over 300,000 active users and provides a $10 million incentive scheme to new participating projects.

What Is the BSW Token?

BSW is the native token of the Biswap exchange used to incentivize liquidity providers and users. The BSW token powers the Biswap ecosystem. The weekly burning mechanisms on the Biswap platform increase the value of the BSW token in the long run by decreasing the total supply of BSW tokens. 

The BSW token has several use cases, including staking the tokens in the launch pools to get other tokens, staking the tokens given by liquidity providers in Biswap Farms pairs to get BSW tokens, and to trade BSW tokens with low transaction fees. Plus, BSW holders can use BSW to add liquidity to the liquidity pools and receive 50% of each transaction fee on the Biswap platform.

How Many Biswap (BSW) Coins Are There in Circulation?

BSW has a total supply of 700 million; the 600 million BSW tokens are distributed as follows:

• Farms / Launchpools: 80.7%
• Referral Program: 4.3%
• SAFU (an emergency insurance fund for all users): 1%
• Team: 9%
• Investment Fund: 5%

The remaining 100 million BSW has been allocated 70/30 between NFT (Earn), GameFi (Play to Earn), Strategic Partnerships (70%), and Transaction Fee Mining (30%). Biswap also implements several deflationary mechanisms, including burning 50% of transaction fees, 13% of lottery tickets, 10% of sales proceeds, and 10% of new NFT mints.

BiSwap Exchange Features

BiSwap Exchange provides its users with a plethora of features, such as:

Swapping: You can instantly swap a wide range of BEP-20 tokens on the Biswap website by selecting your trading pair, entering the token amount you want to swap, and clicking the swap button.

Launchpools: The platform interface allows users to earn extra BSW and other tokens by staking BSW in relevant Biswap Launchpools. There are two types of pools: auto-compounding and non-compounding tools, and they both provide competitive interest rates. In addition to BSW, the launchpools allow you to farm tokens like CAKE, DOGE, BUSD, etc.

Liquidity Mining: You can deposit funds into any pool on the Biswap Exchange platform. To do so, go to the website’s “Liquidity” tab and select the “Add Liquidity” button. Choose the pool you want to provide liquidity to, and you’ll be given a liquidity provider token that you can stake on the Biswap farms. Besides earning BSW, you can also obtain a percentage of the trading fees generated by that pool.

Transaction Mining: This cashback program allows traders to receive 100% of their trading fees back in BSW tokens. The site generally charges a minimal transaction fee of 0.1%. With this functionality, the fee is further reduced to zero in some circumstances.

Yield Farming: On the Biswap website, you’ll find a variety of farms where you can use your LP tokens to double your earnings.

Competitions: To reward users, interact with the community, and highlight new exchange listings, Biswap organizes trading and other competitions.

Referral Program: There are three ways to earn referral rewards on Biswap. You get a cut of trading costs, receive a certain commission reward each time your referrals make swaps on the Biswap platform, and a 5% return in BSW tokens from their referrals’ earnings from farming and Launchpools. Furthermore, the incentives are derived from BSW block emissions, accounting for 4.3% of the tokenomics.

How Is the Biswap Network Secured?

BSW is a BEP-20 token on Binance Smart Chain (BSC), secured by a Proof-of-Stake (PoS) consensus mechanism. Every 24 hours, 21 validators are elected to validate transactions and keep the blockchain secure. To be eligible, these validators must stake a specified amount of Binance Coin (BNB) with Binance. Biswap has a bug bounty program as well. Depending on the security issue, you might receive anywhere from $10 to $100,000 for reporting vulnerabilities.

Biswap has been audited by Certik, one of the leading DeFi audits to date.

There are more than 350 million dollars in total locked value (TLV), which gives more security and credibility to Biswap.

Additionally, in July 2021, Biswap received the Binance “Most Valuable Builder II” (MVBII) award and was among the top ten exchanges that got rewarded.

Bottom Line

Biswap is a top-notch decentralized exchange (DEX) created for the BNB Smart Chain. The network guarantees superior speed and lower network transaction cost and enables Biswap users to earn passive income through the three-type referral system, stake BSW tokens to earn BSW tokens via Launchpools, and benefit from farms with high annual percentage yields (APY).

Biswap deserves consideration owing to its proficient team, robust tokenomics, thriving and enlarging user community, distinctive attributes and offerings, and enticing staking and farming prospects.

QuickSwap is a Layer 2 decentralized exchange and automated market maker (AMM). It was created on the Polygon blockchain and is essentially a fork of Uniswap.

QuickSwap uses a liquidity pool model similar to Uniswap in that users offer liquidity and earn transaction fees when they swap tokens from these liquidity pools. However, its advantages are that QuickSwap is built on the Polygon network, enabling it to facilitate token swaps faster and at a lower fee.

QuickSwap connects the Ethereum and Polygon blockchains, enabling users to swap and trade ERC-20 tokens on QuickSwap.

This article will delve deep into the QuickSwap protocol, provide an extensive breakdown of its technology and features, and proceed with a quick tutorial on trading tokens on QuickSwap.

Let’s get started!

What Is Quickswap?

Quickswap is a Layer 2 decentralized exchange, and automated market maker (AMM) launched in 2020 by Nick Mudge and Sameep Singhania.

QuickSwap protocol offers a bridge between the Ethereum blockchain and Polygon, enabling users to swap and trade ERC-20 tokens on QuickSwap without order books and without having to pay Ethereum’s high gas fees. With a liquidity pool, users can bridge ERC-20 tokens from Ethereum to Polygon and trade any pair via QuickSwap. By supplying a token pair, anyone can launch a new liquidity pool and begin collecting transaction fees from other participants.

QuickSwapaims to solve such user experience problems as Ethereum’s high transaction fees and transaction times by leveraging the low fees and rapid confirmation times of Polygon’s Layer 2 technology. QuickSwap users can perform faster and cheaper transactions on the Polygon network and enjoy the secure, audited code of Uniswap.

QuickSwap is powered by the QuickSwap token (QUICK) and the Dragon’s Quick token (dQUICK), QuickSwap’s interest-bearing token.

The QuickSwap team forked the code behind Uniswap without changing the underlying code to run on Polygon and named the resulting project QuickSwap. The team also developed additional features such as Dragon Lair, where users can stake their QUICK tokens to earn protocol fees, and Limit Order support and Dragon Syrup, where stakers of dQUICK can earn additional yields from projects that are traded on QuickSwap.

What Is Polygon?

QuickSwap has become one of the most popular automated market makers (AMMs) by building on top of the Polygon Layer 2 scaling solution, which benefits from near-zero gas fees and up to 65,000 transactions per second. By building on top of Polygon, QuickSwap aims to facilitate fast transactions with virtually no transaction costs while redesigning how people interact with Decentralized Exchanges and DeFi by developing intuitive user interfaces.

Polygon is a developer-friendly hybrid protocol rebranded from the well-known Matic Network in Q1 of 2021. It’s one of many Layer 2 scaling solutions helping to scale the world’s most programmable blockchain. Polygon combines Proof-of-Stake (PoS) and Plasma to enable developers to quickly develop and deploy Ethereum-compatible, highly scalable decentralized applications (DApps).

On the Ethereum Mainnet, Polygon employs “PoS checkpoints” to complete transactions. It uses several smart contracts for functions like staking, message relaying, checkpointing, finality, and dispute resolution.

Polygon enables developers to create customizable blockchain networks. Ethereum’s strength and interoperability are combined with these networks’ flexibility, sovereignty, and scalability. This makes the testing and releasing secure decentralized applications (DApps) to the market exceedingly simple. Additionally, all tools made for Ethereum developers are compatible with DApps developed on Polygon. For example, you can change the Remote Procedure Call (RPC) from Ethereum to the Polygon/Matic Network at the top of the extension to utilize Polygon with MetaMask.

Polygon powers QuickSwap transactions, i.e., asset exchanges on QuickSwap exchange take less than two seconds and cost a fraction of what they do directly on Ethereum.

The Layer 2 solution offered by Polygon is in great demand and essential for developing the crypto sector.

What Is QUICK Token?

The QuickSwap platform is powered by its native QUICK token, an ERC-20 token. The QUICK token was introduced in February 2021 and had a nearly 90% rise on its initial trading day. Check the current QUICK token price, total supply, maximum supply, live market cap, current circulating supply, 24-hour trading volume, etc., and get real-time updates on QUICK to USD price on CoinStats, one of the best crypto platforms around.

The QUICK token distribution was based on a community-focused governance structure. The QUICK coin received no seed money from private or public sources. There were no pre-sales, private sales, or seed rounds. 90% of all QUICK tokens were or will be distributed to the QuickSwap community via liquidity mining rewards, slated to be paid out until 2025.

Liquidity providersearn a 0.25% fee on all trades proportional to their pool share. Liquidity providers for select incentivized pools receive LP tokens, which they can then stake in LP Mining or Dual Mining to earn more rewards in addition to a portion of the pool’s trading fees. The LP tokens received for providing liquidity for incentivized pools can be used for yield farming.

QUICK token holders can vote for various aspects of the protocol changes and cast votes on multiple topics, including changes to the reward structure and whether pools are eligible for quick mining.

The QUICK cryptocurrency is designed to enable QuickSwap to achieve complete decentralization.

QUICK’s use cases include:

• Providing Liquidity
• Yield farming to earn dQUICK tokens as rewards
• Voting power for QUICK token holders 
• Staking to earn more QUICK tokens (Dragon’s Lair for Old QUICK, Dragon’s Syrup Pools for New QUICK)
• Participating in Initial DEX offerings (IDOs)
• Speculating and trading.

How Does Quickswap Work?

The QuickSwap protocol uses an automated market maker model (AMM) called Constant Product Market Maker to create liquidity pools of tokens that users can access to swap. Users don’t trade as makers or takers but interact with a smart contract, a unique computer program built on the Ethereum blockchain.

Smart contracts regulate and manage any token exchanges on QuickSwap automatically. As a result, swaps are accessible to all QuickSwap users via a browser plugin without any requirement to register or provide ID details.

A liquidity pool is another crucial component of QuickSwap. Liquidity pools are funded by liquidity providers, allowing any project participant to contribute the equivalent of two tokens to the pool. The small fee traders pay is divided among liquidity providers based on the proportion of their shares in the liquidity pool.

Quickswap Liquidity Pool

Liquidity providers create a market by depositing the equal value of two tokens. Afterward, a smart contract automatically locks the token pairs – a pair of ERC-20 tokens or ETH and an ERC-20 token.

Although this is not required, pools typically consist of stackable tokens like DAI, USDC, or USDT. In exchange, liquidity providers receive liquidity tokens (LP), representing the liquidity pool’s share. Providers who contribute more typically receive more significant benefits.

Tip: You can click on your selected pool to view data such as the total prizes awarded daily, the annual percentage yield (APY), etc. You can also select Dual mining pools, which double your earnings when you deposit your liquidity provider tokens (LP).

Dragon’s Lair

QuickSwap’s Dragon’s Lair is a popular single-staking product that allows users to stake their QUICK tokens to supply liquidity on QuickSwap to earn rewards without the risk of impermanent loss. By staking QUICK tokens in the Dragon’s Lair, users can earn dQUICK tokens as rewards and a share of 0.04% of all trading fees on QuickSwap indefinitely. Plus, users can earn passive income by staking QUICK tokens in Dragon’s Syrup Pools, which offer a finite number of rewards in participating tokens that expire once the limit is depleted.

Token Swaps

QuickSwap enables users to quickly exchange ERC-20 tokens and any Polygon-related tokens, as well as wrapped tokens, for only a 0.3% transaction fee. The fees collected from these transactions are paid out to liquidity providers. Unlike other platforms, QuickSwap doesn’t require KYC, so users only need MATIC in their wallets to perform the swap. With its simple and user-friendly layout, QuickSwap offers a permissionless way to exchange tokens.

How to Trade on Quickswap?

You can access QuickSwap exchange (quickswap.exchange) on both mobile devices and desktop web browsers for swapping tokens. With the help of one of the liquidity pools, you may effortlessly trade your coins for a fee.

1. Navigate to quickswap.exchange.

2. Connect your wallet. You should use a mobile wallet app or a desktop browser extension wallet supported by the Polygon Network, such as the Trust Wallet or MetaMask

3. Click Swap in the navigation bar once your wallet is connected.

4. Select the token pair you wish to swap. The default token is usually MATIC, but you can swap MATIC for other tokens.

Tip: QuickSwap provides price impact warnings at the bottom of your trading dialog after you have selected your trading pair and the amount you are trading. This helpful header tells you the difference between the market price and the estimated transaction price.

5. Click Swap to initiate the swap.

6. Preview and confirm the transaction on your wallet.

Uniswap vs. QuickSwap

QuickSwap has become a popular alternative to Uniswap for many customers due to its fast transaction speeds, low costs, and compatibility with Ethereum. The Polygon network’s low fees and short transaction times are a major draw for users. Using QuickSwap, users can enjoy the significant security benefits of Uniswap’s audited code while conducting transactions on the Polygon network quickly and inexpensively. Users can also bridge between Polygon and Ethereum to transfer ERC-20 tokens on QuickSwap without paying Ethereum’s high gas fees.

Final Words

QuickSwap has gained popularity among users looking for fast, inexpensive, and secure transactions. With its compatibility with the Ethereum network and the low fees and fast transactions offered by the Polygon network, QuickSwap offers a compelling alternative to any centralized exchange. Users can earn rewards by staking QUICK tokens in the Dragon’s Lair or participating in Dragon’s Syrup Pools. Plus, QuickSwap’s permissionless token swaps allow users to exchange ERC-20 tokens without needing KYC verification. Overall, QuickSwap is a promising platform for users seeking a reliable and efficient decentralized exchange.

dYdX is a crypto derivatives decentralized (DEX) exchange offering users a wide range of financial instruments such as perpetuals, margin, spot trading, lending, borrowing, and making bets on the future prices of popular cryptocurrencies. It enables users to trade over 35 different cryptocurrencies. The dYdX protocol was developed on Ethereum smart contracts and Stark rollups powered by Starkware. It’s designed to bring the standard trading features of a centralized exchange to the blockchain world. In so doing, it combines the security and transparency of a decentralized exchange with the speed and usability of a centralized exchange.

The protocol has its native governance token, DYDX, which enables network participants to control future developments, gain mining rewards, and receive trading discounts on the exchange.  

dYdX was launched in July 2017, initially offering crypto margin trading, lending, and borrowing services across Ethereum Layer 1. 

In August 2021, the dYdX exchange launched Layer 2 cross-margin perpetual trading enabling users to repurpose their available platform balance to offer liquidity to existing trades to prevent liquidations during periods of extreme volatility.

The project was designed to be the fastest, cheapest, and most powerful decentralized exchange. The dYdX platform is one of the world’s largest decentralized exchanges in terms of trading volume and market share, with over 60,000 users. It’s worth about $11 billion in perpetuals and profits and over $25 billion in flash transactions via dYdX Liquidity Pools. 

How Does dYdX Work?

dYdX is based on the Ethereum blockchain. The exchange combines Ethereum’s security with fast and low-cost transactions via its Layer 2 network.

The L2 protocol uses the scalability solution StarkEx and Perpetual smart contracts of dYdX. Perpetuals are essentially crypto derivative swapping contracts based on speculation on the future price of cryptocurrencies without expiration dates. dYdX allows up to 25X leverage.

Instead of individual borrowers and lenders making and accepting loan offers,  there is one global lending pool per supported asset on dYdX. The lending pool is managed by smart contracts, so withdrawing, borrowing, and lending can happen anytime without waiting for matches or sufficient capital. The supply and demand for each asset determine the interest rates of each asset. The technology ensures lender security by requiring borrowers to deposit sufficient account collateral. 

The protocol achieves decentralized governance through its native ERC 20 token DYDX.

dYdX introduces retroactive mining bonuses to past users in addition to trading and liquidity provider awards, incentivizing them to trade on the Layer 2 protocol. DYDX token holders can stake their tokens in the dYdX safety staking and liquidity pools to earn rewards for securing the protocol. While the safety pool serves as the platform’s safety net in a shortfall event, the liquidity pool attracts high-quality market makers.

Layer 1 dYdX  (Ethereum)

The Layer 1 version of dYdX is a highly liquid decentralized exchange for cryptocurrency margin and spot trading with 5x leverage on assets like BTC and ETH paired with stablecoins (USDC & DAI). 

Borrowing to fund your positions is simple and quick, with funds sent directly to your wallet as long as you collateralize properly. Currently, the collateralization minimum is 125%, meaning you must deposit significantly more than you wish to borrow. Over-collateralization safeguards lenders in the event of a default.

Layer 2 dYdX (Starkware)

The Layer 2 version of dYdX improves network scalability by employing zkSTARKS, a type of zero-knowledge Rollup technology.  zkSTARKSe uses an off-chain virtual machine to process batches of transactions and post a validity proof on-chain to confirm. It removes expensive computations from the mainnet while still preserving decentralization.  

Layer 2 dYdX provides cryptocurrency perpetual contract trading for a broad range of digital assets, including USD-paired cryptocurrencies like BTC, ETH, SOL, DOT, AAVE, LINK, UNI, SUSHI, MATIC, and LTC. In terms of leverage, you can use up to 25x, a significant improvement over dYdX on Layer 1. 

Layer 2 dYdX offers the following benefits:

• Low/ no gas fees
• Mobile friendly
• Cross-margining
• Secure and private transactions
• Fast transactions.

dYdX Founders

Antonio Juliano is dYdX founder and CEO – an experienced programmer with expertise in blockchain technology. He became involved in crypto as a software developer at the Coinbase cryptocurrency exchange platform in 2015. Juliano is a Princeton University graduate with a computer science degree. He launched dYdX in early 2017.

dYdX started with the launch of the Layer 1 product (Solo), which supported lending, borrowing, and margin trading on Ethereum.

In 2021, dYdX launched a closed alpha for its new Layer 2 cross-margined Perpetuals product built on StarkWare’s StarkEx scalability engine.

In August 2021, dYdX Trading Inc. announced the creation of the dYdX Foundation. The dYdX Foundation deploys smart contracts and issues the DYDX governance token. It supports community research and education and also manages the dYdX community treasury.

The exchange launched in 2019 after receiving over $10 million in seed venture capital funding in 2017. The dYdX token ICO was held on September 9th, 2021.

The project investors are Andreessen Horowitz, Paradigm, Polychain capital, and Coinbase CEO Brian Armstrong.

dYdX Trading Options

dYdX provides perpetual markets (buying or selling orders at a fixed price indefinitely, i.e., with no expiry date), including spot and margin trading on the Ethereum Layer 1 blockchain and Layer 2 cross-margined perpetuals. Let’s look into the details of each below:

Perpetual Trading on the dYdX Exchange

Perpetual trading is dYdX’s primary product, enabling users to trade open markets with non-expirable contracts. As a result, investors can hold their buy or sell positions indefinitely until the predefined transaction conditions are met. For example, if a user places an order to sell one Bitcoin for $100,000, the order will be active until Bitcoin reaches $100,000 and the trade is completed. On the other hand, an investor can terminate the contract by pre-closing the buy or sell order.

The dYdX perpetual is a non-custodial, decentralized margin product that provides a synthetic exposure to a wide range of cryptocurrency assets. Perpetual contracts are created on top of an underlying asset, in this case, Ethereum-based ERC-20 tokens. As a result, dYdX enables the creation of totally new asset classes, the values of which are derived from the underpinning blockchain-based assets.

dYdX Governance & Staking

The governance token for the dYdX protocol, DYDX, was issued a year after the dYdX platform launch. The DYDX token can be used for community voting and governance projects on the platform. Users can vote with their DYDX reserves on community proposals related to module enhancements, restorations, and grants.  Furthermore, users can earn DYDX by trading on the DEX, with all costs and interest paid.

The dYdX exchange’s community arm enables users to stake their existing crypto holdings to earn yield in its in-house governance token DYDX. The exchange provides two pools to stake USD Coin (USDC) to earn rewards for contributing to dYdX exchange liquidity.

To help the community, you can purchase  DYDX tokens on prominent cryptocurrency exchanges like Kraken and Coinbase.

Non-Fungible Tokens on DYdX

dYdX’s most recent NFT collection is Hedgies, a collection of animated hedgehogs developed by two independent digital artists, Anna and Arek Kajda. The NFT collection went live in February 2022 and launched 4,200 NFTs minted on the Ethereum network.

Users receive Hedgies depending on their trading data and community engagement, including voting. Hedgies NFT holders are entitled to specific benefits when trading on dYdX. You can mint Hedgies through the free app that rewards users for various activities and achievements.

Spot and Margin Trading on dYdX

On November 1, 2021, dYdX discontinued its Layer 1 offering of spot and margin trading services on the Ethereum Layer 1 blockchain protocol. It shifted to offering Layer 2 perpetual products to help achieve its goal of decentralization.

The dYdX exchange leverages spot and margin trading with Ethereum smart contracts. It also provides trading options such as stop-loss and limit orders like other centralized and decentralized exchanges.

What Is DYDX Token?

DYDX is the dYdX protocol’s governance token that enables traders, liquidity providers, and partners to participate in the protocol’s community growth.

Token holders can stake their tokens to earn rewards and receive trading discounts. They can also make proposals to the dYdX’s Layer 2.

dYdX Liquidity Staking Pools 

dYdX offers two types of staking pools. 

The safety pool creates a safety net and ensures that the DYDX users who staked their tokens receive a portion of rewards in proportion to their staked tokens in the pool.

The liquidity pool provides liquidity network effects and incentivizes professional market makers to invest in the platform. 

To encourage liquidity providers, dYdX liquidity staking pools award DYDX tokens to users depositing USDC in the pool. As part of the initiative, 25 million DYDX tokens are up for grabs, accounting for 2.5% of the entire token supply.

After depositing USDC to the protocol, users must stake it in the pool to receive stkUSDC. Then they must mark their token as active to add it to the liquidity pool to start earning DYDX tokens and a share of trading fees on their USDC deposit. 

dYdX Trading Rewards

You don’t have to be a liquidity provider to earn some tokens; you can earn DYDX tokens by trading on the platform. The platform rewards traders in DYDX tokens from a 250 million DYDX token stash. That’s 25% of the total token supply, demonstrating a substantial commitment to dYdX users.

Discount on Trading Fees 

Trading on dYdX entitles you to discounts in trading fees, thereby improving your profit and loss.

You must hold DYDX tokens in your wallet to receive trading fee discounts ranging from 3 to 50% for the largest dYdX investors.

How Many DYDX Tokens Are in Circulation?

A total of 1 billion DYDX tokens have been minted and will be distributed over five years starting August 3rd, 2021. 50.00% of the supply will be reserved for the community; 25.00% will be used as trading rewards; 7.50% will be set aside for retroactive mining rewards; 7.50% will be assigned for liquidity provider rewards; 5.00% will be dedicated to a community treasury; 2.50% will be allocated to users staking USDC in a liquidity staking pool, and 2.50% to users staking DYDX in a safety pool. Past investors will receive 27.73% of the proceeds, 15.27% will be distributed to the company’s team members, and 7.00% will be retained for future dYdX workers and consultants.

DYDX Tokenomics

• Max supply -1,000,000,000 dYdX
• Market cap – $1,251,357,416
• Fully diluted – $24,355,536,193
• Total value locked – $694,154,000
• Circulating supply – 1,000,000,000.

Who Is dYdX Designed For?

All of this discussion about crypto margin, spot, and perpetuals trading overlooks one crucial fact regarding their intended customer. What kind of cryptocurrency trader uses dYdX? 

While Layer 1 dYdX can be used for simple crypto spot trades, that’s not its intended application. The spot trading function appears to be built in to provide an early revenue stream for the site through transaction fees and deposit collateral, but it will be removed later. Furthermore, the dYdX foundation realized that the crypto spot trading industry is rife with the rivalry between well-known brands. As a result, the team is entirely focused on crypto derivatives such as perpetual contracts.

Crypto derivatives trading is often reserved for experienced traders who have perfected their art over time and understand the risks, gains, and tactics involved. For example, trading BTC perpetual contracts requires several moving elements and cannot be done hands-off. Failure to adequately fund an account over time might result in liquidation, which is the loss of your whole stake.

However, although dYdX best suits seasoned crypto traders, anyone can learn how to trade crypto derivatives.

How to Use dYdX?

As a decentralized exchange, dYdX doesn’t require users to undergo Know Your Customer (KYC) verification on the platform. You only need a funded Ethereum crypto wallet to start trading in minutes. dYdX is non-custodial, meaning traders have complete access to their funds.

Here is a step-by-step guide on trading dXdY perpetual contracts:

1. Navigate to the official dYdX website or download the dYdX trading app on iOS. 
2. Connect your wallet (CoinStats Wallet, MetaMask, Coinbase, etc.). After connecting to the wallet, a popup invites you to generate a Stark Key. The Stark Key is a way to assist with the user’s account’s identity, creating a secure interaction between Layer 1 and Layer 2. Click on the Generate Stark Key, which generates a Signature request. Sign the transaction, and there is no gas fee to sign.
3. Agree to the terms and create an account. 
4. Deposit funds from Ethereum mainnet. Currently, the platform only accepts the stablecoin USD Coin (USDC) as trading collateral. 
5. Select your asset and a type of trade.
6. Create a position with the desired leverage (if any) and limits.
7. Monitor your profit and loss statement and fund your position as needed.

The Future of dYdX

The dYdX exchange’s original goal is becoming completely decentralized, with no centralized components. Currently, dYdX is in its third version, with most of the dYdX v3 platform’s components being decentralized; however, it still uses centralized systems for the order book and matching engine. 

dYdX v4, the dYdX protocol’s fourth version, will be released as an open-source, decentralized, and community-controlled trading platform. Aside from complete decentralization, the dYdX v4 protocol will reintroduce trading features, including spot, margin, and other synthetic products.

The community will take control of dYdX v4 away from dYdX Trading Inc., which will no longer receive revenue on trading fees. Following community approval, the inability to earn revenue will extend to all the connected centralized systems.

Centralized exchanges such as Binance and Coinbase have been dominating the trading landscape in terms of trading volumes, despite cryptocurrency’s underlying goal of financial decentralization. One of the main reasons for this is the ease of regulating centralized enterprises. However, through decentralization, dYdX promises to give control to its investor community while still maintaining the highest level of transparency.

Bottom Line

Decentralized lending and borrowing are available in DeFi via increasingly advanced trading features. However, dYdX focuses on developing more powerful trading capabilities on the Ethereum blockchain.

The dYdX protocol, like other DeFi technologies, is open to anyone to use and expand upon, with users’ assets governed by smart contracts rather than individuals.

Since providing liquidity to DEXs is more profitable than staking, investors tend to choose yield farming when comparing yield farming vs crypto assets staking. However, are higher APY rates enough to ignore the safety hazards that unsecured liquidity pools offer?

In comparing yield farming to staking, one of the disadvantages of staking is that it doesn’t offer much compared to yield farming. Yield farming and staking returns differ, with stakes ranging between 5% and 15% maximum. On the other hand, the returns on yield farming may surpass 100% in some cases. Staking and yield rates are paid out annually. Yet, security-wise, yield farming on newer projects may result in complete loss as developers favor so-called rug pull projects.

The sole determining factor in deciding between farming and staking your assets should be your taste for risks. Yield farming is a better choice if you’re confident in your trading skills and believe that gaining money in a short period is risk-worthy. Yield farms offer users the highest possible return on cryptocurrency assets, while liquidity mining mainly focuses on improving the liquidity of the DeFi protocol and maintaining the security of a blockchain network. Yield farming can also be considerably more confusing for beginner investors and may demand regular research and more work. Staking provides lower benefits, but funds can be held for extended periods, and it doesn’t necessitate constant attention. So, it all boils down to your experience with the DeFi space and the kind of investor you want to be.

Decentralized finance can be a powerful tool to enhance financial inclusion worldwide by reinforcing the benefits of using digital assets in the financial sector. The two newly emerging solutions in DeFi trading are crypto staking and yield farming that let crypto investors earn interest and rewards on their crypto assets. With blockchain developers exploring ways to develop passive income opportunities, one of the most considered questions is yield farming vs staking: the differences between them and how each suits the average investor.

Staking

Staking is a technique derived from the proof-of-stake consensus model, an energy-efficient alternative to the proof-of-work model where crypto investors need computational power to solve complex mathematical problems. It’s essentially an interesting way of pledging crypto assets as collateral on blockchain networks that leverage the Proof-of-Stake algorithm. Similar to miners using computational power on the Proof-of-Work blockchain network to achieve consensus, users with the highest stakes are selected for validating transactions on the POS network. Only a POS-based blockchain network can yield staking income for an investor. On POS blockchains, staking is the mechanism that confirms transactions and secures the ledger. Rather than spending hardware power and electricity to validate transactions and solve complex mathematical problems, stakers lock up their assets to confirm blocks and nodes. Generally, stakers are users who set up a node personally and join any POS-based network to gain backing as a node validator. Users of centralized and decentralized exchanges stake their assets without handling the technicalities involved in setting up a node. Staker’s only responsibility is to provide the assets, and the exchange handles the validation process independently. Stakers can stake multiple assets from one place and avoid the effects of slashing, a mechanism that cuts down a users’ assets anytime they act maliciously.

With the surge in DeFi platforms and decentralized exchanges (DEXs), several projects are not allowing users to stake crypto-assets to earn rewards, bypassing becoming a node. 

How Staking Works?

Users must stake a fixed amount or engage in liquidity pools to become validators. Once an asset is locked up, it’ll act as a ‘stake,’ forcing users to confirm transactions in good faith. Each liquidity pool has different conditions and annual percentage yields (APYs), i.e., the annual income of a pool. Before staking, you should note the pool’s conditions as some have a fixed timeframe or lower APY rates than others. So make sure to study the different ways of staking your particular cryptocurrency to generate the highest possible passive income from staking. 

Risks In Staking

Staking is not entirely risk-free, but the risks involved are typically low. To name one, certain platforms enforce timelocks, locking stakers’ assets for up to an entire year, and an investor will suffer significant losses during this timelock if a bull market suddenly turns into a bear market. Instead of staking on an exchange, you can keep complete control of your coins if you use a staking wallet like the CoinStats Wallet. A platform like CoinStats is perfect for tracking your stakes, and your staked coins never leave your wallet; they only get delegated. However, if you stake via a custodial exchange like Binance, you must deposit your altcoins into the exchange.

Let’s look into some of the financial and security risks you can encounter when staking crypto:

• Volatility

If a radical event changes the value of your cryptocurrency, you won’t be able to sell it off due to having the coin locked up in staking. 

• Bad Validator

You can lose your money if you stake your coins via a validator, and he decides not to pay you back.

• Wallet or Account Breach

Your exchange account or staking wallet might get hacked.

• Project Failures

A project failure could wipe out your staked coins if you stake in PoS projects that guarantee higher yields but fail halfway.

• Extended Lock-up Periods

Keeping your assets locked with a network that doesn’t allow withdrawals till a specific period could affect your holding if the value of your staked crypto assets drops.

It’s worth noting that the main goal of staking is to safeguard a blockchain network by improving its security. The more users stake on a blockchain, the more decentralized it is, and it’s harder to attack it.

Timelocks and low APY rates, between 5% and 12%, are the main drawbacks of staking. Users risk losing their investments if the market changes without warning from a bull market to a bear market.

Yield Farming

Decentralized exchanges are the primary product of the DeFi market, and they rely on crypto investors willing to provide liquidity to facilitate trades. Yield farming, alternatively known as liquidity mining, is a popular method of temporarily lending crypto-assets to DeFi platforms to earn returns. It offers a flexible approach to generating passive income by depositing crypto-assets into a liquidity pool- a crowdsourced pool of digital assets locked in a smart contract. Cryptocurrency holders can lend their assets and receive rewards when using liquidity pools.

Yield farming is a more modern concept than staking and lets an investor meticulously plan and choose which tokens to lend on what platform. The hype around yield farming began around 2020 when the first DeFi lending protocol -Compound- was launched. Yield farmers deposit their crypto assets for any period they want. A yield farmer will earn a portion of the platform’s fees daily for the period he decides to pledge his assets, which can last anywhere from a few days to a couple of months. For example, when a yield Famer provides liquidity to a DEX like Insatdapp, he earns a fraction of the platform’s fees; these fees are paid by the token swappers who access the liquidity.

As a result of their high annual percentage yield rates (APY) – between 2.5% and 250%- yield farming pools are immensely competitive. The change in APY rates forces liquidity farmers to switch between platforms constantly. The downside to this constant switching is that liquidity providers (LP) pay gas fees every time they enter or leave a pool. This proves hunting for high-APY during times of high network congestion on the Ethereum network to be almost entirely inefficient.

Although Yield farming is centered around liquidity provision, it can be prone to losses if the markets turn violently bearish; users have to pay gas fees that are higher than usual.

How Yield Farming Works?

In the traditional banking system, banks acting as intermediaries handle financial operations such as borrowing and lending  using “order books.” In contrast, yield farming or liquidity mining uses AMM or smart contracts to facilitate crypto trading. To sustain the system and earn interest, liquidity providers pledge funds to the liquidity pool. Other users can borrow, lend, and trade crypto because of the funds offered by LPs to specific pools. All crypto transactions have a service fee dispersed among the LPs, and each lending protocol has a native token distributed to the LPs to incentivize pool funding further.

It’s vital to remember that yield farming is relatively new. To reap maximum rewards and determine which one suits you best, you should compare yield farming vs staking and consider all the risks and rewards.

Yield Farming Risks

While yield farming lets you gain the highest yields possible, there are risks associated with it. There are no rewards without risks.

• Impermanent Loss

You can suffer impermanent loss if the liquidity you provide loses its value.

• Price Fluctuations

Tokens can suddenly lose value due to the volatile nature of the crypto market.

• Protocol Glitches

Yield farming relies on smart contracts to facilitate financial operations, and a poorly designed smart contract or protocol can lead to hacks and other malfunctions.

While yield farming can be a profitable passive income generator, it’s also a risky business. Ethereum gas fees can wipe out any APY rate you’ve earned if the market turns wildly bullish or bearish. Consider using yield farm and market monitoring to defend yourself against some of these risks. 

Liquidity Pool

A liquidity pool is a crowdsourced pool of digital assets locked in a smart contract.  It’s one of the primary technologies behind the current DeFi Market and is used to facilitate trades between digital assets. Liquidity pools are essential for automated market makers (AMM), yield farming, borrow-lend protocols, on-chain insurance, blockchain gaming, synthetic assets, etc. To create a market, liquidity providers (LPs) add an equal value of tokens to a pool for crypto trading. In exchange for their liquidity, LPs earn rewards from the trades happening in their pool. Anyone can become a liquidity provider, with automated market makers making the market more accessible.

Many decentralized protocols have liquidity pools as their foundation. Bancor was one of the first DeFi protocols to use these pools, but the concept gained attention with the popularization of Uniswap. Other prominent exchanges that use liquidity pools on the Ethereum Blockchain are Curve, Balancer, and SushiSwap. Pools in these platforms contain ERC-20 tokens. Similar equivalents on the Binance Smart Chain (BSC) are Burgerswap and PancakeSwap, with the pools containing BEP-20 tokens.

How Liquidity Pools Work?

Popularized by exchanges such as Bancor and Uniswap, liquidity pools are a highly competitive sector and possibly the most revolutionary technology in the decentralized finance space. Liquidity pools help decentralized protocols operate by providing liquidity, convenience, and speed to those platforms. They also let investors who deposit funds into these pools earn passive income. The funds of these Liquidity providers (LPs) power the DeFi ecosystem.

Liquidity Pools Risks

You need to be aware of some of the risks involved before providing liquidity to an automated market maker.

• Impermanent Loss

You can suffer impermanent loss if the liquidity you provide loses its value.

• Smart Contract Risk

While technically, no middlemen hold your funds when you invest them into a liquidity pool, smart contracts can be considered a custodian of these funds. Your funds could be lost forever if there’s a bug or some exploit, i.e., through a flash loan.

Liquidity Mining

Liquidity mining is the process where crypto holders lend assets to a decentralized exchange in return for rewards. These rewards are commonly derived from trading fees traders pay for swapping tokens. In liquidity mining, yield farmers supply pools with crypto assets and earn fees and tokens in return throughout the entire yield farming process. Trading fees average at 0.3% per swap, and the total reward varies based on one’s equivalent share in a pool.

Liquidity mining is one of the ways of earning passive income, but similar to the other two approaches; it also comes with risks like project risks, impermanent loss, and smart contract risks.

Top Yield Farms

Now that we’ve reviewed what you need to know about yield farming and staking, here are some top-yield farms.

Yearn.Finance

Performance score: 8/10

Yearn.finance is a DeFi aggregator that offers great yield farming opportunities while utilizing automation to maximize profits for investors. Yearn uses various products on its platform to bring about the highest cryptocurrency yield possible.

Pros

• Lower fees
• Fully decentralized and secure

Cons

• Several security concerns
• Lack of protocol documentation.

Uniswap

Performance score: 8/10

Uniswap is the second-largest DEX by total value locked, with over $5.5 billion on the platform. The platform allows swaps with Ethereum and several ERC-20 tokens and staking in liquidity pools to provide the swaps. Interest rates on Uniswap vary by pool and market fluctuations.

Pros

• Ample liquidity
• Full transparency and open-source code

Cons

• High trading fees
• No remuneration after liquidity withdrawal
• Supports only Ethereum-based assets.

Aave

Performance score: 9/10

Aave is very popular among yield farmers and ranks as the most popular platform on Ethereum, with over $10 billion in collective assets. Aave allows its users to trade around 20 leading cryptocurrencies, attracting investors looking to maximize profits on their assets. 

Pros

• Huge lending pool
• Stable interest rates for some assets

Cons

• Lacks high incentives
• Past security issues

Curve Finance

Performance score: 9/10

Curve finance uses locked funds better than any other DeFi platform, and its unique market-making algorithm benefits users that provide the platform liquidity and swaps. With a total value of $7.9 billion, Curve finance is one of the largest DEXs.

Pros

• Offers greater rewards via composability
• Secure and efficient

Cons

• High gas fees during heavy traffic
• Inflation threats.

SushiSwap

Performance Score: 8/10 

SushiSwap is primarily known for its DEX but has recently expanded to staking and yield farming solutions. Sushi offers a liquidity pool and trading options on over 1000 pairs, like the Ethereum/Bitcoin, Bitcoin/Litecoin equivalents, and is persistently growing in TVL and volume.

Pros

• Several initiatives like liquidity pools, staking, etc.
• Easy to navigate and use

Cons

• Security concerns
• High gas fees.

Final Thoughts

In conclusion, our review on yield farming vs crypto staking has revealed different approaches to investing crypto assets. Consider all the differences between yield farming vs crypto staking and your crypto investing skills to select the best option to generate passive income for your crypto funds.

VVS Finance, or Very Very Simple Finance, is an automated market maker (AMM) DEX and the largest project built on the Cronos blockchain, launched by Crypto.com in 2021.

VVS facilitates liquidity pools, swaps, and staking and offers an intuitive UI aiming to drive global adoption of DeFi. 

Read on for a deep dive into the VVS Finance protocol and its key features. 

What Is VVS Finance?

VVS Finance is a decentralized finance (DeFi) platform built on the Cronos blockchain. It was created to simplify the DeFi market for everyone and empower the masses to take control of their finances. 

To make DeFi more accessible to billions of consumers worldwide, VVS Finance offers fast transactions, minimal charges, and high potential earnings. The DeFi platform also intends to create passive revenue streams for users through various options, such as yield farming.

Definition: Yield farming is an investment strategy allowing users to lend their digital assets in exchange for benefits like interest or a share of the platform’s transaction fees.

Based on the Cronos blockchain, VVS Finance enables users to swap cryptocurrencies or stake their digital assets to provide liquidity in different liquidity pools. In exchange, VVS Finance allows investors to receive two-thirds of the collected swap fees. Similarly, the platform permits users to collect liquidity awards in the form of 0.2% of trading transaction fees.  

The use of the AMM protocol enables VVS Finance to provide incentives to users to ensure long-term sustainable growth. The platform focuses on making it simple for users to transfer tokens and receive dividends “while having fun.” VVS Finance emphasizes the “fun” aspect of DeFi to onboard as many users as possible, including those with little to no prior experience in blockchain and cryptocurrency. The VVS team believes the more users on the platform, the better value there will be for network participants. 

Who Created VVS Finance?

The VVS Finance team calls its members the “Craftsmen” – “Coming from a deep product design background, a team of humble farmers got together, determined to build DeFi products for our aunts and neighbors, to bring amazing protocols to the masses.” 

While staying anonymous, VVS Finance has successfully created several valuable partnerships with key strategic partners, such as the Crypto.org and Crypto.com ecosystems. 

What makes VVS Finance Unique?

VVS Finance’s unique selling points (USPs) include the following:

Bling Swap

Bling Swap is an algorithmic routing system that enables users to swap tokens across several liquidity pools to obtain a better price for the requested pair. Users can swap tokens for a small fee of 0.3%. 

Liquidity Provision

Users can become Liquidity-Providers (LPs) by adding tokens to a liquidity pool. As evidence of their share of the pool’s assets, each LP is given a CRC-20 pool token (LP token). To trade through their liquidity pools, users must pay swap fees to LPs.

• Liquidity providers get two-thirds of swap fees (0.2% of swap volume at launch);
• 0.1% of the swap volume at launch, or one-third of swap fees, is held in treasury.

The swap fees are kept in liquidity pools’ reserves. Users will receive their proportionate part in exchange for their share of the reserves when pool tokens are returned. 

Before choosing to contribute to a liquidity pool, LPs are advised to weigh the risk of impermanent loss against the anticipated share of fees and income because they may experience impermanent loss if the tokens’ prices decrease.

CRYSTAL Farming

LPs can stake their LP tokens in “Crystal Farms” to get VVS tokens as rewards. 

• View: Users can view the eligible pool, as well as the staked, earned, and APR percentages for each pool (accessible after Pioneer Farming Mode);
• Stake: Allows users to pay gas fees and quickly stake qualified LP tokens in a few clicks;
• Claim: Facilitates customers’ quick and easy claims of their accumulated VVS by paying gas fees;
• ROI calculator: Allows users to calculate their ROI by entering the stake amount, time frame, and compounding duration. (accessible after Pioneer Farming Mode).

Glitter Mining

The “Glitter Mine” allows non-LP users to stake VVS tokens and get VVS tokens or other partner tokens as rewards. In addition to the View, Stake, Claim, and ROI calculator features, users can also use auto-compounding, which allows users to activate the auto-compounding of staked VVS tokens for each user in the Auto VVS pool in exchange for VVS tokens. 

Initial Gem Offerings (IGOs)

Users can benefit from larger rewards and early access to Cronos ecosystem’s new projects through the VVS Initial Gem Offerings. They can buy the new projects’ tokens using VVS-CRO LP tokens by participating in one of the two sale options: basic sale or unlimited sale. Let’s explore their characteristics.

Basic Sale

• Users can commit VVS-CRO tokens up to a maximum determined amount (differs for each project, e.g., $100, $500 worth)
• No participation fees
• If there’s an overflow in the subscription, any unspent LP token will be returned.

Unlimited Sale

• No cap on the amount of VVS-CRO to commit
• The participation fee will decline based on the percentage of overflow. The initial participation fee is set at 1%.
• If there’s an overflow in the subscription, any unspent LP token will be returned.

Analytics

Analytics allows users to access the overall VVS Finance protocol’s per-token/pair data, including liquidity, trading volume, etc. Users can access the VVS protocol via a dedicated web interface and connect using the Crypto.com Wallet Extension or any mobile wallet that supports WalletConnect (available on the Crypto.com DeFi Wallet).

VVS Finance intends to provide native wallet integration with popular wallets and API access in the future.

Why Is VVS Finance Popular?

VVS Finance intends to simplify DeFi by offering a user-friendly interface, seamless swaps, liquidity pools, staking, fast and cheap transactions, etc.

A cryptocurrency project’s health is also evaluated according to the following criteria:

• Substantial market cap: In the first few months since its launch, VVS Finance’s market cap increased from $20 to $170 million and has mirrored the general market trend since then. 
• Reasonable trading volume: VVS Finance’s trading volume has primarily stayed within 5 and 20% of its market capitalization range. 
• Price action: The protocol’s VVS token’s price action is approximately as volatile as you would anticipate from a new DEX project and a new chain, but without strange pumps.

What Is VVS Token?

VVS is the VVS Finance protocol’s utility, reward, and governance token. The VVS token was created on the Cronos blockchain’s CRC-20 architecture. VVS adopts an emission model in which 50 trillion VVS will be created in the first year and half of that every year after that  (for example, 25 trillion in the second year), and the per-block emission is based on the chain’s technological design.

VVS tokenomics is as follows:

• 30% to farms and liquidity mining
• 23% to the team
• 15% to the community wallet for future initiatives
• 13.5% for network security and maintenance
• 13.5% for ecosystem development
• 2.5% to traders and referrers
• 2.5% to market makers.

In addition to the Cronos blockchain’s core VVS and CRO tokens, the protocol also supports USDT, USDC, SHIB, ATOM, and other tokens.

The VVS Finance team makes the current governance decisions in consultation with the community feedback; however, to fully decentralize the protocol, VVS Finance intends to hand the project over to VVS token holders gradually.

Make sure to track your crypto, NFT, and DeFi investments with CoinStats, the top portfolio tracker on the market.

How Many VVS Tokens Are in Circulation?

VVS’s total circulating supply is 2.2 trillion. Its total supply is over 36 trillion, increasing to 100 trillion over ten years through its emissions schedule. 

How Does VVS Finance Work?

VVS Finance focuses on tested and audited protocols. It provides a lucrative creative program supported by the native VVS Finance token (VVS). 

The protocol offers liquidity pools, each consisting of two tokens. Tokens are added to the pool by liquidity providers and then traded amongst traders.

The methodology is based on a formula for producing a consistent product. To clarify, after a swap is carried out, the sum of the quantities of both tokens in a pool stays the same. Additionally, the price slippage from the swap may differ according to the total number and distribution of tokens in the pool.

The stakeholders can profit from VVS Finance’s underlying mechanisms in the following ways:

• Liquidity providers (LPs): LPs receive 2/3 of the individual pools’ transaction fees. You will get VVS incentives for staking valid LP tokens under the “Crystal Farm” tab.
• VVS stakers: Stakers are rewarded in  VVS and partner tokens for staking VVS on the “Glitter Mine” page.
• Trading incentives: Rewards for trading tokens on VVS Finance are promised to users who swap tokens on the platform but have yet to be made public. Referral program: Users recommending others to trade on VVS Finance will receive benefits that have yet to be disclosed.

A sizable amount of the VVS supply is set aside for future community projects to ensure benefits for the  VVS Finance contributors and users.

Bottom Line

VVS Finance is built on the Cronos blockchain that facilitates cheap and fast transactions and leverages proven and audited protocols. It also provides a rewarding incentive scheme powered by the VVS Finance token.

The VVS Finance price prediction anticipated steady growth, drawing inference from its market capitalization moving from $20 to $170 million and then to $350 million in early April. If VVS Finance continues its steady growth, the protocol could retain its large market share on the Cronos blockchain.

People always want to trade at the best price in a market as volatile as cryptocurrency. Choosing the best alternative after manually comparing the pricing provided by other DEXs is one approach to achieve this. However, it takes a long time to complete that process.

In this article, let’s learn more about Matcha and its financial prospects.

What Is Matcha Crypto?

As a decentralized exchange built on Ethereum, Matcha aggregates liquidity from exchange networks like Ox Mesh, Kyber, Uniswap, Curve, and Oasis to offer customers the best pricing when trading tokens.

Many decentralized exchanges run on Ethereum, and Matcha stands out as having DEX’s most straightforward user interface.

Matcha crypto trading platform powered by 0x Labs and utilizes the Ethereum smart contract infrastructure to enable tokens peer-to-peer exchanges for users. Since it’s a DEX, users maintain full custody of their tokens during every trading process. 

To maximize the value users get from every deal, Matcha collects the best rates from an increasing number of liquidity sources. Matcha never retains the difference between quoted and realized prices, in contrast to certain other DEX aggregators, and transparently exposes all fees and costs related to trades.

There are no platform fees for trades at this time on Matcha. The transaction fee for each trade you make on Matcha is composed of an Ethereum gas fee and a 0x protocol fee (if 0x liquidity is used). Your total order fee will vary depending on which decentralized exchanges are used to generate the liquidity. For instance, the base price for each trade on most DEXs is 0.3%.

Who Are the Founders of Matcha Crypto?

Matcha is a product of 0x Labs. After developing the 0x protocol and assisting others in creating fantastic DeFi products for a few years, 0x Labs had a ton of fresh ideas for facilitating the entry of more individuals into interesting new markets. With this insight, 0x created Matcha, a straightforward decentralized crypto exchange made for everyone, to reinvent the exchange experience and lay the groundwork for onboarding the upcoming wave of cryptocurrency traders.

All types of value will be tokenized on open blockchains, according to 0x Labs’ vision. This includes fiat money, stocks, bonds, commodities, debt instruments, real estate, video game items, digital collectibles, software licenses, reputation, and a wide range of other things.

Why Was Matcha Crypto Created?

The continuous emergence of Automated Market Makers (AMMs) is one of the most revolutionary changes in the current decentralized financial landscape. However, due to the abundance of AMMs, aggregators like Matcha have become necessary.

At the moment, AMMs are the most widely used decentralized exchange. They trade token pairs using algorithms rather than order books and utilize smart contracts to build liquidity pools. Examples include Balancer, Uniswap, and Curve, all Ethereum-based.

There is often a price differential between the many decentralized exchanges at any given time since AMMs use liquidity pools to determine trading prices. Aggregators like Matcha have become very helpful because they combine all the networks to determine the best rate for the user.

Matcha was built to help users save money from multiple decentralized exchanges, find the best prices, and easily trade tokens peer-to-peer. 

Why Is Matcha Popular?

The homepage has a search area and token shortcuts, which is the first thing you’ll notice. On some exchanges, accessing the markets entails selecting the desired assets from two different dropdown boxes. Any token or combination you’re looking for may be easily entered using Matcha search, allowing you to enter the market and start trading immediately.

At some point, you’ll be able to trade thousands of possible pair combinations over hundreds of different assets. Therefore, Matcha optimized the platform so that traders may identify and move to any markets they’re interested in as quickly as possible with fewer interactions.

Token Shortcuts and a Search Field

To begin trading on other exchanges, users must navigate the trading website and select one or more tokens from two dropdown menus. However, the default search box on Matcha’s home page allows users to enter the assets they wish to trade and immediately be taken to the relevant trading market.

User-Friendly Language

For newcomers to the DeFi landscape, technical words while using DeFi services can be a barrier. Matcha recognizes this and converts each technical term into a user-friendly language. Users benefit from a better trading experience, avoiding any losses brought on by misunderstandings.

What Is Matcha Token?

At the time of writing, it has yet to be confirmed that Matcha has released a token. Although, there are rumors about a possible airdrop.

How Does Matcha Crypto Work?

We must examine three of Matcha’s internal ingredients to understand how Matcha works. Matcha searches all decentralized exchange (DEX) networks and individual market makers first to determine what price is best for you at that precise moment. Matcha uses intelligent order routing to ensure your trade is carried out quickly and effectively after the best price has been determined. Finally, we leverage meta transactions and gas tokens to further lower transaction costs for traders, saving you money on Ethereum gas fees.

Matcha collects liquidity from increasing sources, including 0x, Uniswap, Balancer, Curve, Kyber, Oasis, and others, in contrast to other exchanges that only employ one source of liquidity. Matcha gathers pricing information from all liquidity sources at the time of your trade, much like a media aggregator would (for instance, Google News or HuffPost for news, and MetaCritic or Rotten Tomatoes for reviews). 

To give you the best price/least amount of slippage, Matcha divides your transaction among various sources of liquidity via an automated procedure known as “smart order routing.” Larger trades benefit the most from smart order routing, where a single source is unlikely to provide you with the best value. 

DEX Aggregation & Smart Order Routing

To find the most affordable pricing, Matcha combines all of these networks. As soon as the optimal rate is found, Matcha’s order routing algorithm automatically distributes transactions throughout these several DEXs to maximize the overall return for traders. Smart order routing is the name of this procedure.

To help travelers find the greatest offers, Matcha goes one step further by executing a transaction instantly after the best price is identified, relieving customers of the burden of worrying about price shopping when they wish to trade.

Meta Transactions & Gas Tokens

For traders to trade without being concerned about Ethereum network congestion, 0x Labs has been experimenting with a number of various techniques to lower fees. Meta transactions, commonly referred to as gas-less deals are the first.

Meta transactions make it possible for traders to communicate with Ethereum without paying gas fees, which results in a seamless trading experience since customers no longer need to comprehend how blockchains operate or the workings of the fee market. To help traders pay their gas fees, Matcha can sign and authenticate transactions on their behalf.

The use of gas tokens, which enables Matcha to harvest tokens and lock in low gas prices to be used when gas prices rise, has also been investigated by 0x Labs. Matcha does not apply these methods to every deal — it is important to keep this in mind.

Is Trading on Matcha Safe?

It is quite safe to trade on Matcha. The 0x v4 smart contracts Matcha employs have undergone auditing by ConsenSys Diligence and comprehensive testing by 0x Labs. 

Additionally, when you do a deal on a decentralized exchange like Matcha, as opposed to a centralized exchange, where your tokens may be mismanaged or lost, you maintain full custody of your tokens throughout the whole trading process.

Bottom Line

Matcha makes the process simple, even if decentralized finance can be intimidating for some individuals, especially when trying to ensure you’re receiving the best bargain possible. Finding the best trading price on Ethereum is now achievable with just a few clicks, thanks to Matcha’s integration of the top decentralized exchanges on one straightforward interface.

Matcha wants its users to always feel knowledgeable and in charge when using the platform. In addition to protecting you and your money, Matcha ensures full transparency about fees and the current state of the market.

Let’s talk about Curve Finance, one of the most popular stablecoin-centric DEXs on the market. Read on as we give answers to all your questions.

What is Curve Finance? 

Curve Finance is an automated market maker (AMM) decentralized exchange protocol that swaps stablecoins with low trading fees. Anyone can contribute their assets to various liquidity pools through this decentralized liquidity aggregator while earning a profit from fees in the process.

Curve is a blockchain-based system that aims to make trading easier without using a central order book. Users can lock stablecoins into lending pools and receive CRV tokens in exchange for doing so and also get a share of the trading fees.

Although it has many similar features to Uniswap and Balancer, this AMM platform distinguishes itself by only allowing liquidity pools of similar assets like stablecoins or wrapped versions of related assets like wBTC and tBTC. This approach enables Curve to employ more effective algorithms and offer low fees and low slippage.

AMMs operate without an order book. This can be beneficial for switching between tokens that stay in a similar price range due to the way Curve’s pricing mechanism functions.

This implies that it’s perfect for swapping stablecoins and various tokenized coin forms. As a result, Curve is one of the most acceptable ways to exchange between various tokenized forms of Bitcoin, such as WBTC, renBTC, and sBTC.

Curve Finance supports 10 blockchain networks, including:

1. Ethereum
2. Polygon
3. Fantom
4. Celo
5. Arbitrum
6. Avalanche
7. Kava
8. Glosis
9. Moonbeam
10. Optimism

Let’s have a quick review of how AMMs operate before concentrating on how Curve outperforms other AMMs in the DeFi ecosystem regarding risk and efficiency.

What Is an Automated Market Maker (AMM)?

By leveraging liquidity pools rather than trading directly between buyers and sellers, automated market makers (AMMs) enable the permissionless and automatic trading of digital assets.

A liquidity pool is essentially a shared pool of tokens. Tokens are added to liquidity pools by crypto users, and a formula determines the pricing of the tokens in the pool. By changing the formula, liquidity pools can be more effective for various goals.

Anyone with access to the internet and a few ERC-20 tokens can become a liquidity provider all you have to do is add or deposit liquidity tokens to the pool of an AMM. However, traders who use the liquidity pool pay a fee to the liquidity providers in exchange for their provision of tokens to the pool.

Founders of Curve Finance 

Michael Egorov is the founder and CEO of Curve. Michael Egorov is a Russian scientist who has experience with various cryptocurrency-related businesses.

He co-founded NuCypher, a cryptocurrency company that develops infrastructure and protocols that protect user privacy. In 2015 he was appointed CTO of the company.

Egorov also founded the decentralized lending and banking platform LoanCoin.

As part of the initial launch strategy, Curve’s regular team, which is a member of the Curve CRV allocation structure, will be given tokens on a two-year vesting schedule.

In August 2020, Egorov claimed that he “overreacted” in response to Yearn.Finance’s voting power by locking up a significant amount of CRV tokens, giving himself 71% of governance in the process.

What Is the CRV Token? 

The native utility token of the Curve protocol is called CRV. Its key use cases include governance, LP rewards, increasing yields (as veCRV), and token burns.

The Curve protocol established a decentralized autonomous organization (DAO) in August 2020 to oversee protocol modifications as it began its path toward decentralized governance. Most DAOs are governed by governance tokens, which grant voting privileges to their holders. The CRV token, in this instance, governs the Curve DAO. 

The CRV token can be bought or earned through yield farming—which is depositing assets into a liquidity pool in exchange for token rewards. You obtain the CRV token in addition to fees and interest by supplying DAI to a Curve liquidity pool. Gaining assets and ownership of a strong DeFi protocol are two benefits of yield farming the CRV token, which also boosts the incentives to work as a Curve liquidity provider.

Furthermore, an update to the Curve protocol may be suggested by any party holding a sufficient amount of vote-locked CRV tokens (meaning CRV crypto holders automatically get to participate in the decision-making process of the protocol ). A few examples of updates include shifting fees or where they go, setting up new liquidity pools, and adjusting yield farming rewards.

What Gives Curve (CRV) Tokens Value?

Curve focuses mainly on using AMM for stablecoin trading. Following this mandate, Curve has attracted a lot of interest.

Given that CRV is a governance token and that users are allocated the token based on their commitment to liquidity and length of ownership, the launch of the Curve DAO and its native token resulted in increased profitability.

Curve’s durability has been secured by the rise of DeFi trading, which has resulted in AMMs turning over enormous sums of liquidity and corresponding user gains.

Curve serves people engaged in DeFi activities like yield farming and liquidity mining, as well as those trying to maximize returns and incentivize liquidity providers without taking risks by holding non-volatile stablecoins.

How Many Curve (CRV) Tokens Are in Circulation?

In August 2020, Curve (CRV) and the Curve DAO went live. It serves as a tool for governance, an incentive system, a way to pay fees, and a way for liquidity providers to earn money over the long run.

3.03 billion tokens comprise the whole CRV supply, 62% of which are given to liquidity providers. The remaining money is distributed as follows: Shareholders receive 30%, employees get 3%, and a communal reserve gets 5%. The vesting period for the shareholder and employee allocations is two years.

Since there was no pre-mine for CRV, 750 million tokens should be in circulation a year after launching, thanks to the tokens’ steady unblocking.

According to CoinMarketCap, the current price of the Curve DAO Token is $0.919572 USD. It has a market cap of $488,829,013 USD, a maximum supply of 3,303,030,299 CRV coins, and a circulating supply of 531,583,334 CRV coins.

How Does Curve Finance Work? 

Curve facilitates trading by utilizing the AMM protocol. Automated market makers, or AMMs, use algorithms to price tradable assets in a liquidity pool effectively.

A pricing formula is used to determine the price of assets rather than an order book. Curve’s formula is created primarily to make swaps that take place in a substantially close range easier.

For instance, 1 USDT ought to be equivalent to 1 USDC, which ought to be close to 1 BUSD, and so on. However, there would be some slippage if you want to convert 100 million dollars of USDT to USDC and convert it to BUSD. The formula for Curve is created to reduce this slippage as much as possible.

One thing to remember is that Curve’s formula wouldn’t function properly anymore if they weren’t in the same pricing range. But that’s not something the system has to take into account.

For instance, a price difference between a token and the asset to which it was pinned something outside of Curve would be seriously off. As the system has no power to change circumstances beyond its control, the algorithm works admirably as long as the tokens stay pinned.

Due to this, even huge sizes experience incredibly low slippage. Curve’s spread can effectively compete with some of the best-liquid OTC desks and centralized exchanges.

There are four essential parts to the Curve AMM model:

1. Liquidity Providers, which deposit tokens into the Curve liquidity pools
2. Liquidity Pool, where tokens from liquidity providers are stored in the LP to generate exchange liquidity.
3. Traders that exchange tokens with the liquidity pool to create pressure to buy and sell, influencing token values.
4. AMM Algorithms, which are used to efficiently price tokens in the liquidity pool according to numerous criteria, including the buy and sell pressures exerted by traders.

If you want to track your DeFi investments alongside your crypto and NFTs, check out CoinStats portfolio management app.

Stable Liquidity Pools

In 2020, Curve was introduced as a low-fee AMM decentralized exchange for traders. Curve lets investors avoid more volatile crypto assets while still earning high-interest rates via lending protocols by concentrating on stablecoins. The Curve model is highly conservative compared to other AMM platforms because it steers clear of volatility and speculation in favor of stability.

Liquidity pools on AMMs like Curve always attempt to “buy cheap” and “sell high.” Here’s a reminder of how that rebalancing works, this time with the USD Coin (USDC) and DAI stablecoins tethered to the US dollar. If you were to sell DAI on Curve, the following set of things would happen:

1. The pool is expanded with more DAI.
2. Because there are now more DAI than USDC, the pool is no longer balanced.
3. To encourage equilibrium, the pool offers DAI at a little discount to USDC.
4. The pool rebalances its DAI to USDC ratio.

The pool then tries to return to how it was by offering DAI at a discount.

Compared to other AMM liquidity pools, the Curve pool’s trading between its assets creates the least volatility because their prices are steady relative to one another. Volatility is significant on AMMs like Uniswap or Balancer when liquidity pools might contain any token. By restricting the pools and the types of assets in each pool, the Curve reduces impermanent losses—an AMM situation whereby liquidity providers experience a loss in token value in relation to the market value of that token due to volatility in a liquidity pool

However, impermanent loss isn’t always a bad thing. Users that try to make money by entering and leaving a liquidity pool at the proper time can benefit from volatility and low slippage. Through a strategy known as decentralized finance (DeFi) composability, Curve attracts liquidity providers by trading off the high-risk—and occasionally great reward—aspect of volatility. As a result, you can utilize the money you invested on the Curve platform to get rewards from other DeFi ecosystem platforms.

The values maintained in various assets are not necessarily equal or proportional to one another, as Uniswap or Balancer attempt to do. As a result, Curve can concentrate liquidity close to the ideal price for comparable-priced assets (in a 1:1 ratio) to have liquidity where it is most needed. With those assets, Curve can utilize liquidity considerably more effectively than otherwise.

The like-asset strategy for AMMs is not just applicable to stablecoins. wBTC and renBTC, two tokenized variations of bitcoin (BTC), are also included in Curve’s liquidity pools. Bitcoin is very volatile compared to stablecoins, but the Curve technique still works since tokens in Curve pools need to be stable to other tokens in the same pool. In contrast to wBTC and USDC, which are incompatible, wBTC and renBTC can be included in the same Curve liquidity pool.

Curve Finance Governance

The CRV native token for the Curve platform was released in 2020. 3 billion CRV tokens were produced at this time.

30% of the CRV tokens were set aside for the Curve team and investors, while about 60% were distributed to users who had locked coins on the site. The remaining money was allocated for the project’s personnel and a reserve for charitable causes.

Currently, 2 million CRV tokens are released daily, for a total of 750 million annually. Voting for ideas that establish the Curve system’s regulations will be done with the tokens.

DeFi Composability: Incentivizing Liquidity Providers

Every time a trade is executed on an AMM exchange like Uniswap, fees are earned. Trading fees on Curve are cheaper than Uniswap, but interoperable tokens also let you receive rewards from sources outside of Curve.

For instance, on the Compound platform, DAI is converted into the liquidity token cDAI when it is lent out, and cDAI automatically accrues interest for the holder. A right to withdraw DAI from Compound with interest is conferred upon holders of cDAI. With the ability to deploy cDAI in Curve’s liquidity pools, consumers can get a second layer of utility and potential profit from a given investment.

The advantages of composability in the decentralized finance (DeFi) ecosystem are best demonstrated by using Compound’s cTokens on Curve. Additionally, Curve interfaces with several external DeFi protocols, Compound being just one example. To maximize incentives for liquidity providers, the protocol also interfaces with Yearn Finance and Synthetix.

The Challenges of Curve Finance

Now that the project has undergone an audit, it must be safe to use, right? No matter how many audits smart contracts have, there are always risks associated with using them. Don’t put more money down than you’re willing to lose.

You must consider impermanent loss, just like with any other AMM protocol, before adding liquidity to Curve. 

To increase the profits for the liquidity providers, the liquidity pool may be given to Compound or Yearn Finance. Additionally, users can trade on other smart contracts in addition to Curve because of the wonders of composability. Several of these DeFi protocols become dependent on one another, creating new hazards. If one of them fails, the entire DeFi ecosystem can experience adverse side effects as a result.

Is Curve Finance Safe?

With a wholly non-custodial platform, Curve Finance strives to give consumers the control that cryptocurrency should be about. This implies that your coins are always in your possession and that the platform never assumes custody of them.

Many cryptocurrency users are drawn to earning tokens by using liquidity pools, especially those who prefer to keep their tokens rather than trade them. Users can choose this, and Curve Finance offers a variety of liquidity pools to select the one that best suits their cryptocurrency strategy.

Curve is an excellent choice if you’re a cryptocurrency trader who wants to dive deep into using liquidity pools. Although it has a steeper learning curve, spending the time to go through the documentation reveals an ecosystem that is really about balancing many cryptocurrencies together.

Curve Finance is safe. With complete cost transparency, various liquidity pools to pick from, and a DAO that enables users to participate in the exchange’s future actively, Curve is a DeFi go-to that merits more investigation.

Bottom Line

Although it is a more recent entry into the cryptocurrency world, the Curve Finance platform offers a wealth of advantages for users by allowing for deeper DeFi yield farming, staking, and stablecoin movement.

Due to its preference for consistency and composability above volatility and speculation, Curve is one of the most often-used platforms in DeFi. With the CRV token serving as the governance mechanism and its composable components, making it an interconnected center of the DeFi ecosystem, it is an incredibly decentralized organization that belongs to its people.

Living without CEX can be frustrating, right? Well, it might not be as tough as you might think. In fact, you might just forget about it after a while. 

Not convinced yet? In this article, we’ll highlight the differences between centralized and decentralized exchanges, as well as explore how to navigate the ecosystem while practicing abstinence from centralized exchanges. Let’s jump in!

CEX vs. DEX: What’s the Difference?

Centralized exchanges have been the backbone of the crypto industry for years. However, it appears that they have also become one of the most prominent points of failure in the crypto ecosystem. 

The FTX collapse showed that CeFi brings many uncertainties to the game. Now more than ever, crypto enthusiasts are moving away from CeFi and toward DeFi. Before we start, let’s define the two types of exchanges first. 

Centralized exchanges (CEXs) are currently the most popular platforms for buying and selling cryptocurrencies. While they are easy to use, offer a wide variety of features and support numerous payment gateways, they are also potentially very risky.

Decentralized exchanges (DEXs), on the other hand, are newer and becoming increasingly popular. These exchanges are much safer than CEXs, they aren’t as vulnerable to attacks. DEXs also offer a variety of features and are easy to use.

The main differences between centralized and decentralized exchanges come in the form of:

1. Security: CEXs are much more vulnerable to attacks, because they are centralized. This means that all the funds stored on the exchange are in one place, making them an easier target for hackers. The funds are also held by the exchange rather than the users, making misuse of funds much more likely. DEXs are decentralized, meaning the funds are stored in individual users’ wallets rather than on the exchange itself. This makes them much less vulnerable to attack.
2. Features: CEXs offer a wide variety of features and investment options. DEXs, on the other hand, offer fewer features but are much safer. That being said, decentralized exchanges have greatly improved in the past months and years, and have introduced a variety of features, narrowing the gap between the two.
3. Ease of use: CEXs are generally considered much easier to use than DEXs. This is because they have been around for longer and because they use a system similar to regular markets. DEXs are becoming more popular, however, and much easier to use.
4. The ability to get into crypto: The main value proposition of centralized exchanges is that they’re the primary gateway into crypto. However, people have more options when it comes to buying crypto with their fiat now, with numerous web3 platforms offering fiat-to-crypto gateways.

Centralized Exchange (CEX)

CEXs work similarly to what you would see on the stock market: They use the order book method.

An order book is an electronic ledger that coordinates the buying and selling orders on a specific exchange. Every centralized crypto exchange includes an order book, but, as we will see, order books can be slightly different depending on the CEX. Every order book comprises:

• Bids, or buying orders
• Asks, or selling orders 
• The price at which the orders are placed
• The total amount of cryptocurrencies involved

Each crypto pair has a different crypto order book. Order books show all the limit order data. This refers to the orders that traders and investors choose to place at specific target prices. Users can also use market orders, in which case they are filling in the limit orders and taking away liquidity from the market.

CEX: The Good 👍

Centralized exchanges come with many advantages that set them apart from their decentralized counterparts.

Their main advantage is the fact that they have way more liquidity. Binance, for example, regularly records more than $30 billion in daily trading volumes. This ensures that users can exchange their crypto assets seamlessly at any time, regardless of the size of their order.

Centralized exchanges also offer more payment gateways: They have been the primary way to enter the crypto market for a long time. Most CEXs support credit and debit card purchases, bank card transfers, and more.

Centralized exchanges also offer more features. They are one-stop shops for investors that want to buy crypto, hold it, trade, or invest. Decentralized exchanges are usually more scattered, as they offer a more specialized set of services.

CEX: The Bad 👎

Centralized exchanges come with a few major disadvantages.

Firstly, they are much more vulnerable to attacks than decentralized exchanges. Because all funds are stored in one place, hackers have a greater incentive to try to steal them.

Centralized exchanges are also less secure because the funds are held by the exchange rather than the users. This makes them much more likely to be misused.

Last but not least, the main value proposition of centralized exchanges is that they are the primary gateway into crypto. However, with numerous web3 platforms offering fiat-to-crypto gateways, the main advantage of centralized exchanges is becoming less relevant.

Practising Safe CEX Usage is Important!

The collapse of FTX has raised questions about the safety of centralized crypto exchanges. FTX was the second-largest CEX on the market. Earlier this month, the exchange abruptly announced that it was shutting down, and that users would not be able to withdraw their funds. This has left many investors worried about the safety of their funds on centralized exchanges.

While numerous exchanges are now becoming more transparent and publishing their audited proof of reserves that shows the exchanges’ assets and liabilities, there is still room for customer funds’ misuse. 

There have been several cases of centralized exchanges shutting down without warning, leaving investors with no way to access their funds. In most cases, the exchanges have eventually refunded investors. However, there is no guarantee that this will always happen, and investors run the risk of losing their money if an exchange goes bankrupt or shuts down without warning.

Centralized exchanges are also vulnerable to hackers’ attacks. In January 2019, Binance suffered a major hack in which 7,000 bitcoins were stolen. This is just one example of many hacks that have occurred on centralized exchanges.

Overall, it is important to be aware of the risks associated with centralized exchanges, and to take steps to protect your funds. It is advisable to keep your funds in a wallet that you control, rather than entrusting them to an exchange. And if you do choose to use a centralized exchange, be sure to only store a small amount of funds there and to take additional security measures such as 2-factor authentication. 

Decentralized Exchange (DEX)

Unlike CEXs, decentralized exchanges (DEXs) work slightly differently. Instead of using the order book method, most DEXs use liquidity pools to regulate crypto asset pricing. 

A liquidity pool is a digital wallet that comprises two cryptocurrencies locked in a smart contract. This results in the creation of liquidity between the cryptocurrency pair to create faster transactions.

One major component of liquidity pools is automated market makers (AMMs). An AMM is a smart contract protocol that uses liquidity pools to allow digital asset trading in an automated way rather than through a traditional market of buyers and sellers. The price of a cryptocurrency is determined through a formula.

Advantages of a DEX

First and foremost, decentralized exchanges are more secure because they are not as vulnerable to hackers’ attacks. They don’t have a single point of failure, so if one exchange goes down, users can still access their funds on other exchanges. As users are holding their own private keys, there is no risk of a hack targeting numerous wallets at once.

Decentralized exchanges also offer more privacy and censorship resistance than their CEX counterparts. Because all data is stored on the blockchain, it is much harder for governments or hackers to track user activity or interfere with transactions.

And finally, decentralized exchanges are a gateway to decentralized finance and the NFT ecosystem. DEXs allow users to access the world of smart contracts and dApps that provides financial services, including lending, staking and saving products, as well as NFT projects.

Disadvantages of a DEX

One disadvantage of decentralized exchanges is that they can be slightly more difficult to use. They often have a more complex user interface than centralized exchanges, and it can be difficult to find the right order book or liquidity pool.

Another disadvantage is that DEXs are still relatively new and may not have as many features or as much liquidity as centralized exchanges. They also tend to be slower than centralized exchanges. On the positive side, they are quickly improving and offering a more well-rounded set of features.

Finally, decentralized exchanges can be less reliable than centralized exchanges. This is because they are not as well-tested and may have more bugs. While it is true that there is no single point of failure like with CEXs, we’ve seen numerous DEX exploits that affected the market.

Trading on a DEX

Trading on a DEX is somewhat different from trading on a CEX. Once you connect your wallet, you can choose a blockchain and the cryptocurrency pair you want to work with.

The DEX will calculate the exchange rate of your cryptocurrency, which changes due to fluctuations in the liquidity pool. You can then exchange one cryptocurrency for another.

If, on the other hand, you want to earn passive income, you can act as a liquidity provider to the exchange. However, one thing you have to pay attention to when trading is impermanent loss.

Impermanent loss refers to a moment when the token price change causes your share of the liquidity pool to be worth less than the value of your deposit. This loss is called impermanent because the token price can return to a favorable rate. However, if you decide to pull out your crypto from the liquidity pool, this loss becomes permanent.

How to Buy Crypto With Credit Card?

As we have mentioned before, decentralized protocols and initiatives are gradually becoming more popular since they introduced direct gateways to buying crypto without having to interact with digital asset custodians. 

CoinStats has partnered with Mercuryo and MoonPay to provide its users a quick and reliable way to buy crypto with a credit card without ever having to visit a centralized exchange.

DeFi Tracking

Decentralized exchanges act as a gateway to the DeFi industry, where users can participate in various initiatives, help with project funding, or invest their money by staking, yield farming, lending, buying NFTs, and more.

But if you choose to step into the DeFi world, you may come across one major problem: Your funds will be scattered across different platforms!

CoinStats offers a variety of tools to help users track their portfolios, including price graphs, open orders, and market data. You can track your DeFi and NFT portfolio, as well as your CEX or DEX wallets. It is also possible to view your portfolio in different currencies, as well as the distribution of your holdings and profits & losses across different platforms.

Our platform also allows users to compare the performance of their portfolio with that of other users. Seeing how well you are doing compared to others in the community will enable you to draw the right conclusions and fine-tune your investing strategy.

CoinStats is a cryptocurrency portfolio manager platform with over 250,000 monthly active users offering a solution for its customers to track and manage all of their crypto holdings from one interface. 

Check out CoinStats’ homepage or download our app for free on the Google Play Store and Apple App Store.