To put it simply, decentralized exchanges (DEXs) allow users to buy and sell cryptocurrencies with each other without the need for brokers like platforms like Bitcoin Pro. Users simply need to connect their crypto wallet to a DEX, such as Uniswap or PancakeSwap, select their preferred crypto-crypto trading pair, for example between Bitcoin and Ethereum, enter the amount and press the button. There are a lot more coins and tokens available on these exchanges, making them ideal for adventurous investors.
The programming code that allows applications to independently execute deals, otherwise known as smart contracts, automatically ensures that the BTC trader gets ETH and that the ETH trader gets BTC. Additionally, some wallets such as TrustWallet are themselves DEX with the built-in feature, so you can simply swap directly within the wallet instead of connecting to a platform.
But be aware that more than 100 million investors visit DEX platforms, with transactions totaling over $ 4 billion a day. So what's behind the sudden surge in popularity?
Gateway to the blockchain cyberspace
I hate to disappoint patriots, but America isn't the best country in the world when it comes to investing in altcoins. This is because the country's unique financial regulations and tax laws make it very difficult for exchanges like Coinbase or Binance, the largest cryptocurrency exchange by exchange volume, to list altcoins. Whether this can actually benefit investors is a highly controversial topic. For example, altcoins that can protect users from creepy blockchain (privacy coins) tracking companies, such as Monero and Dash, have returned over 9.800% and 85.000%, respectively, since their inception a few years ago.
So, for most American investors, the only legitimate way to enter the lucrative altcoin market is to trade coins purchased on exchanges that support fiat money transfers to DEX. As no physical broker manages the flow of funds for transactions (everything happens in their own portfolio), DEXs are generally exempt from securities regulations. 476 and 1.988 different altcoins are listed on Uniswap and PancakeSwap respectively. Meanwhile, you can only buy around 50 different types of cryptocurrencies on Coinbase or Binance.us.
Another path to wealth
But because these exchanges rely on peer-to-peer transactions, it can be difficult to find sellers for large trade orders or little-known coins. This is where native tokens come into play that help boost DEX (DEX tokens). Users can put CAKE and UNI into money pools by accepting smart contracts to provide liquidity for trades, in the same way they would accept trade deals when trading stock on a broker. In return, investors receive a slice of all trading fees facilitated by their tokens. Additionally, strong demand for DEX has led to these tokens to skyrocket as well, with CAKE and UNI three- or four-digit percentages over the past year.
Overall, consider checking out DEXs to buy and hold innovative altcoins or invest in DEX tokens themselves, which you can use to earn a fixed income. With the overall cryptocurrency market surpassing $ 2 trillion and soaring, the future is bright for this promising financial instrument.
