Best Decentralized derivatives Crypto exchange
Why Use a Decentralized Exchange?
With the troubles and fraudulent schemes caused by centralized exchanges as we saw with the recent uncovering of the FTX collapse but also with increased government regulations and restrictions on using crypto derivatives and leverages on legally regulated exchanges in certain jurisdictions, a lot of investors are actively emigrating to decentralized crypto derivatives trading platforms.
Decentralized crypto exchanges offer freedom to investors and traders who are able to trade even in very regulated environments, also give people the self-custody of their funds that specialized in these kinds of risky times when institutions are collapsing or defaulting it seems your funds aren't safe to be on platforms anymore.
Con:
The principal CON of a decentralized exchange is the absence of deep liquid markets, prices can be very volatile and even low volume positions can highly influence prices and therefore your potential liquidation call. But also since you have custody of your funds in a separate wallet a lot of people might find it difficult to trade on a decentralized exchange.
Top 3 Decentralized Exchanges:
DYDX:
DYDX has been one of the most prominent decentralized exchanges offering derivatives in the last year. They even have an IOS app unfortunately, it's not available in some jurisdictions like the U.S. But the online web version is available everywhere and it has one of the best user interfaces out there considering they are a decentralized exchange.
They are built on top of Ethereum and use their own token for governance votes and fee reduction. (Ticker: DYDX)
Overall a very solid choice with decent liquidity and a very good user interface, the only downside may be the Ethereum gas fees because of a lack of a centralized custodial structure but it will depend on the coins you are using.
For more info check out their website at DYDX.exchange
you can use our link to create an account
PancakeSwap:
PancakeSwap is currently the fifth decentralized exchange in terms of aggregate volume. Pancakeswap added perpetual future trading with leverage earlier this year, even though it wasn't a great success in terms of adoption by users it still remains a solid platform.
Their perpetual user interface is basically a copy-paste of Binance's future trading interface, since they are built on the BNB smart chain BEP20 this allows transactions to be executed for pennies.
Beyond future trading with up to x125 leverage, they have a wide variety of products and financial services all built on the same platform.
They have their own token for governance votes, stacking, fees reduction, lottery, NFT market place and many more. (Ticker: CAKE)
A very complete platform built on a solid basis the only thing a would like to see is more adoption by traders and more volume. Having a good product means nothing if no one is using it.
For more information, you can check their web page at pancakeswap.finance
Summary:
With the increased risk of contagion following the collapse of FTX, it's important to reconsider the custody of your own coins. Thanks to DEX you can now do this without depriving yourself of perpetual contracts trading.
But bear in mind this doesn't come at no cost, now during the crypto winter liquidity and volume aren't available in general in markets and it's even worse on decentralized exchanges that aren't that popular. Low volume can be a nightmare for traders who see their trades destroyed by too-fragile price action. That's why I wouldn't recommend any other exchange because of the absence of enough liquidity in other exchanges to support a decent trading experience.
Obviously, if you want to trade on DEX you need your own wallet if you still don't know what wallet to use and for what network I have made a full article on the top 5 wallets I recommend to use in 2025.
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