The rise of De-Fi has brought plenty of new decentralized-exchanges (DEX) to trade on, leaving users with a high number of options. However, this can confuse newcomers as they are not familiar with the market and are hesitant to choose which platform is the best suited for them. To help beginners in their trading journey, we will compare two of the most popular DEXes: Uniswap and Kyber.
After reading this article, you will know the fundamental features and services that each platform offers. Both are unique and provide options that one user may like, while another user may dislike that very same platform. Because of the polarizing reasons that determine whether you are for or against these crucial factors, you must make your own decision based on what you have learned. Ready to learn more? Let us start with Uniswap first!
Uniswap is one of the most widely used DEXes in De-Fi (decentralized-finance). In only a year, the lesser-known platform attracted thousands of new users who are now locking up to $2.6 billion in assets. Uniswap is one of the first protocols to develop Vitalik Buterin’s concept of an Automated Market Maker (AMM). By doing so, Uniswap featured an exchange that lacks an order book.
Its most attractive feature is the fully decentralized governance model. Users are free to choose which liquidity pool to introduce each month. Moreover, they submit governance proposals that can completely change the platform. These features are made possible with the help of the UNI governance token. To participate in governance, users must own the UNI token. Most of these tokens were distributed to the Uniswap community itself, to ensure a fair and safe token allocation model.
Uniswap hosts the largest amount of liquidity compared to any other decentralized-exchange. If you know how slippage works, you can conclude that there will practically be no difference between the order you create and the one that is executed by the exchange. Since there is an immense amount of liquidity available, this enables whales and other large players to freely trade high-volume positions without having to use an intermediary.
On Uniswap, you can utilize two main mechanisms: yield farming (liquidity providing) and token swapping. With yield farming, you can provide liquidity to more than dozens of liquidity pools and assets and earn passive income. On the other hand, token swapping allows you to trade via instant market orders for any ERC-20 based token. Each token swap costs 0.3% in fees, which contribute to the profit a yield farmer makes.
The Kyber Network is another lesser-known DEX that aggregates liquidity from a range of different reserves. The platform allows developers to build dApps (decentralized apps) via Kyber, users to provide liquidity, and community members to participate in the KyberDAO governance system.
Essentially, Kyber works by collecting liquidity from market makers, token projects, liquidity pools, and token holders. Then, this liquidity is used to fund token swaps, decentralized payments, and De-Fi dApps.
Compared to Uniswap, Kyber is unique for offering a developer ecosystem where users can build a variety of tools, products, and services. It is one of the most widely used De-Fi protocols for building crypto applications, wallets, websites. Developers can even integrate Kyber’s token swaps into their existing dApps.
A Major Issue with Kyber
However, a major issue with Kyber is that there is a serious lack of trading volume. According to data from DeFi Pulse, users have only provided $9.9 million worth of collateral to the DEX. This makes it one of the most illiquid options for swapping tokens.
Nevertheless, the team’s focus on fostering a healthy developer community means that there is a long-term future for Kyber. As long as developers continue building the platform, it will attract more users at some point. Naturally, this will lead to a drastic increase in liquidity, as well.