Topic: What should you look for in a DEX? (Read 319 times)

I have used all three: Bisq,  BlockDX,  AtomicDEX.

Liquidity, user friendliness and easy to use is important.   trading fees are important too. 

Out of three, currently only working one is AtomicDEX.  AtomicDEX for small DEX traders are fine, the fees are small,  spread is wider than CEX, but definately a niche and very good to use to own your own private keys for most of UTXO coins and also BNB and ETH cross chain trading.

Bisq never worked for me, the deal breaker was high fees and poor liquidity even on DOGE/BTC pair.  Bisq seems to be huge on Monero pair so that it is mainly a private coin dex there.

BlockDX has been dissappointing so far.  It appeared to be great with bitcoin coin clone technology core  plus masternode POS design.  Somehow the light wallet Xlite was never materialized after many years.  BlockDX would be great competitor to AtomicDEX if it delivered what it promised years ago.  For me BlockDX high level DEX design seems to be very decentralized if their service nodes count goes up to big number.

Transparency in operation is something that is supposed to be eminent in every decentralized exchange. The word decentralization means that there is no central authority controlling the operation of the exchange. This means the running of the exchange depends on the activity and the contribution of the exchange users and developers who developed interest in such decentralized exchange.

Now if the exchange is decentralized and open-source, it means that it automatically has a very high transparency of operation. No hidden agenda.
But any decentralized exchange in which you do not know how they operate, simply tells that they are not totally decentralized and should be avoided.

Simple version

• just go to coingecko or coinmarketcap and see what is the number one dex on the list and just use it https://coinmarketcap.com/rankings/exchanges/dex/ https://coinmarketcap.com/rankings/exchanges/dex/
  
• choose the best chain I usually choose ETH BNB Chain and Polygon because there is dozen project on those chain
• Liquidity

Tho some of chain don't have enough liquidity you can use Dex aggregator like 1nch or Dodoex

What you should look for in DEX before using it is the DEX transparency in operations, supported cryptocurrency, liquidity, security, decentralization level, volume, and a friendly and easy-to-navigate user interface.
Nevertheless, If you're looking for privacy and no-KYC exchange for Bitcoin trading or Monero I will advise you to check Crypton Exchange.

What I look at in DEX is something that isn't easy to detect and moat times I end up speculating about it since I do not always get my results accurate.

I look at the level of Decentralization
While many of the DEX will claim they are decentralized, but their level of decentralization is very low. How they handle and store data is very important to me. Many of the DEX actually send data to centralized server. Some run on plugins that we cannot for.
Apart from the above, reputation is important also to me.

What are your thoughts on RoboSats? They seem pretty decentralized with a good maker bond system in place. I like that it runs directly in Tor but anyone can run their own instance on Umbrel and/or Citadel to become a part of the infrastructure.

This is one that I often do when I want to trade on a new DEX or CEX platform. It's always about available Liquidation, if Liquidation is low enough and the orderbook looks slow or even not moving, then few will be interested in the DEX. The orders that appear are also filled with Bots and that's to keep up with selling and buying activity, but still it's just a biot and it doesn't look like real users are doing it. Dex recommendations are also reviewed by several senior users and even have good ratings as Dex that can be used safely.

Simple but meaningful question.. ,  Important Evaluating a decentralized exchange (DEX), Well, there are several factors to consider to determine if it is a good choice for example Security and this should be your priority for any DEX. Look for platforms that use strong security measures such as smart contract audits, bug bounty programs, and strong encryption protocols and low trade taker fees including gas fees on the underlying blockchain network and others in addition to other staples like Liquidity factor , User Interface (UI) and User Experience (UX) and the range of assets available for trading on DEX.

If there are pluses there must be minuses as well. For example for now there are still Regulatory Concerns where DEXs are operating in a relatively unregulated environment, which may raise concerns about the potential risks of the solution yes Users can choose a centralized exchange which complies with regulatory standards and offers added protection the last is Slower Transaction Speed. My reason is that DEXs rely on the blockchain network for transaction processing, which can sometimes result in slower transaction speeds and higher network fees during periods of peak activity and This can be a disadvantage for traders who need instant execution or want to take advantage of short-term market movements.

I think with increased crypto activity in today's digital age one component that is a good indicator of deciding on whether to use a service or not, is finding reviews of what others say about the service..of course this isn't foolproof as review's can easily be bought but if not too much work you could as the community here to find its legitimacy.

Secondly lookout for activity and liquidity  ,if from a quick look things look slow moving and orderbook seems dead just don't bother using such an exchange ,save your time and money and take your business elsewhere .

Lastly I look for competitive pricing to what a CEX has and what market prices are being anticipated then you know which DEX to use.

I have never had any issues with the DEX. Not once have I been worried about hacks, transaction fees, or government regulation while using DEX. As a beginner, you should pay attention to analyzing the reputation of the decentralized exchange, as well as the number of buyers and sellers on the platform because it is crucial to its liquidity. This other point may not sound too important, but an intuitive interface of a DEX will make your life easier as you will not be worked up due to navigation on the platform.

I'm not techy, I usually only look for reputation, if it's been a while since it's been in market, it should be trustable.

Volume/liquidity, mostly that's what I am looking for and next is if they're known and what kind of reputation they've got.

Honestly, before I was too optimistic with DEXes not until I started to see the lack of security of many of them and they've always been targeted by hackers and only a few of them manages to respond from those attacks until many of them closed.

And that optimism that I've got for DEX have already lost when most people are going and adding volume not on them but for the centralized exchanges.

Liquidity & reputation.

These 2 are inter-connected with each other I guess because a DEX that isn't reputable enough will not have high liquidity towards the assets that are being stored in it, and vice versa. A reputable DEX like Uniswap when it was still a popular DEX had lots of volume in every asset that's being supported by the exchange. Correct me, but DEX don't ask for KYC right? I'm not using it TBH that's why I'm not aware that much. A DEX with high reputation has high liquidity on it's assets. You don't want to put your money into a DEX where there has little to no volume in it right? At the same time, you don't want to put your hard-earned money into a DEX that has little to no users as well. A reputable exchange = more trustworthy than a new DEX.

Well, there are some factors that might affect a person's decision in looking for a good DEX but overall, I think these 2 are the most important factors.

Are you looking for fiat to BTC and backwards? Are you looking for BTC to alts and backwards?
Do you need quick trades? Do you typically exchange smaller or larger sums?

To me, volume is sometimes the deal maker or deal braker. I love Bisq but it’s sometimes slow as hell so I have to choose alternatives. A DEX will continue to be a DEX and will likely still be safe (unless you’re going for a never-maintained, unknown project). The question is which one has the features YOU need?

Liquidity is essential for a DEX to ensure smooth trading and competitive pricing. A higher level of liquidity allows for better trade execution and reduces the risk of slippage. Look for DEX platforms that have a wide range of trading pairs and active trading volume.

Look at their reserves, amount locked on chain and check if the coins on their dex are liquid enough to make use their protocol without any compromise issues. Don't connect your real wallet until you are very satisfied, you can use a wallet that has little or nothing to check the protocols before using your main wallet to connect.

I think you must explain what's the reason you're want to use DEX?

If you're really want to protect your privacy, your option is only Bisq.

But if you're just want to looking an exchange where you don't have to submit KYC, you can use Agoradesk or Robosats. Those P2P sites are still reputable and you don't need to worry as long as you use it to trade your coins.

Do you know the popular words that says 'Not Your Keys Not Your Coins' ? This is where decentralized exchanges wins over others, there is no sending your Bitcoin from your wallet into another entity's Bitcoin wallet all because you want to switch the coin to USD stable coins or into your local fiat currency. This is a big win for Dex.

We still need to be picky though, as some DEX are not reliable too, make sure you understand the modes of operation of the DEX you decide to use, I have few in mind that are better than others, some DEX are not completely decentralized, for example, the popular dYdX, this DEX is not true Dex in my opinion.  I prefer the following, Traderjoe, Perpetual protocol, pulseX, Apex, Syncswap.

Other members have enlisted almost everything that's needed or expected for an exchange to be referred to as a DEX or not. But I just want to throw some light in the part where some of these exchanges claim to be Dex but deep down they have Cex pattern of services and features and the user's only get to know much about this when they have already created an account with a deposit in place already.  The foremost reason why people uses dex is due to privacy and when an interference occurs one a user privacy then I wonder if such exchange actually understand the meaning of a Dex.

It sounds cliche but you look for decentralization in a DEX. They should have about three levels of decentralization;
• Decentralized servers,
• Open source codes,
• Non custodian wallets.
These are the key factors that make an exchange a DEX and ensures they are not interfering with the transaction or the user privacy in any way.

After this you consider their mode of operation (how they mediate between transactions), ease of access or use, customer response, terms of service, liquidity etc.

That's exactly what the tool is for. It just gives ratings on different decentralized exchanges and either rates them high, fair or low with reasons for it. It's also a fluid rating which changes with more research.