How to use decentralized exchanges
What is a decentralized exchange
A decentralized exchange is a cryptocurrency exchange which allows users to trade tokens without giving up control of their tokens.
The main difference between centralized exchanges and decentralized ones is that in centralized exchanges users need to transfer their cryptocurrencies to the wallets that are owned and controlled by the exchange to trade, but in decentralized exchanges, users can trade directly from their own wallets or by depositing tokens into smart contracts.
While some of the decentralized exchanges like IDEX require users to sign up to trade, with decentralized exchanges, there is usually no need for a strong password, 2FA or SMS verification, because there is no account to protect, the only thing users need to protect is their wallets, that is to say, private keys.
Therefore, when it comes to trading on decentralized exchanges, a secure wallet and knowing how to protect it are of great importance.
Getting a secure wallet – Using decentralized exchanges
There are many decentralized exchanges available now for the trading of assets based on different blockchains such as Ethereum, EOS, TRON and Binance Chain, which you can check out in the list below:
All of them come with different options of wallets that users use to trade on the exchange. The popular wallet options for using decentralized exchanges are as follows:
Ethereum-based decentralized exchanges: Accessing with keystore file / private key, Ledger hardware wallets, MetaMask, Trezor wallets, Trust Wallet and Coinbase Wallet.
EOS-based decentralized exchanges: Scatter, TokenPocket, MathWallet and LeafWallet.
TRON-based decentralized exchanges: GuildWallet and TronLink.
Binance DEX: Ledger hardware wallets, accessing with keystore file and Trust Wallet.
Waves DEX: Accessing with seed or private key, Ledger hardware wallets, Waves Keeper.
It is well known that using keystore files or private keys either to access wallets or to use with decentralized exchanges is not a trusted method.
The best and most trusted wallet to use with decentralized exchanges is Ledger hardware wallets (Nano S, Nano X), which store private keys in the secure chip, thus they are never exposed to the internet or other devices.
Ledger Nano S or Ledger Nano X can also be used in conjunction with other wallets such as MetaMask and Scatter.
If you use decentralized exchanges or trade on centralized exchanges, either way a hardware wallet like Ledger is a must. Check out the article below to learn why you should get a Ledger Nano X before getting hacked:
Decentralized exchanges that support Ledger hardware wallets: IDEX, ForkDelta, KyberSwap, Binance DEX, Waves DEX. You can also use them in other decentralized exchanges together with MetaMask or Scatter if DEX supports it.
To sum up, the safest and most cost-effective option for traders is getting a Ledger Nano X or Ledger Nano S to protect funds and avoid future regrets, considering that your cryptocurrencies probably worth more than few hundred dollars. If you don’t have one now, at least make sure you rather use MetaMask or other wallets instead of private key / keystore file on decentralized exchanges.
Choosing a decentralized exchange for trading tokens
Once you have a secure wallet, don’t feel discouraged to use decentralized exchanges. But, just like centralized exchanges, you need to know about daily trading volume, listed tokens and such stats of decentralized exchanges before trading.
You can go to the guide below to learn about sites you can use to track various stats of decentralized exchanges:
For example, according to DEXWatch; IDEX, OasisDex, Kyber and RadarRelay are exchanges with the highest volumes respectively in the last 24 hours. And, DAI is the highest volume token in the last 24 hours.
After choosing the exchange, you need to connect your wallet to the exchange to start trading. Depending on the decentralized exchange you’ll use, trading experience might not be smooth. But, using decentralized exchanges is definitely easier than you think with the help of good user interfaces and guides.
As the number of DEXs with high trading volumes is very limited, you’ll probably try only using few exchanges. So, you don’t need to know about how all these decentralized exchanges work and differ from each other. You can check out the guides for some of the most popular decentralized exchanges below:
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