The 5 Best Decentralized Exchanges in 2023 (Reviewed by Experts)

Looking to buy, sell, and trade cryptocurrency on a decentralized exchange? 

Our team of experts have surveyed the market to find the best decentralized exchanges for investors. By the time you’re finished reading, you’ll understand which exchanges offer the best prices and features for investors like you. 

Best decentralized exchanges at a glance 

• Uniswap: Most popular 
• Curve: Best for stablecoins 
• 1inch: Best for low prices 
• PancakeSwap: Best for Binance Smart Chain 
• dYdX: Best for derivative trading 

The top 5 decentralized cryptocurrency exchanges

Uniswap 

Most popular 

Uniswap is the world’s biggest decentralized exchange. You can use Uniswap to buy, sell, and trade ERC-20 tokens on the Ethereum blockchain. 

To start using Uniswap, simply plug in your Ethereum wallet. You can then get started trading cryptocurrencies and adding your crypto into Uniswap’s liquidity pools to generate yield. 

Because Uniswap is so popular, the platform provides ample liquidity for users to carry their trades. In addition, the exchange is considered very user-friendly! 

Curve 

Best for stablecoins

Curve is a decentralized exchange originally designed to allow users to swap stablecoins of similar value. This design helps to help protect liquidity providers and mitigate impermanent loss. 

Curve is considered one of the safest and most trusted decentralized exchanges in the space. As a result, many investors put their stablecoins with Curve to earn low risk staking rewards! 

1inch 

Best for low prices 

Unlike the other decentralized exchanges listed, 1inch is a decentralized exchange aggregator. That means the platform searches different decentralized exchanges on the Ethereum blockchain to find the lowest fees and best prices for your trades. 

1inch allows users to buy, sell, and trade ERC-20 tokens. The exchange even allows you to make purchases with a debit/credit card through Moonpay! 

PancakeSwap 

Best for Binance Smart Chain 

PancakeSwap is a decentralized exchange built on the Binance Smart Chain (BSC). The platform was founded in 2020, at a time when Ethereum-based exchanges like Uniswap suffered from slow transaction speeds and high gas fees. 

Today, PancakeSwap has billions of dollars in liquidity. The platform’s straightforward UI allows users to buy, sell, and trade BSC-based assets. Because the platform is built on the BSC, users pay very low blockchain gas fees. 

dYdX 

Best for derivative trading 

dYdX is a decentralized exchange that supports lending, borrowing, perpetual trading, and margin trading. These types of transactions are not available on other decentralized exchanges, making dYdX a good option for traders looking to take on more risk. 

In addition, dYdX has partnered with Starkware — an Ethereum Layer 2 scaling solution. As a result, the exchange features low blockchain gas fees. 

What is a decentralized exchange? 

A decentralized exchange allows users to buy, sell, and trade cryptocurrencies without a centralized intermediary to provide liquidity and verify transactions. Instead, other users provide liquidity and transactions are verified through the blockchain. 

This arrangement allows crypto users to make transactions without the need for financial middlemen like centralized exchanges or banks. 

Centralized vs. decentralized exchanges

Centralized exchanges like Coinbase are typically considered better for new investors who may not understand the complexities of decentralized finance. Unlike decentralized exchanges like Uniswap, centralized exchanges typically have easy UI, support chat functionality, and can be linked to your bank account. 

The advantages of decentralized exchanges 

There are many reasons why investors may choose to use a decentralized exchange. 

No custody

Centralized exchanges take custody of your cryptocurrency. This can lead to situations like the FTX collapse, where millions of investors lost access to their crypto. On the other hand, decentralized exchanges allow users to trade while custodying their crypto in their own wallets.

Larger selection of cryptocurrencies 

Centralized exchanges often take time to approve new cryptocurrencies for trading. As a result, decentralized exchanges often have a larger selection of coins to buy, sell, and trade. 

Censorship resistant

Because decentralized exchanges are controlled by centralized liquidity providers, there is no middleman that can censor and restrict transactions. 

What important factors should I consider when choosing a cryptocurrency exchange? 

There are several factors you should consider when choosing a decentralized exchange. 

Liquidity 

Liquidity is a measure of how quickly your crypto-assets can be swapped for other crypto-assets. If your exchange has low liquidity, you may have trouble buying and selling different cryptocurrencies. 

Reputation 

To protect your crypto holdings, it’s important to choose a decentralized exchange with a reputation for trustworthiness and security. 

User interface 

A good user interface allows you to make more efficient trading decisions. Because what constitutes a good user interface is somewhat subjective, you should try out multiple exchanges to see which works best for you. 

How do I get started with a decentralized wallet? 

To get started with a decentralized exchange, you can follow this three-step process.

1. Get started with a wallet: Find a wallet that allows you to interact with decentralized protocols like Uniswap. MetaMask and Coinbase Wallet are two popular wallets that come with easy-to-use Google Chrome extensions. 
2. Fund your browser wallet: You’ll need cryptocurrency to get started making transactions on a decentralized exchange. To get started, you should buy cryptocurrency on a centralized exchange and transfer it to your wallet. 
3. Connect your wallet to a decentralized exchange: Once you’ve funded your wallet, you can start making trades and providing liquidity to your decentralized exchange of choice. 

Do I need to pay tax on decentralized exchange transactions? 

Though transactions on decentralized exchanges are pseudo-anonymous, you should report your cryptocurrency taxes. 

Remember, transactions on blockchains like Bitcoin and Ethereum are publicly visible.  In past years, the IRS has worked with contractors like Chainalysis to analyze blockchain transactions and crack down on crypto tax fraud. 

If you’re looking for an easy way to simplify the tax reporting process, CoinLedger can help. The platform integrates with blockchains like Ethereum, Binance Smart Chain, and Solana. Just enter your wallet address and let the platform pull your transactions automatically! 

Get started with a free account today. 

Frequently asked questions 

What’s the best decentralized exchange for beginners? 

Uniswap is a great option for investors who are new to using decentralized exchanges. Uniswap is the world’s most popular decentralized exchange and has a very easy-to-use interface. 

Do decentralized exchanges report to the IRS? 

Currently, decentralized exchanges do not report to the IRS. However, transactions on blockchains like Ethereum and Bitcoin are publicly visible and permanent. 

What is the cheapest decentralized exchange? 

Because 1inch aggregates prices from different decentralized exchanges, the platform can help you find the cheapest prices for trades. 

Is Binance a decentralized exchange? 

Binance is not considered a decentralized exchange. When you trade on Binance or Binance.US, your trades are handled, executed, and verified by a centralized intermediary.