![Decentralized Exchanges to Look Out For On Cardano [2022]](https://i0.wp.com/trading-u.s3.amazonaws.com/wp-content/uploads/2022/07/25163854/Decentralized-Exchanges-to-Look-Out-For-On-Cardano-2022.jpg?fit=1200%2C700&ssl=1)
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Whether you are an experienced trader or a beginner in crypto, you have probably bought Bitcoin, Ethereum or other cryptocurrencies on a cryptocurrency exchange. For the last decade, centralized exchanges like Mt.Gox, Binance or Coinbase have been the go-to place for investors to buy, sell or trade their assets. Although these exchanges have been the biggest gateway for investors to get into the crypto scene, they still spark debates about the crypto market divide.
Proponents of centralized exchanges argue for simplicity, regulation, and widespread availability. At the same time, critics say that these institutions violate the principles of blockchain and crypto: privacy, anonymity, and decentralization (abolition of intermediaries). This led to the development of decentralized exchanges in 2017, with Bancor Network launching the first AMM platform. Surprisingly, DEXs had to wait until 2019 to explode on the DeFi scene with the launch of Uniswap on Ethereum. Since then, the crypto ecosystem has been dotted with hundreds of DEXs, with total daily trading volume consistently topping $1.5 billion in 2022.
As the DEX industry flourishes, more blockchains are challenging Ethereum’s dominance, with Cardano leading the pack. This article focuses on the Cardano DEX ecosystem and some of the best decentralized exchanges built on top of the blockchain.
Understand the Cardano DEX ecosystem
Cardano Blockchain, led by the Input Output Hong Kong (IOHK) team, announced the successful deployment of the Alonzo upgrade on September 21, 2021, ushering in the smart contract era of the blockchain. Despite Cardano being seven years younger than its leading competitor Ethereum, Cardano smart contracts have seen massive adoption. In the first 24 hours, more than 100 smart contracts were running on the network.
Since the Alonzo upgrade in September 2021, Cardano has welcomed thousands of projects onto the blockchain, with the total locked value (TVL) of these projects hitting an all-time high of $326 million in March 2022. While the TVL has dropped following the recent crypto market crash, the Cardano ecosystem still has a cheap TVL of $130 million, data from DeFi Llama shows. The burgeoning increase in TVL of Cardano’s smart contract ecosystem is largely due to the growing market for decentralized exchanges (DEXs), which currently accounts for over 90% of TVL on Cardano.
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This puts the Cardano ecosystem in a prime position to challenge Ethereum and other smart contract platforms, with DEXs becoming the defining factor in decentralized finance (DeFi). In the following section we will focus on some of the best DEXs available on Cardano, what they offer and the potential each has to become a market leader.
The best Cardano DEX projects to watch out for in 2022
- sundae exchange
Sundaeswap, a Cardano-based DEX, launched in January 2022 following the success of decentralized exchanges for food trends like Sushiswap and Pancakeswap. The exchange was the most anticipated and second DEX launched on Cardano and shortly became TVL’s largest DEX. Running on Cardano, DEX allows anyone to trade, stake and lend tokens on the platform while greatly reducing network fees compared to Ethereum.
Sundaeswap uses the eUTXO model, an extension of Bitcoin’s transaction model, to settle trades. In the eUTXO accounting model, custody of assets on the blockchain can be tracked as unspent expenses of transactions. The unspent expenses are used as inputs for new transactions that help generate more unspent expenses. In addition, Sundaeswap introduces a unique constant product pool that makes swapping more efficient.
Unlike other DEXs, Sundaeswap has chosen to allocate its coins in a unique Initial Stake Pool Offering (ISO), which ensures a more equitable distribution of rewards among delegators. The community simply voted to select pool operators receiving SundaeSwap token incentives, thereby attracting and rewarding liquidity providers.
As of this writing, the Sundaeswap token ($SUNDAE) is trading at $0.03423, down slightly by 3.5% per day, with a TVL of $23.56 million.
- blueshift
Blueshift is one of the latest DEXs launched on Cardano. The DEX offers a new generation crypto asset management protocol based on liquidity portfolios tailored for traders, investors and token holders. Blueshift is based on a sophisticated Automated Market Maker (AMM) algorithm that provides exchange price calculations and controls liquidity flows. The platform also allows users to stake their tokens on a high-yield APY platform, providing users with passive income.
Aiming to compete with Sundaeswap and other AMMs in the crypto space, Blueshift introduces liquidity portfolios instead of the orthodox dual token liquidity pools. The community of protocol users maintains lists of accepted tokens in liquidity portfolios. Liquidity Providers (LPs) can invest in any of these tokens and purchase shares of the entire token portfolio. Here, LPs agree that their tokens can be freely exchanged within the portfolio, meaning their own assets will vary over time.
Blueshift creates virtual pairs by taking the required liquidity from the portfolio, allowing users to trade any tokens available in the portfolio. Using liquidity portfolios and virtual pairs offers users many benefits including low price slides, low transient losses and decentralized portfolio management. In addition, traders can claim no fees for arbitrage trades and exchange any available token for any other token in the liquidity portfolio.
Blueshift is excited to announce the #CNT Portfolio campaign!
Community, it’s your time to speak up!
Help Blueshift select tokens for its new portfolio.
Your support will define the new #Cardano Native portfolio.
Leave your favorite CNT in the comment section below! ⏬$BLUES pic.twitter.com/EJjd90xksY
— Blueshift (@blueshiftfi) June 17, 2022
The platform currently has a total value of over $6.5 million, starting in Q2 2022. The TVL hit an all-time high of $23 million in May after staking started on the platform, making it the largest DEX on Milcomeda
- They traded
Finally, we picked Adaswap, a Gal Gadot-backed DEX, as the final platform to watch out for in Cardano in 2022. Launched earlier this year, Adaswap aims to offer four different products to offer its users a complete DEX ecosystem for all their Cardano-based assets. The platform launched an Automated Market Makers (AMM)-based DEX for trading Cardano-based tokens, a dedicated launchpad to help developers build applications on Cardano, a native NFT marketplace, and fixed, long-term, high-yield liquidity pools (stake and Forgotten (S&F)).
When staking in S&F Liquidity Pools, users receive the regular return on investment and bonus rewards for stakers aiming to provide capital to projects listed on the AdaSwap launchpad via the auto-swap tokens feature present on the Liquidity Pools platform is.
Conclusion
Cardano-based DEXs still lag behind their Ethereum counterparts in terms of daily trading volume, community growth, and TVL. With Cardano’s DEX ecosystem only a few months old compared to five years of Ethereum’s dominance, the former could be pitted against the latter in the years to come.
The launch of low-fee, instant, and high-yield AMMs on Cardano could prove a worthy competitor to Ethereum’s DEXs. Finally, the rise of Cardano NFT marketplaces could introduce new utilities for Cardano DEXs, playing a role in the growing market of DEXs on Cardano.
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