Decentralized Exchanges(DEX) have become a common feature in the crypto space since the rise of Decentralized Finance (DeFi). Multiple Blockchains host several DEX, and Solana (SOL) is among the most popular.
The Solana blockchain is home to multiple DEX with distinct features and benefits. This article will discuss some of Solana’s most impressive DEX and let you in on what they offer. Lets jump right in!
Which Are the Best DEX on Solana?
Solana is home to many DEX. However, due to the different DEX’s features and benefits, some have become more popular than others. Here’s a list of popular Solana DEX, and what makes them so popular.
One of Solana’s most popular DEX is Soldex. Soldex is an AI-powered decentralized exchange that allows crypto traders to customize their trading strategies and simplify complicated settlement workflows. This third-generation crypto exchange operates an AI that helps you run three important tasks which include:
- Market Data Analysis: with this, you can study the crypto market and all its trends.
- Market Risk Prediction: this allows you to determine the risks involved in a given transaction
- Buying and Selling Assets: here, the AI can help you trade as long as you set the conditions you want for your transaction.
The most outstanding solution that Soldex brings to the table is the Soldex Academy. This educational resource aims to make trades and developers understand Solana and DeFi in more depth.
Soldex runs on a native token called SOLX. You can use this token to participate in Soldex’s governance, meaning you will be involved in the decision-making. You can also use SOLX to pay transaction fees, and feed AI bots.
Raydium is an amazing DEX on Solana. What places Raydium among the top Solana DEX is the fact that it enables users to get the liquidity and order flow of the entire Serum DEX ecosystem. Liquidity is essential in DeFi protocols because it determines the cost of trading. Once liquidity falls, you may find yourself paying more than the current market prices for a trade.
Raydium has become one of the most used DEX on Solana because of its expanded liquidity by enabling trade between Raydium and Serum through a central limit order book. This is simply a list of what market makers are buying, the prices, and quantities. This order book is then given to takers, who approve the prices and quantities before the Smart Contracts link their order to matching prices and quantities on the order book, and the transaction is authorized.
Raydium’s best solution to DeFi is its Trade & Swap solution. This allows a quick exchange of two tokens through Serum. Trade & Swap also provides charting and limit orders that you can rely on when trading.
The native token on Raydium is RAY, which holders can use for governance and performing transactions. It can also be used for utility, where traders who have staked the token and contributed to liquidity pools get RAY as rewards.
Orca is an Automated Market Maker (AMM) running on the Solana blockchain. An AMM is a decentralized exchange that sums up information from other crypto exchanges and platforms and comes up with an average market price for assets. This means that using Orca saves you the time you would have spent comparing the market price for a given trading pair.
To achieve this seamless price comparison, Orca relies on its Fair Price Indicator. This feature helps you determine whether the price indicated for a given transaction is within 1% of the price listed on CoinGecko. It also indicates whether the slippage is equal to or less than your tolerance settings. Slippage refers to the lack of liquidity for a specific trading pair. Letting you know slippage is crucial because it helps minimize your losses as much as possible.
For many users, Orca’s most significant solution is its Token Panel. Orca’s Token Panel enables you to see your balances without having to open browser extensions. This feature is absent on many DEX, making Orca rank highly on user experience.
Orca’s native token is ORCA and has several uses such as governance, trading, and utility.
When it comes to stablecoins, you probably want to consider Saber as your DEX of choice. Stablecoins are cryptocurrencies that regulate the price of other currencies by linking them to specific assets. What is unique about Saber is that it has established a liquidity foundation to swap and stake your stable coins.
Compared to other DEX, Saber’s most significant advantage is the low slippage that it offers. Because of its already stabilized trading pairs, Saber offers low slippage, which means the prices you pay for your transactions are equal to, if not very close to existing market prices.
Saber runs on the SBR token. Users can use SBR as a governance token or stake it and earn rewards in SBR.
Decentralized exchanges are trying to improve DeFi in multiple ways, and Bonfida has focused on Graphical User Interface(GUI) as its unique selling point. Bonfida is Serum’s flagship GUI provider, ensuring that the platform’s user interface and user experience are all that traders need. Here are some of Bonfida’s GUI features that help Serum run smoothly.
- Exclusive Markets and Listing: Bonfida lists exclusive markets on Serum’s platform. The liquidity for these markets comes from the market makers of Bonfida.
- Advanced On-Chain Order Types: Bonfida adds take-profit orders and stop-loss orders to the list of Serum’s orders. Initially, Serum only had limit-orders and market-orders, but users stake more tokens on the platform with these new orders.
- Placing Orders Through Tradingview Charts: this means users can make orders directly from the trading chats on their dashboards.
This powerful GUI-based DEX operates using the FIDA token. This token allows users to make bot payments and access APIs. It also gives new users access to consulting services on how to start out using Serum.
What is DEX on Solana?
Several blockchains host decentralized exchanges, and Solana is no exception. A DEX is a marketplace where crypto traders can make transactions without the need for a third-party approval.
Unlike centralized exchanges such as banks, where the bank has to approve the transactions you make, decentralized exchanges have a self-approving mechanism called Smart Contracts.
A Smart Contract consists of a code that states the specific requirements needed for a transaction to be approved. If your transaction meets the set requirements, the Smart Contract automatically approves it.
Decentralized exchanges have revolutionized crypto trading, but they have one downside. Automated peer-to-peer markets may take too much time trying to verify transactions. This makes them slow and consequently increases the gas (amount required) for a transaction to be completed.
Why is Solana DEX Popular?
What separates Solana DEX from those on other blockchains is speed and affordability. Solana found a way to verify transactions faster. While blockchains like Ethereum run 15 transactions per second, Solana runs not less than 50000 per second.
The technology behind Solana’s speeds and cost-friendliness is called Proof-of-History. To verify crypto transactions, several independent but interconnected computers need to agree on the transaction’s details. For most blockchains, this verification happens one computer at a time. On Solana, however, Proof-of-History gets all computers to agree on transaction details simultaneously. This makes Solana’s transactions super fast and cuts down costs.
What Do I Need to Trade On Solana’s Decentralized Exchanges?
Because all Solana-based DEX are hosted on the Solana Blockchain, the first thing you need to access any of them is a Solana Wallet. Solana supports multiple wallets, so you won’t have a problem finding one that works for you.
However, it is advisable to use browser-based wallets or mobile app wallets when you are a new user. The wallets have simpler interfaces that will give you a better user experience. For more experienced traders, command-line wallets are more appropriate because they are the first to receive any Solana updates.
What Are the Disadvantages of Trading on Solana’s Decentralized Exchanges?
Although the Solana decentralized exchanges have their benefits, they also come with several downsides. These disadvantages may not be as severe, but they can make your DeFi journey rather hectic. Here are some of the disadvantages you might encounter when using Solan DEX.
Lack of Technical Knowledge
DEX on Solana can be quite technical. It would be best to be well informed on crypto wallets, DeFi-related jargon, security-related concepts, and an overall understanding of crypto trading. This can be quite a challenge for new traders, although there are several online resources to help you get started.
With decentralized finance, anyone with technical know-how can list tokens and create a liquidity pool for them. Some of these tokens may be corrupt or highly volatile. If you aren’t keen, you might end up investing in a token that is about to collapse or one that can compromise your wallet’s security.
Errors in Smart Contracts
Despite being a rare occurrence, Smart Contracts can malfunction from time to time. They may have bugs that people can exploit. This can cause several trading problems and get quite frustrating for most users.
Solana Decentralized Exchanges Make Decentralized Finance More Accessible For You
Solana is currently among the most highly advanced blockchains in the world of cryptocurrency. It is home to several amazing decentralized exchange platforms. By applying market research methods, increased liquidity, price indicators, stablecoin trades, and improved GUIs, Solana’s DEX’s make decentralized finance more accessible for traders, which scales their popularity even further.