Here at Token Metrics, we understand that our most valuable asset is you, our audience.
With your help, we have put together a guide to the Top 3 Crypto Exchanges of 2021, as voted upon by you.
So sit back, relax, and enjoy the Moon Awards.
What is a Crypto Exchange?
A crypto exchange is an online platform with two primary uses. The first use of a crypto exchange is for swapping cryptocurrency and fiat money. The second usage comes from an exchange’s capacity to trade a cryptocurrency for another cryptocurrency.
Swapping cryptocurrency for fiat money or vice versa works like any currency exchange you would find at an airport or bank.
When you trade one cryptocurrency for another cryptocurrency, a crypto exchange works more like a stock exchange. Like a stock exchange, you speculate on the rise and fall of those assets’ market value.
Essentially, a crypto exchange works as a gateway between the fiat and crypto world while also connecting different cryptocurrencies.
Top 3 Crypto Exchanges of 2021
1) Binance
“Binance is the biggest crypto exchange in the world. They’re at the forefront of innovation amongst exchanges, and the future is bright for the company and BNB token.”
– Ian Balina, Founder and CEO of Token Metrics
With a dominating 77% of the total vote, Binance is the clear leader in cryptocurrency exchanges. These results come as no surprise as Binance has been the largest cryptocurrency exchange in the world in terms of trading volume since January of 2018.
Binance was founded in July 2017 by Chinese software developer Changpeng Zhao. Before creating Binance, Changpeng Zhao constructed the Tokyo Stock Exchange systems and developed futures trading software for Bloomberg’s Tradebook.
Initially located in China, the Binance headquarters has remained fluid and has moved around quite a bit since then.
The first relocation of Binance’s servers and headquarters was to Japan in anticipation of the Chinese government’s ban on cryptocurrency trading enforced in September 2017.
Soon after, Japan also began to enforce stricter regulations on cryptocurrency, and the Binance headquarters reportedly moved to Malta. This recent location is inaccurate, though, as the island country recently announced that Binance is not under its jurisdiction.
When asked, CEO Changpeng Zhao also refuses to state Binance’s headquarters, citing its many offices worldwide and desire to be a decentralized exchange.
Binance was designed to be a platform capable of trading a variety of cryptocurrencies within minutes. The platform currently supports over 500 different coins and boasts its low fees for trades and withdrawals. Transactions are further discounted if the user is holding Binance’s native token Binance Coin (BNB).
Regarding fiat currency offerings, Binance supports over 60 different fiat currencies that can be exchanged for over 70 various cryptocurrencies.
Token Metrics’ Analysis of Binance
2) 1inch Network (1INCH)
“Mike Novogratz and Galaxy Digital back 1-inch. 1-inch is a good aggregator DEX which means it helps people find the best prices and trade easily. 1-inch will likely be the way people from Coinbase will enter the decentralized trading universe. It’s easy to use.” – William Noble, Chief Technical Analyst, Token Metrics
Arriving in a distant 2nd place with just under 15% of the total vote is the cryptocurrency exchange, 1inch Network.1inch Network is decentralized and has been a mainstay in this year’s Moon Awards. It was also featured in our previous Moon Awards categories of Best DeFi Projects of 2021 and Best Decentralized Exchanges of 2021.
With the rise of DeFi and decentralized exchanges, 1inch has quickly risen to the top as the premier DEX aggregator in the space.
What is a DEX aggregator? Well, think of it this way. In DeFi, anyone can trade on a decentralized exchange as traders only need to connect their wallets and therefore never give up access to their funds or information.
There are multiple decentralized exchanges, though, and they are all structured in slightly different ways and sell cryptocurrencies for slightly different prices. Now with slightly different prices, how do investors get the best price available?
This problem is where 1inch comes in as a DEX aggregator. 1inch scrapes the biggest decentralized exchanges for the lowest prices and reroutes its customers’ trades to ensure the best prices.
Sergej Kunz and Anton Bukov founded the 1inch Network in 2019 during ETHNewYork’s Hackathon. Since then, the project has raised roughly $15 million in funding from companies such as Binance Labs, Galaxy Digital, and Pantera Capital. You can watch our interview with the 1inch Network co-founder Anton Bukov here!
The 1INCH token was not available initially, though, as the token launched on Christmas day of 2020. The token functions as a governance token that holders use to vote on how the platform runs. The primary way to earn 1INCH tokens is through providing liquidity to the 1inch Liquidity Protocol.
Token Metrics’ Analysis of the 1inch Network
3) Uniswap (UNI)
“Uniswap will undoubtedly be remembered as everyone’s first experience with decentralized exchanges. UNI V3 gears towards institutions, so they are well-positioned. Once ETH moves to proof of stake, and gas fees are a thing of the past, UNI may regain its popularity across the board. ” – William Noble, Chief Technical Analyst, Token Metrics
Coming in 3rd place with 11% of the total vote is the decentralized exchange Uniswap. This result comes as no surprise as, like 1inch Network, Uniswap was also featured in previous Moon Awards categories of Best DeFi Projects of 2021 and Best Decentralized Exchanges of 2021. The Uniswap exchange also has a 24-hour trading volume of over $1.5 billion!
Uniswap launched in November of 2018 and was recently replaced by Uniswap Version 3 in May of this year. Uniswap Version 3 is a significant upgrade over Version 2 as it added many new features, including concentrated liquidity and multiple fee tiers.
The Uniswap DeFi project is a protocol built on the Ethereum network for swapping ERC-20 tokens. Unlike centralized exchanges, Uniswap is designed to function as a public good, meaning that it is a platform for the community to trade tokens without fees or intermediaries.
Uniswap’s primary distinction from other DEXes is a pricing mechanism called the “Constant Product Market Maker Model.” This model means that any token can be added to Uniswap by funding it with an equivalent value of ETH and the ERC-20 token traded.
Absolutely any ERC-20 token can be listed on Uniswap with no permission required.
In September of 2020, Uniswap launched the UNI token by airdropping 400 UNI tokens to every wallet address that had interacted with the Uniswap protocol before September 1. As a governance token, UNI entitles holders to a vote in how the protocol runs.
It is important to note that Uniswap plans to distribute a capped total of 1 billion UNI over four years, with 60% reserved for community distribution, 21.5 % earmarked for Uniswap employees, and the remaining 18.5% allocated to investors and advisors.
Uniswap is a genuinely unique DEX, and with the recent release of Uniswap Version 3, the project will continue its reign as one of the best DEXes in the crypto space.
Token Metrics’ Analysis of Uniswap
Honorable Mention: Coinbase
“Coinbase’s undeniable success in America’s ambiguous crypto industry is remarkable. While no exchange is perfect, Brian Armstrong and the team have created a compelling balance between a lucrative business and a highly approachable first step into crypto for many people.” – Dylan Love, Host of Crypto Hot Seat, Token Metrics
After being narrowly edged out by Uniswap, the cryptocurrency exchange Coinbase is more than worthy of being an honorable mention. Being listed as an honorable mention does not diminish the achievements of Coinbase, though, as the exchange has become increasingly popular amongst investors, particularly beginners.
Founded in June of 2012 by Brian Armstrong and Fred Ehrsam, Coinbase’s goal was to be the most trusted name in cryptocurrency exchanges. Coinbase has been mostly successful in this endeavor and remains relatively unrivaled on this claim.
Coinbase is headquartered in San Francisco, California, and maintains this high level of trust by being a regulated US financial institution. This status makes Coinbase a centralized exchange instead of a decentralized exchange like 1inch Network and Uniswap.
Coinbase is also FDIC insured for US deposits up to $250,000 and is compliant with crucial EU financial regulations.
Another attractive feature of Coinbase is its insurance guarantee outside of the FDIC. In this guarantee, Coinbase promises to cover any customer funds lost due to a breach of its online storage. Coinbase’s online storage holds only 2% of customers’ funds to enhance security further. The rest of the funds are in Coinbase’s offline storage.
While Coinbase’s centralized nature goes against crypto’s primary goal of decentralization, their federally backed promises of security and enhanced focus on trust have made it the most popular exchange amongst beginner crypto investors.
Other than Coinbase’s centralized nature, another downside of the enhanced focus on trust is the limits placed on the exchange.
Coinbase supports more than 50 cryptocurrencies on the exchange, but that small list does include all the top coins. Coinbase also limits who can use the exchange as users must come from a list of roughly 30 countries located in North America, Europe, and Oceania.
Token Metrics’ Analysis of Coinbase
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