Decentralized exchanges are the future of crypto transactions and other digital asset investments. DEXs on BNB Chain, a modified version of the Ethereum GETH client, remains a promising alternative allowing users to transact and use DeFi at a fraction of the cost on Ethereum. Readers will learn about decentralized exchanges on the BNB Chain and how to get the best out of some of an highly rewarding DEX like Pandora in this article.
What is A Decentralized Exchange?
A decentralized exchange is a platform for exchanging cryptocurrencies on the blockchain. With decentralized exchanges, cryptocurrency holders can buy the tokens they need by paying a market value in the tokens they hold. A couple of mechanisms make the on-chain exchange process possible. The first popular on-chain exchange mechanism was the atomic swap which is still used on blockchains like Stellar today. The most popular mechanism is the AMM or automated market maker mechanism which allows liquidity providers to provide liquidity in liquidity pools that decentralized exchanges use to fulfill user trades. Liquidity providers receive incentives to keep their tokens in the pools, while those who use the exchange for DEX swaps pay fees to the exchange.
The biggest risk in providing liquidity on an exchange is impermanent loss, but arbitrageurs are always available to profit from the differences and stabilize prices. Decentralized exchanges differ from centralized exchanges because the data on centralized exchanges are stored on centralized servers managed by humans, who may sometimes be unpredictable. Even though humans also create decentralized exchanges, they are self-sustainable, and the smart contract cannot be modified once it is live on the blockchain. Decentralized exchanges do not also hold user funds in a wallet which offers an additional layer of security.
Trading on a DEX
Before trading on a DEX, users often search for the cheapest decentralized exchange to minimize costs. The search for low-cost decentralized exchange available has made the BNB chain a favorite for DEXs users lately. However, it is important to note that the blockchain used also determines the exchanges the user can interact with, which is why many projects are bridging to multiple blockchains to reach more users.
Transactions or trading on decentralized exchanges starts with downloading a compatible Web3 wallet. Once users have Web3 wallets like MetaMask installed, the next step is to move funds from a centralized exchange or connect a hardware wallet to access the funds they want to use on the decentralized platform. Users will find the connect wallet button on exchanges like Pandora, one popular BNB chain DEXs. They can select the amount of a token A they want to exchange, and they will be provided with an estimated value of the other token B, which they will receive after the transaction. Most exchanges also display the slippage and transaction fees close to the confirm tab to ensure that the user knows what they are doing. After clicking on “swap,” a few confirmations are needed to complete the transaction. The initiator of the transaction will find the appropriate swapped tokens in their balance after the transaction.
Reasons For DEX Token Swaps
Users often need to do a couple of transactions, such as decentralized lending, borrowing, or trading on decentralized trading platforms. They could also hold a more promising asset with a huge potential for an increase in the short or long term. Instead of going back to a centralized exchange, using a DEX makes moving from one cryptocurrency asset to another straightforward. When users find decentralized exchanges charging the lowest fees, they can exchange tokens while paying a negligible fee compared to the fixed rates on some centralized exchanges. Some experienced DeFi users use decentralized exchanges just because they want to keep their funds safe by avoiding the numerous problems that could result from relying on centralized exchanges.
Popular BNB Chain DEXs
There is over $4 billion on decentralized financial platforms on the BNB chain right now, and most of these platforms are decentralized exchanges. Pancake swap is the most popular BNB Chain DEX among many crypto users. Pandora, BiSwap, Wombat Exchange, MDEX, Nomiswap, DODO, KnightSwap Finance, Titano Swych, Bakery Swap, Orion, Hashflow, FstSwap, Open Leverage, and KyberSwapare some of the most popular BNB Chain DEXs out there allowing users to exchange cryptocurrencies without any form of custody. Pandora especially unique for its high yield and gamified reward system that gives back to its users for staying consistent on the platform.
Playing it All Safe On Crypto Exchanges
While decentralized exchanges are safer, better, and more reliable than most centralized exchanges, there are a couple of tips and things users must do to stay safe while using these platforms.
First, users should have their funds in hardware wallets. Wallets like Ledger and Trezor support tokens on the BNB Chain, so users can still hold their assets for whatever purpose they decide to use them for a while, keeping them safely in their hardware wallet.
Next, users should only interact with exchanges that prioritize security. The best way to measure an exchange’s security is to check for security issues in reviews and social comments by other exchange users. A complete Twitter comment history can provide insight into the experience of existing exchange users. After that, users must ensure that experienced smart contract auditing companies have audited the exchange’s smart contracts. Platforms with multiple audits, like Pandora, are often reliable bets, as they are highly committed to providing a secure experience.
Again, users should check the permissions on their Web3 wallet, such as MetaMask, to avoid falling victim to bots that occasionally drain the wallets of unsuspecting persons. They can do this by connecting to a block explorer and checking contract permissions on their address to ensure that no malicious permission has been granted unknowingly. Another important step is reducing wallet lock time to a couple of seconds. That way, users can protect themselves from sudden bot attacks.
Get More With Pandora
Aside from exchanging tokens on the cheapest decentralized exchanges. Most DeFi users are also interested in building a sustainable income. Pandora is one BNB Chain DEX proudly committed to making this possible for a growing number of folks in the BNB Space. By simply using Pandora and staying consistent on the platform. By executing hashrate eligible trades, crafting PandoBoxes, opening staking slots, and participating in the lottery by buying a ticket for just $1, users can grow through levels on Pandora and earn a lot from lucky draws, events, and contests. One new hot investment topic in the community is the first-of-its-kind decentralized securities that pay a stable interest annually and can also be staked to earn the high-yield rewards in Pandora’s native PSR tokens. Pandora NFT Securities is a blue-chip DeFi investment asset allowing investors to earn in multiple ways from one investment.
Conclusion
Decentralized exchanges are the future of crypto and financial services. Additionally, many people are moving away from Ethereum altogether due to the high transaction fees, which the merge didn’t resolve. Users moving to BNB chain DEXs for better transaction fees also need all that they got from many options available on the Ethereum blockchain. With DEXs like Pandora, BNB Chain users interested in using a better exchange can make the best out of Pandora’s super-inclusive and rewarding experience. Pandora carries all its users along, and every activity on the exchange is reviewed continuously to create an increasingly rewarding experience for those who believe in the platform.
These contents are for general information purposes only. They are not investment advice, a recommendation, or solicitation to buy, sell, or hold any digital asset or engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the crypto asset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your crypto assets, and you should seek independent advice on your taxation position.
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