Decentralized Exchanges (DEXs) are peer-to-peer digital marketplaces where transactions are conducted. These transactions are carried out without needing a third or superior party. These transactions are conducted via smart contract, which uses automated agreements written in code. Not to be confused with centralized exchanges like Coinbase and Binance, DEXs are usually built on the Blockchain. It's also important to note that DEXs were built to ensure that activities performed within a specific exchange are decentralized.

Most of the DEXs found in the crypto space are built on the Ethereum Blockchain, supporting smart contracts. Also, like centralized exchanges, DEXs charge transaction fees from users who transact and use their services. While the advantages of DEXs are speed, token availability, and reduced security risks, it possesses their disadvantages. One of such disadvantages of DEXs is high gas fees, which has limited their popularity and growth. This article will be looking at the top 5 decentralized exchanges on Polygon.

Using a DEX is quite simple and does not involve a sign-up process like a centralized exchange. A user is only expected to have an internet-enabled device for connection and a crypto wallet. These wallets must be compatible with the smart contracts on the DEX's blockchain network. To make the process seamless, the user is expected to have the native token of the DEX's Blockchain on the wallet. There are three main types of DEXs: Automated Market Maker (AMM), Order Books DEX, and DEX aggregator. The AMM DEX, largely inspired by Ethereum's Vitalik, relies on smart contracts created to solve liquidity problems. Alternatively, Order books DEX compile ledgers of all open orders to buy and sell assets for specific asset pairs. In the DEX aggregator, there is a usage of variant protocols and mechanisms to solve problems associated with liquidity in the decentralized finance sector.

Polygon is a unique Blockchain scalability platform that aids and unites Blockchain networks compatible with Ethereum. Created in 2017 as MATIC, Polygon is also referred to as Ethereum's internet of Blockchain because of its connectivity capabilities. Since its launch by Jayanti Kanani ad co., it has aggregated scalable solutions to support a multichain Ethereum space. The Blockchain is also a Layer-2 aggregator, built based on Ethereum and complemented with fundamental features. The network is powered by its native token- MATIC, which has a $17 billion market cap. According to CoinMarketCap, Matic is ranked as the 15th largest cryptocurrency. MATIC is a utility token and can be used for staking and validating transactions in the Blockchain. It is also worth noting that Polygon offers developers various tools to create high-solution blockchain protocols and DEXs. Polygon is also an aggregator of DEX and a unique high-solution offering of the vast Blockchain network.

The rising high cost of gas on Ethereum has continued to force Blockchain projects to look for alternatives. Simultaneously, this has coincided with the rising influx of projects into Polygon, as it charges cheaper fees than Ethereum. While it is cheaper, Polygon doesn't compromise on the security and interoperability offerings of the Ethereum network. However, listed below are the top five DEXs on Polygon making waves in 2022:

With a Total Value Locked of more than $790 million, Quickswap is one of the most valuable DEXs on Polygon. The Automated Market Maker (AMM) DEX is an alibi of the Uniswap protocol, offering users the same features and experience. However, while Uniswap runs on Ethereum, Quickswap utilizes the cheap service of Polygon to deliver premium service. This has resulted in the high popularity of the DEX and the high rate of crypto users utilizing its services.

Sushiswap is also another fork of Uniswap and one of the most popular DEX on Polygon. However, unlike Quickswap, it has its governance token used for various purposes. SUSHI holders control the protocol and also earn bounty rewards on staking. Sushiswap was operating on Ethereum but switched to Polygon to enjoy the swift speed and affordability of the aggregator protocol. It is currently one of the best DEX on Polygon, with users committing more than $5 billion in TVL.

Firebird Finance is a 3-in-1 Defi platform currently thriving on Polygon and offering immense bespoke services to many users. It is a yield aggregator, a vault, and also poses as an exchange. The DeFi platform not only guarantees rewards for its users but also optimizes their experience. Its swap page with yield farming features also ensures that traders and yield farmers earn rewards. The native token of the platform is HOPE, and its holder also receives a reward for staking it. Firebird Finance is also popular for incorporating technology into its protocol, a unique feature of the AMM. At the time of writing, the TVL in the DEX is $33.6 million.

Polycat is one of the latest projects to have joined Polygon, and its growth has been remarkable. The DEX is also the first to offer Initial Farm Offerings (IFO), allowing investors to earn massively on stakes. Another benefit of the IFO is that it exposes investors to farming opportunities within the ecosystem. Also, in a bid to attract investors, Polecat stakes the deposit fees from its farms and pools. The proceeds are then used to buy and burn FISH- its native token. This, and more, is one of the reasons why Polycat is currently making waves on Polygon. The investor attraction of the DEX platform is evident in its portfolio, which possesses an impressive $23 million in TVL.

Launched in August 2021, Polydex is one of the few DEXs changing the face of traditional DEXs on Polygon. The DEX is a fork of Pancake Swap but possesses features that make it faster and more scalable. The platform offers users a seamless and stress-free experience and a gasless one. It is no wonder why it is so popular amongst users and has easily made its way to the top. The platform also offers a unique reward interface model for its Yield farming termed Elastic Yield Farming (EYF). The current TVL in the DEX is $4.4 million, as it continues to increase in popularity.

The popularity of DEXs has continued to increase in the Blockchain ecosystem, with Ethereum providing a home for them. However, the status quo is changing, as Polygon seems to be offering irresistible services. The Ethereum-powered Blockchain now hosts most of the leading DEXs in 2022, offering speed and lower fees than Ethereum. With a TVL of $9.2 Billion, it is expected that more DEXs will deploy on Polygon.

Decentralized exchanges are marketplaces that work on a peer-to-peer basis. This means that the traders in the market carry out their activities without any management. Management, in the case, that there is no financial third party or custodian. To carry out transactions, traders use smart contracts. A smart contract is an agreement code that is written to facilitate transactions.

The creation of Decentralized exchanges was based purely on the need for eliminating authorities. This is why most of the transactions are strictly peer-to-peer. This means that the buyers of a particular asset are linked to the sellers. With the market non-custodial, traders are the ones holding the private keys of their wallets. In this article, we will be looking at the top 5 decentralized exchanges on Layer 2.

Decentralized exchanges are protocols that enable users to use smart contracts to carry out transactions. This is because the activities in the decentralized finance sector are done without the need for a third party. Centralized exchanges are owned by investments looking to make profits and monitor most of their activities. In turn, they are responsible for the safekeeping and regulation of the exchange. Unlike them, decentralized exchanges users are responsible for their safety in the market. This way, they are in charge of their keys and can interact directly with the smart contracts on such exchanges.

The majority of the decentralized exchanges in the DeFi ecosystem are housed on blockchains that allow smart contracts. This is the same blockchain that traders use to keep their funds safe. To carry out transactions, users pay small fees, which are usually charged with the trading fees. In summary, traders who intend to carry out trades on decentralized exchanges must interact with smart contracts. There are majorly three types of decentralized exchanges: DEX aggregators, Automated market makers, and Order books DEX.

Decentralized exchanges built on Layer 2 provide their users with many benefits, including zero or low transaction fees. Asides from that, there is the speed of settlement and massive scalability. These are made possible by taking transactions away from the main blockchain while ensuring the security is still maintained. Layer 2 provides that traders on decentralized exchanges enjoy all the benefits of a centralized exchange while still controlling their funds. Below are the top 5 decentralized exchanges on Layer 2.

Uniswap v3 is an upgrade to the previous version of Uniswap ( v1,v2) that launched in May. The decentralized exchange is based on Ethereum and uses the same Automated market maker as the previous v2 model. Asides from that, it provides a lot of benefits to users and liquidity providers of the protocol. Some of its features include minimized risks, eliminating or minimizing price slippage, and helping traders and liquidity providers increase their profits.

The protocol developers rolled out three main features: concentrated liquidity, oracle feed development, and new fee tiers. Uniswap v3 development was necessary due to users' complaints about congestion and increased gas fees on the Ethereum blockchain.

The concentration liquidity feature allows traders who provide liquidity to set their price range before depositing liquidity. This means that their rewards will be based on tiers from their risk in a liquidity pool. Asides from that, the gas fees issue vanished after the Uniswap v3 worked on Optimism, a layer 2 scaling solution. Also, swap fees are no longer at 0.3% as on the v2. It now has fee tiers ranging from 0.05% to 0.30% and 1%. This means that the risks increase as a liquidity provider decides the assets they supply to a token pair.

The dYdX protocol is a decentralized exchange that allows the trading of perpetual contracts using low fees. It also provides excellent liquidity and a leverage of up to 25x. To offer its users a great seamless trading experience, it launched on StarkWare, a layer 2 protocol. With the recent surge in the gas fees on Ethereum, dYdX provides users with this scalable solution. StarkWare also has a zero-knowledge roll up which affords traders maximum privacy.

The protocol also allows traders who intend to withdraw their funds to its Layer 1 on Ethereum. Traders holding the DYDX tokens can control a portion of the platform, earn discounts on trading fees, and participate in governing the protocol. DYdX also uses a standard protocol to help governance and the community on the platform.

SushiSwap is a decentralized exchange forking from Uniswap. Not only can traders swap tokens, but they can also carry out other services using the exchange. Just like all other decentralized exchanges, SushiSwap makes use of smart contracts to complete trades. Traders can also provide liquidity so that others can complete trades.

As mentioned above, SushiSwap completes transactions using smart contracts. It is an automated market maker. Users of the exchange lock up funds in liquidity pools which house pairs of tokens used to complete trades. Also, staking and lending services happen on the platform. Using the Polygon network, Sushiswap provides users with low fees on trades and fast processing instead of the congestion on Ethereum.

Quickswap is a DEX forking from Uniswap. It was developed in October 2020 on the Polygon network, which is a Layer 2. With its deployment on Polygon, users of QuickSwap enjoy lower transaction fees and fast transactions compared to Ethereum. Holders of the QUICK token, the native token of the protocol, have exclusive rights over changes made in the protocol.

The protocol started to solve the issues plaguing Ethereum at the period. These issues, including fast transactions and low fees, were enough to push users out of the DeFi sector. With its development on Polygon, QuickSwap completes about 65,000 transactions every second. QuickSwap also has features like Dragon Lair, which allows users to earn rewards from staking the native QUICK tokens of the network.

Curve is an automated market marker DEX that initiated on Layer 2, Polygon. It allows users to exchange tokens and wrapped assets with very low fees. Asides from providing liquidity and earning rewards in turn, users can earn rewards through yield farming on Aave. The main reason Curve moved to Polygon was due to the massive congestion and high fees on Ethereum.

The major reason why traders will want to consider these decentralized exchanges is because of their scaling solutions. With Etheruem based exchanges suffering great congestion and high transaction fees, these layer 2 exchanges eliminate those. However, traders should note that they should research a lot in order to pick out the best. This is because things change, and decentralized exchanges provide new features on their protocols every day.