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Uniswap vs. SushiSwap vs. PancakeSwap: Which DEX is the best?

pancakeswap vs uniswap vs sushiswap
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In the dynamic landscape of DEXs, market share often serves as a crucial indicator of popularity and user adoption. As of 2023, PancakeSwap claims the lion’s share with approximately 54% of the market, while UniSwap follows closely behind with around 32%. SushiSwap, although comparatively smaller, still holds a respectable 6% market share.

While these figures paint a clear picture of their respective popularity, it’s important to understand the unique features and user preferences that make each platform stand out.

In the battle for DEX supremacy, PancakeSwap, UniSwap, and SushiSwap offer distinct advantages and cater to different user preferences. So, whether you’re a beginner looking for simplicity, a seasoned trader seeking advanced features, or a community-oriented participant, there’s a DEX tailored to your needs.

What is DeFi?

DeFi (decentralized finance) is a popular term for people making financial transactions on networks built by blockchain technology. What distinguishes it from traditional financial activities is the elimination of intermediaries like banks, brokers, or exchanges. Moreover, the technology uses advanced technology, e.g., smart contracts, to secure and protect financial transactions on the blockchain network.

Like conventional finance, investors use crypto as a medium currency for lending, borrowing, investing, and even buying insurance. Decentralized crypto exchanges are a marketplace where investors trade or conduct other financial businesses without control and monitoring by a centralized authority.

Investors should beware that DeFi is still in an earlier development stage despite its recent explosive use and may involve unforeseen application risks.

Comparison of PancakeSwap, UniSwap, and SushiSwap

Take a closer look at these platforms and compare them based on key factors such as fees, liquidity, native tokens, security, token usage, and user interface.

  PancakeSwap UniSwap SushiSwap

Fees in % of a trade

0.25%

0.3%

0.3%

Fee-sharing mechanism with liquidity providers in %

90% of fees

60% of fees

50% of fees

Liquidity

Highest with USD1.9B in funds

Medium with USD1.4T in funds

Lowest with USD518M in funds

Native token

CAKE

UNI

xSUSHI

Security

Audited by CertiK

Audited by PeckShield

Audited by CertiK and PeckShield

Token usage

Used for governance, staking, and yield farming

Used for staking, trading, and yield farming

Used for governance, staking, and yield farming

User interface

Easy and user-friendly for beginners and advanced users

Complicated for new users

Complicated but easier than UniSwap in use

Determining the best decentralized exchange (DEX) among PancakeSwap, UniSwap, and SushiSwap depends on individual preferences and specific needs. Each platform offers unique features and advantages. Here are some factors to consider when choosing the best DEX for you:

  • Liquidity: PancakeSwap has the highest liquidity, which may be beneficial for larger trades or accessing a wide range of tokens.
  • Fees: PancakeSwap charges a lower trading fee of 0.25%.
  • Native Tokens: Each platform has its own native token. CAKE is used for governance, staking, and yield farming on PancakeSwap, UNI is used for staking, trading, and yield farming on UniSwap, and xSUSHI is used for governance, staking, and yield farming on SushiSwap. Consider which token aligns with your investment goals and preferences.
  • User Interface: PancakeSwap is known for its user-friendly interface, making it more accessible to beginners. UniSwap and SushiSwap may have a steeper learning curve but offer advanced features for experienced traders.
  • Security: All three platforms have undergone auditing for security, with PancakeSwap audited by CertiK, UniSwap audited by PeckShield, and SushiSwap audited by both CertiK and PeckShield.

PancakeSwap: Best for Beginners and Low-cost Conscious Investors

About

PancakeSwap is a decentralized crypto exchange for investors to trade cryptocurrencies. Registered in Fukuoka, Japan, in 2020, the exchange is the second-largest exchange in the market. It provides automated market maker(AMM) service, governance, yield-farming, staking, and lottery pools to investors.

Instead of Ethereum, PancakeSwap uses the BNB Smart Chain(BSC) and BEN-20 tokens to increase market liquidity. The exchange aims to facilitate crypto trades without intermediaries and central control.

Unique features

  • BNB Smart Chain and BEP-20: Unlike other centralized exchanges, PancakeSwap uses the BNB Smart Chain(formerly Binance Smart Chain) and BEP-20 as the lp tokens (liquidity provider tokens.) Investors can convert other cryptocurrencies to BEP-20 or vice versa to trade for other cryptocurrencies on the network and lower trading fees.
  • Automatic market maker(AMM): AMM is an autonomous market mechanism that makes crypto trades more marketable without central intervention and order books. And a liquidity pool exists through contributions from investors to allow investors to trade more efficiently besides AMM.
  • Yield farming: PancakeSwap offers investors to earn rewards like interest, governance tokens, or others by locking up their cryptocurrencies to a liquidity pool. A liquidity pool aims to provide liquidity to asset trades and investments. A large pool means more investors participate in yield farming activities.
  • Liquidity mining: Like yield farming, liquidity mining provides liquidity to exchanges or liquidity pools, but the return differs. The rewards earned can be other cryptocurrencies besides governance tokens.
  • Lottery pools: PancakeSweep founds a lottery pool allowing investors to win its native “CAKE” tokens.

Pros

  • Decentralized investing: As a decentralized exchange, PancakeSweep allows users fewer regulations and monitoring than centralized ones on trades and other investing activities. Investors have more control over their investments. Decentralization is one main reason investors prefer and use the exchange regarding privacy and personalized trades.
  • Low fees: Like other decentralized exchanges, PancakeSweet charges 0.25% for all trades. The low fee structure makes it a popular investment destination among investors.
  • Vast token choices: PancakeSweep uses BEP-20, an advanced-technology token, to allow more trading flexibility among crypto networks. Besides, the exchange offers a sea-wide choice of cryptocurrencies for trades on its platform, making it a favorable crypto center.
  • Yield farming: The exchange rewards investors for contributing to its liquidity pools with its native currency – “CAKE,” and subsequently increases the currency flow and reduces the volatility of its investment pools.

Cons

  • Security: Investors run the risk of loss of crypto assets and personal information due to hacks. Besides, a client may lose his funds in an account due to the loss of passkeys by negligence.
  • Lack of liquidity: Unlike bitcoins or Ether, some less popular cryptocurrencies are less liquid than popular assets. Investors may encounter the problem of a quick sale or have to lower the offer price in exchange for a quick sale.
  • Temporary loss: If you deposit and lock up your assets in a liquidity pool for a period, you risk losing paper value as you cannot sell it when the asset falls in price.

PancakeSweep is a popular decentralized exchange for investors for trades. Beginners can use its user-friendly system to start investing in cryptocurrencies from ground zero.

uniswap

UniSwap: Best for Sophisticated Investors 

About

Founded and registered in 2018 in New York, US, Uniswap is the largest decentralized exchange in trading volume worldwide. Using the Ethereum blockchain network to facilitate trades, the exchange adopts ERC-20 tokens as a liquidity facilitator without a central controller.

Like PancakeSwaeep, it uses smart contracts to execute trades. Users of Uniswap provide liquidity and determine the exchange’s trading rules by votes. 

Uniswap lets users connect their Ethereum wallets to the interface and begin trading digital tokens. The separation of clients’ assets from Uniswap is popular for investors cherishing privacy and security.

Unique features

  • Decentralization: Built on the Ethereum blockchain technology, Uniswap has no central management likely to interfere and control operations. Users have more confidence in their privacy.
  • No asset custody: Uniswap does not keep users’ assets. A customer only connects his crypto wallet to the system and begins to trade. Therefore, a user is not worried about asset theft and other possible financial crimes.
  • Decentralized governance: Managed by exchange users, Uniswap does not have a centralized structure to control operations, so users quickly make a sale or purchase through a liquidity pool.
  • Governance token: Owned by its native token owners: UNI, Uniswap is generally under the management of voters. It aims to protect users’ privacy, security, and trading efficiency.
  • Transaction fees: The fees are compensation a buyer pays to an asset provider for locking up his assets in the pool in return for rewards. The transaction fee is low enough to generate abundant liquidity and prices reflective of the market situation.

Pros

  • Open system: Uniswap is a public system for users interested in selling or buying cryptos by connecting their digital wallets to the exchange and beginning to trade. The exchange does not take custody of investors’ assets, so users can keep cryptos in their wallets.
  • Yield farming: Investors can provide liquidity to an investment pool by locking up their assets and earning native cryptos – “UNI” as passive income.
  • Low fees: A low fee of 0.3% on trades mainly compensated to other crypto depositors. The trading costs make Uniswap a popular destination for investors.
  • A wide range of cryptos: Investors can choose multiple cryptocurrencies for trades and financing.
  • Smart contracts: It is a safe and transparent execution program allowing trades and investment systems to be more efficient.
  • Governance: Holders of UNI – a governance token can vote on how trading systems run. It enables the exchange to be transparent and democratic.

Cons

  • Limitation of the Ethereum network: Uniswap only allows Ethereum-compatible cryptocurrencies to trade on its system. It limits its flexibility in appealing to other system users.
  • Fee payment limitation: Investors must pay Ether for a transaction fee. As cryptocurrency prices are volatile, it may deter investors from buying or selling digital assets in Uniswap.
  • High energy exhaustion: Uniswap uses the proof-of-work method to mine cryptos and consumes more energy and resources than other environment-friendly mining methods.
  • Self-help investing style: Investors should use their digital wallets to connect the no-custody dealing system of Uniswap. It increases users’ workload in trading and investing and complicates trading procedures.
  • Liquidity risk: Investors may have difficulties trading a rare currency if the liquidity of the currency is scarce in the pool without a backup and swift response from a central authority.

UniSwap allows sophisticated investors to use advanced tactics like liquidity mining, farm yielding, and staking to profit besides trades.

sushiswap

SushiSwap: Best for Investors for Opting for Operation Participation

About

Registered in Tokyo, Japan, in 2020, SushiSwap started as a decentralized exchange to trade a broad series of cryptocurrencies ever since. SushSwap runs the system using Ethereum blockchain technology. Like the other 2 exchanges, it acts as an automatic market maker without central control and monitoring.

Like UniSwap, ERC-20 is a token standard for SushiSwap’s operating system catering to numerous cryptocurrencies on its network. Besides, “xSushi” – the native currency from the exchange, provides liquidity and voting right for its users.

SushiSwap supports yield farming, liquidity mining, trading, and other financing activities.

Unique Features

  • Market maker: Like other decentralized exchanges, SushiSwap is an automatic market maker using a liquidity pool, instead of order books, backed up by its users to facilitate trading activities. The use of a liquidity pool protects users’ privacy.
  • Governance: Holders of “xSushi” currency can vote to decide on the rules and regulations of the exchange. Users have the democratic right to participate in management and increase their sense of belonging.
  • Liquidity mining: Investors can contribute to a liquidity pool and earn “xSushi” as a reward. The liquidity pool uses investors’ locked-up assets to increase the pool flows to reflect marketability.
  • Yield farming: Another program for users to earn rewards besides “xSushi.” Investors can gain interest in cryptocurrencies as a return for contributing to a liquidity pool.

Pros

  • Privacy and control: SushiSwap uses liquidity pools to increase crypto flows so users can keep updated on the market and make sales or purchases more efficiently. Instead of order books, the automatic market maker system protects parties’ identities.
  • Community-driven project: The decentralized exchange is an open voting structure where users holding “xSUSHI” crypto can determine how the exchange runs collectively. In other words, users can participate in the company’s operations.
  • Low fees: Like other decentralized exchanges, SushiSwap charges a transaction fee of as low as 0.3% on all trades due to its decentralized management structure, making it a popular option for investors.
  • Incentives: SushiSwap has popular reward systems like yield farming and liquidity mining to earn cryptocurrencies and enhance pool liquidity.

Cons

  • Loss in value: Investors may suffer from a paper loss if they lock up their assets in a liquidity pool. Whether the locked-up assets go north or south, they cannot sell them for a profit or loss reduction up to a committed period.
  • Complex system: Compared with PancakeSwap and UniSwap, SushiSwap has a more complex system. Novice users may take longer to learn how to use and trade on the system.
  • Limited currency choice: SushiSwap provides less than 50 cryptocurrencies for investment. Investors should have limited discretion in trading on the exchange.

SushiSwap is a community-governed project where users participate more in the operations besides trades. Investors willing to join in the management of the exchange may find SushiSwap a good option.

Factors to Consider When Choosing a Decentralized Exchange

The following are the primary considerations to be taken in choosing a decentralized exchange:

  • Features: Decentralized exchanges differ in services offered regarding margin trading, lending, staking, and liquidity mining. Interest rates also vary among offers by individual institutions. Investors should review and compare to make a better decision.
  • User-friendly system: Users may save effort in making a deal on a user-friendly interface rather than on a complicated system requiring a long learning curve. A beginner may require an easy-to-use apparatus to start work; an investor should base his know-how on selecting a decentralized exchange.
  • Fees: Cost is a universal factor in investing. The higher the cost, the less the return. In a volatile cryptocurrency universe, fees are essential in making an investment decision.
  • Security: Avoid investing in exchanges involving frequent hacks, fraud, and data theft. The quality factors should weigh on other quantity considerations, such as the return, as the potential loss you suffer from the former may outweigh the latter.

See Also: Crypto Card Singapore and Crypto ETF

FAQ

1. Is SushiSwap better than UniSwap?

Though the 2 exchanges are similar in many respects, like yield farming and crypto trading, UniSwap has more complex reward programs and an operating system for investors. New crypto investors may find SushiSwap more user-friendly in navigating its interface.

2. Is PancakeSwap better than UniSwap?

PancakeSwap uses the Binance Smart Chain and caters to fewer types of cryptocurrencies than UniSwap’s Ethereum blockchain system. However, PancakeSwap has a more user-friendly interface for beginners and sophisticated investors than UniSwap. An investor should choose a suitable exchange based on his needs and investment knowledge.

3. Is PancakeSwap better than SushSwap?

Both are decentralized exchanges. However, PancakeSwap’s BNB Smart Chain technology leads to lower trading costs than SushiSwap’s Ethereum blockchain. Besides, PancakeSwap has a larger liquidity pool, meaning more liquid for trades than SushiSwap.

But SushiSwap has a robust community governance model, and users can have more say on operation affairs.

Finally, it depends on what your needs are for an exchange. If you want lower costs and a user-friendly investing interface, PancakeSwap is your choice. At the same time, SushiSwap lets you participate in running an operation if you like participating in operations besides investing.

4. Why is PancakeSwap cheaper than UniSwap?

PancakeSwap’s BNB Smart Chain technology lowers trading costs more than UniSwap’s conventional Ethereum blockchain network. In addition, a larger and more liquid fund of PancakeSwap makes trading costs cheaper than the conventional one.

Final Thought

PancakeSwap is popular with new beginners and investors conscious of low-cost trading. UniSwap is suitable for investors inclined for advanced skills and product choices; finally, SushiSwap allows users more control over how the exchange runs. Whichever you choose depends on your needs and objectives.

Key Takeaways

  • PancakeSwap is suitable for new or low-cost-conscious investors.
  • UniSwap meets sophisticated investors with choices of multi-cryptocurrencies.
  • SushiSwap allows user participation in exchange operations.
  • You should choose an appropriate exchange based on your needs and requirements.
  • Decentralized finance is in early development, and investing in it involves risks.

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