Uniswap UNI vs Polkadex PDEX – Which One is Better?

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Uniswap UNI vs Polkadex PDEX – Which One is Better?

Not your keys, not your coins! That is why we all need Decentralized Exchanges. When it comes to decentralized exchanges that have something new and different to offer, two major platforms stand out: Uniswap and Polkadex.

Both platforms make crypto trading easy. And to give users full control of their funds. Uniswap is the leading DEX on Ethereum. It has remained a key player in the DEX market since it launched in 2018. Polkadex is a newer DEX. But it is posing a heavy competition thanks to its appealing features. Today, we are looking at the differences between Uniswap and Polkadex. The idea is to help you choose the best platform that suits your needs.

The Current Problems of Decentralized Exchanges

The debate between centralized exchanges (CEXes) and decentralized exchanges (DEXes) has been ongoing for a while. Both platforms have their pros and cons. While CEXes offer a better trading experience. However, many crypto natives prefer DEXes because of their transparency. And because they are non-custodial, that is not to say these platforms are free of trouble.

If you’ve used a DEX for trade, you’d spot some major drawbacks with these platforms. For example: 

  1. DEXs are expensive to use. Most Dexes run on networks that are prone to congestion. This results in expensive trades due to high gas fees.
  2. They have limited functionality and are prone to slippage. 
  3. Poor User Interfaces.

However, Polkadex has found ways to resolve some of the challenges most DEXes face. We’ll talk about that shortly. But let’s look at Uniswap for a minute.

A Look at Uniswap

Uniswap is the first DEX in crypto. It currently leads the market in terms of total value locked (TVL). TVL is the DeFi version of assets under management. Built on Ethereum, Uniswap enjoys the bulk of the market share and trust. Uniswap enables users to directly trade ERC-20 tokens without needing a central exchange. Uniswap operates on Ethereum, Polygon, Optimism, Arbitrum, and BNB Chain.

Uniswap uses the UNI token as its governance token. So, token holders can participate in the platform’s decision-making processes. Several clones of Uniswap have emerged over the last few years. Some of the notable names include Sushiswap, Pancakeswap, and Quickswap.

How does Uniswap Work?

Uniswap facilitates trades using an automated market maker (AMM) mechanism. AMMs rely on smart contracts to create and manage liquidity pools.

So, users access the pools and can use their tokens to swap assets within the pools. Liquidity providers contribute to pools to earn fees.

However, Uniswap is often expensive to use as every swap requires an expensive Ethereum transaction. Aside from gas fees, Uniswap recently imposed a 0.15% interface fee on top of its existing “protocol fee” managed by governance voters. 

Due to this, Uniswap, and other AMMs in general, are too expensive for most traders. However, the main issue with the AMM model pioneered by Uniswap is that it is incredibly bad at maximizing liquidity efficiency and needs a lot of TVL in one pool to avoid slippage on a market pair. Polkadex has found ways to resolve some of these limitations.

Polkadex and How It Changes the DEX Market

Polkadex is a non-custodial order book exchange built on Substrate. Polkadex currently enables users to trade tokens from different Polkadot parachains and will soon add multi-chain support for Ethereum.

Polkadex combines features from a CEX (orderbook) with those of a DEX. In other words,, Polkadex offers the speed, functionality, user experience, and affordability of a CEX, while allowing users to maintain custody of their assets.

Polkadex is a non-custodial, peer-to-peer exchange. So, users hold their assets in their wallets. And directly trade with each other.

But how does it work? Polkadex uses the Substrate framework to run a custom-built order book pallet with an off-chain trade execution engine on the Polkadex network, a distributed network of over 200 validators that also handles on-chain settlement. This infrastructure enables the Polkadex Orderbook exchange which looks, performs, and feels like a CEX (with an order book or list of buy and sell orders organized by price levels) even though it is decentralized.

Due to the price efficiency of order books– which means they need lower TVL to offer liquid markets–DEXes like Uniswap have been trying to make AMMs resemble order books (Uniswap v4). Other order book DEXes have been built in the past, but these have either been throttled or siloed by the chains they run on, meaning either speed or interoperability is sacrificed. Polkadex’s unique value proposition allows them to:

  • Provide DEX users with high trading functionality and interoperability.
  • Attract centralized exchange users with a non-custodial model free of centralized malpractice.
More About Polkadex

Polkadex allows users to trade like on CEX. But in a decentralized environment. So, users can not only place limit orders and wait for their desired price, but they can also use the orderbook to place market orders. 

In addition, Polkadex allows users to delegate their crypto assets to third parties, which means users can integrate trading bots and run sophisticated trading strategies. Back to the orderbook. The Polkadex orderbook is also heavily secured.

All trades and balances are maintained by a network of over 200 Polkadex validators and over 5.5 million PDEX staked, thereby inheriting the same level of security as the runtime (on-chain state). When a user deposits from their on-chain funding account to their on-chain trading account, only their same wallet address can trigger a withdrawal of the traded assets back out of the trading account.

Merging the Features of a CEX and a DEX

From a distance, Polkadex looks like a CEX. But under the hood, it is a decentralized exchange combining the best of both worlds. Polkadex does not store users’ funds. Instead, users have control of these funds in their wallets.

CEXes are mobile-friendly. Their services exist on mobile apps. But DEXes are notoriously bad at serving mobile users. And Polkadex also plans to change that. It designed its services to be accessed via desktop and mobile devices and tablets.

Other Polkadex Tools

The Polkadex parachain on Polkadot allows the Polkadex Orderbook to list tokens from across the Polkadot ecosystem. Tokens like DOT, ASTR, iBTC, and more.

Another major tool is THEA, the Polkadex interoperability layer which is designed to make deposits and withdrawals to and from Polkadex feel as they do in a CEX. THEA is run by the Polkadex validators and therefore inherits the security of the runtime. Ultimately, it is designed to add decentralized bridging support for networks like Ethereum and Polygon, which will gradually make Polkadex Orderbook as interoperable as existing CEXes. 

Polkapool, an AMM-based pallet on Polkadex, will allow users to auto-convert a small amount of their deposits of certain assets into PDEX, thereby making the deposit process seamless, even for those who do not have a Polkadex account with a PDEX balance before using Polkadex Orderbook.

Trading on Polkadex is pretty simple. An average user can understand the interface. The simple onboarding process involves connecting your wallet and creating a trading account. There are no KYC requirements.

The PDEX Token

Polkadex has its native token, PDEX. You can use PDEX for the following purposes:

  • Pay for network fees.
  • Participate in the on-chain governance of Polkadex.
  • This includes proposing and voting on listings.
  • Stake PDEX to secure the Polkadex network while you earn.
How Does Polkadex Differ From Uniswap

Back to our original Polkadex vs. Uniswap comparison. Both platforms provide good decentralized features. However, Uniswap is DEX 1.0. And Polkadex is DEX 2.0. Polkadex is the next generation. It seeks to resolve some of the challenges of platforms like Uniswap.

Polkadex merges the best of a CEX and DEX on one platform. This allows for a wider range of trading features. Uniswap, while it keeps iterating to resemble an order book, does not achieve the price efficiency or user experience of a true order book.

As I said earlier, Polkadex supports a full order book. Trades are matched at CEX-like speeds. On the other hand, Uniswap uses a bonding curve. So, users trustlessly draw liquidity from one or more liquidity pools. Polkadex operates on Substrate. Substrate is a modular, highly customizable high-speed blockchain framework.

It gives DApp builders much more flexibility than Ethereum. It also currently supports feeless trade swaps. And addresses the issues of high network and trading fees that Uniswap suffers from. Polkadot is quickly becoming the most exciting DEX on Polkadot. It has the potential to keep leading the DOT ecosystem. And DeFi at large. 

Bitcoin on Polkadot via Polkadex

Here’s another big reason to use Polkadex: You can now trade Bitcoin on Polkadex. Polkadex listed Interlay’s iIBTC on Monday, November 6th. Polkadex has been adding trading pairs in recent months. As of November 6, they have:

  • iBTC/USDT.
  • PDEX/, USDT.
  • DOT/USDT.
  • ASTR/USDT.

Wrapping up. Polkadex has several advantages that an established DEX like Uniswap lacks. Polkadex presents an easy way to trade crypto in a decentralized way.

Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.

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