What Is Polygon DEX?
The Polygon Network (started as Matic Network) is a L2 scaling solution for Ethereum. Polygon DeFi aims to solve its existing problems related to transaction speed, cost, and scalability. Thus, Polygon allows users to do almost all the same actions as Ethereum, only faster and cheaper.
In 2024, Polygon has evolved significantly, and in addition to being a L2 solution, it became a broad ecosystem with numerous use cases. You can read more about Polygon in In-Depth Analysis by Notum.
Interesting fact! Now using the Polygon Network, users and developers can launch Ethereum-compatible blockchains, as well as create various dApps, platforms, and projects, including DEXs.
Polygon DEX are decentralized exchanges built on the Polygon network that allow users to trade tokens directly without any centralized intermediary.
Important! DEX or decentralized exchange is a trading platform that allows transactions to be made directly between crypto users.
Many Ethereum-based DEXs suffer from high fees and slow processing times, but Polygon offers users a solution to these problems. By operating on the Polygon network, DEXs take advantage of its high throughput and low-cost transactions, resulting in significantly lower gas fees and faster transaction confirmations compared to Ethereum. This makes trading on Polygon DEX more accessible and cost-effective for a wider range of users and investors.
How Does Polygon DEX Work?
DEX on Polygon operate similarly to other block chain networks, but offer high throughput and low transaction fees. These DeFi exchanges are built on smart contracts that automate the asset exchange without involving any centralized intermediaries.
Important! Utilizing Polygon’s DEXs, users can trade directly from their wallets, providing greater security and control over their funds.
Using Polygon’s Layer 2 scaling solutions, DEXs offer faster transaction processing times and significantly lower costs compared to Ethereum’s Layer 1, making trading more efficient and accessible.
Speaking of architecture, these Polygon exchanges usually utilize automated market maker (AMM) protocols. AMMs, like those used by Uniswap or SushiSwap, rely on liquidity pools where users provide pairs of tokens. Users who contribute to liquidity pools receive fees on trades proportional to their share of the pool.
Important! Pools enable decentralized exchanges using mathematical formulas to evaluate assets, eliminating the need for traditional order books.
Advantages of Using Polygon DEX
- Low Fees. Compared to Ethereum-based DEXs, Polygon decentralized exchanges offer significantly lower transaction fees. Since Polygon's Layer 2 scaling solution reduces gas fees, trading on its DEXs becomes cheaper and more efficient.
- Interoperability. Due to its compatibility with Ethereum, Polygon users can seamlessly interact with Ethereum-based projects and assets. Thus, they benefit from both ecosystems while maintaining access to a wide range of DeFi applications and Ethereum's liquidity.
- Transaction Speed. As known, Polygon has faster transaction processing than Ethereum. High throughput, in turn, allows for quick confirmation of transactions, which makes the user experience more enjoyable.
- Scalability. Polygon's architecture is built to scale and process higher transaction volumes without sacrificing performance.
However, in addition to the above advantages, it’s important to pay attention to Polygon exchange’s security.
Security and Risks
A significant advantage of using Polygon DEXs is the robust security measures inherited from Ethereum's proven security protocols and smart contract standards.
Important! Using Polygon's Layer 2 scaling solution increases security by reducing network congestion and its possible vulnerabilities.
Besides, Polygon’s multi-chain system allows for risk diversification. Since assets can be distributed across different chains, the impact of potential breaches is minimized.
However, despite the proper level of security, it is still important to be aware of risks such as smart contract vulnerabilities and liquidity issues.
Popular Polygon DEX Platforms
Today’s article from Notum will pay attention to the best Polygon DEX on the market.
Quickswap
Quickswap is a fork of Uniswap, which has a similar interface but offers users increased speed and lower fees. Quickswap was created in 2020, and by July 2024, it is one of the largest Polygon’s liquidity centres. The platform offers trading of over 450+ coins and 1000+ trading pairs, which, combined with small commissions and minimal gas fees, makes it one of the best options for users.
In addition to high speed and low fees, the platform has a number of advantages that make it a good solution in 2024. For example, Quickswap allows users to buy crypto with fiat money. Moreover, it supports payment systems such as Apple Pay and credit cards. Another big advantage is the reward system for liquidity providers. Quickswap rewards LPs with 0.25% of the fees generated by each Polygon DEX swap made using their liquidity.
SushiSwap
SushiSwap is a community-driven DEX that is also a fork of Uniswap. SushiSwap initially ran on the Ethereum blockchain, but in 2012 the DEX also became available on Polygon. The exchange supports a huge number of tokens and allows users to swap across 15 chains.
Interesting fact! SushiSwap has its own governance token SUSHI, that allows token holders receive governance rights and a portion of the fees paid by the platform.
As a Polygon DEX, SushiSwap also offers additional features such as liquidity pools and bonds, allowing users to earn rewards for providing assets.
Aave
Aave is a famous DEX and liquidity protocol for lending and borrowing crypto assets. Aave was originally built on Ethereum, but now it operates on several blockchains, including Polygon, Optimism, Arbitrum and others.
Aave on Polygon offers users faster transactions and lower fees, making it a great option for high volume transactions. The platform also allows users to earn rewards in Polygon for supplying liquidity and borrowing.
The platform has a convenient dashboard and offers users access to the Polygon Market, where they can lend and borrow assets with favorable APY, making it a relevant option in 2024.
Source: Aave
Curve
Curve is another well-known Polygon-based DEX in the crypto world, which can be described as a universal platform for trading cryptocurrencies. Curve Polygon offers users a built-in yield aggregator, the advantage of which is that it can compare prices across chains and find the best deals on the market.
Important! Curve offers users several earning opportunities, such as pools, yield farming, as well as lending and borrowing.
Curve Polygon offers several distinctive features, such as low slippage for its swaps, which reduces the risk of money losses. Another important benefit of Curve is its safety level. This DEX aggregator uses smart contracts that have been thoroughly audited by independent companies, and also has a bug bounty program that encourages developers to report any bugs and exploits found.
Balancer
Balancer is a quite popular DEX in the crypto space, as it offers passive yield-bearing pools for LPs, as well as a trusted toolkit for true AMM experiments.
Important! Balancer has been around since 2020 and currently offers over 80+ coins, 100+ trading pairs, and a number of unique features such as automatic investment management, low fees, and zero starting capital for arbitrage.
Balancer allows users to swap across 10 networks, including Polygon and Polygin zkEVM, and supports a huge number of tokens. In addition, the platform offers users a wide range of liquidity pools with fairly large APRs.
1inch Network
Last but not least DEX on our list is 1inch Network, which offers optimization of trades across multiple networks, such as Ethereum, Polygon, BNB Chain and many others.
Interesting fact! 1inch analyzes hundreds of DEXes and their fees to provide users with the most favorable rates.
The platform has a number of unique products, such as 1inch physical and digital card for crypto assets, aggregation protocol for multiple DEXs to get the best swap rates, limit order protocol and liquidity protocol - next generation AMM for LP’s capital efficiency.
Source: 1inch
Fees and Costs
Using Polygon DEXs involves the following fees and expenses:
- Transaction Fees. In comparison to Ethereum, Polygon DEXs offer significantly lower transaction fees due to Polygon’s use of sidechains and zk-rollups. These fees cover the cost of executing trades and interacting with smart contracts on the network.
- Gas Fees. While Polygon DEXs charge lower gas fees than Ethereum, they are still required to execute transactions on the network.
- Liquidity Provider Fees. LPs get rewards from the trades executed in the pools they invest crypto in. These fees are a percentage of the trading volume, and they can vary from DEX to DEX.
- Slippage Costs. Slippage occurs when there is a difference between the expected price of a trade and the actual execution price. While Polygon DEXs reduce transaction costs, slippage can still impact trading performance.
Overall, Polygon DEXs are designed to minimize these costs compared to Ethereum, increasing accessibility and efficiency for users.
Conclusion
Polygon DEXs are a big improvement in decentralized trading, as they provide faster and cheaper transactions, improved scalability, and accessibility for users. The most popular Polygon DEXs on the market in 2024 are Balancer, SushiSwap, 1inch Network , Curve and AAVE, as they not only provide efficient and decentralized token trading, but also a number of unique features that shape the future of decentralized exchanges.