One of the most well-regarded decentralized exchanges in the cryptocurrency ecosystem is Uniswap. Uniswap is presently the topmost Ethereum-based decentralized exchange based on the number of users and trading volume. Meanwhile, Binance is also among the most well-known centralized cryptocurrency exchanges. It is the best bet for most people for reasons such as the number of supported assets, security, and fees.
But how do they compare when pitted against one another?
As a centralized cryptocurrency exchange, Binance poses no worries in securing the safety of cryptocurrencies and wallets. So long as a ‘2FA’ is installed on a Binance account, safety can be guaranteed once simple wisdom is applied. Binance has instituted an indemnity fund for users which is also referred to as the SAFU. It gives users absolute peace of mind.
Meanwhile, using a decentralized exchange like Uniswap makes the user solely responsible for the safety of the wallet and cryptocurrencies. Popular safe wallets like the MetaMask can be used by users if the safety of their personal computers is assured.
Such action will prevent the loss of cryptocurrencies. However, the glaring challenge is that one cannot be sure about the security of a computer that is linked to the internet. Ledger Nano X is a hardware wallet that can be acquired if the trading involves more significant sums of cryptocurrencies (as it has an initial upfront cost). This can separate the private keys in the safety chips and never release them to computers and subsequently to the internet.
Cost of Transactions
Uniswap charges a static fee of 0.30% whenever a transaction is conducted regardless of the trade size or volume. There is the need to pay a transaction fee for every trade conducted since the Ethereum blockchain carries out transactions through a smart contract. The smart contract needs gas to process the transaction.
With Binance, trading fees start from as low as 0.10%. A trader who has done business with 50BTC and 50BNB in the past month can enjoy lower rates on transactions. If you have a Binance account open you can enjoy a 20% discount or simply pay BNB fees from a BNB wallet.
Uniswap solely backs ERC-20 tokens as a decentralized exchange fuelled by the smart contract. But it does not suggest other cryptocurrencies cannot be traded. Other tokens such as the ‘renBTC and WBTC’ on Uniswap are ERC representations of Bitcoin.
Since Binance is a centralized exchange, many cryptocurrencies are built on different blockchains and added to the ERC-20 tokens listed on Uniswap. EUR or GBP are statutory fiat currencies of Binance that cannot be found on a decentralized exchange like Uniswap.
The Volume of Trading and Liquidity
As an Ethereum-based decentralized exchange, Uniswap does not make provision for assets for cryptocurrency apart from ERC-20 and Ether. Tokens like WBTC are however supported by Bitcoin and follow the price of Bitcoin. Users can easily trade and use Bitcoin on the Ethereum blockchain due to WBTC.
Sufficient liquidity can be found on Uniswap as well as Binance if one is looking to trade common pairs such as LINK/ETH, or ETH/USDT. When planning to trade a token or pair that is not popular, first of all, check to find out if that token is traded and if the liquidity on Uniswap is sufficient. In some circumstances, Uniswap can be used to sell or buy tokens that Binance has not listed which make it advantageous for traders using rarer ERC20 tokens.
Binance on the other hand can be considered as the cryptocurrency exchange that has one of the highest liquidities.
Uniswap Vs Binance – Which is the Better Option?
Due to their unparalleled terms of service, both Uniswap and Binance are much preferred choices for traders.
Uniswap also allows any user who has an internet connection and Ethereum wallet to participate in trading, transferring, or investing in a liquidity pool. This is highly appreciated by users who reside in countries with a restrictive control of the capital.
The choice in selecting one as the best alternative solely rests on the investors, depending on their needs, and expectations.