KuCoin is an exchange platform allowing you to trade or exchange crypto assets with other users. However, KuCoin confuses many users. Although it needs you to create an account, you can always use it to trade with decentralized features.
So, is KuCoin decentralized? We answer that and more below.
Is Kucoin Decentralized?
KuCoin isn’t decentralized — at least not yet.
As things stand, it combines centralized and decentralized features with a future plan to convert it to a completely decentralized exchange platform.
Currently, KuCoin runs on centralized and decentralized models to serve its customers in the market. It relies on centralization to secure the platform and ensure compliance by users.
Is Kucoin Fully Decentralized?
As stated above, KuCoin isn’t wholly decentralized. It’s a hybrid platform with both centralized and decentralized features
KuCoin recently launched a fully decentralized wallet for users to fund and participate in Web3 and crypto markets as part of its plans to move to complete decentralization.
What Makes An Exchange Decentralized?
Let’s explore some features that tell a decentralized exchange apart from a centralized one:
Regulation
A decentralized exchange platform eliminates a central point of trust, which means no single entity controls the platform. No central banks or governments can set rules, censor, or regulate a decentralized platform.
Authority
In a DEX, all participants own and have absolute control over their crypto assets.
Unlike centralized exchanges, DEXs give users full ownership of their crypto assets using non-custodial features. You own your wallet and all its keys, and you can trade or swap the assets with whoever and whenever you want.
Fees
Centralized exchanges charge users a regular fee, participants on DEXs pay their transaction charges via gas fees.
The ecosystem determines gas fees to motivate validators to approve new transactions to the blockchain. Often, these fees are cheaper than trading on centralized exchanges.
Privacy and Anonymity
Decentralized exchanges uphold users’ privacy.
Most centralized exchanges have Know Your Customer (KYC) requirements to collect user information and, in some cases, financial details. DEXs are essentially blind, and users can trade without revealing their identities. You don’t even require an account to trade on a decentralized exchange platform.
Most DEXs offer a straightforward, open platform to access, swap, trade, or buy crypto. All you need is a wallet address.
Security
Decentralized exchanges depend on validators and participants to secure the network. Also, you are the keeper of your wallet keys, which deters the theft of your crypto assets.
However, while getting hacked on a decentralized platform is hard, it’s difficult to regain control over your wallet or coins once stolen.
What Are The Best Decentralized Exchanges?
There are plenty of decentralized exchanges you can participate in:
PancakeSwap
Founded in 2020, PancakeSwap is a major decentralized crypto exchange running on the Binance Smart Chain Network that caters to the BEP-20 tokens.
Like most DEXs, it relies on Automatic Market Makers (AMMs) to provide its users with ways to earn from their crypto assets. Examples of such income-generating methods include staking, yield farming, and swapping tokens.
Pros
- You can purchase tokens for businesses that are yet to list publicly.
- You can participate in providing liquidity.
Cons
- Doesn’t support ERC-20 tokens
1inch
1inch is an Ethereum-based decentralized exchange that doubles as a DeFi compiler and gives users a platform to select the best and most affordable offers amongst DEXs.
With 1inch, you can look at and compare tokens and liquidity providers from several blockchains, making it easy to end up with a great deal for your crypto money.
Today, 1inch caters to close 2 million users, 7 blockchains, and more than 150 liquidity providers.
Pros
- It supports all ERC-20 tokens.
- No fees on deposits or withdrawals
- It gives a comparison of prices from other networks.
- It supports multi-wallets.
Cons
- Limited to ERC-20 tokens.
- It doesn’t store assets on its network servers.
UniSwap
UniSwap is among the leading DEXs which support complete anonymity. With UniSwap, you don’t need to give out your personal or financial information. You only need a few ETH tokens for your gas fees and are good to go.
UniSwap is popular because of its swap feature, and you can convert your ERC-20 token to another token with the Ethereum network. Besides the swap feature, UniSwap lets you trade and buy new ERC-20 tokens.
Besides that, UniSwap offers a platform that allows you to earn passive income through liquidity pools.
Learn more: Is Uniswap Really Decentralized?
Pros
- No intermediaries.
- No need for KYC.
- It offers passive income for participants.
Cons
- It’s costly to pay gas fees in ETH.
What Are Examples Of Centralized Exchanges?
A centralized exchange is a cryptocurrency exchange platform that lets crypto users buy, exchange or trade more crypto assets. Centralized exchanges are an excellent option for beginners and those who aren’t familiar with crypto.
As the name suggests, centralized exchanges have one central authority that oversees all the operations and ensures that both the body and the users comply with the regulations.
Here are five examples of centralized exchanges:
- Binance
- Coinbase
- KuCoin
- Kraken
- FTX
- Bitfinex
- Huobi Global
When To Use Centralized Exchange?
Here are some factors to consider if you prefer to use a centralized exchange
- If you’re a beginner to cryptocurrency and want a transparent and easy-to-manage exchange platform.
- If you want a crypto exchange platform that offers a variety of crypto assets.
- If you’re going to pay a service fee instead of gas fees.
- If you wish to have your crypto investments under a central authority.
- If you don’t care much about control over your crypto assets.
When To Use Decentralized Exchange?
- If you want to stay anonymous.
- If you want to trade without intermediaries.
- When you are looking for a secure crypto exchange platform without regulation from central authorities.
- If you’re seeking to sell, swap or hold cryptocurrency of a particular blockchain network.
- If you are worried about controlling your crypto wallet and crypto assets.
- If you want to use a platform that offers a non-custodial system.
Final Thoughts
KuCoin isn’t fully decentralized, but let’s expect that soon.
