Binance and Uniswap are some of the most popular cryptocurrency exchanges out there. Thanks to their advanced technology, unique functionalities, and offerings, these exchanges stand out from the rest.
Binance is a popular centralized digital asset exchange. With hundreds of listed cryptocurrencies and high liquidity, it is the preferred crypto exchange for most traders and investors. On the other hand, Uniswap is currently the top Ethereum-based decentralized exchange (DEX) in terms of trading volume and the number of users.
But which exchange is better? How does Uniswap differ from Binance? Let’s find out.
Binance vs. Uniswap: Key Considerations
1. Fees
Trading on Binance is relatively cost-effective when compared to Uniswap. The Uniswap exchange has a flat fee of 0.30%. Irrespective of the trading volume, trade size, etc., the platform charges a 0.30% trading fee when you trade on the forum. Meanwhile, Binance is known for its low trading fees, which start from 0.10%. If your trading volume in the last 30 days is more than 50 BTC and you have over 50 BNB in your wallet, you can pay a discounted fee of 0.09% for your trades.
The above-mentioned trading volume is not necessary to enjoy lower fees on Binance. Users can simply open a Binance account with a 20% fee discount and/or hold BNB in their wallets to pay fees in BNB.
While trading on Uniswap, users need to pay transaction fees for each trade as the trades happen on the Ethereum blockchain network via smart contracts. Before performing a swap on Uniswap, users have to permit the smart contract to spend their tokens by pressing the “approve” button, an action that will again incur a transaction fee.
2. Trading Volume and Liquidity
Uniswap is an Ethereum-based decentralized exchange, so it does not provide liquidity for cryptocurrencies other than Ether and ERC-2O tokens. However, there are tokens like WBTC, which are backed by Bitcoin and track Bitcoin price.
Thanks to WBTC, users can use and trade Bitcoin on the Ethereum blockchain easily.
If you are looking to trade common pairs like ETH/USDT, LINK/ ETH, etc., you can find enough liquidity on Uniswap as well as Binance.
If the token/pair you are planning to trade is not that famous yet, then make sure to first check if that token is traded and there is enough liquidity on Uniswap. In some cases, you can use Uniswap to buy or sell tokens that are not listed on Binance.
All in all, Binance is a cryptocurrency exchange with the highest liquidity, and Uniswap can be considered its decentralized equivalent. Depending on the token you are trading and your needs, you can use both these exchanges for trading.
3. Security
As Binance is a centralized digital asset exchange, users need not worry about securing their wallets and assets. As long as they set up 2FA on their Binance account and follow standard safety protocols, they are safe. Binance exchange also has a fund for its users called SAFU, which provides insurance against potential breaches, making users feel safe on Binance.
When using decentralized exchanges such as Uniswap, you are the only one responsible for the security of your wallet and digital assets. If you are sure about your computer’s security and use popular and safe wallets like MetaMask, it is unlikely that you will lose your crypto assets or be prone to cyber-attacks.
The Uniswap exchange does not require users to give up control of their assets to trade. Users can trade on the platform via Ethereum from the safety and comfort of their own wallets. While practicing self-custody of digital assets is not a completely risk-free activity, it does eliminate the risks of an exchange hack.
If you trade or hold large amounts of virtual assets, you can purchase a hardware wallet like Ledger Nano X, which will separate your private keys in a secure chip and never expose them to the internet. You can also choose to connect your Ledger wallet to MetaMask and use any Ethereum-based decentralized applications (dApps), including Uniswap, in a secure manner.
4. Digital Assets Supported
Uniswap, a DEX powered by smart contracts, only supports ERC-20 tokens. This does not mean that users cannot trade other assets on the platform. Pegged tokens such as WBTC and renBTC are available on Uniswap. These tokens are ERC-20 representations of Bitcoin.
Uniswap supports assets and trading pairs that users typically cannot get on custodial alternatives, thanks to its permissionless nature. Since it is easy to spin up a trading pair on Uniswap, it is often the first place where new Ethereum-based assets are listed. Even when trading pairs are later added on custodial exchanges such as Coinbase Pro or Binance, Uniswap usually has very competitive liquidity and fees.
Binance, on the other hand, supports a variety of cryptocurrencies based on different blockchains in addition to ERC-20 tokens. The exchange also supports fiat currencies like EUR and GBP, a functionality not available on Uniswap.
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Binance vs. Uniswap: Which One Is Better?
Binance and Uniswap are both much-preferred choices of cryptocurrency exchanges because of their unique offerings. Uniswap users do not have to be approved to transfer, trade, or invest in liquidity pools. Any user with an internet connection and an Ethereum wallet is free to participate. Users who prioritize privacy or those living in countries with restrictive capital controls appreciate this aspect of Uniswap.
Binance attracts a large user base with its unique features and selling points such as low trading fees, support for 180+ digital assets, Binance futures, 24/7 customer service, etc.
It is not easy to definitively pick one exchange as the superior platform as the choice depends on the investors and their priorities.
Binance vs. Uniswap: The Bottom Line
Binance and Uniswap are two of the most popular cryptocurrency exchanges, and each of them has various pros and cons.
One is decentralized and employs an AMM model, and the other one is a centralized exchange operating in a very different manner. As Uniswap and Binance are very different at the core and accommodate different needs, both are well-suited to traders, depending on their needs.
For traders, it is best to make use of both Uniswap and Binance to find more trading opportunities and make a profit.
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