Due to exceptional growth in the DeFi sector, the community has also witnessed a growth in decentralized exchanges, and potential actors are looking for non-custodian solutions.
Due to the increasing demand for DeFi protocols, frauds and scams have also expanded their existence in the industry. There are also many other shortcomings, such as there are no fixed criteria for listing of DeFi tokens over decentralized exchanges, such as Uniswap. Similarly, the absence of a review process and zero listing fees also welcome malicious factors in the industry.
Independent Research Audit
The data unveiled by new research shows that most of the decentralized exchanges (DEXs) are left behind in security and have many shortcomings in the delivery of safety features. Cer Live conducted an independent research audit, which is then published by Hacken, a renowned security firm.
According to Cer Live’s research report, it has carried out an independent audit of 25 prominent decentralized exchanges (DEXs). Out of 25, there are 14 DEXs, which are lacking several safety measures. It has also discussed other features that make a decentralized exchange a good non-custodial platform, such as transactions’ delay, the authenticity of token listings, and slippage tolerance.
Based on the particular factors and criteria, the exchanges then give a “security score” from 1-10. Those who have attained from 8-10 are considered as “good.” Similarly, the non-custodial exchanges are only favorable if they are able get a score from 6-8, while some are “unsafe” because they achieve a score below 6.
Uniswap at Top’s Position
According to Cer Live’s audit, Uniswap gets top position in all things with a score of 8.35. Syntetyx and Curve come at second and third positions with 8.25 and 7.35 scores, respectively.
Loopring and Bancor are termed as “unsafe” as they have attained low scores after an independent audit. Both companies have collected millions of dollars via ICOs in 2017.
Prominent DEXs, such as Sushi and Balancer, come in the middle and are considered as favorable in terms of security. It shows that decentralized exchanges need to do more in order to compete with centralized exchanges.
“We encourage all DEX platforms to comply with best practices and perform security audits after each significant software update,” Hacken said.