Decentralized exchanges (DEX) are growing in popularity due to the many benefits they can offer users. One of the most popular decentralized exchanges is IDEX, which will be discussed in detail in this beginner’s guide to trading on IDEX.
What Is IDEX?
IDEX is an Ethereum-based decentralized exchange that was launched in early 2018. IDEX enables users to trade ether (ETH) and Ethereum-based ERC20 tokens on a peer-to-peer basis through the use of smart contracts directly on the Ethereum blockchain. This allows IDEX users to hold onto their private keys, which increases fund security when transacting on the platform.
According to a ranking by StateofDApps, IDEX is the largest DApp on the Ethereum network as measured by ETH transaction volume. The exchange stands out from other decentralized exchanges as it provides the benefits of a decentralized exchange, such as privacy and fund security, but also comes with a user-friendly experience, which many of its DEX counterparts are currently missing.
While the most important functions of the exchange happen in a decentralized manner, it still has some aspects of centralization (for now). “The smart contract is used for custody of funds, trade, and settlement, while the IDEX servers manage the off-chain balances, orderbook, and trade dispatching,” according to Aurora, the Panama-based company behind IDEX. In that sense, IDEX is currently actually a hybrid-decentralized exchange as opposed to a full decentralized exchange, although that is the direction that Aurora intends to head with this platform.
IDEX charges a price maker fee of 0.1 percent and a price taker fee of 0.2 percent, while gas fees are paid by the price takers. Charts on IDEX are taken from TradingView, which provides users with advanced charting abilities on the exchange. Finally, IDEX also provides a customer support live chat where the customer support team intercepts user queries and concerns.
How to Get Started on IDEX
To get started on the IDEX platform, you first need to log onto the official IDEX website at https://idex.market/. Next, you will need to either create a new wallet or connect one of their existing wallets. New wallets can be created by clicking on “New Wallet” on the top right.
IDEX then creates a new wallet for you on the exchange for which you will need to enter a unique password and for which you will be given a private key and a downloadable JSON file for you to securely store on your computer (or offline on a USB stick) to sign onto your account. Alternatively, and more common, users can connect an existing Ethereum wallet, through uploading a private key, a Keystore File, or through connecting a software wallet such as MetaMask or the Ledger wallet, which can be done by clicking on “Unlock Wallet.”
Once you have connected your existing Ethereum wallet or set up a new wallet on IDEX, you can start depositing funds in your account’s smart contract on the platform.
To do so, you have to click on the person icon to find your Ethereum wallet address linked to your IDEX account.
Next, you will need to deposit ether into that wallet (to pay gas fees) and any ERC20 tokens you may want to trade for ether on the exchange if the wallet you have linked to IDEX does not already hold tokens.
Now you can view your token balance under “Balance” in the menu bar on the top of the UI.
On the balance page, you will need to differentiate between the funds you hold in “Your Wallet” and the funds you hold in “My IDEX Balance.” To deposit funds to trade on the exchange, you will need to send funds from your personal wallet to IDEX by clicking on the token that you want to deposit in your account and clicking the “Deposit” button.
Pending token deposits can be viewed in the “Balance History” until they have been completed and show up in “My IDEX Balance.”
Once you have deposited ether (ETH) and ERC20 tokens onto your IDEX smart contract, you can start to trade.
To withdraw, you follow effectively the same process except that you withdraw funds from “My IDEX wallet” into “My Wallet Balance,” at which point the tokens are back in your personal wallet. Alternatively, you can also transfer balances into a different Ethereum wallet – using the “Transfer” function – if you prefer to hold your funds in another wallet that you do not use for trading.
How to Buy ERC20 Tokens on IDEX
Once you have deposited ether (ETH) and ERC20 tokens onto your IDEX smart contract, you can start to trade by placing a limit order or a market order.
To purchase a token using ETH, you have to choose the asset you want to trade by typing its name or ticker into the search box on the top left under “Markets” and then wait for the platform to refresh to show the assets chart, orderbook, and buy/sell boxes.
Next, you can type in the parameters for your limit order, including price (in ETH) and the amount you want to purchase. Your order will then show up in the order book, and you need to wait until the order is filled.
Alternatively, you can place a market order by typing in the amount of the token you want to purchase, and the order will be immediately executed by filling the best available offers in the orderbook.
Thirdly, you can click on an existing offer in the orderbook to purchase the amount at the level the seller is willing to sell. This option will guarantee you execution at this price, whereas the other two options do not. However, the amount of the offer may not always suit your needs, especially if you are trading in larger volumes.
You can check the progress of your trades on the “Trade History” tab. Remember, as the trades happen on the blockchain, they may take a little longer than if you were trading on a centralized exchange.
If you need any help trading or have questions about issues on the platform, you can use IDEX’s live chat which directly puts you into contact with the platform’s customer service team. Alternatively, you can also go onto the exchange’s Discord channel for less urgent matters and for guides to help you with specific actions on the platform. This focus on customer service is a big step up from other decentralized exchanges who do not offer this type of service.
What To Look Out For When Trading on IDEX
Despite IDEX being relatively user-friendly compared to many of its Ethereum DEX peers, you are still dealing with smart contracts, private keys, and gas fees, which may be a bit tricky at first for newcomers. Hence, IDEX is definitely an exchange for more advanced users who are already versed in these terms and feel comfortable with using smart contracts.
Furthermore, regardless of whether you are a beginner or a seasoned crypto trader, whenever making any transaction on IDEX, it is best to always double check that you are transferring or trading the correct token and that you are using the correct addresses to avoid expensive mistakes. Silly mistakes like getting the price or the amount wrong when placing an order can become very costly for users.
Should You Trade on IDEX?
If you prefer financial privacy and enhanced fund security and are looking to trade in ERC20 tokens, then IDEX provides an ideal solution for you. Aside from offering all of the common features of the leading decentralized Ethereum exchanges, IDEX stands out, as it is much more user-friendly than the likes of EtherDelta or ForkDelta and provides additional functionalities.
Hence, it is an excellent option for trading newly launched ICO tokens that are not yet available on popular centralized exchanges or if you simply prefer to trade without having to undergo lengthy KYC processes when signing up to an exchange. Despite only having been launched in January 2018, IDEX has managed to attract a lot of former EtherDelta users and has managed to take the top spot among decentralized Ethereum exchanges for the time being. As the Aurora team works on improving the platform and moving it towards becoming a fully decentralized exchange, it would not be a surprise to see more users who want to trade in Ethereum tokens move away from centralized exchanges and towards IDEX.