Shapeshift Review

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ShapeShift is a non-custodial and decentralized cryptocurrency platform that earned a name for itself with zero-fee trading fees and anonymous crypto swaps. Combined with seamless integration with popular hardware and software wallets, users on Shapeshift can buy, sell, trade, swap and earn passive rewards on crypto through its native FOX tokens.

This review will take a closer look at the features of the Shapeshift platform to determine whether it's a suitable crypto exchange for beginners, traders or experienced investors.

Our Take

3.7/5

HedgewithCryptoScore

Bottom line:

Shapeshift is a top decentralized platform that is best suited for experienced crypto investors. They need to have an understanding of using a non-custodial exchange, yield farming and staking to get the most out of its features. The ability to trade crypto with zero fees and remain anonymous without having to create an account will appeal to certain investors.

While the DAO has improved customer service, the company's biggest reputation issues stem from its long history of poor response times and questionable handling of customer complaints. Based on our assessment, Shapeshift is not recommended for beginners that want to start their crypto journey.

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Trading Fees:

None

Currency:N/A

Country:Global (USA allowed)

Promotion:

None available at this time

Pros and cons

• Excellent user experience and a simple UI
• No account registration or KYC. Moreover, a password or 2FA is not required
• Auto Scans multiple DEX to find the best price
• Strong balance of both security and anonymity. Keep full control over wallet and private keys
• Built-in hardware and native software wallet support

• Several unresolved issues involve poor customer service and missing transactions
• Fees vary for THORChain trades
• Prior internal security breach
• Fiat payments managed by a third party with higher fees
• Margin trading is currently not available with ShapeShift
• Failed orders must be validated on-chain, which can be costly

Shapeshift Overview

On July 1, 2014, Erik Voorhees created ShapeShift, a cryptocurrency exchange platform based in Switzerland. His motive for founding Shapeshift was the collapse of Mt. Gox, when he claimed to have lost 550 BTC. ShapeShift DAO, a Decentralized Autonomous Organization, currently owns and operates ShapeShift. It was necessary for ShapeShift to transition from a centralized corporation to a Decentralized Autonomous Organization (DAO) in order to meet "Know Your Customer" (KYC) standards for trading without requiring customers to give personally identifiable information.

The platform gives you an easy-to-use web interface and boasts 0% trading, deposit, and withdrawal fees on all crypto-to-crypto transactions. ShapeShift offers noncustodial cryptocurrency trading, allowing users to purchase cryptocurrencies without completing any KYC requirements. The platform

ShapeShift offers several notable features, including:

• Invest and trade hundreds of ERC-20 tokens
• KYC is not required for trading
• The ecosystem's largest liquidity pools have been integrated into the platform
• Straight pass-through pricing, no added commissions
• Support for KeepKey, Trezor One, Ledger, Portis, MetaMask and many other wallets, including ShapeShift's own software wallet
• Exchange native Bitcoin for Litecoin and ETH with the THORChain integration

What Is Shapeshift? - Brief History

ShapeShift is a cryptocurrency exchange, with offices in London, UK, and Denver, Colorado. Erik Tristan Voorhees, CEO of the former parent company, ShapeShift AG, started the ShapeShift Platform in 2014. Since then, Shapeshift has become one of the most popular and best exchanges places to buy and sell cryptocurrency online.

ShapeShift DAO comprises an engaged community of builders working to advance the state of crypto trading, investing, and access to open, decentralized financial systems. The DeFi platform offers one of the most complete DEX aggregators on the market. It allows users to trade native BTC, LTC, ETH, USDT, and SUSHI while automatically scanning thousands of DEX order books to find the best price to offer the user on each transaction.

In 2021, to align with the ethos of decentralized finance, ShapeShift AG started breaking up its corporate structure and turning the ShapeShift Platform into a community-owned, non-custodial, multi-chain, free and open-source exchange platform where people can trade, track, buy, and earn cryptocurrencies. The company is owned and operated by ShapeShift DAO, a Decentralized Autonomous Organization.

ShapeShift customers do not need to provide personally identifiable "Know Your Customer" (KYC) documents. This means customers get more privacy, security, and control over their crypto investment activities. To find the best crypto exchanges without KYC, read this comparison list.

Is Shapeshift Safe To Use?

ShapeShift is a non-custodial exchange that reduces the opportunity for hackers and fraudulent activity with its customers. As there is no account sign-up process, individuals buy and sell crypto directly to their nominated wallet. Although, ShapeShift has been battling some bad stigma ever since it was hit by a string of back-to-back security incidents in 2016. Since then, the platform has reformed its security practices, rebuilding its entire protocol.

A 2018 investigation by the Wall Street Journal found that ShapeShift had processed $9 million in funds from criminal activities over a two-year period. Wannacry used ShapeShift (along with other mechanisms) to launder the malware Bitcoin. The mixing went from 3 addresses to 5 million addresses in a single hop!

Are US investors Allowed?

Yes, ShapeShift is available to everyone outside of restricted jurisdictions. However, ShapeShift suspended service in New York and Washington in response to BitLicense laws that would have required it to go against the values of its users.

Best Features on Shapeshift

One of the most interesting aspects of the ShapeShift DAO is the manner in which it integrates with the constant stream of brand-new Decentralized Finance projects. Members of the ShapeShift DAO use FOX tokens, ShapeShift's ERC-20 governance token, to vote on crucial governance matters such as partnership proposals, workstream budgets, and a variety of other topics.

FOX Tokens provide additional loyalty benefits in connection with a user’s use of the service, such as commission-free crypto trading or other enhanced features of the service. ShapeShift distributes FOX Tokens to verified users in a variety of amounts based on various promotions or for completing certain actions.

Using FOX tokens for free trading on Shapeshift.

Each FOX Token held in a digital wallet linked to an account will waive the normal commissions or trading spreads on the platform, up to USD $10 of trade volume per rolling 30-day period. For example, 100 FOX Tokens entitles up to $1,000 in commission-free trading over the course of 30 days. Utilizing Commission-Free Trading does not require the FOX Tokens to be burned, spent, or locked up.

FOX Token holders can choose to share their earnings with other token holders, keep them or use them to diversify the treasury's portfolio. Users can buy back FOX to burn or keep funding community incentive programs, invest in other projects, or participate in one of ShapeShift’s DeFi strategies.

Trading with zero fees on Shapeshift.

Users looking for lower exchange rates should know about ShapeShift’s FOX incentives, as ownership comes with a slew of perks. By using ShapeShift to trade through DEX protocols, users get the best rates across multiple exchanges, zero-commission trading, and earn FOX Tokens incentives from Rainfall—free USDC rewards to random ShapeShift users each time someone trades on the platform.

Using FOX tokens to earn rewards on Shapeshift.

People with more FOX Tokens in their wallets have a better chance of winning. Rainfall Rewards winners are announced on the activity board, with over $50K in rewards reportedly given every month. On the other hand, users who do not have FOX available in their wallets will see how much more they could have received if they had.

ShapeShift's DEX aggregator gathers trades from different decentralized finance platforms (DeFi) into one place. This lets traders access larger pools of liquidity and get better prices through a simple interface. In addition, decentralized trading provides you with greater privacy, transparency, and security.

No personal information or authentication is required for a trade to be completed successfully. On a ShapeShift trade, traders can observe if the transaction was made on the 0x or THORChain network. The trade will be executed via THORChain or 0x, depending on the token pair you select.

ShapeShift leverages the 0x DEX aggregator to facilitate P2P crypto trades of Ethereum-based assets. THORChain was created in 2018 to address the issue of cross-chain trading by creating permissionless, non-custodial blockchain bridges at the protocol level.

Staking is one of the core functions of ShapeShift, which is done via FOX tokens. Sending FOX-ETH LP Tokens to the FOX Staking Contract will lock them out of circulation for a certain amount of time. There are a few steps that incur fees along the process of providing liquidity and staking your FOX. Staking ETH-FOX V3 has a current return of 54.23% APY.

Related: Which are the best staking platforms?

The ShapeShift platform allows FOX holders to provide liquidity on the decentralized exchange Uniswap v2 liquidity pool. Anyone can earn a commission for contributing their tokens to a "liquidity pool," which ensures tokens are available when needed.

Compared to other yield farming crypto platforms, the opportunities are limited to FOX tokens which may not be ideal for investors that prefer to diversify their portfolio to generate passive income.

Screenshot of yield farming FOX tokens on Shapeshift.

ShapeShift offers both a web-based interface and a mobile app. For those that want to swap crypto on mobile, then the best option is to install the ShapeShift app which is easy to use. Users can quickly buy, sell, swap and send digital assets like Bitcoin and Ethereum through the desktop version of app. The main products of Shapeshift can be easily accessed on the app including monitoring a crypto portfolio, buying and selling, rainfall rewards program and staking FOX tokens.

Related: Best exchanges to instantly swap crypto.

Screenshot of swapping crypto on Shapeshift.

Shapeshift Verification

Know-Your-Customer (KYC) is not required to trade on the ShapeShift platform. This is partly due to the fact that the platform does not actually hold custody of customer funds. Since transfers occur in P2P between wallets owned and controlled by individual users, KYC measures are not strictly necessary. Moreover, there is no need to verify an account to trade through ShapeShift. For those that want to buy crypto with fiat, there is a verification process through Banxa which is a third-party provider.

Funding & Limits

For depositing cryptocurrency to the ShapeShift platform, there are no additional fees. When it comes to buying crypto, ShapeShift does not directly support any fiat currencies and is essentially a crypto-to-crypto trading platform only. While there is a fiat on-ramp is available via the exchange's Banxa and GEM partnerships, there are limitations which include:

• Banxa: The minimum amount to off-ramp BTC is $50.
• GEM: The minimum amount to off-ramp ETH or BTC is $5.

Buying and selling crypto on Shapeshift.

Shapeshift Fees

Shapeshift doesn't charge any trading or service fees, but there are "miner fees" for all cryptocurrency transactions outside of specific exchanges. Additionally, ShapeShift doesn't suffer from slippage, which is when a trade's predicted price differs from the actual price. However, trades are based on their own exchange rates, listed on Coincap.io. Therefore, it is important to watch the cost of purchases to make sure it aligns with standard market pricing.

Security of Assets

Shapeshift had three attacks in March and April of 2016 that resulted in the theft of 469 BTC, 1900 LTC, and 5800 ETH from the platform's hot wallets. In one case, an employee of the company took about $230,000 worth of cryptocurrencies from the company's hot wallets. However, the compromise had no effect on actual users' funds. Shapeshift.io shut down until April 20 so that the team could upgrade its infrastructure with new security measures.

Frequently Asked Questions

Final Verdict

ShapeShift offers fully decentralized trading that lets investors stay in control of their private keys as opposed to using a centralized cryptocurrency exchange. Perhaps the best feature of Shapeshift is the ability to buy, trade, and sell crypto with no additional fees. The platform is therefore highly recommended for users who are looking to lower the cost of swapping from one crypto to another. Moreover, the option to remain anonymous while purchasing bitcoins and other cryptocurrencies may be an important aspect for some investors.

Overall, Shapeshift is a unique crypto platform in the market, however, is not that suitable for beginners. The rewards and staking features are complicated and do require a level of understanding to make the most of them. Newer traders are better off using a centralized exchange such as Coinbase, Kraken, or Binance for buying digital assets with fiat currency.