DEX

Decentralized Exchange

A type of cryptocurrency exchange that allows for peer-to-peer (P2P) trading of cryptocurrencies without the need for an intermediary, such as a centralized exchange. DEXs operate on blockchain networks, typically Ethereum, and use smart contracts to facilitate trading. Key features of DEXs include:

1. Non-custodial: Users retain control of their funds and private keys, reducing the risk of hacks or theft associated with centralized exchanges.
2. Anonymity: Most DEXs do not require users to complete Know Your Customer (KYC) or Anti-Money Laundering (AML) procedures, allowing for more privacy.
3. Liquidity pools: Many DEXs use an automated market maker (AMM) model, where users can provide liquidity to trading pairs and earn fees from trades.
4. Permissionless listing: Anyone can list a token on a DEX without seeking approval from a central authority. This leads to a wider variety of trading pairs and an increased risk of scams or low-quality tokens.

Examples of popular DEXs include Uniswap, SushiSwap, Curve Finance, and PancakeSwap. While DEXs offer several advantages over centralized exchanges, they may have lower trading volumes, higher slippage, and potential smart contract risks. The user experience (UX) can be more complex, as users must interact with blockchain wallets and pay transactional fees.

• Abbreviation: DEX