DeFi 10119 August 2021

What is a Decentralized Exchange?

What exactly is a Decentralized Exchange?

Summary

  • DEX allows cryptocurrency trading
  • Decentralized exchanges are more secure
  • Decentralized exchanges use smart contracts

A decentralized exchange, or DEX, is a platform that allows cryptocurrency traders to trade without an intermediary, as is the case with centralized exchanges like CoinBase and Binance. One of its major appeals is security since they are less vulnerable to hacks. Decentralized exchanges give users full access to their crypto without restricting a user’s ability to sell them.

A decentralized exchange uses smart contracts, which are automatically executed protocols, to facilitate trading without taking control of the coins. This ensures that users can perform peer-to-peer transactions from their wallets while still maintaining control of their assets.

Decentralized exchanges embrace the blockchain ethos of privacy and trustlessness to ensure tokens remain in the hands of the owner until they are traded. The AVAX token is one of the most common ones featuring in decentralized exchanges.

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