Disclaimer: The following is for informational purposes only and should not be construed as financial advice.
Centralized exchanges (CEXs) make it easy to buy and sell crypto using fiat currency. But despite their ease of use and convenience, CEXs have a few downsides including vulnerability to hacks, technical failures, and lack of transparency. This is where decentralized exchanges (DEXs) come in.
But what are DEXs and how do they work?
In this article, we’ll discuss everything you need to know about DEXs and how to use them.
A DEX is an application built on top of one or more blockchains that enable peer-to-peer transactions. DEXs allow users to trade and exchange cryptocurrencies without a centralized financial intermediary.
Unlike CEXs, these crypto exchanges are non-custodial, meaning the user retains ownership of their assets and controls what happens to them. Some of the most popular DEXs include Uniswap, dYdX, Serum, Curve and PancakeSwap.
On DEXs, traders interact with self-executing smart contracts (codes that trigger various outputs when given certain inputs) to store funds and conduct trades.