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What is a DEX

DEX (Decentralized Exchange) is a cryptocurrency exchange that allows users to trade digital assets directly on a blockchain without intermediaries.

In simple terms, a DEX is a crypto exchange without a central authority, where trades are executed automatically using smart contracts.

DEX platforms are a core component of the DeFi ecosystem. A more detailed explanation is available in the decentralized exchanges guide.

How a DEX works​

DEX platforms use smart contracts to execute trades automatically.

Instead of traditional order books, most DEX platforms rely on liquidity pools and automated market makers (AMM).

The typical process:

  1. the user connects a crypto wallet
  2. selects tokens to swap
  3. the smart contract executes the trade using a liquidity pool

DEX example​

For example, a user can swap ETH for USDT on a DEX.

The smart contract calculates the price and executes the trade automatically using available liquidity.

DEX vs centralized exchange (CEX)​

Key differences of a DEX:

  • no central authority or intermediary
  • users keep control of their funds
  • no mandatory registration or KYC
  • trades are executed via smart contracts

Where DEX platforms are used​

DEX platforms are widely used in:

  • DeFi
  • token trading
  • cryptocurrency markets
  • liquidity provision

Advantages of DEX​

  • no intermediaries
  • full control over assets
  • permissionless access
  • transparent operations

Learn more about DEX​

A more detailed explanation of how decentralized exchanges work, including AMM and liquidity pools, can be found here:

FAQ​

What is a DEX in simple terms?​

A DEX is a crypto exchange where users trade directly without intermediaries.

How does a DEX work?​

It uses smart contracts and liquidity pools to execute trades automatically.

How is a DEX different from a CEX?​

A DEX does not hold user funds and does not require registration.

Do you need KYC to use a DEX?​

Usually not. Users only need a crypto wallet.