A decentralized exchange, or DEX, is a type of cryptocurrency exchange that operates on a blockchain network without the need for intermediaries. Instead of relying on a central authority to facilitate trades and hold user funds, DEXs allow users to trade directly with each other using smart contracts.
One of the main advantages of decentralized exchanges is that they eliminate the need for trust in a central authority. Since trades are executed automatically by smart contracts, there is no need to trust a centralized exchange with your funds. This reduces the risk of hacking or loss of control over your assets.
DEXs also offer greater privacy and security compared to centralized exchanges. Users can trade directly from their wallets, eliminating the need to deposit funds onto a centralized exchange. Additionally, since trades are settled on-chain, there is no need to worry about the exchange’s internal systems being compromised.