A decentralized exchange (DEX) is a peer-to-peer (P2P) marketplace that connects cryptocurrency buyers and sellers.

What is a Decentralized Exchange (DEX)?

DEX – “Decentralize Exchange” platform that allows users to exchange cryptocurrencies, especially, users have complete control and decision to make personal transactions without going through a intermediate. All transactions on the exchange are anonymous and stored on the Blockchain ecosystem, it also helps users avoid security risks, hackers, and scams.

Decentralized Exchange Characteristics

Some of the most notable aspects of DEXs include:

Non-custodial: Ownership of the underlying assets is never revoked.
Automated: With no intermediaries, DEX trading is instantaneous so long as there is sufficient liquidity.
Cost-Efficient: Many DEXs have minimal trading fees, allowing users to swap assets at little to no cost.
Globally accessible: Most DEXs do not require any sign-ups and, in most cases, do not involve any counterparty risk.
Intuitive: Newer trends have evolved in DEX trading from order books to simple point-and-click swaps.
Pseudo-anonymous: Users simply connect a wallet of their choice to start trading. No profile or background information is required.

Types of DEX Exchange

Order Book

Place large limit orders fixed at one price. Helps make large multi-million dollar trades without much slippage.
Minimal slippage for large transactions.
If you want to cancel or make an error on a limit order, you must usually submit money, which is already on the floor and can cause risks.

AMM

Designed for new coins with limited liquidity.
The sell and buy wall gap is typically quite large for large orders that will result in a loss as soon as you buy.
Liquidity providers face a risk of permanent loss.

Top reputable and safe DEX Exchange

Currently, there are many decentralized exchanges built on different blockchain platforms, and the dominant blockchains are Ethereum, Binance Smart Chain, and Solona. Here are the top DEX exchanges for newbies to consider:

PancakeSwap
Uniswap
Airswap
MDEX
DEX Serum
Finance on the Curve
Quickswap
Updating…

Key Points to Consider in DEX

With so many DEXs to choose from, here are a few of the boxes you should be sure to check before getting started:

Slippage: The biggest thing to note when using a DEX is the slippage associated with the trading pair. As a general rule of thumb, the more obscure the pair (i.e., exchanging tokens with small respective market caps), the more slippage there will be. Almost every DEX will display the expected slippage under their “Advanced” options.
30D Volume: The best way to ensure a DEX is worthwhile is to check its relative volume. Generally speaking, those with the most volume over a 30 day period tend to be the most reputable.
Custody: Be sure to note the degree of custody a DEX requires. The spectrum varies greatly, and we largely recommend using DEXs, which do not require assets to be deposited into other smart contracts for trading to happen.
Audit History: Virtually all DEXs will undergo a rigorous number of audits before their “full launch”. It’s always great to make sure a platform has been audited before using it to trade.
Many DEXs are still in their nascency and will signal this with a “beta mode” indicator somewhere on the site. For new users, we recommend staying away from projects that are still in beta mode.
Social Presence: Projects that have community backing are often the most active on social media. If you’re on the fence about using a DEX, check out their Twitter to see if the community is engaging with their posts as a signal of trust.

The future development of DEX

Given that the DEX ecosystem is still quite simple, primitive, and lacks many supporting tools at the moment, it does not have more liquidity than the centralized exchanges present in the crypto market.

Those inadequacies have caused the decentralized exchange to face many difficulties and obstacles in attracting and retaining traders to participate in the exchange.

However, with the strong development of DeFi and the cryptocurrency market in the future, there will be a change in DEX decentralized exchanges. We can fully expect and believe that it will happen in the near future.

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