DEX

A DEX, or decentralized exchange, is a trading venue that runs entirely on a blockchain through smart contracts, letting users swap tokens directly from their own wallets without depositing funds with a company. Trades settle on-chain, and at no point does a central operator hold your assets. Uniswap on Ethereum is the best-known example: a user connects a wallet, chooses to swap ETH for USDC, approves the transaction, and receives the tokens in the same wallet moments later.

Most major DEXs use an automated market maker (AMM) model, where prices come from formulas applied to pooled liquidity rather than from an order book matching buyers and sellers. Some newer DEXs do run on-chain or hybrid order books, especially on faster chains, but the AMM design remains the most common.

A common misconception is that DEXs are anonymous and consequence-free — every trade is recorded publicly on-chain and can often be linked to an identity later. The genuine advantages are self-custody, permissionless access, and the ability to trade tokens the moment they exist on-chain. The trade-offs include gas fees, slippage on large orders, exposure to scam tokens that anyone can list, and the fact that a mistaken transaction cannot be reversed by any support desk.