A Decentralised Exchange (DEX) is a cryptocurrency trading platform that operates via smart contracts, enabling peer-to-peer trading without a centralised intermediary holding user funds. Unlike centralised exchanges (CEXs) like Binance or Coinbase, DEXs maintain user self-custody (you trade directly from your wallet), are permissionless (any token can be traded without listing fees), are non-custodial (the DEX never controls your funds), and operate 24/7 globally with no KYC requirements. DEX types include AMM-based (Uniswap, Curve, Raydium) – trading against liquidity pools; Order book DEXs (dYdX, Serum) – traditional matching with on-chain settlement; and DEX aggregators (Jupiter, 1inch) – routing across multiple DEXs for best price. DEX volume surpassed $1 trillion in 2023 and represents ~15-20% of all crypto trading volume. Disadvantages vs CEXs include higher slippage on low-liquidity pairs, no fiat on-ramps, UI complexity, gas fee overhead, and risk of trading counterfeit tokens that share a name with legitimate projects on popular pairs.
Example: Example: A user wants to trade a newly launched token available only on Uniswap – not yet listed on any CEX. They connect MetaMask, paste the contract address, approve the token, and swap ETH for it directly from their wallet. No account creation, no KYC, no deposit – the entire process takes 30 seconds. CEXs would take weeks to list this token.
Learn more: Uniswap – Leading DEX
