DEX (Decentralized Exchange)

Short Description:

A DEX (Decentralized Exchange) is a blockchain-based platform that enables direct peer-to-peer trading of cryptocurrencies, NFTs, and digital assets without intermediaries.

Main Description:

A DEX (Decentralized Exchange) is a blockchain-based platform that enables direct peer-to-peer trading of cryptocurrencies, NFTs, and digital assets without intermediaries. Unlike traditional centralized exchanges that rely on central parties like banks or companies to facilitate transactions, DEX’s allow users to directly interact with counterparties to buy, sell, or trade assets. On some chains like Ethereum, DEXs are implemented as Layer 2 solutions using smart contracts as the settlement layer to ensure the assets are traded fairly. Other chains like the XRPL have a DEX built-in as a core feature. DEXs also come in two main styles: Central Limit Order Books (CLOBs) and Automated Market Makers (AMMs). CLOBs let traders make offers to specify the exchange rate and amount they would be willing to trade, whereas Automated Market Makers let people put money into pools that can then be traded against via an automatically determined exchange rate.