Decentralized Exchange
An exchange where users trade directly from wallets without a custodian.
An exchange where users trade directly from wallets without a custodian.
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Sep 2026 · Freshness Score: 50%
What is Decentralized Exchange?
An exchange where users trade directly from wallets without a custodian.
- Category
- concept
- Type
- Authority Node
- Sources
- 1
Most DEXs use automated market makers (AMMs): users provide liquidity to pools, and trades execute against those pools with prices set by a bonding curve. Alternative designs include on-chain order books and RFQ/request-for-quote models. Us
DEXs are foundational DeFi infrastructure — they enable permissionless trading, long-tail assets, and composability with lending and yield protocols. They remove custodial and listing barriers, though they introduce slippage, impermanent lo
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1. What Is a Decentralized Exchange
A decentralized exchange (DEX) is a marketplace for trading crypto assets without a central intermediary. Trades settle on-chain through smart contracts, and users retain custody of their funds.
2. How It Works
Most DEXs use automated market makers (AMMs): users provide liquidity to pools, and trades execute against those pools with prices set by a bonding curve. Alternative designs include on-chain order books and RFQ/request-for-quote models. Users connect a wallet, approve token spend, and swap; fees go to liquidity providers and the protocol treasury.
3. Why It Matters
DEXs are foundational DeFi infrastructure — they enable permissionless trading, long-tail assets, and composability with lending and yield protocols. They remove custodial and listing barriers, though they introduce slippage, impermanent loss, and smart-contract risk.
4. Key Facts
- Uniswap is the largest AMM-style DEX
- AMM formula: constant product x*y=k
- Liquidity providers earn fees but face impermanent loss
- Aggregators route trades across DEXs for best pricing
5. Related Concepts
- liquidity-incentive
- swap-fee
- aggregation-protocol
- price-impact
Frequently Asked Questions
What is Decentralized Exchange?
An exchange where users trade directly from wallets without a custodian.
How does Decentralized Exchange work?
A decentralized exchange (DEX) is a marketplace for trading crypto assets without a central intermediary. Trades settle on-chain through smart contracts, and users retain custody of their funds. Most DEXs use automated market makers (AMMs): users provide liquidity to pools, and trades execute again
Why does Decentralized Exchange matter in Web3?
- swap-fee - aggregation-protocol - price-impact