DEX

A Decentralised Exchange (DEX) allows peer-to-peer token swaps directly on-chain. Unlike centralised exchanges (CEXs), DEXs are non-custodial — users retain control of their private keys throughout the trade — and permissionless — anyone can list a trading pair by adding liquidity.

Most DEXs use Automated Market Makers (AMMs) — notably Uniswap's x*y=k formula — instead of traditional order books. Prices are determined algorithmically by the ratio of tokens in a liquidity pool. Traders pay a small fee that goes to liquidity providers.

DEXs provide censorship resistance and access to long-tail tokens unavailable on centralised platforms, but typically offer less liquidity for large trades, no fiat on/off ramps, and no recourse if a user makes an error.