Decentralized exchange (DEX)
Also called: DEX · decentralised exchange · on-chain exchange
Definition
A decentralized exchange (DEX) is a trading platform that runs on smart contracts, letting you swap tokens directly from your own wallet without depositing funds with a company.
This entry is shown in English.
How Decentralized exchange works
Most DEXs, such as Uniswap, PancakeSwap and Curve, use automated market makers: you trade against a liquidity pool, and a formula sets the price. Others, especially perp DEXs like Hyperliquid, run an order book on-chain or on a dedicated chain.
Compared with a centralized exchange, you keep custody of your coins, any token can be listed by anyone, and there is usually no account sign-up. In exchange, you pay network gas fees, may face higher slippage on small tokens, and have no support team if you send a wrong transaction or buy a scam token.
Before swapping, check the token contract address, the expected output, the price impact and your slippage setting. A high slippage tolerance can let bots sandwich your trade.
Example
Imagine you want to swap 1,000 USDC for ETH on a DEX. The interface quotes 0.330 ETH with a 0.3 percent pool fee and 0.2 percent price impact. You set slippage to 0.5 percent, so the trade fails rather than fill below about 0.328 ETH. The swap confirms and you receive 0.329 ETH plus pay a network fee of a few dollars in ETH, depending on the chain.
Common mistakes
- Buying a token by name instead of verifying its contract address.
- Setting a very high slippage tolerance to make a trade go through.
- Comparing DEX and exchange prices without counting gas fees and price impact.
Learn and practise
FAQ
What is the difference between a DEX and a CEX?
A CEX holds your funds and matches trades on its own servers. A DEX lets you trade directly from your wallet through smart contracts.
Do DEXs require KYC?
Most DEX contracts do not, but some front-ends block certain countries, and the token you buy can still be a scam.