DEXs, or decentralized exchanges, are peer-to-peer markets where cryptocurrency traders can conduct transactions without entrusting the company’s management of their funds to an intermediary or custodian. Instead, smart contracts, which are self-executing contracts written in computer code, are used to expedite these transactions.
DEXs were created to do away with the need for any authority to monitor and approve trades executed within a particular exchange. Instead, cryptocurrency trading can be done peer-to-peer (P2P) on decentralized exchanges. Peer-to-peer refers to a marketplace that connects cryptocurrency traders. Since they are frequently non-custodial, investors retain ownership of their wallet’s private keys. A strong encryption method that gives investors access to their crypto is known as a private key. After putting their private key to access the DEX, users can immediately see their cryptocurrency balances. In addition, those who value their privacy won’t be forced to give personal information such as names and addresses.
Automated market makers, for example, helped draw people to the decentralized finance (DeFi) area and greatly aided in its growth as innovations that addressed liquidity-related issues. In addition, decentralized platforms expanded due to DEX aggregators and wallet extensions, optimizing token prices and exchange fees while providing customers with a better deal.
