What is DeX

Decentralized exchange resolves two main issues associated to centralized exchange. The first is custody. Centralized exchange involves the presence of an intermediary who receives orders from buyers and sellers, matching them together. This, however, implies that there is an instant where the asset is held in the hands of the middleman.

 

Moreover, through intermediation, the central platform that coordinates the transaction retains information about both parties involved in the transaction. This contrasts one of the principles of cryptocurrency: anonymity.

 

Decentralized exchanges allow to bypass the middleman, thereby ensuring anonymity and retaining custody over own assets.

 

Today, even crypto exchanges are done in a centralized manner; only selective few exchanges are decentralized. DEX are still relatively new, therefore there is room for growth as the number of DEX trades are low. However, DEX is also expected to encounter upcoming challenges, especially related to regulation.

DeX

DEX is short for decentralized exchange and refers to exchanges performed without an intermediary.

Related terms

Decryption DApp DeFi Deep Web Double Spending DAC

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