Decentralized exchange

How it is used

Most DEXs use liquidity pools and automated market makers instead of an order book. Users connect a wallet, choose two tokens and swap. Typical concerns are slippage, gas fees and fake tokens with copied names.

Example sentences

1. The token is only traded on a decentralized exchange, so you need a wallet to buy it.

2. Always check the contract address before swapping on a decentralized exchange.

Common collocations

• swap on a decentralized exchange
• DEX aggregator
• DEX volume
• trade on a DEX

Related terms

• centralized exchangeA crypto exchange run by a company that holds customers' funds, matches buy and sell orders on its own system and usually checks users' identities. Often shortened to CEX.
• automated market makerA type of decentralized exchange that sets prices with a mathematical formula and trades against liquidity pools, instead of matching buyers and sellers in an order book.
• liquidity poolA smart contract that holds two or more tokens which traders can swap against. Users who deposit tokens into it earn a share of the trading fees.
• slippageThe difference between the price you expect when you place a trade and the price at which it is actually completed, usually caused by low liquidity or fast price moves.
• DeFiShort for decentralized finance: financial services such as lending, borrowing and trading that run on smart contracts instead of through banks or brokers. Users keep control of their own wallets.

More terms: DeFi & NFTs

• NFT
• collateral
• yield farming