A decentralized exchange, or DEX, is a crypto trading platform that uses smart contracts instead of a central company holding user funds. Users usually connect a wallet and trade directly from it.
How DEX trading works
Many DEXs use liquidity pools. Traders swap tokens against pooled funds, and liquidity providers may earn fees for supplying assets.
DEX benefits and risks
A DEX can give users more control because they do not deposit funds into a centralized exchange. It can also list tokens quickly and operate transparently on-chain.
The risks include smart contract bugs, poor liquidity, price slippage, fake tokens, and irreversible transactions. Always verify the token contract before trading.