A decentralized exchange, or DEX for short, is one of the main products of the DeFi space.
In this piece, we explain what a DEX is, and what are some of the core features that make DEXs the go-to platforms for swapping assets privately and securely.
What is a DEX?
A decentralized exchange (DEX), as the name suggests, is a platform that allows users to swap, buy or sell crypto assets in a decentralized, peer-to-peer manner, without relying on authorization from a central authority.
Since there is no middleman that facilitates transactions, these are enabled by the DEX’s infrastructure, smart contracts, and protocols — all computer code. For that reason, DEXs don’t need to hold users’ funds to perform transactions but do need a high enough liquidity of an asset for it to move from one user wallet to another.
A DEX also can’t freeze or seize user accounts and can provide higher security and privacy of users’ assets, thanks to the decentralized infrastructure that defies single-point attacks or other risks associated with centrally run platforms.
What are the main features of a DEX?
There are several traits that are typical for a decentralized exchange platform, and they are the reason DEXes are gaining recognition among users who value their privacy and the self-sovereignty of their crypto portfolios.
Decentralization
DEXs perform transactions in a decentralized way, independently from a central authority or server, and by only relying on protocols that enable decentralized asset swaps. The absence of a single point of failure or attack allows DEXs to defy hacks or censorship that would come from a central authority pulling the strings.
Wide and easy accessibility
To access a DEX, users typically need only an internet connection and a personal digital wallet. This makes DEXs defy geographical or jurisdictional borders, and more accessible to global crypto trading communities. Besides, thanks to the typically low overhead costs of such platforms, the fees are often low, further increasing the popularity of DEXs among both beginners and veterans who value affordable and fast crypto transactions.
Peer-to-peer (P2P) trading
The protocols and decentralized technologies powering DEX-based transactions allow users to exchange assets directly with one another, without authorization from a middleman. As the transactions bypass a third party and are typically facilitated by smart contracts or other automated systems, this kind of asset exchange is fast, requires lower fees, and provides high security.
Asset security
Speaking of asset safety, on DEXs, users hold the reins of how their funds are spent, exchanged, and transacted. By connecting only their personal digital wallet to the DEX platform and authorizing transactions directly from it, users don’t have to deposit any funds to the platform in order to initiate their trade.
User data privacy
The way of connecting to a DEX with a personal digital wallet further addresses data privacy concerns. Since DEXes don’t demand their users to pass a KYC check before granting them access, users can retain privacy and anonymity. Due to the transparency of blockchain-based transactions, these are still trackable, but not to a user profile, sign-up credentials, or other personal data.
More options and better control
The code running a DEX can easily be updated to support new assets and broaden the range of supported crypto exchange pairs. Users can frequently find new options to expand their portfolio without leaving the platform, exchange some crypto nickels, or invest in newly released tokens. This lets them control their assets and trades well, as they can always keep track of past transactions in their wallet.
More DeFi options
DEXs, as potent as they are, are often only a part of larger DeFi platforms, offering more opportunities for users to put their crypto assets to use, from yield farming, staking, borrowing and lending, and more. A DEX-based swap is thus often just the first step into the DeFi world, as it allows users to swap the assets they currently hold and quickly obtain new tokens that could then be used in other DeFi products.
How to exchange assets on a DEX?
With the expansion of the DeFi ecosystem, the number of DEXs has grown, as well. When choosing a DEX, you should consider the network it’s built upon, the range of asset exchange options it provides, and what other features you could take advantage of. To use a DEX, you should also have a digital wallet installed with some balance.
Beamswap DEX is one of the leading decentralized platforms on the Moonbeam Network. Simply connect your wallet, switch to the Moonbeam Network, and exchange away. You could also first bridge your assets to the platform from other networks using Multichain-backed Beamswap Bridge.
Once you’re in, simply choose the asset you’d like to exchange, set the quantity, and choose the asset you’d like to receive. If you’re on the right network, and if your balance is sufficient, your DEX-based swap is just a click away.
Take control of how you swap your crypto assets and enter the Beamswap DEX.
About Beamswap
Beamswap is a DeFi Hub built on the Moonbeam Network featuring a decentralized exchange (DEX) and an automated market maker (AMM). It gives users the freedom of adding liquidity, performing peer-to-peer transactions, swapping fungible tokens, and earning passive income from staking and yield farming. Beamswap will support the growth of Moonbeam’s ecosystem and act as a launchpad for new projects developing on the network. Our team’s mission is to aid in the multichain vision to serve as a host for projects on the Moonbeam & Polkadot Ecosystem while working alongside projects with existing infrastructure looking to bridge into the multichain universe.
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