Decentralized Exchanges — The Only Article You Have to Read About DEX

What are DEXes? And how can we use them? Are Decentralized Exchanges better than centralized exchanges? Have you ever wondered why and how many DeFi protocols all follow a particular guideline or structure of code or governance that all dApps should follow?

In this article, we will dissect what exactly a DEX is, how it works, and examine the biggest DEX and the pros and cons of using a DEX. Shall we?

BTW, if you are really interested in learning everything about DeFi, check this out.

What are Decentralized Exchange (DEX) Protocols

Decentralized exchanges are a marketplace that facilitates the exchange of one cryptocurrency to the other with no centralized parties involved. Everything is automated via Smart Contracts on the blockchain. The core capabilities of every DEX are buying, selling, trading, and portfolio management. These rely on smart contracts to lock funds (tokens) and automate transactions through AMM, Automated Market Maker.

In a DEX, users can only swap cryptocurrency for another cryptocurrency. Unlike centralized finance, where a user is matched with an individual seller and can set a buy order, the AMM offers tokens from a pool where people (also called liquidity providers) have…