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Crypto Terms:  Letter D

What is Decentralized Exchange (DEX)?

Meaning:
Decentralized Exchange (DEX) - a peer-to-peer cryptocurrency exchange service that conducts trading without an intermediary.
easy
2 minutes

Let's find out Decentralized Exchange (DEX) meaning, definition in crypto, what is Decentralized Exchange (DEX), and all other detailed facts.

Decentralized currency exchange (DEX) is a cryptocurrency exchange platform that offers near-complete anonymity for traders. It conducts its services without an intermediary, meaning that the assets flow directly between the traders.

DEXs were created as an alternative to centralized exchanges (CEXs). The most popular crypto exchange platforms in the world, like Binance and Coinbase, are centralized. They take orders from traders who want to purchase or sell their assets and match them with prospective sellers and buyers. CEXs function similarly to securities exchanges.

However, centralized cryptocurrency exchange platforms have some disadvantages that have received criticism from crypto traders. CEX platforms are privately owned, which means that an intermediary is involved in all transaction operations. Their services are custodial, meaning that the asset used in a transaction is held by the platform.

Centralized platforms also collect customer data and may be required to comply with regulations such as Know Your Customer (KYC). The concept of a currency exchange run by a central authority goes against the principles of decentralization and complete transaction anonymity which are the core ideas of cryptocurrency.

Decentralized exchange platforms allow users to perform crypto transactions completely anonymously. Since DEXs are still relatively new, they see far lower trading volumes than their centralized counterparts. DEXs that use formulas to set prices, instead of order books, are called "Automated Market Makers", or AMMs.

Decentralized platforms create regulatory issues since they do not comply with KYC or similar policies. Furthermore, the use of decentralized exchanges can lead to traders getting scammed, as there is no way to confirm the identities of the parties involved.

A well-known DEX "scam" is the so-called "sandwich attack". It takes place when a token price spikes before purchase and drops immediately after. In order to avoid it, a user can divide their trades into smaller ones.

smart contracts<\/strong><\/a> with rules decided upon by members and in accordance with the legal system or law of nature.<\/p>\n<p><strong>Responsibilities differ based on the network topology and the interactions within the decentralized network governance.<\/strong> This needs a reactive distribution of governance roles, privileges, and obligations to power relations among participants.&nbsp;<\/p>\n<p>Likewise, when new components of power relations, such as those including server suppliers and <strong>miners,<\/strong> emerge in blockchain-based solutions, governance mechanisms should be held accountable.<\/p>\n<p>In the absence of a centralized authority, the activities of decentralized networks rely on evolving innovative governance mechanisms to ensure the sustainability and overall real utilization of their efforts.&nbsp;<\/p>\n<p>To begin, blockchain governance employs strategies to make judgments on project advancement and continuing updates, as well as to guarantee that the underlying protocols and environment operate accurately and successfully.<\/p>\n<p>Nonetheless, there are downsides to decentralized government. One of these is that a public blockchain is inherently <strong>unpredictable,<\/strong> and it may be <strong>forked<\/strong> or discarded at any time if it is no longer desirable or lucrative.&nbsp;<\/p>\n<p>As a consequence, it is debatable whether a completely decentralized blockchain, such as <strong><a href=https://www.bitdegree.org/"//crypto//buy-bitcoin-btc/">Bitcoin, can be regarded as a global ledger because there is no guarantee that it will function or even survive in the future.<\/p>","definition":"refers to the procedures completed by a platform's elimination of intermediaries in buyer-seller transactions, as well as competent management for blockchain networks and dApps.","status":"published","meta_title":"What is Decentralized Governance? Definition & Meaning | Crypto Wiki","meta_description":"Decentralized Governance meaning: Decentralized Governance - refers to the procedures completed by a platform's elimination of intermediaries in buyer-seller transactions, as well as competent management for blockchain networks and dApps.","meta_keywords":null}" :prev-section="{"id":245,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Distributed_database","level":"medium","author_id":1,"created_at":"2023-06-19T06:58:59.000000Z","updated_at":"2024-01-04T14:17:37.000000Z","slug":"what-is-decentralized-database","title":"What is Decentralized Database?","section":"D","keyword":"Decentralized Database","content":"<p>A sort of storage network that has a distinct method of storing information and records across several nodes is referred to as a decentralized database.<\/p>\n<p>As blockchain products continue to grow rapidly, there is a demand for prominent data storage solutions. There is an option to keep information on <a href=https://www.bitdegree.org/"//crypto//buy-ethereum-eth/">Ethereum <strong>or other blockchains<\/strong>, nevertheless, the costs are very high. In regards to that, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-are-decentralized-applications-dapps/">dApps choose to put their data in the hands of <strong>centralized storage solutions.<\/strong><\/p>\n<p>Even though centralized storage solutions are more budget-friendly, they are less secure and more vulnerable to manipulation.<\/p>\n<p>Some great features of a decentralized database include ultimate privacy because of the advanced sharding techniques to make sure the full privacy of information is achieved. Besides, all of the information is repetitively kept in <strong>several nodes across the globe<\/strong>.<\/p>\n<p>This prevents failure. Indicating that even if a couple of nodes break down, the information will be accessible. Also, as the result of blockchain technology utilization, <strong>the information can&rsquo;t be corrupted.<\/strong><\/p>\n<p>Speaking of enterprise-level dApps, these need high <strong>scalability,<\/strong> which a decentralized database can also provide by storing information in separate nodes.<\/p>\n<p>Because all documents and information are kept across numerous nodes, users have rapid access to the information. The underlying technology is being developed in order to install and alter the placement and number of nodes to give quicker speeds.<\/p>\n<p>However, developers still come across the debate of whether to choose poor data protection or huge prices. Decentralized databases appear like the best alternative by providing users with a <strong>censorship-resistant way of keeping information, that will be completely protected, as well as always accessible.<\/strong><\/p>\n<p>Decentralized databases make use of blockchain stacks that have been specifically tailored for database activities. The innovative data delivery network protects customers' intellectual property from data leaks, hitches in performance, and network outages.&nbsp;<\/p>\n<p>It is the environment in which you spend the least amount of money for storage space and read\/write access. While you are also benefiting from characteristics like<strong> high scalability, censorship and tamper-proofing, and unrivaled security.<\/strong><\/p>\n<p>Besides, in a decentralized database, the fundamental blockchain technology offers 100% availability to data. Every document is copied across multiple storage nodes worldwide. This decreases the storage costs and makes sure that the information can be accessible even in a scenario where one or multiple modes break down.<\/p>","definition":"is a storage system that combines decentralized technology with cutting-edge computers to store information and documents at random among several nodes.","status":"published","meta_title":"What is Decentralized Database? Definition & Meaning | Crypto Wiki","meta_description":"Decentralized Database meaning: Decentralized Database - is a storage system that combines decentralized technology with cutting-edge computers to store information and documents at random among several nodes.","meta_keywords":null}" :model="{"id":243,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Decentralized_finance#Decentralized_exchanges","level":"easy","author_id":1,"created_at":"2023-06-19T06:58:59.000000Z","updated_at":"2024-01-04T14:21:44.000000Z","slug":"what-is-decentralized-exchange-dex","title":"What is Decentralized Exchange (DEX)?","section":"D","keyword":"Decentralized Exchange (DEX)","content":"<p><strong>Decentralized currency exchange (DEX)<\/strong> is a cryptocurrency exchange platform that offers near-complete anonymity for traders. It conducts its services without an intermediary, meaning that the assets flow directly between the traders.<\/p>\n<p><strong>DEXs were created as an alternative to<\/strong> <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-centralized-exchange-cex/">centralized exchanges (CEXs)<\/strong><\/a>. The most popular crypto exchange platforms in the world, like <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Binance<\/strong><\/a> and <a href=https://www.bitdegree.org/"//crypto//goon//coinbase/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Coinbase<\/strong><\/a>, are centralized. They take orders from traders who want to purchase or sell their assets and match them with prospective sellers and buyers. <strong>CEXs function similarly to securities exchanges<\/strong>.<\/p>\n<p>However, centralized cryptocurrency exchange platforms have some disadvantages that have received criticism from crypto traders. CEX platforms are privately owned, which means that an intermediary is involved in all transaction operations. Their services are <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-custodial/">custodial, meaning that the asset used in a transaction is held by the platform.<\/p>\n<p>Centralized platforms also collect customer data and may be required to comply with regulations such as <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-know-your-customer-kyc/">Know Your Customer (KYC)<\/strong><\/a>. The concept of a currency exchange run by a central authority goes against the principles of decentralization and complete transaction anonymity which are the core ideas of cryptocurrency.<\/p>\n<p><strong>Decentralized exchange platforms allow users to perform crypto transactions completely anonymously.<\/strong> Since DEXs are still relatively new, they see far lower trading volumes than their centralized counterparts. DEXs that use formulas to set prices, instead of order books, are called \"Automated Market Makers\", or AMMs.<\/p>\n<p>Decentralized platforms create regulatory issues since they do not comply with KYC or similar policies. Furthermore, the use of decentralized exchanges can lead to traders getting scammed, as there is no way to confirm the identities of the parties involved.<\/p>\n<p>A well-known DEX \"<em>scam<\/em>\" is the so-called \"sandwich attack\". It takes place when a token price spikes before purchase and drops immediately after. In order to avoid it, a user can divide their trades into smaller ones.<\/p>","definition":"a peer-to-peer cryptocurrency exchange service that conducts trading without an intermediary.","status":"published","meta_title":"What is Decentralized Exchange (DEX)? 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He&rsquo;s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain &amp; Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","image_id":2641,"referral_token":"05TMu2NysXOCn525","referred_by":null,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-01-09T15:22:21.000000Z","full_name":"Aaron S."}}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","status":"published","modified_content":null},{"chapter_id":2,"order":4,"slug":"coin-vs-token","title":"Coin VS Token: How Do They Differ?","status":"published","modified_content":null},{"chapter_id":2,"order":5,"slug":"what-are-stablecoins","title":"What are Stablecoins, Altcoins & Wrapped Coins?","status":"published","modified_content":null},{"chapter_id":2,"order":6,"slug":"what-is-a-bitcoin","title":"Bitcoin: the Pioneer of the Crypto World","status":"published","modified_content":null},{"chapter_id":2,"order":7,"slug":"what-is-ethereum","title":"The Ultimate Blockchain for dApp Creation: Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":8,"slug":"what-is-cardano-in-crypto","title":"What is Cardano and What is It Used For?","status":"published","modified_content":null},{"chapter_id":2,"order":9,"slug":"what-is-shiba-inu-coin","title":"Shiba Inu: the Dogecoin 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Mining?","status":"published","modified_content":null},{"chapter_id":9,"order":3,"slug":"what-is-staking-crypto","title":"An Advanced Look into What is Staking Crypto","status":"published","modified_content":null},{"chapter_id":9,"order":4,"slug":"what-is-proof-of-stake-vs-proof-of-work","title":"Proof-of-Work VS Proof-of-Stake: The Differences That Matter","status":"published","modified_content":null},{"chapter_id":9,"order":5,"slug":"what-is-crypto-mining-rig","title":"Crypto Mining Rig: What It is and How to Build One?","status":"published","modified_content":null}]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/crypto-101-glossary.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}]" current-chapter="D" current-section="what-is-decentralized-exchange-dex">