A Decentralized Exchange (DEX) is a type of cryptocurrency exchange that operates without a central authority, enabling users to conduct peer-to-peer transactions directly from their digital wallets.Unlike traditional centralized exchanges, DEXs do not hold customer funds, execute trades, or provide custody services.Instead, they use smart contracts on a blockchain to facilitate trading.
This approach enhances security and privacy, as users maintain control of their private keys and personal information. DEXs also reduce the risk of hacking and server downtime. However, they can be less user-friendly, have lower liquidity, and slower trade execution compared to centralized exchanges. Examples of DEXs include Uniswap and SushiSwap, which operate on the Ethereum blockchain.