{"id":2564,"date":"2022-11-06T18:41:33","date_gmt":"2022-11-06T18:41:33","guid":{"rendered":"https:\/\/metaschool.so\/articles\/?p=2564"},"modified":"2023-04-18T19:56:00","modified_gmt":"2023-04-18T19:56:00","slug":"dex-decentralized-exchange","status":"publish","type":"post","link":"https:\/\/metaschool.so\/articles\/dex-decentralized-exchange\/","title":{"rendered":"DEX"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_56_1 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/metaschool.so\/articles\/dex-decentralized-exchange\/#What_is_a_DEXdecentralized_exchange\" title=\"What is a DEX\/decentralized exchange? \">What is a DEX\/decentralized exchange? <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/metaschool.so\/articles\/dex-decentralized-exchange\/#Origin_of_DEX_in_crypto\" title=\"Origin of DEX in crypto\">Origin of DEX in crypto<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/metaschool.so\/articles\/dex-decentralized-exchange\/#Differences_between_centralized_and_decentralized_exchange_platforms\" title=\"Differences between centralized and decentralized exchange platforms\">Differences between centralized and decentralized exchange platforms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/metaschool.so\/articles\/dex-decentralized-exchange\/#Best_decentralized_exchanges_and_their_tokens\" title=\"Best decentralized exchanges and their tokens\">Best decentralized exchanges and their tokens<\/a><\/li><\/ul><\/nav><\/div>\n\n<h2 class=\"wp-block-heading\" id=\"what-is-a-dex-decentralized-exchange\"><span class=\"ez-toc-section\" id=\"What_is_a_DEXdecentralized_exchange\"><\/span>What is a DEX\/decentralized exchange? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>DEX stands for decentralized exchange\/s. These are <a href=\"https:\/\/metaschool.so\/articles\/peer-to-peer-p2p\/\">peer-to-peer<\/a> trading platforms where a user can buy, sell and exchange cryptocurrency. Because they\u2019re decentralized, users can directly sell or purchase crypto from any other user using their own wallets without depending on a third party.<\/p>\n\n\n\n<p>DEXs usually have a utility or governance <a href=\"https:\/\/metaschool.so\/articles\/what-is-a-token-guide\/\">token<\/a> that has benefits like governance rights, liquidity, and staking rewards; only the token holders can utilize these benefits. They run on different <a href=\"https:\/\/metaschool.so\/blockchains?ref=Article&amp;utm_source=Blog_Organic\">blockchain<\/a> ecosystems and their working is almost the same as a centralized exchange except users have full ownership and control over their funds and private keys.<\/p>\n\n\n\n<p>Moreover, decentralized exchanges rely on self-executable <a href=\"https:\/\/metaschool.so\/articles\/what-is-a-smart-contract\/\">smart contracts<\/a> to allow traders to execute orders and transfer funds. This happens without intermediaries otherwise present at centralized exchanges.<\/p>\n\n\n\n<p>With the rise of DeFi, the adoption of decentralized exchanges has been increasing. In fact, they have experienced exponential growth in the last 3 years and recorded trillions of dollars in trading volume.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"origin-of-dex-in-crypto\"><span class=\"ez-toc-section\" id=\"Origin_of_DEX_in_crypto\"><\/span>Origin of DEX in crypto<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In <a href=\"https:\/\/metaschool.so\/blockchains?ref=Article&amp;utm_source=Blog_Organic\">cryptocurrency<\/a>, DEXs were first introduced in the year 2014. DEXs primarily used a peer-to-peer trading mode for the users to sell, buy and trade their crypto assets.&nbsp;<\/p>\n\n\n\n<p>The earliest versions of DEXs were not too advanced and fairly difficult to put into use. However, there is a wide range of options available to choose from today.&nbsp;<\/p>\n\n\n\n<p>Moreover, the inception of smart contracts has further added to the overall efficacy and efficiency of DEXs.&nbsp;<\/p>\n\n\n\n<p>The earliest DEX platforms have been seen to be using something called order books. Over time, the record-keeping mechanisms in DEXs have changed for the better.&nbsp;<\/p>\n\n\n\n<p>The inclusion of liquidity pools in crypto further added to these platforms\u2019 overall liquidity status and gave an incentive to the users to use DEX platforms for their crypto assets.<\/p>\n\n\n\n<p>While previous DEXs had limitations of their own, the latest DEXs are only getting better and stronger by the minute.<\/p>\n\n\n\n<p>Lastly, it is important to note that DEX did not rise to popularity until <a href=\"https:\/\/metaschool.so\/articles\/defi-meaning\/\">DeFi (Decentralized Finance)<\/a> was introduced and eventually became a big thing.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"differences-between-centralized-and-decentralized-exchange-platforms\"><span class=\"ez-toc-section\" id=\"Differences_between_centralized_and_decentralized_exchange_platforms\"><\/span>Differences between centralized and decentralized exchange platforms<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Function<\/strong><\/td><td><strong>Centralized Exchange<\/strong><\/td><td><strong>Decentralized Exchange<\/strong><\/td><\/tr><tr><td>Control<\/td><td>Owned and controlled by a central organization&nbsp;<\/td><td>Users have control and can manage using their private keys<\/td><\/tr><tr><td>Security<\/td><td>More vulnerable to hackers and other attacks<\/td><td>Users\u2019 private keys provide a higher level of security<\/td><\/tr><tr><td>Transparency<\/td><td>Lack of transparency<\/td><td>Everything is crystal clear<\/td><\/tr><tr><td>Liquidity<\/td><td>Larger user base leads to higher liquidity<\/td><td>Smaller user base leads to lower liquidity<\/td><\/tr><tr><td>Speed<\/td><td>Higher trading fees and higher speed<\/td><td>Lower trading fees and lower speed<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"best-decentralized-exchanges-and-their-tokens\"><span class=\"ez-toc-section\" id=\"Best_decentralized_exchanges_and_their_tokens\"><\/span>Best decentralized exchanges and their tokens<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>DEXs give users freedom and ownership and are playing an important role in the growth of DeFi.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Uniswap \u2013 an automated liquidity protocol built on the Ethereum Blockchain. Users can trade here without the need for a central authority. Moreover, users can launch <a href=\"https:\/\/metaschool.so\/articles\/erc20-token\/\">ERC-20 tokens<\/a> on <a href=\"https:\/\/metaschool.so\/blockchains\/uniswap?ref=Article&amp;utm_source=Blog_Organic\">Uniswap<\/a> as well. It has a token named <strong>UNI <\/strong>which is used to govern Uniswap.<\/li><li>PancakeSwap \u2013 a DEX powered by the Automated Market Maker (AMM) model built on the BNB Smart Chain. Users can trade without third-party interference, swap BEP-20 tokens, and earn different rewards by staking tokens in liquidity pools. Its token, CAKE, is<strong> <\/strong>used to govern the Pancake ecosystem.<\/li><li><a href=\"https:\/\/stellar.org\/tools\" target=\"_blank\" rel=\"noopener\">Stellar<\/a> \u2013 an open-source payment protocol serving as a DEX built-in order book. It allows users to move or store any form of money at a low price. <strong>XLM <\/strong>is Stellar\u2019s native coin and acts as an intermediary currency during transactions.<\/li><\/ul>\n\n\n\n<p>DEXs give users freedom and ownership and play an important role in the growth of DeFi.<\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":5423,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[73],"tags":[51,4,74,68],"class_list":["post-2564","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-web3-crypto-glossary","tag-blockchain","tag-cryptocurrency","tag-web3-glossary","tag-web3-words"],"_links":{"self":[{"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/posts\/2564","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/comments?post=2564"}],"version-history":[{"count":10,"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/posts\/2564\/revisions"}],"predecessor-version":[{"id":5381,"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/posts\/2564\/revisions\/5381"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/media\/5423"}],"wp:attachment":[{"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/media?parent=2564"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/categories?post=2564"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/metaschool.so\/articles\/wp-json\/wp\/v2\/tags?post=2564"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}