Decentralized Exchanges (DEXs) are vital parts of the crypto world, but how do they work, and how can you try them? In this article, we’ll simply explain what makes these systems tick, and illustrate what they are all about with real-life examples.
DEX meaning
What is a DEX? Generally speaking, DEX means an online platform where users can trade various types of cryptocurrencies for each other. On the surface, they seem really similar to traditional exchanges, but when going deeper into their workings, some key differences become obvious. For instance, while the majority of Centralised Exchanges (CEXs) and some decentralized ones provide peer-to-peer trading, most of the DEXs offer trading against automated liquidity pools - these are essentially significant sums of various cryptocurrencies locked by actual holders in return for yields. Also, while most CEXs allow users to exchange traditional fiat currencies (e.g., GBP, USD, EUR) for cryptocurrencies, DEXs tend to only support the crypto-for-crypto option.
Why are DEXs important?
Thanks to their user-friendly interfaces and global accessibility, DEXs, such as Uniswap, and PancakeSwap, enjoy great popularity within the crypto community, registering billions of dollars in transaction volume every single day. This, alone, is a really crucial part, but DEX's role doesn't stop here: they are also the platforms where most of the newly launched crypto tokens are publicly available for the first time. Without their fairly simple listing process, starting projects would be hard, if not impossible, for the vast majority of enthusiasts. For example, most of the novel Ethereum-based tokens, such as the highly popular Shiba Inu (SHIB), and Decentraland (MANA), all began their regular trading (read more: https://www.coinpass.com/en/blog/academy/dex-meaning-what-is-uniswap-pancakeswap-and-a-dex-in-general)…
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