What are the Benefits of Decentralized Exchanges?

In
the
crypto
economy,

decentralized
exchanges
have
been
nothing
less
than
revolutionary.
In
case
you
are
not
familiar
with
DEXs
or
decentralized
exchanges,
it
is
time
to
get
familiar
with
the
topic.
The
insight
can
help
you
thrive
in
crypto
and
proactively
engage
in
crypto
trading
platforms.
However,
before
learning
about
the
main
benefits
of
decentralized
exchanges,
you
need
to
first
understand
what
these
exchanges
are.

DEXs
are

peer-to-peer
marketplaces
that
rely
on

smart
contracts
within

blockchain
networks.
It
serves
as
the
place
where
the
traders
of

cryptocurrency
get
to
engage
in
different
kinds
of
transactions.
Furthermore,
they
get
to
enjoy
a
seamless
and
smooth
experience.
Within
a
short
span
of
time,
DEXs
have
become
immensely
popular
in
the
online
crypto
community.

This
is
due
to
the
fact
that
DEXs
remove
the
need
for
any
authoritative
party
to
authorize
or
oversee
transactions.
As
the
name
suggests,
there
is
complete

decentralization,
which
ensures
that
there
is
an
equal
distribution
of
power.
Unlike

centralized
exchanges,
where
authoritative
bodies
like
banks
play
a
key
role,
DEX
does
not
rely
on
such
intermediaries.

If
you
intend
to
dive
into
the
crypto
realm,
you
need
to
familiarize
yourself
with
the
chief
benefits
of
decentralized
exchanges.

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Benefits
of
Decentralized
Exchanges

Do
you
have
the
question
in
your
mind
–What
are
the
advantages
of
decentralized
exchanges?
If
yes,
you
will
get
the
answer
shortly.
DEXs
have
a
host
of
benefits
that
make
them
far
superior
in
comparison
to
centralized
exchanges.
Some
of
the
chief
benefits
include:

• Having
  custody
  of
  assets

One
of
the
fundamental
benefits
of
decentralized
exchanges
is
that
users
have
custody
of
their
assets.
In
other
words,
you
do
not
have
to
transfer
your
assets
to
any
third
party.
Hence,
the
level
of
risk
from
malicious
actors
such
as
cybercriminals
is
low.
You
do
not
have
to
have
sleepless
nights
thinking
that
the
entity
possessing
your
assets
may
get
hacked.

By
using
DEXs,
your
assets
can
remain
completely
safe
and
secure.
In
technology-driven
times,
it
is
natural
to
feel
vulnerable
in
the
crypto
domain.
However,
you
can
rest
assured
of
safety
while
completing
a
transaction
on
DEXs.
Issues
such
as
hacking,
theft,
fraud,
etc.,
will
not
be
able
to
affect
you
in
the
crypto
domain.
The
DEXs
will
ensure
that
you
have
the
power
over
your
own
assets.
If
you
want
to
ensure
that
your
assets
remain
safe
while
transacting
in
the
crypto
economy,
DEXs
is
the
ideal
platform
to
conduct
transactions.

• Prevention
  of
  market
  manipulations

A
common
concern
for
most
individuals
who
are
involved
in
trading
activities
revolves
around
market
manipulations.
However,
in
the
case
of
DEXs,
you
do
not
have
to
worry
about
the
manipulation
of
the
market
setting.
This
is
because
users
get
ample
protection
from
elements
such
as
wash
trading
or
fake
trading.

DEX
encompasses
diverse
anti-manipulation
features
that
make
it
a
safe
trading
platform.
The
commit-reveal
systems
of
DEX
are
vital
properties
that
offer
protection
to
users
against
manipulations.
Similarly,
the
decentralized
nature
of
the
exchanges
ensures
that
no
one
party
has
majority
control
while
engaging
in
transactions.
The
peer-to-peer
platform
enables
users
to
trade
directly
with
one
another
in
a
seamless
manner.
Certainly,
it
is
one
of
the
chief
advantages
of
decentralized
exchanges.

• High
  resistance
  to
  hacking

In
the
current
era,
a
major
concern
in
the
minds
of
most
online
users
revolves
around
hacking.
The
threats
from
online
hackers,
cybercriminals
and
other
malicious
entities
may
cause
many
sleepless
nights.
However,
the
threat
from
such
malicious
elements
is
low
in
the
crypto
realm.

Decentralized
exchanges
are
not
run
by
a
single
entity.
Instead,
the
foundation
of
DEXs
is
made
of
a
network
of
computers.
This
network
of
computers
enables
DEXs
to
remain
functional
and
run
efficiently.
This
feature
makes
these
exchanges
highly
resistant
to
threats
from
cybercriminals.
If
you
engage
in
trading
activities
in
the
crypto
domain,
you
need
not
worry
about
hacking
or
other
security
risks.
The
opportunity
for
hackers
and
online
criminals
to
target
you.

• High
  efficiency

Blockchain
technology
is
the
decentralized
exchange’s
core
pillar.
Due
to
this,
the

benefits
of
blockchain
can
be
seen
in
DEX
as
well.
One
of
the
main
reasons
for
the
decentralized
exchange
advantages
is
that
it
is
a
highly
efficient
and
effective
alternative
to
the
traditional
approach.
Moreover,
it
is
highly
transparent,
as
the
records
of
all
transactions
exist
on
the
blockchain.
Transparency
ensures
that
all
trade
activities
and
transactions
are
verifiable.
Hence,
it
offers
an
additional
layer
of
security
to
users.

DEXs
are
a
revolutionary
invention
that
perfectly
suits
the
crypto
realm.
The
core
features
and
advantages
of
the
exchange
make
it
ideal
for
users
who
engage
in
trading
activities.
The
high
level
of
security,
transparency,
and
efficiency,
coupled
with
stability,
makes
it
a
popular
exchange
medium
that
is
used
today.
It
is
instrumental
to
become
familiar
with
the
core
benefits
of
decentralized
exchanges
so
that
you
can
derive
optimum
value
by
transacting
on
them
in
the
crypto
setting.

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risks
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Cryptocurrency
Fundamentals
Course

How
do
DEX
platforms
work?

It
is
important
to
bear
in
mind
that
DEX
is
starkly
different
from
centralized
exchange
platforms.
Unlike
the
centralized
platforms
that
adopt
a
conventional
approach,
DEX
leverages
innovation.
In
fact,
innovation
lies
at
the
very
forefront
of
these
exchanges
and
makes
them
efficient,
robust,
and
well-functional.
Technology
serves
as
the
catalyst
in
DEX
and
supports
the
delivery
of
services
to
users.
Thanks
to
digital
technology,
services
like

liquidity
pools
and
services
relating
to

smart
contracts
are
accessible
to
users.

DEXs
offer
liquidity
to
users
and
traders.
If
you
are
a
trader,
you
can
take
advantage
of
available
pools
of
paired
assets
for
swapping
one
token
in
exchange
for
another.
Liquidity
pools
are
smart
contracts
that
traders
can
use
to
move
in
and
out
of
specific
tokens.
The
exchanges
fundamentally
use
smart
contracts
to
automate
the
trading
process.

In
case
a
trader
wishes
to
trade
a
cryptocurrency
for
another,
the
process
is
quite
simple.
They
simply
need
to
send
their
specific
assets
to
a
smart
contract.
The
smart
contract
will
be
responsible
for
matching
buy
as
well
as
sell
orders.
Hence,
the
execution
of
the
sale
can
take
place
automatically
without
relying
on
human
intervention.

The
advantages
relating
to
decentralized
exchanges
give
it
an
upper
hand
in
comparison
to
traditional
exchanges.
DEXs
are
well-suited
to
meet
the
needs
of
users
who
like
trading
in
the
modern
age.

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Future
of
Decentralized
Exchanges

The
future
of
DEX
seems
to
be
extremely
bright
in
contemporary
times.
The
rising
popularity
of
these
platforms
gives
a
glimpse
into
their
bright
and
promising
future.
The
core
features
of
DEX
have
enabled
the
exchange
to
grow
exponentially
within
a
short
span
of
time.
As
the
adoption
of
blockchain
technology
gradually
gains
momentum,
it
can
further
enhance
the
acceptance
of
DEXs.

Today,
DEX
acts
as
a
perfect
alternative
to
centralized
exchanges.
DEX
platforms
ensure
that
there
is
an
ample
degree
of
adaptability
and
flexibility
for
users
and
that
their
needs
are
met.
The
traders
who
exist
in
the
crypto
landscape
get
to
enjoy
liberty
while
engaging
in
transactions.

The
core
benefits
of
decentralized
exchanges
may
subsequently
lead
to
the
mainstream
adoption
of
these
exchanges
among
crypto
traders.
The
rise
in
the
awareness
of
DEX,
coupled
with
its
simple
use,
may
contribute
to
its
rising
acceptance
and
adoption.
Hence,
in
the
future,
DEX
may
soon
pose
a
threat
to
traditional
and
centralized
exchanges.

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Downside
of
Decentralized
Exchanges

It
is
true
that
DEXs
give
rise
to
a
host
of
benefits
and
advantages
to
crypto
community
members.
However,
you
need
to
be
aware
of
certain
downsides
relating
to
these
exchanges.
Only
by
gaining
a
comprehensive
insight
into
decentralized
exchange
can
you
derive
optimum
value
from
them.
Some
of
the
main
disadvantages
of
DEXs
are:

• Need
  of
  a
  certain
  degree
  of
  knowledge

In
order
to
utilize
DEX,
you
need
to
be
able
to
use

cryptocurrency
wallets.
This
is
because
these
exchanges
are
accessible
through
these
wallets.
Hence,
you
need
to
possess
basic
knowledge
about
trading
in
the
crypto
domain.

Moreover,
you
must
have
an
understanding
of
the
security
aspects
so
that
you
can
ensure
the
safety
of
your
funds.
Although
it
is
true
that
there
is
ample
safety
in
blockchain,
you
need
to
keep
in
mind
certain
safety
elements
so
that
you
can
act
in
a
responsible
manner.
Without
having
an
insight
into
blockchain
and
DEX,
it
might
get
overwhelming
to
engage
in
trading
activities.

• Vulnerabilities
  relating
  to
  smart
  contracts

Smart
contracts
are
indispensable
components
that
exist
in
the
blockchain
domain.
While
trading
on
DEX
platforms,
you
must
be
aware
of
vulnerabilities
arising
from
smart
contracts.
Although
the
level
of
security
is
high,
the
possibility
of
some
form
of
threat
always
exists
in
the
virtual
world.
Hence,
a
certain
degree
of
uncertainty
exists
that
may
arise
due
to
bugs
or
security
gaps.
Similarly,
any
kind
of
error
may
also
give
rise
to
security
concerns
for
users
who
engage
in
crypto
trading.
Thus,
it
is
important
for
you
to
prepare
yourself
while
diving
into
the
crypto
trading
domain.
As
new
kinds
of
exploits
come
into
existence,
you
need
to
adopt
a
practical
outlook.
Therefore,
you
cannot
ignore
the
probability
of
security
concerns
while
reading
via
DEXs.

• Lower
  level
  of
  liquidity

It
may
come
as
a
surprise,
but
DEXs
have
lower
liquidity
in
comparison
to
exchanges
that
follow
the
centralization
concept.
Yes,
you
heard
it
right!
The
reason
for
lower
liquidity
is
the
existence
of
broader
bid-ask
spreads.
Moreover,
longer
waiting
time
also
comes
into
play
and
contributes
to
a
lower
degree
of
liquidity
in
DEXs.

This
weakness
of
DEXs
may
act
as
a
bottleneck
for
users.
Due
to
liquidity
concerns,
users
may
find
purchasing
or
selling
assets
at
the
intended
price
daunting.
Hence,
it
is
a
vital
disadvantage
that
you
must
remember
while
trading
on
these
platforms.

• Inefficiency
  in
  terms
  of
  transaction
  time

Another
disadvantage
of
DEX
revolves
around
the
slow
transaction
time.
Although
one
may
expect
that
the
efficiency
is
high
in
relation
to
transaction
time,
that
is
not
always
the
case
in
the
practical
setting.
There
is
a
chance
of
slow
transaction
time
due
to
the
high
degree
of
reliance
on

blockchain
networks.
It
may
take
considerable
time
to
carry
out
the
validation
process.

Similarly,
settling
trades
may
consume
a
substantial
amount
of
time.
Hence,
such
activities
that
take
place
within
the
blockchain
network
may
make
the
transactions
time-consuming
for
users.
When
it
comes
to
trading,
time
is
a
critical
factor
that
traders
must
take
into
consideration.
If
you
have
an
interest
in
crypto
trading,
it
is
necessary
to
know
that
transaction
time
is
a
major
area
of
concern.

Although
decentralized
exchanges
have
a
number
of
disadvantages,
they
fail
to
overshadow
the
benefits
of
the
exchange
platform.
However,
if
you
are
passionate
about
crypto
trading,
you
need
to
familiarize
yourself
with
its
benefits
as
well
as
drawbacks.
A
comprehensive
insight
into
DEXs
can
help
you
understand
the
true
capabilities
of
the
exchange
platform.
Furthermore,
you
can
make
use
of
your
understanding
to
leverage
the
technology
to
its
fullest.

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Final
Words

In
the
crypto
universe,
the
emergence
of
DEXs
is
one
of
the
most
valuable
inventions.
These
platforms
have
brought
about
a
revolutionary
change
in
trading
activities
and
transactions.

Crypto
users
have
the
opportunity
to
optimally
leverage
the
exchange
platform
to
engage
in
the
transactions
of
their
choice.
A
diverse
range
of
benefits
relating
to
decentralized
exchanges
are
enjoying
custody
of
assets,
prevention
of
market
manipulations,
high
resistance
to
hacking,
and
high
efficiency.

Unquestionably,
the
future
of
DEXs
is
bright
as
it
offers
a
plethora
of
benefits
to
users.
If
you
are
keen
on
trading
in
the
crypto
landscape,
you
can
take
advantage
of
DEX
platforms.
These
platforms
offer
superior
value
in
comparison
to
conventional
platforms
that
center
around
centralization.

However,
a
number
of
downsides
relating
to

decentralized
exchanges
exist
that
you
need
to
be
aware
of.
The
guide
sheds
light
on
some
of
the
disadvantages
of
DEX,
such
as
the
need
for
certain
knowledge,
vulnerabilities
of
smart
contracts,
lower
liquidity,
and
transaction
time
inefficiency.
You
need
to
know
about
the
benefits
and
drawbacks
of
DEXs
to
be
well-equipped
as
a
crypto
trader
in
the
blockchain
setting.

*Disclaimer:
The
article
should
not
be
taken
as,
and
is
not
intended
to
provide
any
investment
advice.
Claims
made
in
this
article
do
not
constitute
investment
advice
and
should
not
be
taken
as
such.
101
Blockchains
shall
not
be
responsible
for
any
loss
sustained
by
any
person
who
relies
on
this
article.
Do
your
own
research!