Decentralized Exchanges (or DEX) are peer-to-peer (P2P) marketplaces where financial transactions take place between crypto investors and traders directly without any intermediate or custodian fostering in between for management. These transactions happen under smart contracts (coded self-executing agreements). The most popular DEXs like Sushiswap and Uniswap are based on Ethereum blockchain technology.

Working of Decentralized Exchange (DEX)

As DEXs are developed over Blockchain networks that work on smart contracts where the traders hold their funds, every participant pays an extra transaction fee (also called ‘gas fee’) during the time of trading. Fundamentally, the users connect with smart contracts to use DEX on the blockchain network. 

There are three types of DEXs— Order Book DEX, Automated Market Makers, DEX Aggregator. Each one of them lets the users facilitate direct trading under the smart contract protocol. The first-ever DEX used a similar order book type, like Centralized Exchange (CEX).

Advantages of DEX For Your Blockchain Development Company

Vast Variety

If you’re keen to know about new tokens in the market, Decentralized Finance (De-Fi) is the best place to be at. DEXs bring virtually immeasurable varieties of tokens that includes well-known, weird, and random art.

Hack-Free

As the traders stores all their funds on their wallets in a DEX platform, it is less likely to get hacked. DEXs are well-known for reducing the hack risk (also called ‘counterpart risk’) as no central authority or third-party entity is involved.

Anonymity

There is no need for any personal information to trade on the most popular DEX platforms.

Vital Utility of Digitalized World

Anonymity, P2P lending, and faster transactions have made it easy by DEX in various developing economies around the world. Now, anybody with a desktop/smartphone and internet access can do trading through DEX.

Developing a strategy to increase ROI by taking part in trading while maintaining privacy & security with convenience are one of the key factors of DEX’s creation. LBM Blockchain Solution Blockchain Development Company understands that and gives you the best suggestion for your business development. Contact Us Now!