What are decentralised exchanges; how to use DEXs

Top-tier blockchains that support smart contracts have formed the foundation for the development of well-known decentralised exchanges

What are decentralised exchanges; how to use DEXs
An enhanced encryption method that gives consumers access to their cryptocurrency is known as a private key.

DEXs, or decentralised exchanges, are peer-to-peer markets where cryptocurrency traders can conduct transactions without entrusting the management of their funds to a middleman or custodian. Smart contracts, which are self-executing contracts written in computer code, are used to expedite these transactions, as reported by Cointelegraph.

DEXs were developed to do away with the need for any authority to monitor and approve trades executed within a particular exchange. Cryptocurrency trading can be done peer-to-peer (P2P) on decentralised exchanges. Peer-to-peer refers to a market place that connects cryptocurrency buyers and sellers. Since they are frequently non-custodial, users retain ownership of their wallet’s private keys. An enhanced encryption method that gives consumers access to their cryptocurrency is known as a private key. After entering their private key to access the DEX, users can immediately see their cryptocurrency balances. For those that value their privacy, they won’t be forced to give any personal information such names and addresses, the Cointelegraph stated.

Automated market makers, for example, helped draw people to the decentralised finance (DeFi) area and greatly aided in its growth as innovations that addressed liquidity-related issues. Decentralised platforms expanded as a result of DEX aggregators and wallet extensions optimising token prices, exchange fees, and slippage while providing customers with a better deal.

Top-tier blockchains that support smart contracts have formed the foundation for the development of well-known decentralised exchanges. They are constructed directly on the blockchain since they are built on top of layer-one protocols. The Ethereum blockchain is the foundation for the most well-known DEXs.

Decentralised exchanges charge a trading cost in addition to a transaction fee since they are built on blockchain networks that support smart contracts and allow users to retain custody of their money. To use DEXs, traders essentially communicate with smart contracts on the blockchain.

Automated market makers, order books DEXs, and DEX aggregators are the three primary categories of decentralised exchanges. Through their smart contracts, all of them enable users to transact directly with one another. Order books identical to those used by centralised exchanges were utilised by the first decentralised exchanges.

Also read: What is Tokenomics and how does it work

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