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2. Intermediate Course

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  1. 1. Ethereum 2.0 - What is it? 
  2. 2. What is cryptocurrency burning?
  3. 3. How to create your own cryptocurrency? 
  4. 4. Blockchain Oracle - what are oracles? 
  5. 5. How to make money with NFT?
  6. 6. What is an ERC20 token and how is it created?
  7. 7. The Metaverse – a new virtual world
  8. 8. Metaverse – TOP 15 virtual reality projects
  9. 9. Technical analysis – is it worth using?
  10. 10. What are DeFi liquidity pools?
  11. 11. Second layer (layer 2) - what is it? 
  12. 12. What are wrapped tokens 
  13. 13. What is the Lightning Network, and how does it work?
  14. 14. What are security tokens?
  15. 15. What is Play-to-Earn (P2E) and how does it work?
  16. 16. What are Social Tokens? 
  17. 17. Examples of the use of WEB3 on the blockchain
  18. 18. What is Web5? 
  19. 19. Ethereum London Hard Fork - what is it ? 
  20. 20. Segregated Witness - what is Segwit Bitcoin all about?
  21. 21. Polkadot - Decentralized blockchain and DOT cryptocurrency
  22. 22. Polkadot Parachain - Next-generation blockchain
  23. 23. Trading order types: stop loss, trailing stop loss, LIMIT
  24. 24. Set up of Stop Loss and Take Profit orders
  25. 25. What are Decentralized Cryptocurrency DEX Exchanges?
  26. 26. What is Curve Finance?
  27. 27. What is GameFi and how does it work?
  28. 28. Non-fungible tokens and NFT exchanges
  29. 29. Cryptocurrency steps - What is move to earn M2E?
  30. 30. What is Proof of Reserves (PoR)? How does it work?
  31. 31. Interoperability in the world of cryptocurrencies and blockchain
  32. 32. Blockchain and its layers - What is layer three in Blockchain (L3)?
  33. 33. What is Layer 0 in Blockchain technology?
  34. 34. What is layer 1 in Blockchain?
  35. 35. What is MakerDAO and DAI Stablecoin?
  36. 36. What is Blockchain sharding?
  37. 37. What is the NFT licence fee?
  38. 38. What is the SubDAO protocol, and how does it work?
  39. 39. The main differences between static NFT and dynamic NFT
  40. 40. What is minting an NFT?
  41. 41. Mainnet versus Testnet on the Blockchain. The complete guide!
  42. 42. What are NFT Ordinals? A guide to Bitcoin NFT.
  43. 43. Market Cap versus Fully Diluted Market Cap - the most important differences you should know!
  44. 44. MINA Protocol: the lightest blockchain in the world!
  45. 45. NFT Gas Fee - what is it? How can you reduce your gas fee?
  46. 46. Liquidity Provider Tokens (LPs). What are they, and why are they so important?
  47. 47. What is KnowOrigin NFT, and how does it work?
  48. 48. What is decentralized social media?
  49. 49. What is the Ethereum Name Service (ENS) and how does it work?
  50. 50. Arbitrum: Ethereum scaling solution - everything you need to know
  51. 51. Ethereum ERC-4337 - what is it and how does this standard work?
  52. 52. Sustainable Blockchain - Proof of Useful Work & Flux
  53. 53. Ethereum Proof-of-Stake (PoS) - what should you know?
  54. 54. Atomic Swap: What is an atomic swap, and how does it work with cryptocurrencies?
  55. 55. What Is Cryptocurrency Vesting? What Are Its Advantages?
  56. 56. What Is the Metaplex Candy Machine Protocol? How Does It Work?
  57. 57. What Is the BNB Greenfield Ecosystem?
  58. 58. Real Yield in DeFi - what is this trend? What does it consist of?
  59. 59. What Is Slashing in Cryptocurrencies?
  60. 60. How to Create Your Own Decentralized Autonomous Organization (DAO)?
  61. 61. The ERC-721X VS ERC-721 Standard – Key Differences!
  62. 62. Royalties – What Are They? How Does This Type of Licensing Fee Work?
  63. 63. Polygon 2.0 - the value layer for the Internet
  64. 64. ERC-6551 - the new NFT standard. What does it bring to the non-exchangeable token sector?
  65. 65. What is TradFi? The importance for cryptocurrencies!
  66. 66. What is the Real World Asset (RWA) trend in cryptocurrencies? Explanation and examples!
  67. 67. Pyth Network: a powerful oracle harnessing the power of Solana!
  68. 68. Vampire Attacks in Decentralized Finance (DeFi): Explanation and Examples
  69. 69. What are stables in the world of cryptocurrencies?
  70. 70. What Is Binance Oracle?
  71. 71. What is NFT Lending all about? An innovative solution in the world of cryptocurrencies!
  72. 72. Shibarium: A new era in the Shiba Inu ecosystem?
  73. 73. What is an ETF? How will an exchange-traded fund on bitcoin work?
  74. 74. Symmetric and asymmetric encryption - key cryptography techniques!
  75. 75. Cosmos SDK: Building the Blockchain Ecosystem
  76. 76. DAO Investment: A revolution in the world of finance and investment
  77. 77. What is cross-chain interoperability in Blockchain technology?
  78. 78. Blockchain trilemma - explanation of the problem. What is the impact on cryptocurrency payments?
Lesson 25 of 78
In Progress

25. What are Decentralized Cryptocurrency DEX Exchanges?

DEX, is a decentralized exchange, which appeared in the world of cryptocurrencies some time ago. Definitely different from centralized exchanges (CEX). Today we will tell you how they work, what they are characterized by and whether it is worth using them. We invite you to read!

DEX decentralized exchange – definition

Decentralized Exchange, abbreviated DEX. It is a decentralized cryptocurrency exchange that, as the name suggests, operates without the involvement of third parties. Trading using cryptocurrencies takes place directly between interested investors, i.e. in mode Peer-to-Peer

DEX-y are nothing but applications that rely on blockchain. They enable and coordinate large-scale trading of digital assets. Everything is done using automated algorithms.

They do not use intermediaries between the seller and the buyer. Algorithms that are used in DEXs are smart contracts that trigger “exits” upon receiving certain “outputs”.

The idea of ​​decentralized exchanges is simple. They want to eliminate the intermediaries between transactions so that users do business directly with each other. Using this kind of DEX exchange, you don’t have to transfer your assets to it. Everything is securely located on users’ wallets, which further increases their security. Using DEX also prevents price manipulation and counterfeiting of trades. Trading in this market is simple and user-friendly.

There’s no denying that DEX-y are the biggest decentralized applications. They usually operate on a conventional basis in stock exchange books. What does it mean? Based on the ledger, buyers, and sellers are matched against each other based on data such as order prices and volume. We all know that full decentralization is the key to success when it comes to the industry of cryptocurrencies.

Each DEX is more advanced than CEX. Why? If only because of the privacy that DEXs provide on a large scale. User wallets, balances, and transactions are private and safe in this asset market. What’s more, making transactions between investor A and investor B in decentralized exchanges gives us a sense of greater individuality and independence.

As we have already mentioned, DEXs are managed with smart contracts (then they are said to be fully automated) or with the involvement of programmers and the community (then we mention semi-automated exchange).

Decentralized exchanges match requests to buy/sell digital assets. Moreover, some DEXs allow staking and farming.

DEX vs CEX

We already found out what they are, decentralized exchanges (DEX). It is worth highlighting the basic differences between them and centralized exchanges (CEX)

  • CEX, is a traditional exchange that has its board of directors and keeps user data confidential.
  • The algorithms used to operate CEX store the trading history of the exchange, users, and control its work.
  • DEXs have no governing body. They are fully automatic or semi-automatic.
  • DEXs are based on automatic market creation protocol. Thanks to this, the price of a given asset is determined using an algorithmic write function. CEXs use historical transaction data of their users for this analysis and pricing. The CEX exchange is entirely different from the traditional and well-known cryptocurrency exchange.
  • In decentralized exchanges, they require the minimum steps you need to take to trade them.
  • In the case of CEXs, you must go through the entire registration process and verify your identity.
  • When trading on decentralized applications, the whole process is done in peer-to-peer mode. And they pay for the transaction.
  • Speaking of differences, it is also worth looking at the commissions offered by these exchanges. In the case of DEX, its height is dynamic and largely depends on the amount of traffic on the blockchain. There are also no intermediaries between them, so the commission is lower than in the case of centralized exchanges.

Advantages and disadvantages of DEX exchanges

BenefitsDefects
They ensure complete anonymity. KYC registration and authentication is not required.They do not have a security deposit, which in turn limits their functionality.
We do not store our funds on DEXs, which is why they are completely safe. In the event of a hacker attack or even a collapse of the stock exchange, you risk nothing.The liquidity pool is definitely smaller than in the case of CEXs.
A hacker attack is virtually impossible. Why? Because DEXs operate on a distributed ledger.We have no technical support in case of error or our mistake.
 No governing body.

Are DEXs really completely safe?

No doubt, their popularity has increased thanks to anonymity and full decentralization. However, when we take a closer look at them, they really are decentralized exchanges that have a shadow of centralization. We are talking here, even about oracles, smart contracts or so-called administrator keys. It is true that the use of smart contracts gives users of decentralized applications full control over their funds. Thanks to this, the risk of theft or loss of funds is minimal.

The best DEXs

  • UNISWAP – decentralized cryptocurrency exchange platform. It is based on blockchain Ethereum and uses smart contracts.
  • PancakeSwap –  DEX, which was created on BNB Chain. It is based on the model of an automatic market maker(AMM). What does it mean? That you are trading against the liquidity pool because there is no order book in PancakeSwap.
  • SushiSwap – in addition to the fact that we can trade digital assets on it, SushiSwap offers us many tools for passive and active earning.
  • 1inchdecentralized protocol is based on algorithms that analyse and search for the most profitable investment offers for its users.
  • Curve Finance – if you dislike risk, this platform is perfect for you. On CRV you will find stable and less volatile assets. It focuses on stablecoins and their exchange.

Summary

You already know the basic differences between DEX exchanges and CEX. If you value security and anonymity, trading with decentralized applications is a better choice for you. However, remember that DEX-y are not regulated in any way – neither legally nor physically.