Hello to my friends who love life and keep smiling despite all kinds of negativity. In this article I will tell you about "the decentralized exchange (DEX)". What is DEX…? What are the advantages and disadvantages…?
If you are interested, let's start ...
Decentralized exchange (DEX); They are platforms that allow direct peer-to-peer cryptocurrency transactions to be carried out online securely and without the need for an intermediary. It uses smart contracts to facilitate trade between individuals.
DEX can work in three ways; It is an in-block order book, a non-blockchain order book, or an automated market maker approach.
In the order book in the blockchain; each transaction is written to a blockchain. This can be not only a purchase request, but also a request to fulfill or cancel an order. This is the ultimate in decentralization. Transaction fees are high and slow.
In non-blockchain order books; All transactions are handled elsewhere and only the last transaction takes place on the blockchain. Since the orders are not recorded on the blockchain, there may be security problems. Transaction fees are low and fast.
Automated market makers (AMM); do not use order books. This is done through projects that provide oracle services. (For example, Chainlink, Band, Dia,…) Decentralized exchanges use liquidity pools for these transactions. Transactions are fast. Gas charges vary according to the traffic of the blockchain.
Advantage;
There is privacy. Users do not need any KYC to trade. You make your transaction with any wallet supported by the decentralized exchange. It has a high degree of confidentiality
Know Your Client (KYC); To identify the customer's personal information and to check its compatibility.
Therefore, it is more resistant to attacks and manipulations than a central exchange. Your cryptocurrencies are in your wallet. You are the only person with access.
The decentralized exchange (DEX) cannot be shut down by regulators because it is operated in a decentralized way.
Decentralized exchange (DEX) runs through cloud servers.
Allows anyone to create coin pairs. In this way, you can perform your transactions very easily and quickly. You can offer the cryptocurrency, which is the product of your project, to investors without an intermediary. PancakeSwap (CAKE) on Binance Smart Chain, UniSwap (UNI) on Ethereum, ...
Disadvantage;
Their use is difficult compared to centralized exchanges. You should know the use of the DEX you want to use. There is no customer service you can contact.
You only trade with hedgehogs. There are no purchasing alternatives such as credit card, bank transfer.
Prices can be low or high depending on the transaction volume.
There are no protective functions such as stop-loss, OCO in centralized exchanges. Cryptocurrencies are in your wallet.
Transaction fees can be more expensive than central exchanges. There are two fees here.
First; the fee in the cryptocurrency pool you will trade
Second; It is the network fee to get it in your wallet. Whichever blockchain you are trading on, you pay gas fees with its cryptocurrency. In your wallet, you need to hold ETH for the Ethereum network and BNB for the Binance Smart Chain (BSC) network.
Source CoinMarketCap
As I finish, my friends, I suggest you learn about the operations of decentralized exchanges and make transactions. You may have difficulty at first. But there are thousands of good videos on youtube.
Two points are important;
First; pay attention to the security of the wallet you are trading with.
Second; is that you analyze the cryptocurrencies you will receive. Because anyone who wants can enter these exchanges and provide liquidity to their cryptocurrencies. Good projects are first traded on decentralized exchanges. It is then traded on central stock exchanges. In this way, you can make a good profit from the cryptocurrencies you buy at very affordable prices.
It can be a good alternative, especially as countries put pressure on centralized exchanges.
As I always said, listen to everyone, decide for yourself ...
Buy while everyone is selling, sell when everyone is buying ...
I'm looking forward to your comments. Thanks to your comments, we can shape my next articles together. Let's stay in touch… Take care of yourself so that you and the people around you are happy…
