Decentralized Exchange (DEX)

A decentralized exchange is a blockchain-based trading arrangement that uses smart contracts to execute asset swaps without a conventional central order-taking operator.

DEX designs may use liquidity pools, on-chain order books, aggregators, or other mechanisms, and users commonly authorize transactions from their own wallets. This can reduce reliance on a central custodian while introducing smart-contract, token, oracle, liquidity, governance, and transaction-ordering risks. The interface may still be operated by an identifiable party, and decentralization does not guarantee legal compliance, fair pricing, or recoverability after an error.

A malicious token or vulnerable smart contract can cause irreversible asset loss even when the user retains control of the wallet.