A decentralized exchange, or DEX, is a platform that lets people trade cryptocurrencies directly with each other, without needing a bank, broker, or central authority in the middle. Instead of handing over your assets to a company and hoping they keep them safe, DEXs run on smart contracts that automatically match, execute, and settle trades on the blockchain.
The key difference? On a DEX, you stay in control of your own funds. There's no need to deposit your crypto into an exchange’s wallet. You trade straight from your personal wallet, and your private keys (which prove ownership) never leave your hands. That makes DEXs fundamentally different from centralized exchanges, where users must trust a company to hold their money and manage their accounts securely.
DEXs represent a major step toward financial systems that are more open, borderless, and programmable. They are popular for enabling peer-to-peer trades, offering access to a wider range of tokens, and providing more privacy and censorship resistance. But they also come with risks, like less customer support, potentially complicated interfaces, and limited safeguards if something goes wrong.