What is a DEX?

What is a DEX?






What is a DEX?

A Decentralised Exchange, also known as a DEX is a peer-to-peer marketplace which allows users/traders to trade assets between themselves, without the need for any third parties. DEXs were built to disrupt the way we exchange financial assets.

How does it work?

Firstly, there are 3 types of DEXs: AMMs, Aggregators & Order Book DEXs. The easiest way to explain it is to take an example. In our case, let’s choose PancakeSwap. Pancake Swap uses what’s called an AMM Model, aka the Automated Market Maker.

When a user wants to swap an asset on the DEX, let’s say $BNB – $FLOKI. The transaction will be sent through to the smart contract, which guarantees the finality of your transaction, securely! Where does the money come from? Simple answer, Liquidity pools!

You can read more on Liquidity Pools on my website, which will be linked at the end. In the meantime, if you’re new to the world of decentralised exchanges, you can check out my YouTube channel for a variety of tutorials, on many different blockchains!

Youtube Links

Channel – https://www.youtube.com/@altcryptogems

Uniswap (ETH) – https://youtu.be/ByfPZFlcALs

PancakeSwap (BNB) – https://youtu.be/81iljIEJ1IQ

CamelotDEX (ARB) – https://youtu.be/VZ3OSsWvZAQ

MinSwap (ADA)  – https://youtu.be/GPC3t1qrgb4


That’s it! Thanks for reading! Have a look at our Guides section for more!

If you’re interested in learning more about Web3 and getting free crypto alpha, be sure to follow me on Twitter – @AltCryptoGems.