There is a fundamental difference between decentralized exchanges and centralized exchanges. Whether there is an intermediary between investors in the stock market.
On a decentralized exchange, smart contracts facilitate trading orders. These are programs stored on the blockchain that run automatically when certain conditions are met.
Smart contracts allow transactions to occur without intermediaries. Because this process is automated according to pre-existing rules accepted by the actors on both sides of the trade.
Investors maintain control of their funds and must take full responsibility for keeping the addresses and private keys to which they send the funds safe.
On a centralized exchange, the platform itself facilitates cryptocurrency trading.
Centralized exchanges operate an order book where buyers and sellers bid prices they are willing to pay or receive, and trades are executed when a buyer and seller’s price match.
These exchanges are generally easy to use, regulated and act as a reliable broker. Centralized exchanges cover all the requirements for digital trading.

How to Use DEXs

To use DEXs, a user must either connect a pre-existing crypto wallet to the decentralized exchange or use a wallet with DEX capabilities.
You don’t need to go through any KYC process as it has no middleman. All you need is a smartphone or an internet-connected computer.
First, determine which exchange platform you want to use. Each platform has its own set transaction fees, so take this into account when choosing which DEX to use.
Next, you have to make sure that your wallet is compatible with the exchange. Finally, you will need to fund your wallet with the platform’s own token.
The initial money you need in your wallet will be used to cover “gas fees” in addition to any transaction fees DEX pays.
These gas fees pay the miners for each blockchain transaction. Let’s mention that you have the option to use a wallet extension that lets you access your digital assets from your browser.
These user-friendly extensions can be installed in the same way as other extensions. If you have an existing wallet, you can import it or create a new one.

Advantages of Using DEX

  • Privacy: DEXs offer users more privacy than centralized exchanges. A decentralized exchange does not require any of the usual identification processes. Instead, it is an anonymous process.
  • Less risk: A welcome byproduct of the peer-to-peer nature of decentralized exchanges is that it reduces the risks of hacking and hacking.

  • Low cost: Transaction fees on DEXs are generally lower than those charged on centralized exchanges. This makes decentralized crypto exchanges more attractive to investors.

  • Full control of funds: Users always have full control of their funds and are not dependent on any institution for their management.

  • Trade all tokens: Centralized exchanges can support some of the most popular cryptocurrencies, while decentralized exchanges can trade all existing tokens.

Most Popular DEXs

As one of the first automated market makers, Uniswap gives users the role of liquidity provider and investors add their assets to decentralized liquidity pools.
Liquidity providers earn passive income by taking a share of the fees accumulated in the pool. It has a token called UNISWAP.

Another of the automated market makers, SushiSwap allows users to generate revenue from trading fees by providing liquidity to the platform.
It also offers many opportunities, including yield pools, on-chain orders, and launchpad. It has a token called SUSHI and investors can stake it to gain voting rights.

TraderJoe, which facilitates trading on the Avalanche platform, offers a variety of tools, including yield farming, launchpad and DeFi loan feature.
At the same time, it is as convenient for investors as it eliminates the hassle of manually trading multiple tokens and adding liquidity.

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