Decentralized Exchange
A decentralized exchange (DEX) is a set of smart contracts that swaps tokens directly from the user's own wallet, without an account or a custodian.
What Is a Decentralized Exchange?
A decentralized exchange (DEX) such as Uniswap or Jupiter runs as smart contracts on a blockchain. Users connect their own wallet, sign a swap, and the contract trades against a liquidity pool or other orders in the same transaction. There is no account, and the DEX never holds the user's funds between trades.
The risks move from the exchange to the user: approving the wrong contract, price slippage, front-running, fake token copies and look-alike phishing sites.
A hardware wallet can sign DEX trades, but it protects only as far as the device shows what is being approved and swapped.
A crypto exchange is a company that lets users buy, sell and trade crypto and, by default, holds the keys to their coins.
Read full definitionA smart contract is a program stored on a blockchain that runs exactly as written when a transaction calls it.
Read full definitionA blockchain is a shared, append-only record of transactions kept by many independent computers, so no single party can rewrite it.
Read full definitionIn cryptocurrency, a swap is the direct exchange of one token for another on a blockchain, often via decentralized exchanges (DEXs) without intermediaries.
Read full definitionA liquidity pool is a smart contract holding paired cryptocurrency reserves. It powers decentralized trading on AMMs like Uniswap by enabling automated swaps.
Read full definitionSlippage is the difference between the expected price of a cryptocurrency trade and the actual executed price, caused by market volatility or low liquidity.
Read full definitionMEV (Maximal Extractable Value) is the profit block producers extract by reordering, including, or excluding transactions in a block, often via front-running.
Read full definitionA token is a digital asset on a blockchain that represents value, ownership, utility, or access rights. Examples include ERC-20 tokens on Ethereum.
Read full definitionReal-World Examples
Example 1: A user swaps ETH for USDC on a DEX from a hardware wallet; the tokens never leave their self-custody except in the swap itself.
Example 2: A copy of a popular DEX at a look-alike domain asks for an unlimited approval and drains the wallet.
In cryptocurrency, a swap is the direct exchange of one token for another on a blockchain, often via decentralized exchanges (DEXs) without intermediaries.
Read full definitionEthereum is a decentralized blockchain platform that enables smart contracts and decentralized applications (dApps). Its native cryptocurrency is Ether (ETH).
Read full definitionA stablecoin is a cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the US dollar or backed by reserves.
Read full definitionA token is a digital asset on a blockchain that represents value, ownership, utility, or access rights. Examples include ERC-20 tokens on Ethereum.
Read full definitionSelf-custody means users control their own private keys to manage cryptocurrency assets directly, without third-party custodians. It embodies 'not your keys, not your coins.'
Read full definitionA token approval lets a smart contract spend a set amount of your tokens. It stays active until it is used up or revoked.
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