Dear guys,
I have found, so many guys on this forum have confusions about Decentralized Exchanges (DEXes) platforms so I decided to create this topic to throw fuels to increase your knowledge about DeFi platform. so let's get started.
What is Decentralized Exchange (DEX)?
DeFi is a modern concept that has been widely discussed by cryptocurrency communities. Decentralized Exchange(DEX) is that type of cryptocurrency exchange that operates and functions without a central authority that allows users to have peer-to-peer trading of cryptocurrencies. Nowadays, DEXes are getting incredible reputations due to so many features to give full financial freedom to users. Some famous examples of DEXes are:- Binance DEX, IDEX, Bancor, Kyber Network, Uniswap, etc
So here are some Pros and Cons of DEXes:-
Pros:-
You have full control over your funds, private keys, wallets, etc on DEXes
DEX does not control your funds so you can directly deal with buyers or sellers
If you are against KYC requirements on the exchange then DEXes can be the best option for you. You will have an ability to transact without KYC verification
On a Centralized Exchange (CEX), your funds can be tracked by the government for taxation purpose but in the case of DEX, it is really harder for the government to trace or freeze your holdings
Fees are extremely low or no fee on DEXes.
Cons:-
There will be no KYC and if your private key is stolen by a hacker, there is no way to revert your funds.
Newcomers might get confused while entering in DEX platform
There will be no central support for you from DEX. Most of them prefer a community-based support system.
Another problem on DEXes is low trading volumes
Note:-I have tried my best to write everything in simple language to make sure everyone can easily understand some basic information about DEX. If you have any problem, I am always open to listen to you 🙏.
References:-
https://en.wikipedia.org/wiki/Decentralized_exchange