IDEX - one of the largest options available on the market with over $1.5 million in trading volume and around 400 hundred trading pairs. Some of the major decentralized exchanges available today include: What Are the Main Decentralized Exchanges? As a result, the former are less prone to server downtime.
Lastly, decentralized exchanges’ operations are maintained via a distributed network of nodes, unlike their centralized counterparts, which are hosted on company servers. Conversely, decentralized exchanges allow their users to enjoy the right to privacy and remain completely anonymous. Centralized exchanges are operated by companies, which are required by law to acquire industry-appropriate licensing and maintain Know Your Customer (KYC) guidelines, forcing their customers to disclose personal data before they can access the exchange. Malicious attacks are a major problem for centralized exchanges: in 2019 alone, hackers have managed to steal over $292 million worth of customers’ cryptocurrencies in 12 major attacks.Īnother advantage of DEXs is their anonymity. In addition, the lack of central storage for customer funds deprives potential hackers of an easy target. The exchange is unable to freeze, lose or manipulate the users’ cryptocurrency for any reason - be it policy, incompetence or malice. The first and foremost reason for people to use decentralized exchanges is that they can maintain complete agency over their funds, which in turn allows for a number of advantages. Why Do People Use Decentralized Exchanges? This peer-to-peer trading is fully automated and decentralized on DEXs, and the exchange of coins happens immediately and directly. Instead, they merely serve as a place for a buyer and a seller to meet and exchange their cryptocurrencies or crypto tokens. On a decentralized exchange, on the other hand, there is no central agent to hold customers’ funds or track IOUs. The “coins” that are being exchanged between the buyers and sellers are actually IOUs that are tracked internally by the centralized authority of an exchange, and they are only converted back into actual cryptocurrencies when a user decides to withdraw their funds. Traditional cryptocurrency exchanges work in a centralized manner: the exchange not only provides a venue for buyers and sellers to conduct their deals, but also takes a passive part in them as a trusted third-party intermediary.Ĭentralized exchanges are traditionally custodial, meaning that after their customers deposit their cryptocurrencies onto an exchange account, the latter holds those funds for them. How Does a Decentralized Exchange Differ From a Normal Cryptocurrency Exchange? A decentralized exchange - or DEX - is a cryptocurrency exchange that operates without a central authority.
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