Everything You Need to Know About Decentralized Crypto Exchanges

by kbing

Decentralized crypto exchanges that are also known as DEXs or are peer-to-peer platforms where crypto traders can make their transactions directly without giving the intermediary custody of their funds or assets to a third party. The exchange has an automated system that facilitates the transactions by using self-executing contracts written in code known as the smart contracts

The reason for the conception of decentralized exchange was to eliminate the need for any third-party or authority to manage the trades conducted on any crypto coin exchange. These decentralized crypto exchanges enable peer-to-peer (P2P) trading of crypto assets. As the name implies, peer-to-peer is a marketplace which links the buyers and sellers of crypto assets. Most of the time, decentralized crypto exchanges are non-custodial that means traders oversee their digital wallet private keys. A private key is explained as an advanced encryption which allows users to access their accounts. Traders can easily login to their digital wallets with these private keys. No personal information is required when you are signing up on any decentralized crypto exchange which is a huge plus point to this kind of exchange. 

Crypto market advancements that resolved liquidity-related issues like automated market makers derived a vast number of user engagement to the DeFi (decentralized finance) space and hugely added value to its popularity. With their token prices, swap fees and slippage, and a better rate time these crypto coin exchanges have fueled the market. 

Advantages Of Using DEX Crypto Exchanges

The fee structure of best crypto exchanges may vary from network to network but, there are numerous upsides of using DEX platforms. Some of the key benefits of best crypto exchanges for peer-to-peer trading are mentioned below.

Token Availability

On any common centralized exchange like Binance, they must vet digital assets and make sure that they adhere to local regulations before supporting them. Whereas the decentralized crypto coin exchanges can offer support to any crypto asset minted on the blockchain they are developed on. This means that any new projects can easily list on these best crypto exchanges before being accessible to their centralized counterparts.

With the wide opportunity for new projects comes the threat of fraud and thefts as anyone can list a project easily. There is a very common fraud termed as a “rug pull,” where the development team behind a project dumps their crypto asset. When their price goes up, the asset that was being used to add liquidity on that specific DEX exchange pools is dumped making it impossible for other trades to sell. Therefore, run some credit checks before trading on these kinds of this crypto coin exchanges

Competitive Rates

Mostly, decentralized crypto exchanges are cheaper as compared to any centralized exchange. The centralized crypto exchanges charge more as they must bear additional costs for facilitating the transactions and maintaining the system to provide secure and dedicated wallet services to the users. The usage of smart contracts on crypto coin exchanges makes many complicated operations on the DEX exchange self-regulated and automated.

Anonymity 

The best thing about DEX crypto exchanges is that when traders make a trade, their anonymity is preserved on these platforms. Moreover, on a DEX exchange the users do not need to go through a standard identification process known as Know Your Customer (KYC).

This process includes gathering users’ personal information such as their full legal name, photograph, and their national identity card issued by the government. Therefore, DEXs compels a respectable number of users as people are more into security and anonymity these days.

Reduced Security Risks

Advanced crypto traders can manage their funds on their own with these DEX crypto exchanges. They are at a reduced risk of being hacked as these exchanges have the custody of their crypto assets. On the contrary, the users safeguard their funds and only make contact with the trading platform when they want to. In case there is a hack or system failure, only liquidity providers may be at risk.

To make sure that there are no other risks while using DEX crypto exchanges, you can conduct an in-depth search on the exchange’s smart contracts, if they have been audited and then decide based on your findings.

Conclusion

The idea behind decentralized crypto exchanges is quite unique and benefiting for traders around the globe. The best aspect of best crypto exchanges for peer-to-peer trading includes their security, anonymity, no KYC, asset support, and competitive rates. So, in the vast arena of blockchain technology, DEXs (decentralized exchanges) are something very natural and possess an immense potential.

 

 

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