A [[DEX|decentralized exchange]] ([[DEX]]) is a type of cryptocurrency exchange that operates on a decentralized network, typically utilizing blockchain technology. Unlike traditional centralized exchanges, which rely on an intermediary to facilitate the trading process and hold users' funds, DEXs allow users to trade directly with each other without the need for a centralized authority. In a DEX, trades are executed through smart contracts or protocols that run on the blockchain. These smart contracts enable automated order matching and settlement, ensuring transparency and immutability of transactions. As a result, users have more control over their funds as they retain ownership throughout the trading process. Decentralized exchanges offer several advantages over centralized exchanges. They eliminate the risk of hacks or thefts from a single point of failure since funds are not held in a central repository. Additionally, they often have lower fees as there is no need for intermediaries. DEXs also provide increased privacy since users do not need to disclose personal information. However, DEXs also face certain challenges compared to centralized exchanges. They may have lower liquidity due to the absence of market makers and limited user adoption. The speed and efficiency of transactions can also be slower due to the reliance on blockchain consensus mechanisms. Despite these challenges, decentralized exchanges have gained popularity within the cryptocurrency field as they align with the principles of decentralization and offer enhanced security and privacy features for users.