DEXs are very complicated smart contracts with very basic goals: to provide liquidity to anybody who wants to trade cryptocurrency. Uniswap, the most popular DEX, is developed solely on the Ethereum blockchain. Uniswap is a decentralised trading platform for cryptocurrency users who want to exchange Ethereum-based tokens.
DEXs offer many key advantages over centralised exchanges. They also provide “yield farming” opportunities to investors, which are opportunities to allow decentralised swapping or trading of digital assets in exchange for a small fee. And the smart contract code (Uniswap is built on Solidity) is open and transparent, enabling crypto natives to simply check the code rather than depend on the solvency of a centralised business.
Some basic advantages of DEXs are given below:
- It provides security.
- It provides privacy.
- It provides sovereignty.
DEXs are valued for providing increased privacy, stronger security, and more user control to digital asset owners.