What it means
Decentralised exchange: smart contracts that let you trade tokens straight from your own wallet, with no company holding your money.
You keep custody until the moment of the trade, and the trade settles in one transaction: either both tokens change hands, or nothing happens.
How it works
Most DEXes are automated market makers. Instead of matching buyers with sellers, they keep pools of two tokens, supplied by liquidity providers, and set the price from the ratio between them. Uniswap and Curve work this way. Others run an order book onchain, like a classic exchange.
The bigger the trade compared with the pool, the more it moves the price; that's price impact. The price can also move between sending and confirming; that's slippage, and you set how much you accept.
A DEX needs no account and no identity check, and anyone can list a token on it. That's also a risk: fake tokens with real names are common, so check the token's contract address.
Rates depend on each pool's liquidity, which is why aggregators compare many DEXes at once and split a trade between them for the best rate.
When you exchange between digital euros and dollars in Defied, the trade is routed through onchain liquidity and settles in your own wallet. The rate and our fee show before you confirm, and fees are on our Fees page.
Related terms
| Term | What it means |
|---|---|
| AMM | Automated market maker: a DEX that prices trades with a formula over a pool of tokens, instead of matching buyers and sellers. |
| CEX | Centralised exchange: a company that runs a trading platform and holds your money while you use it, such as Coinbase or Binance. |
| Aggregator | A service that checks many exchanges at once and routes your trade through the one, or the mix, with the best rate. |
| Slippage | The difference between the rate you see and the rate you get, because the price moved before the trade settled. |
This glossary explains terms in general. It isn't investment, tax or legal advice.