decentralized exchange

Phonetic: /diːˈsɛntrəˌlaɪzd ɪksˈtʃeɪndʒ/

Part of Speech: noun

Category: To be determined

A decentralized exchange (DEX) is a platform for exchanging cryptocurrencies based on functionality programmed on the blockchain (i.e., in smart contracts). If cryptocurrency is web3’s monetary system, its financial system is DeFi.

Definition source: Consensys Software Inc., A Blockchain Glossary for Beginners

Sample sentence

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Additional definitions

An exchange which does not require users to deposit funds to start trading and does not hold the funds for the user.

Source

Extended definition

This includes familiar concepts like loans and interest-bearing financial instruments, as well as so-called “DeFi primitives”, novel solutions like token swapping and liquidity pools. The trading is peer-to-peer, or between pools of liquidity. This is in contrast with a centralized exchange, which is more akin to a bank or investment firm that specializes in cryptocurrencies. Additionally, there are so-called on-ramp providers, who could be compared to currency brokers, exchanging traditional “fiat” money for cryptocurrencies, and do not hold customer’s funds “on deposit” the way a centralized exchange does. There are important technical and regulatory differences between these, which are constantly evolving.

This word came from... the ether

Date first recorded: 2025-01-31

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