Decentralized exchanges (DEXs) like the Uniswap Protocol are a cornerstone of DeFi, offering users access to a vast selection of tokens and facilitating billions of dollars in monthly trades. DEX users enjoy the simplicity of connecting a wallet and swapping, which can feel like a stark contrast to the often complex process of getting started with centralized exchanges.
What is a DEX?
A decentralized exchange (or DEX) is a peer-to-peer marketplace that allows users to swap crypto assets without an intermediary.
Note on the term “exchange”: while these platforms are commonly referred to as "decentralized exchanges," they aren’t exchanges in the traditional sense. Instead of being a centralized entity that matches orders and holds custody of funds, a DEX is a set of smart contracts that facilitates direct, peer-to-peer crypto swaps. This industry term helps distinguish these protocols from centralized exchanges.
Decentralized exchanges (DEXs) are a popular category of onchain apps and are mainly used for swapping crypto.
Centralized vs. decentralized exchanges
While DEXs and centralized exchanges both allow users to swap assets, they operate in fundamentally different ways. These are the main features that set them apart:
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Centralized exchanges operate similarly to brokerages or banks, which custody your funds and assets, curate which assets can be traded, and may cap the daily trading volume of individual customers.
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Decentralized exchanges offer users much more control and autonomy. DEXs do not custody user assets, nor do they set a volume limit on funds that can be swapped. They also provide access to a wider range of tokens for users to swap. And unlike a centralized exchange, which handles trades on the user’s behalf, crypto-to-crypto swaps on a decentralized exchange execute via smart contracts. This key feature enables users to swap without an intermediary to actually facilitate trades.
So while decentralized and centralized exchanges both give users access to crypto, they have different underlying processes and offer users vastly different experiences.
What are the benefits of using a DEX?
Decentralized exchanges attract a diverse range of users, from individual traders to institutional firms. DEXs offer several key benefits, including:
- Tokens: DEXs offer a wide range of tokens for swapping. In contrast, centralized exchanges often have a more limited selection of tokens
- Control: DEX swappers retain custody over the funds in their wallets. Any assets acquired through a swap are sent directly to the user’s wallet, rather than being custodied by an intermediary.
- Support for Chains: DEXs frequently support a wider range of blockchains than centralized exchanges.
- Access: Because DEXs are smart contracts and not centralized intermediaries, DEXs don’t experience outages.
Given these advantages, crypto trading volume on decentralized exchanges has climbed steadily in recent years, now reaching billions of dollars in daily swaps.
Types of DEXs
Decentralized exchanges take different approaches to pricing and execution, but they all rely on smart contracts to settle trades onchain. Three models are common today:
- AMMs (automated market makers): Instead of matching buyers and sellers, AMMs like the Uniswap Protocol use liquidity pools funded by users. Swaps move tokens in and out of these pools, and the pool’s formula updates the price on a continual basis.
- Order book DEXs: These work more like traditional exchanges. People place bids and asks, and trades happen when orders line up. It’s familiar, but it depends on fast, affordable networks to feel smooth.
- Aggregators and intent-based routers: Rather than relying on a single token pool, aggregators like UniswapX look across many liquidity sources at once. Users express an “intent,” and the protocol finds a path that can get it done efficiently.
How to swap on a DEX
To complete a swap on a DEX, you’ll need a crypto wallet, assets you’re ready to swap, and enough of the blockchain's native token to cover transaction fees (e.g., ETH if you’re using a DEX on Ethereum).
Next, you’ll need to choose a DEX to use. Many DEXs (including the Uniswap Protocol) are accessible on a web interface or a mobile app that makes swapping simple.
Regardless of the platform you use, most DEXs follow the same five steps:
- Connect your wallet
- Choose your input token
- Choose your output token
- Select the amount to swap
- Confirm your transaction
For a detailed explanation of these steps, visit our guide to crypto swaps.
Make your first DEX swap with Uniswap apps
The Uniswap Protocol is DeFi’s leading decentralized exchange, processing more than $4 trillion all-time swap volume and trusted by millions of swappers worldwide. Everyone from beginners to experienced traders can connect their wallets to explore a wide range of tokens and seamlessly swap using the Uniswap Web App or Wallet.
- Unmatched Track Record: The Uniswap web app and wallet are some of the most used apps in crypto.
- Expert Support: Our New York-based customer experience team is here to answer questions 24/7, or you can visit our Help Center to find a library of resources to help you navigate DeFi.
- Seamless UX: Connect your wallet and start swapping instantly.
Go direct to DeFi. Connect your wallet today to swap using the Uniswap Web app — or get started by downloading Uniswap Wallet on your mobile device.
DEX FAQs
What is a decentralized exchange (DEX)?
A decentralized exchange (DEX) is a peer-to-peer platform enabled by smart contracts that lets you trade crypto directly from your own wallet.
How is a DEX different from a centralized exchange?
DEXs enable peer-to-peer trading thanks to smart contracts, which can make it possible to conduct transactions permissionlessly. DEXs also do not require users to give a centralized exchange custody of your funds.
What are the main types of DEXs?
The main types of decentralized exchanges are automated market markers (AMMs), order book DEXs, and DEX aggregators.
