Decentralized Exchanges Introduction
DEXs let you trade crypto directly from your wallet without intermediaries.
How DEXs Differ from CEXs
Centralized Exchanges (CEX)
Company holds your fundsOrder book matchingKYC requiredExamples: Coinbase, BinanceDecentralized Exchanges (DEX)
You keep your fundsAutomated Market MakersNo account neededExamples: Uniswap, SushiSwapAutomated Market Makers (AMMs)
Instead of order books, AMMs use:
Liquidity Pools
Paired tokens (e.g., ETH/USDC)Provided by usersEarn fees from tradesConstant Product Formula
```
x * y = k
```
x = amount of token Ay = amount of token Bk = constant valueMaking a Swap
Connect wallet to DEXSelect tokens to tradeEnter amountReview price impactApprove token (first time)Confirm swapTokens arrive in walletKey Considerations
**Slippage**: Price change during transaction**Price Impact**: Your trade moving the price**Gas Fees**: Network costs for transaction**MEV**: Bots that may frontrun trades