Insurgency s growing among the people. Now they want autonomy in every matter. They no longer prefer a third party in their affairs. They want a system that they have complete control over, which is entirely secure and independent also.
Crypto was a step towards a non-central or decentralized system, and decentralized exchanges are also linked in the same chain. If you are curious about how a system without any central control can work? You are at the right place. We are going to discuss all decentralized Exchanges in this article.

What Are Decentralized Exchanges?

Before going towards exchanges, let’s shortly understand decentralization or decentralized system. In a decentralized system, there is no central or single authority to make decisions for the whole system. There is a contribution of every member of that community in taking any decision. This system does not fail until one member is working, although other all members got failed. In this system, access to data is faster than any other system.

Decentralized crypto exchanges, also called DEXs, are an alternative to traditional centralized exchanges. This plate form does not depend on any company, person, or service; instead of that all transactions or trading are controlled through an automated process without any central hub.

There is no need to transfer funds into the exchange before the execution of trades in these exchanges. In these exchanges risk of hacking is minimum. They also prevent price manipulation and reduces the chances of washing your account due to fake volumes.

Unlike centralized exchanges here, your actual asset never goes in the hands of any third party or interrupter. Your funds directly go towards a person with whom you are trading directly. According to experts, DEXs are bringing a new level to crypto markets.

Types of DEXs

Decentralized exchanges are mainly divided into three different types

• Automated market maker DEXs
• Order books DEXs
• Aggregators DEX
All these allow traders to trade independently.

Automated market makers

This type of exchange watches trades and provides an automated system to ensure that orders meet correctly. All this work is completely automated using intelligent contracts protocols and self-executing computer programs.

For example, a trader wants to sell an Ethereum for $4000, the role of an automated market maker or AAM is to match this with a person willing to buy it for $4000. In this system, besides any company or big traders, a small individual can also provide liquidity as long as it meets the market’s requirements.

Order books DEXs

An order is a book/file having all the buy and sell orders compiled in a single place. The average difference in sell and buy prices is market prices.
In these types of exchanges, the trader can place an order. They may trade if he finds a trade according to his desire, and order is present in order books. By seeing order books, one can also predict the market—Specially the sport and resistance level.

DEXs Aggregators

DEXs aggregators are protocols that traders can trade a wide range of trading pools via one single dashboard. Traders love these aggregators because they provide massive liquidity in the market. If someone wants to take a good position in the market these aggregator helps you to take a position with a huge amount.

Top decentralized exchanges

It is pretty worth choosing an exchange. Choosing exchange matters a lot in the whole trading. Here are names and a few explanations of good exchanges.

1-Pancake Swap

Pancake swap is considered a more extensive and famous decentralized crypto exchange according to market capitals. It is built on Binance smart chain, a blockchain built by the Binance crypto exchange.

It is built on Automated Market Maker (AAM) system. Furthermore, it relies on users to provide liquidity. As Binance itself is a centralized exchange, it does not operate PancakeSwap. It also allows stacking of some coins like its native coin Cake.

2-DYdX

DYdX is a decentralized exchange based on an order book system. It was launched in 2017. It was built on Ethereum’blockchain or Ethereum smart contract.

 Furthermore, it offers different types of trading like spot, margin, lending, and borrowing. Its founder Antonio Juliano believes that the order book system is more efficient than AAM. He also gave so much logic in defence of his argument.

3-Uniswap

Uniswap is also one of the largest decentralized Exchanges. It was built on the etheriumblockchain. It was one of the first Defi. It allows traders to trade from worldwide. It was built in November 2018. Its weekly trading margin is ten billion$ plus at the time of writing. Liquidity pools are also offered by uni swap. By supplying tokens on these pools, suppliers can earn interest.

Benefits of DEXs

No verification needed

There is no need for the verification of decentralized crypto exchanges. Users can use it without verifying its identity or KYC.

No middleman
There is no risk of involvement of a third party. All trading is done directly between traders. There is no need of funding your account before trading.

Low hacking risk
The risk of hacking is almost null in DEXs. The system is completely safe and secure.

Real trades
They minimize the chance of manipulating markets. As all transactions are done peer-to-peer, there is no chance of fake manipulation

Token launching ease
Anyone can launch tokens on decentralized exchanges quickly. It’s difficult to launch a token on centralized exchanges.

Drawbacks of decentralized exchanges

Complex system
It is a complex system. It’s complimentary to safe, private keys and passwords. If you lose them, recovery is impossible. And its using system is not as frequent as centralized exchanges.
Only crypto payments
They don’t offer fiat payments. In DExs, all payments are made with crypto.
Liquidity issues
There is no proper channel for providing liquidity. Sometimes it’s difficult to find liquidity in your desired pair.
Transaction speed
Transaction speed is also a problem. Their transaction speed is lower than centralized exchanges.
Fake tokens
Another issue is fake tokens. As anyone can launch tokens on it. Some groups launch their token, sell it at a high price, and then it is dumped. To prevent this, a bit of research is needed before investing.