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Blockchain
What is Decentralized Exchange?
A cryptocurrency exchange that operates without a central authority, allowing peer-to-peer trading without KYC requirements or custodial risk.
Also known as: DEX
DEXs enable cryptocurrency trading without trusting a central company with your funds or identity.
How They Work
- Smart contracts handle trade execution and settlement
- Users trade directly from their wallets
- No account registration, email, or identity verification
- Funds never leave user custody (no "exchange wallet")
Privacy Benefits
- No KYC/AML requirements on most DEXs
- No account linking your identity to your trades
- No centralized database of trading activity to be hacked or subpoenaed
Popular DEXs
- Uniswap: Largest Ethereum DEX
- dYdX: Derivatives trading
- THORChain: Cross-chain swaps
- Bisq: Bitcoin/fiat trading without intermediaries
Limitations
- Trading on public blockchains (Ethereum) means trades are publicly visible
- Privacy coins on DEXs provide the best privacy combination
- Front-running (MEV) is a risk on transparent blockchains
- Liquidity can be lower than centralized exchanges
Related Terms
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