What is a DEX? | Cryptocurrency Glossary

Highly Flexible Decentralized Exchanges (DEXs)

Exchanges for buying and selling cryptocurrencies such as Bitcoin include centralized exchanges and decentralized exchanges; the latter are referred to as DEX (short for Decentralized Exchange).

Centralized exchanges are the most common type of cryptocurrency exchange and can be thought of as similar to brokerage firms in the stock market.

Since you deposit your crypto assets into the wallet of a centralized exchange, there is a risk of being hacked and losing your assets if security measures are inadequate.

In contrast, a DEX exists on the blockchain itself. You manage your crypto assets (virtual currencies) in your own wallet and use the platform only when you want to buy or sell.

Since you manage your private keys yourself and do not entrust management to the exchange, you can minimize the risk of hacking under your own responsibility and avoid the risk that centralized exchanges are more vulnerable to hackers.
However, with DEXs, fees are charged for each transaction, so costs tend to be higher.

Additionally, since most users currently use centralized exchanges, there are disadvantages such as low trading volume—making it difficult to sell at the desired price—and transactions not being executed immediately, even when you want to buy or sell.