Decentralized exchanges (DEXs) are cryptocurrency exchanges that allow users to trade cryptocurrencies directly with each other without a central authority. They are considered to be safe and secure because they don’t have custody of users’ funds or assets, and they use smart contracts to protect transactions. However, there are some risks associated with DEXs, including faulty smart contracts.
Here are some more details about DEXs:
How they work
DEXs use non-custodial wallets, which means users retain control of their funds and private keys. Transactions are powered by algorithms and smart contracts, which are automatically executed if there are any violations.
Benefits of DEXs
DEXs offer inherent privacy and security, and users don’t need to transfer their assets to a third party.
Risks associated with DEXs
One risk is faulty smart contracts, which can be exploited by malicious actors to steal users’ funds.
Disadvantages of DEXs
DEXs may not offer advanced features like margin trading or limit orders. Transactions can also be slower than centralized exchanges (CEXs) because they are processed on-chain.
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