Decentralized Exchange
A trading venue built from smart contracts where people trade directly from their own wallets without handing assets to a company.
Most decentralized exchanges use an automated market maker: pooled assets and a pricing formula replace a matching engine, and the swap settles on the blockchain in the same transaction that submits it. Some run an order book on chain or keep the book off chain and settle matches on chain. There is no account, no deposit, and no withdrawal queue, but the user pays network fees and can lose a transaction to congestion or to a price move beyond the slippage tolerance set in the interface. Listing is usually permissionless, which means anyone can create a market for any token, including a worthless or malicious one.
In practice
Uniswap popularized the automated market maker model on Ethereum, where a swap executes against pooled reserves rather than against another trader's resting order.
The common misunderstanding
A decentralized exchange removes custody by a company, not risk: smart-contract bugs, malicious token contracts, and shallow pools remain.
The figure this maps to
The dollar value of tokens swapped through decentralized exchange contracts over the last 24 hours.
Limits: Wash trading is the central defect: wherever a venue, a chain or a prospective airdrop rewards volume, participants trade against themselves and the contracts record it as genuine, with no surveillance function able to exclude it. Aggregators and routers create double counting when a single order…