Trading on decentralized exchanges (DEXs) surged to over $3.25 trillion last year, reflecting a shift towards safer trading due to the collapse of large centralized exchanges like FTX. This rise underscores a growing preference for non-custodial solutions that allow users to maintain control over their assets. However, trading on DEXs presents challenges such as market making and liquidity management. While benefits include global access and reduced risk of centralized hacks, understanding DEX mechanics is critical for traders as they navigate these platforms.
Trading volume on decentralized exchanges (DEXs) reached over $3.25 trillion due to heightened demand for safer alternatives to centralized exchanges (CEXs) after recent collapses.
The narrative of self-custody and financial sovereignty gained momentum, which saw unprecedented outflows of coins such as Bitcoin from centralized exchanges.
Despite these advantages, trading on DEXs presents challenges like liquidity, latency, and market making, all of which influence potential trading efficiency.
Automated Market Makers (AMMs) are intrinsic to DEX functionality, allowing users to trade without a traditional order book, enhancing accessibility in the crypto space.
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