A decentralised exchange (DEX) is a program on a blockchain where people swap one crypto for another. No company takes your money or holds it. You connect your own wallet, and the trade happens directly on the blockchain. Decentralised exchanges are part of DeFiDeFi (decentralised finance)Financial services, such as lending, saving and trading, that run on smart contracts on a blockchain instead of through a bank or other middleman., decentralised finance.
How does a decentralised exchange work?
Instead of a company, smart contractsSmart contractA program that runs on a blockchain and automatically carries out what it was written to do once certain conditions are met. handle the trades. Most DEXs use liquidity poolsLiquidity poolA shared pot of tokens held in a smart contract, which people trade against on decentralised exchanges. Those who fund it earn a share of the fees., which other users fill with crypto. When you swap, say, ether for USDC, you put ether into the pool and take USDC out. The price depends on the ratio between the two coins in the pool. Uniswap on Ethereum is a well-known example.
You pay a network feeNetwork feeA fee paid to a crypto network, not to a bank or company, for including your transaction in a block. to the blockchain network, and usually a trading fee that goes to the people who put crypto into the pool.
Benefits and risks
Your crypto is kept in your own wallet, so no middleman can freeze it or lose it in a bankruptcy. The flip side is that all the responsibility is yours. If you connect your wallet to a fake website or approve the wrong transaction, nobody can reverse it.
Anyone can create a token and list it on a DEX, so scams such as the rug pullRug pullA scam where the people behind a new token or crypto project collect money from buyers and then vanish with it, leaving the token worthless. are common. MiCA doesn't cover services provided in a fully decentralised way without an intermediary, so you don't get the same protection as with a licensed provider.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.