10 Best Decentralized Exchanges (DEXs) in 2025

Decentralized exchanges (DEXs) offer an anonymous and non-custodial trading experience. No account is needed; connect a self-custody wallet and immediately swap cryptocurrencies.

When considering centralized vs. decentralized crypto exchanges, there’s a number of elements you need to take into account. For instance, unlike centralized platforms, there’s little counterparty risk when trading on reputable DEXs. This is because smart contracts and decentralized liquidity pools execute trades. These automated processes ensure that trades on are carried out securely and transparently, reducing the chance of fraud or default by any individual party.

But what are the best platforms for DEX trading in 2025? This guide reveals the leading DEXs for Bitcoin, Ethereum, Solana, and other popular networks. Read on to choose a reliable and secure DEX with low fees and a great user experience.

There are some great DEXs out there for crypto traders, as you’ll see below.

Best Decentralized Exchanges for 2025: Detailed Reviews and Analysis

Detailed reviews of the best decentralized crypto exchanges can be found below. From platforms with the best DEX wallets to aggregators and cross-chain bridges, I explore everything DEX traders need to know. This includes supported chains and cryptocurrencies, fees, security, user-friendliness, and core features.

1. Best Wallet – The Overall Best DEX With Multi-Chain Trading and Non-Custodial Storage

Look no further than Best Wallet when selecting a DEX. In a nutshell, Best Wallet is primarily a non-custodial wallet that supports over 60 blockchain networks and thousands of tokens. This includes everything from XRP, Avalanche, and Bitcoin to Ethereum, Cardano, Solana, and Arbitrum.

That said, Best Wallet doesn’t only present the best DEX wallet; it also comes pre-installed with a native DEX that connects to dozens of liquidity pools. This means Best Wallet secures the best available price for the cryptocurrencies you want to trade. What’s more, Best Wallet doesn’t charge commissions or markups. The quoted exchange rate is the price you pay. This ensures cost-effectiveness and transparency.

No account or personal information is needed — DEX trades are executed instantly via smart contracts. The purchased cryptocurrencies are immediately added to the wallet balance. Best Wallet comes as a mobile app for iOS and Android, although a desktop version will be launched soon. Other features include staking, portfolio management, and token analysis. Also, as I explain below, the brand also provides the best DEX aggregator. With all these handy features, it’s not hard to see why this platform offers the best DEX exchange services out there.

Pros

• The overall best decentralized exchange
• Backed by one of the best decentralized crypto wallets
• Supports thousands of tokens on over 60 networks
• Comes as a user-friendly app for iOS and Android
• Traders get the best prices via external liquidity pools

Cons

• The desktop version is still being developed
• Does offer perpetual futures

Visit Best Wallet

2. Exodus – Trade Thousands of Cryptocurrencies Directly From a Secure Self-Custody Wallet    

Exodus is a trusted self-custody wallet that also offers decentralized trading. It comes as a native app for iOS and Android, plus desktop software for Windows, Mac, and Linux. Exodus supports thousands of cryptocurrencies, ranging from Bitcoin and Solana to BNB, XRP, and Ethereum. Custom tokens can be added from over 50 blockchains.

Exodus’ DEX leverages the aggregator model, meaning it obtains prices from external liquidity pools. This means that Exodus wallet fees are perennially manageable. It takes seconds to trade cryptocurrencies and exchange rates are transparently displayed before proceeding. There’s no requirement to leave the wallet interface either. The purchased cryptocurrencies are transferred to the Exodus wallet balance.

Another benefit is that Exodus connects to Trezor, a leading hardware wallet. This offers an additional layer of security compared to other exchanges, especially for those trading large amounts. Alternatively, Exodus is also compatible with decentralized applications (dApps) so you can interact with standalone DEXs like Uniswap and Pancakeswap. This opens the doors to staking and other DeFi offerings. With so many advantageous qualities, it’s no wonder that Exodus is one of the best DEX platforms 2025.

Pros

• Trade and store thousands of crypto assets in one safe place
• Available on multiple device types and operating systems
• Prices are obtained from leading liquidity providers
• Connects with popular dApps from multiple networks
• Trusted by millions of traders since 2015

Cons

• It isn’t an open source DEX exchange like other self-custody wallets
• Doesn’t come with multi-sig or 2FA security

Visit Exodus

3. AlphaX – One of the Best Options for Trading Leveraged Perpetual Futures 

AlphaX has revolutionized the DEX industry; it enables traders to speculate on perpetual futures while remaining on-chain. This means traders can buy and sell leveraged digital assets without using centralized order books. The leverage limit is 125x, converting to $125,000 for every $1,000 staked.

What’s more, AlphaX supports some of the best cryptocurrencies to buy, including large caps like Bitcoin, Solana, Ethereum, and Cardano. Decentralized perpetual futures are also offered on meme coins. This covers everything from FLOKI and Shiba Inu to Dogecoin. Unlike many decentralized exchanges, AlphaX offers comprehensive trading tools and analysis features.

For instance, traders can execute market, limit, and trigger orders. The pricing chart integrates with TradingView, covering drawing tools and over 100 technical indicators. AlphaX offers a fully anonymous and secure trading experience. Safety features include two-factor authentication (2FA) and on-chain transparency via layer-2 networks.

Pros

• The best DEX for trading perpetual futures
• Supports a huge range of markets
• Enables traders to go long or short
• Trade cryptocurrencies with 125x leverage
• Offers a private and anonymous experience

Cons

• Likely not suitable for inexperienced traders
• Doesn’t support options trading

Visit AlphaX

4. OKX – Trusted DEX and Bridge Aggregator Connecting to 400+ Liquidity Providers

OKX, the popular spot trading and derivative exchange, is also one of the best DEXs in the market. It operates an aggregator model, meaning it is one of the top liquidity providers around, counting over 400 external ones that it connects with. Traders get the most competitive prices in real time. This almost always works out cheaper than using a standalone DEX platform.

What’s more, OKX has also developed a cross-chain bridge. This supports over 100 blockchain networks, ranging from Litecoin, Bitcoin Cash, and Ethereum to Cronos, Dogecoin, and Zcash. It also makes cross-network swaps seamless and cost-effective. For instance, you can instantly swap BONK (on the Solana network) for Pepe (on Ethereum) — or Mochi (on Base) for BNB (Binance Smart Chain).

OKX doubles as a non-custodial wallet with MPC (Multi-Party Computation) security. It comes as desktop software for Windows and Mac and a mobile app for iOS and Android. Browser extensions for Chrome are also supported. OKX is also a great choice for DeFi (Decentralized Finance) features, including staking and liquidity farming. These are just some of the reasons why it has made our hottest decentralized exchange crypto list.

Pros

• Connects with over 400 DEX liquidity providers
• The best available rates are sourced in real-time
• Offers a cross-chain bridge for over 100 networks
• Doubles up as a non-custodial wallet
• MPC security offers a safe user experience

Cons

• Suitable liquidity won’t always be available on micro-cap tokens
• Doesn’t offer a browser extension for Firefox

Visit OKX

5. Changelly – A Beginner-Friendly and Anonymous Exchange Supporting 500+ Cryptocurrencies   

Changelly is one of the top decentralized exchanges for beginners. It offers a simple user experience that will appeal to first-time DEX traders. This brand doesn’t leverage automated market makers (AMMs) like other DEXs. Instead, Changelly aggregates liquidity from centralized and decentralized platforms. This hybrid model often results in industry-leading pricing.

Moreover, Changelly supports over 500 cryptocurrencies. This includes some of the best altcoins, including Stellar, BNB, Dogecoin, Cardano, Ethereum, and Chainlink. Bitcoin, and a full range of stablecoin trading options, are also supported. Traders can swap cryptocurrencies on any compatible chain. Such actions don’t require a bridging tool, meaning fees are super competitive.

Instead, cross-network trades are conducted manually via wallet transfers. For example, suppose you’re trading XRP for Litecoin. You’d transfer XRP to Changelly, and provide the receiving Litecoin wallet address. The Litecoin will be transferred to the wallet once Changelly receives the XRP. Trading commissions cost 0.25%.

Pros

• One of the best crypto swap sites for beginners
• Trade over 500 cryptocurrencies from multiple blockchains
• No additional fees when making cross-network swaps
• Transparent trading commission of 0.25%
• Obtains liquidity from over 20 trading platforms

Cons

• Trades can take up to 40 minutes to complete
• Lacks advanced analysis tools for seasoned traders

Visit Changelly

What is a Crypto DEX and How Do They Work?

If you’ve often wondered how to buy crypto on decentralized exchanges, this section of the article has you covered. By this point in time, you know that decentralized exchanges allow users to trade cryptocurrencies. However, unlike centralized exchanges, such as Binance and Coinbase, trades are executed via the blockchain network using decentralized protocols. This means traders can remain on-chain, and swaps are facilitated by smart contracts.

In turn, decentralized exchanges never hold client-owned cryptocurrencies, which removes the counterparty risk. For example, consider that FTX filed for bankruptcy in 2022. Billions of dollars in customer funds were subsequently mishandled, resulting in significant and life-changing losses. These risks aren’t prevalent when using a decentralized exchange.

The DEX process is as follows:

• First, users connect a private wallet to the decentralized exchange. This removes the need to open an account, provide any personal information, or complete a KYC verification process.
• Next, the user decides which cryptocurrencies they want to trade. For example, suppose the connected wallet holds Ethereum, and the user wants to purchase Shiba Inu. This would require the ETH/SHIB liquidity pool.
• Ethereum is immediately swapped for Shiba Inu, and the purchased tokens are immediately added to the connected wallet.
• The user disconnects their wallet from the decentralized exchange, and the trade is complete.

Not only are decentralized exchanges a safer alternative to centralized platforms, but they’re also a great way to invest in new cryptocurrencies. This is because newly launched tokens often begin trading on decentralized exchanges before they’re added to mainstream platforms.

Additionally, there are various kinds of decentralized exchanges available today. Some platforms feature a native DEX, allowing trades to happen without the need for third-party liquidity pools. Instead, native DEXs utilize the Automated Market Maker (AMM) model, which updates prices in real-time based on volume, market cap, and other data metrics.

Some decentralized exchanges operate on the aggregator model. This means they source cryptocurrencies from outside liquidity pools. Because of this, you frequently receive better pricing since pools are selected based on current exchange rates. Additionally, there are decentralized exchanges that provide leveraged derivatives like perpetual futures, delivery futures, and options.

Advanced users may also take advantage of cross-chain DEXs, which enable the swapping of assets between different blockchains without the need for a centralized bridge or intermediary. Additionally, many leading DEXs now support features like limit orders, staking integrations, and governance token voting—giving users more control over their trading environment. As innovation accelerates, DEXs continue to close the gap with CEXs in terms of functionality while maintaining superior privacy and decentralization.

Types of Decentralized Exchanges: Which Option is Best?

Let’s take a closer look at the different types of decentralized exchanges. This will help you choose the best DEX for your trading goals and experience level.

Whether you’re seeking lower fees, deeper liquidity, or multi-chain access, each type of DEX exchange offers a unique benefit depending on your specific needs. Understanding these distinctions is essential for building an efficient crypto trading strategy.

Native DEX

Some decentralized exchanges offer a native trading experience. Uniswap is a great example of an Ethereum exchange. Uniswap is built on the Ethereum blockchain, so it supports thousands of ERC-20 tokens. Anyone can provide Uniswap with liquidity, allowing investors to earn passive income on idle wallet balances.

For example, suppose an investor holds Ethereum and USDC. They would add equal amounts of ETH/USDC to the Uniswap liquidity pool. Whenever someone uses that liquidity pool to trade, the investor receives a small percentage of the trading fees.

Other notable native DEXs include PancakeSwap for Binance Smart Chain, Trader Joe for Avalanche, and Raydium for Solana. Each native DEX typically aligns with the underlying blockchain’s ecosystem, offering better liquidity and lower fees for native tokens.

For traders focused on a specific chain, using its corresponding native DEX often provides the most efficient and cost-effective experience. Native DEXs also tend to offer governance tokens, giving users voting rights on platform upgrades and fee structures.

Such governance mechanisms can empower users to influence key protocol developments, such as liquidity rewards, staking opportunities, and fee models—enhancing community ownership in the DeFi landscape.

DEX Aggregators

Another popular way to trade cryptocurrencies is via DEX aggregators. Some of the leading examples include Best Wallet, OKX, and Exodus. These platforms partner with hundreds of external liquidity providers, including native DEXs like Uniswap, PancakeSwap, Jupiter, and Raydium.

Users fill out the DEX trading form, selecting which cryptocurrencies they want to swap and the amount. The DEX aggregator will immediately evaluate the best exchange rates from its partnered liquidity providers.

Multiple providers can be used for the same transaction if this makes pricing more competitive. For example, suppose you want to swap $5,000 worth of BNB for Chainlink. The aggregator might obtain $3,000 from one DEX and $2,000 from another.

This type of intelligent routing not only improves price execution, but also helps reduce slippage and optimize gas efficiency, especially for large trades or highly volatile assets.

Order Book DEX

A newer breed of decentralized trading leverages the conventional order book system. However, unlike centralized exchanges, order books remain on-chain. This model is particularly useful for trading derivative products such as perpetuals.

AlphaX is a great example. It’s an on-chain DEX that supports leveraged futures. Traders can go long or short with leverage of up to 125x. No account needs to be opened; traders simply connect a self-custody wallet and begin placing orders.

Since these platforms operate entirely on-chain, users maintain full custody of their funds while gaining access to advanced tools like limit orders, margin positions, and isolated leverage options.

Cross-Chain DEX

Cross-chain DEXs are another option to consider. You can find the best cross chain bridges in decentralized exchanges that support multiple blockchain standards, meaning traders can convert one cryptocurrency for another, even if they operate on different networks.

• For example, suppose you want to swap Bonk for Shiba Inu.
• These meme coins operate on the Solana and Ethereum blockchains, respectively.
• Cross-chain DEXs facilitate trades via bridging tools.
• Everything happens behind the scenes, meaning the DEX connects with Solana and Ethereum simultaneously and swaps the required tokens.

This offers a smooth and seamless user experience. Cross-chain functionality also allows traders to diversify their portfolios across multiple ecosystems without the need to move assets manually between different blockchains. As a result, users save significantly on time, transaction fees, and potential bridge risks.

Additionally, the best cross-chain DEXs often integrate liquidity pools from multiple chains, providing deeper liquidity and better price execution for less common token pairs. Traders can therefore gain access to a broader market, unlocking arbitrage opportunities and improving trade efficiency.

Finally, emerging technologies like zero-knowledge proofs and decentralized bridge protocols are being incorporated into next-generation cross-chain DEXs, offering even greater security and trustless interoperability between different blockchain networks. This evolution makes cross-chain DEXs a critical piece in the future of decentralized finance.

Non-Custodial Exchange

Non-custodial exchanges offer a similar user experience to DEXs. However, the process is slightly different. Changelly is a great example. Although Changelly is a centralized platform that operates off-chain, it still offers a decentralized experience for traders.

You don’t need to register an account or enter any payment information. Instead, trades happen through manual wallet transfers. For example, if a trader wants to exchange Bitcoin for Avalanche, Changelly creates a unique Bitcoin wallet address. The trader then transfers the coins and waits for the blockchain to confirm the transaction.

Then, Changelly automatically transfers Avalanche to the trader’s wallet. Cryptocurrencies are obtained from over 20 liquidity providers, including centralized and decentralized platforms. This often results in industry-leading prices and spreads.

Ranking the Best Decentralized Crypto Exchanges: My Methodology

CoinGecko data shows that over 850 decentralized exchanges are currently active. This can make it challenging to choose the right DEX.

My methodology explored the most important metrics, including security, supported networks, fees, liquidity, and security. I discuss these factors in more detail below.

Type of DEX

Traders should initially determine the type of DEX they want to trade on. For example, one of the most common options is to use an aggregator DEX like Best Wallet. Traders frequently get the best exchange rates, considering Best Wallet aggregates prices from hundreds of different liquidity pools.

Alternatively, you might want to trade on a standalone DEX that specializes in a specific network standard. Suppose you’re looking to trade meme coins on the BNB chain. In this case, you should consider PancakeSwap. Alternatively, if you’re more interested in Ethereum-based projects, check out Uniswap and SushiSwap.

That said, some DEX traders seek derivative products, especially those deploying short-term strategies. For example, scalpers and day traders can speculate on perpetual futures on AlphaX. Hundreds of leveraged markets are supported, and long and short positions can be entered.

Supported Networks

My methodology prioritized decentralized exchanges supporting the widest range of networks. This is ideal for diversification, as you can trade thousands of tokens from multiple blockchain ecosystems, all without leaving the DEX interface.

Once again, Best Wallet is a good option here. It supports over 60 blockchains, including Bitcoin, Ethereum, BNB Chain, Solana, Polygon, and Avalanche. Traders can buy and sell tokens from any of these blockchains at the best market rates.

Similarly, traders should also explore which specific tokens are supported. For example, Jupiter only supports cryptocurrencies from the Solana ecosystem. Conversely, AlphaX supports every crypto asset imaginable. This includes everything from Dogecoin and Aave to Ethereum, Filecoin, and Bonk.

It’s also worth noting that some DEXs offer seamless bridging tools, making it easier to swap assets across different chains without using a separate cross-chain platform. This streamlines the trading process and enhances capital efficiency, especially for DeFi power users.

Liquidity

Both centralized and decentralized exchanges need liquidity. However, liquidity sits at the heart of the decentralized exchange phenomenon. It’s important to note that liquidity levels represent a micro fraction of traditional spot trading exchanges.

• For example, consider that in the prior 24 hours, Uniswap, the largest DEX for Ethereum-based tokens, attracted $461 million in volume.
• In contrast, Binance, the biggest centralized exchange, facilitated almost $10 billion worth of volume over the same period.

As such, my methodology explored average liquidity levels when ranking DEXs. This is why aggregators were prioritized. As mentioned, aggregators partner with hundreds of different liquidity providers.

This means traders always have enough liquidity to trade, which translates to competitive pricing and wafer-thin spreads. It also reduces slippage risks. Conversely, DEXs with limited liquidity offer a subpar trading experience, leading to high slippage and volatile pricing swings.

On-Chain Only

As someone who values security and transparency in cryptocurrency trading, I also favor DEXs that operate 100% on-chain. This design means traders can buy and sell cryptocurrencies without relying on centralized order books. Instead, trades are executed via self-executing smart contracts directly on the blockchain network, a feature I find significantly increases both security and transaction transparency. This on-chain execution ensures that all transactions are recorded publicly and immutably, enhancing trust and verifiability.

Furthermore, the on-chain nature of these DEXs provides users with complete custody of their funds, eliminating the risks associated with holding assets on a centralized exchange. Because trades are peer-to-peer and governed by code, no intermediary could potentially be hacked or act maliciously. This direct interaction with the blockchain also often leads to greater censorship resistance, as no single entity can easily prevent or reverse transactions.

Core Features

Another important metric when choosing a DEX is whether any notable features are offered.

For instance, SushiSwap, known for ERC-20 tokens, enables traders to use a dollar-cost averaging strategy. This lets traders buy their preferred cryptocurrencies regularly in smaller amounts. For example, a trader might choose to invest $300 in Shiba Inu each week. This helps average the purchase price and lowers volatility risks.

Another top feature is decentralized exchanges that double up as non-custodial wallets. Best Wallet, OKX, and Exodus are good examples. They offer native wallet software for mobiles and desktops. This allows traders to buy and sell cryptocurrencies without leaving the wallet interface.

Some DEXs also come equipped with built-in portfolio trackers, real-time analytics, and tax reporting tools—features that help traders stay organized and compliant, especially during volatile or high-frequency trading sessions.

Anonymity

The best decentralized exchanges offer a private and anonymous experience. Unlike centralized platforms, users won’t be asked to open an account. Trades are conducted by connecting a self-custody wallet, ensuring personal details and ID documents will never be required.

This is a great benefit for traders based in countries where crypto trading is illegal or vastly restricted. DEXs are inclusive and never ask for the trader’s location.

How to Use a Cryptocurrency DEX: Step-by-Step Guide

Decentralized exchanges can be intimidating for first-time users. The good news is that once you know the basics, DEX trading is seamless. It rarely takes more than a couple of minutes to complete a trade.

I’ll now walk you through the step-by-step process, using Best Wallet’s DEX for the tutorial. However, the steps are much the same with most other DEXs.

Step 1: Get a Non-Custodial Wallet 

The first action step to working with a fully on-chain DEX, like the ones I use, is to get a non-custodial wallet. Vendors who run centralized exchanges have an account opening process they have created, whereas decentralized exchanges do not operate similarly. In decentralized exchanges, your non-custodial wallet is your passport and interaction with the DEX. This is significant because it gives you full control over your private keys and, therefore, your digital assets. As a user, I want complete control over my security, and I hope you do, doo.

Some platforms, such as Best Wallet, are both a DEX and a secure wallet app. They do include both functions within the same interface on iOS and Android and present a seamless experience. I can also understand the user experience some may like to maintain, separating their wallet from the DEX they are using. There is nothing wrong with the starting point of reviewing and applying oversight to two separate user experiences. If there is a security breach with one component, there may be limitations on the security level of the other component. A secure wallet is a separate experience for connecting with separate DEXs. This separation is consistent with lowering the number of failure opportunities.

 

Therefore, consider using the MetaMask wallet, which is trusted by over 100 million traders. MetaMask is free to download and it supports several networks, including Ethereum, BNB Chain, and Arbitrum. Visit the MetaMask website and choose the preferred device type. Options include a browser extension or a mobile DEX crypto app.

Next, open MetaMask and create a new wallet. Choose a password and write down the backup passphrase. Keep this somewhere secure and never share it with anyone. The backup passphrase provides remote access to the wallet should you misplace the password or lose the device.

Step 2: Get Some Crypto to Trade With 

Decentralized exchanges specializes in crypto-to-crypto trading. This means you need to fund MetaMask with some coins. This should be a coin from the network you plan to trade. For example, if you want to trade ERC-20 tokens, get Ethereum. Alternatively, get BNB if you’re interested in BNB Chain tokens.

MetaMask offers a fiat on-ramp within its wallet. So you can instantly purchase coins with a debit/credit card. However, a KYC process will be required. An alternative option is to buy coins from a Peer-to-Peer or P2P crypto exchange. Some platforms support anonymous trading, even when using fiat payment methods.

Step 3: Connect Wallet to the Best Wallet DEX 

You’ve now got some crypto coins stored in the MetaMask wallet. The next step is to connect MetaMask to the Best Wallet DEX.

Just click the ‘Connect Wallet’ button and choose MetaMask. This will trigger a connection request. Open MetaMask and approve the connection to Best Wallet.

Step 4: Complete the DEX Trading Form 

The next step is to complete the DEX trading form. First, select which crypto you want to trade with. This will be the crypto that’s currently stored in MetaMask. In our example below, I’ve selected ETH.

Then, choose which crypto you want to buy. You can search for the coin manually. Or, the safer option is to paste the contract address. You can get this from the project’s CoinMarketCap page. I’ve opted for WBTC in our example.

Next, type in the number of coins to exchange. Best Wallet immediately obtains the best market price from its partnered liquidity providers. For example, I’ve typed in 1 ETH and I’m quoted 0.042613 WBTC.

Step 5: Confirm DEX Trade and Disconnect Wallet

You can confirm the DEX trade once everything has been checked, including the cryptocurrencies being swapped and the amount. This will trigger another MetaMask notification. Open MetaMask and approve the smart contract transaction.

The cryptocurrencies will then be swapped. The purchased tokens will be added to the MetaMask wallet. This rarely takes more than a few seconds. Once the transfer is verified, disconnect MetaMask from the Best Wallet DEX.

Crypto DEXs: The Key Benefits

Those new to decentralized exchanges might not be fully aware of the key benefits. This section takes a closer look at the standout advantages of DEX trading.

Anonymous and Private Trading

The first benefit of decentralized exchanges is the private and anonymous experience offered. To understand why this is advantageous, let’s briefly consider the traditional process when joining a centralized exchange. Let’s use Coinbase for this example.

• First, users must complete an application form, including their full name, nationality, residential address, date of birth, and other personal information.
• Next, Coinbase will initiate a KYC process. This requires some documents, including a government-issued ID.
• Then, Coinbase will verify the documents before providing access to its exchange.
• Only then can you start buying, selling, and trading cryptocurrencies.

Now compare this to a no KYC exchange like Best Wallet. There is no account opening process, let alone requests for personal information or a government-issued ID.

Traders link a non-custodial wallet to the DEX, select the cryptocurrencies they want to trade, and wait a few moments for the swap to complete. After that, the trader disconnects the wallet, finishing the process. This kind of anonymity is not often provided by centralized platforms due to growing pressures from regulatory agencies.

Avoid Counterparty Risks

Another major benefit offered by decentralized exchanges is the removal of counterparty risk. This is because traders don’t need to worry about their cryptocurrencies being misplaced. As mentioned earlier, billions of dollars worth of cryptocurrencies were “lost” when FTX declared bankruptcy in 2022.

If you were an FTX user back then, some or all of your cryptocurrencies might still be lost. This is a risk you face when using a centralized exchange since cryptocurrencies are kept in custodial wallets. This means only the exchange has access to the wallet’s private keys, so you never truly own those coins.

The experience is completely different when using a decentralized exchange. Crucially, DEXs never hold client-owned cryptocurrencies. Trades are executed on the blockchain via immutable and transparent smart contracts.

For instance, think about a trader who wishes to exchange Solana for dogwifhat. The trader links a wallet to the DEX, and a smart contract automatically changes Solana for dogwifhat using liquidity pools. The acquired dogwifhat tokens are placed into the same wallet address. The DEX cannot manage this transaction, so it can’t freeze or alter the smart contract. In the end, this provides you complete control over your cryptocurrencies.

Beyond eliminating counterparty risks, using a decentralized exchange also reduces the risk of regulatory intervention freezing your funds. Unlike centralized exchanges, which can be pressured by governments to comply with asset seizures or account suspensions, DEXs operate permissionlessly.

Inclusive and Accessible

Not everyone can easily access the crypto markets. In some countries, there is a total ban on owning crypto. This means centralized exchanges won’t accept clients from those nations. As a result, decentralized exchanges become very attractive. DEXs do not require the trader’s country of residence, personal information, or ID verification.

Such an inclusive framework ensures that anyone, no matter where they’re from, can trade on decentralized exchanges. Similarly, some nationalities have restricted access to certain crypto products. For example, US and UK retail clients have limited access to crypto derivatives such as perpetual futures.

Decentralized exchanges are a great way to avoid this censorship. For instance, AlphaX offers hundreds of perpetual futures with high leverage limits. Anyone can join the platform, just connect a wallet and start trading. Perpetual futures are also offered by other popular DEXs, such as Jupiter, dYdX, and PancakeSwap.

Another way DEXs support investing is by increasing multi-chain and layer-2 integrations, allowing users from different blockchain networks to connect easily. With the growth of cross-chain liquidity protocols, traders can now obtain tokens on various blockchains without having to convert assets many times or depend on centralized gateways. This improvement lowers transaction fees and boosts overall trading efficiency, solidifying DEXs as the preferred platforms for open, borderless crypto trading.

Ideal for Investing in Newly Launched Tokens

Newly launched tokens offer the best chance of finding the next 1000x crypto. This is because the majority of new cryptocurrencies have a micro-cap valuation which is often below $1 million. You then get the perfect balance between high volatility and price potential for speculative traders. Crucially, new tokens are rarely listed on centralized exchanges.

On the contrary, they opt for decentralized platforms. Anyone can add cryptocurrencies to a DEX; the only requirement is to provide liquidity. As such, decentralized exchanges list thousands of undervalued tokens. This enables investors to get a first-mover advantage before they’re listed on more prominent centralized exchanges.

Additionally, trading on DEXs allows investors to bypass the stringent listing requirements of centralized exchanges, which often delay access to high-potential projects. Many newly launched tokens also debut with exclusive staking and farming incentives, rewarding early adopters with high APYs.

Furthermore, since liquidity pools determine pricing on decentralized exchanges, savvy investors can leverage arbitrage opportunities before prices stabilize across broader markets. With real-time access to emerging tokens, DEX users can enter positions early and maximize their profit potential before mainstream adoption.

Transparency

One major downside of using a centralized exchange is the lack of transparency, particularly regarding order books. Some analysts claim that even top-tier exchanges manipulate prices, leading to unfair trading conditions. While we can’t definitively prove or disprove this idea, it is clear that order books are highly centralized and unclear.

This is in contrast to decentralized exchanges. Every transaction, whether that’s a buy or sell order, is transparently viewable on the blockchain network. This includes the token amount, wallet address, timestamp, and other key metrics. This means decentralized exchanges offer a far more credible and trustworthy trading experience.

Cross-Chain Simplification

Trading cryptocurrencies from different blockchains used to be a cumbersome process. For example, centralized exchanges like Coinbase and Binance support some crypto cross pairs, such as LTC/BTC, ETH/BTC, and EOS/BTC. However, outside of Bitcoin and Ethereum, cross-chain trading is no easy feat.

• Let’s say you’re currently holding ATOM, but you want to purchase DASH.
• Centralized exchanges won’t offer an ATOM/DASH pair, considering almost non-existent demand from users.
• This means you’d need to sell ATOM for another crypto, such as USDT.
• You would then need to exchange that USDT for DASH.
• This means two trading commissions.

The same transaction can be completed in just one step when using a suitable DEX. Best Wallet, for example, supports cross-chain trading for more than 60 blockchains. This means you can immediately swap ATOM for DASH, with the transaction taking less than 60 seconds to complete.

Crypto DEXs: Drawbacks and Risks 

Decentralized exchanges solve many issues prevalent on centralized platforms. However, traders should also consider the risks. This section explores the main drawbacks of DEX trading.

Liquidity Issues

I previously noted that DEX trading volumes are much lower than those of centralized exchanges. This leads to liquidity problems, making it hard to execute trades at good prices. While this is usually not a concern with large-cap pairs like ETH/USDC or SOL/BONK, trading micro-cap tokens can lead to a less satisfying experience.

• For instance, suppose a newly launched token has $50,000 in DEX liquidity.
• A new investor purchases $10,000 in that token.
• That amounts to 20% of the overall liquidity, meaning just one buy order will have a significant impact on its price.
• Similarly, that trader will also influence the token’s price when they eventually decide to sell.

Limited liquidity also results in high slippage. This means traders must accept a worse-than-expected exchange rate to execute their buy or sell order. Don’t be surprised if slippage of over 10% is needed when trading micro-cap tokens.

Moreover, limited liquidity makes it difficult for investors to implement advanced trading strategies such as stop-loss orders or limit orders effectively. On many DEXs, thin order books or fragmented liquidity across multiple pools can lead to unpredictable execution prices or delayed transactions, further compounding the risks.

Aside from this, arbitrageurs often capitalize on these inefficiencies, creating unfavorable conditions for retail investors. To mitigate these perils, always review the liquidity pool risks by checking the size and trading volume of the token pair before executing trades.

Learning Curve for Beginners

We’ve established that DEX trading utilizes a completely different process from centralized platforms. Traders need a non-custodial wallet that’s funded with cryptocurrencies. Trades are then executed via smart contracts on the blockchain.

This procedure will likely be new to traditional investors who are used to brokerage accounts and order books. The key issue is that DEX traders with limited experience can make costly mistakes. For instance, they could trade the wrong token or transfer funds to an incorrect wallet address.

Network Fees

Decentralized trading is facilitated via the blockchain network. Each buy and sell order initiates a new blockchain transaction. This subsequently attracts network fees that must be covered by traders. Now, network fees can be competitive or expensive depending on the blockchain.

For example, Ethereum is known for high transaction fees when the network experiences busy periods. Traders were reporting fees of over $100 per transaction earlier this year. This is why many new token launches are opting for more cost-effective blockchains like Solana and BNB Chain.

Nonetheless, if network fees are too high, this can make DEX trading unviable for those on a budget. This is because transaction fees will eat into the profit potential.

In addition, network fees can fluctuate based on the complexity of the transaction. Simple token swaps may have relatively lower fees, while multi-step operations—such as adding liquidity or interacting with complex smart contracts—can cost significantly more. For instance, bridging assets across chains or executing transactions on Layer 2 networks can introduce additional fees, which may offset any savings from using a cheaper blockchain.

No Access to Fiat Facilities

Decentralized exchanges only offer crypto-to-crypto trading pairs. For example, you can trade Ethereum against USDC. But you can’t trade Ethereum against USD or GBP.

This also means deposits must be made in cryptocurrencies rather than convenient payment methods like Visa, Mastercard, and PayPal. As such, first-time traders will need to obtain cryptocurrencies elsewhere before getting started.

Lack of Customer Support

Another drawback with DEX trading is the lack of accessible customer support. After all, decentralized exchanges operate autonomously, as buy and sell orders are executed through smart contracts.

This makes it challenging to obtain assistance if things go wrong. However, it wouldn’t be the case when using a centralized exchange, which typically offers 24/7 support via live chat.

Conclusion

DEX trading will play a major role in the Web 3.0 era. Traders are no longer faced with counterparty risks on centralized exchanges. Instead, users can instantly buy and sell cryptocurrencies without the DEX ever touching their funds.

Overall, my top DEX pick is Best Wallet. It supports thousands of cryptocurrencies from over 60 blockchains, not to mention an anonymous experience. Best Wallet obtains industry-leading exchange rates from hundreds of liquidity providers.

Visit Best Wallet

See Also:

• 8 Best Crypto Exchanges With Lowest Fees
• What is Photon Crypto? Beginner’s Guide to Photon DEX

FAQs

References

1. What Are Automated Market Makers (AMMs)? (Chainlink)
2. Top Decentralized Exchanges Ranked by Volume (CoinGecko)
3. Decentralized Exchanges (DEX) Explained (Finance Magnates)
4. ‘Old-fashioned embezzlement’: where did all of FTX’s money go? (The Guardian)
5. FCA bans the sale of crypto-derivatives to retail consumers (FCA)