A DEX (Decentralized Exchange) is a cryptocurrency trading platform that runs entirely on smart contracts on a blockchain, with no central operator.
Instead of a central order book, many DEX protocols such as Uniswap or PancakeSwap use Automated Market Makers (AMMs): users supply liquidity into pools, and prices are set automatically by mathematical formulas rather than buyer-seller matching.
Because no central operator ever controls user funds, there is no risk of an exchange going insolvent or being hacked in a way that makes customer funds disappear – though capital risk from smart-contract bugs or exploits remains.
DEX users retain control of their own wallets and private keys throughout every trade, but must pay network fees (gas fees) and generally need a bit more technical know-how than on a CEX.
