Understanding what a DEX (decentralized exchange) is and how to incorporate it into your trading strategy can be a great way for you to improve your overall results. DEXs are hugely popular nowadays but this wasn’t always the case. These unique digital exchanges have had an interesting rise to fame. It wasn’t always pretty, but through perseverance, DEXs have grown to become the ideal way for crypto traders to conduct exchanges. Here’s some valuable insight into what is a DEX and why you need to use one when trading in 2022.
DEX vs CEX
In the early days of crypto, there were very few exchanges. These networks operated much like your stock exchanges. People would register and upload the funds they wanted to trade to the network. They could then conduct trades and when they were finished, they could withdraw their assets.
This structure was ideal for the time because there was no technology available that provided a better alternative. Additionally, it enables developers to create exchanges that looked and operated similarly to popular stock exchanges including charting tools and features like stop loss. For most people, their first experience in the crypto market was via a CEX.
DEXs are like CEXs in that you can trade your assets with others securely. However, from there the similarities cease. DEXs are not centralized and no organization or group authorizes accounts or trades. Instead, DEXs function as pure code. Their only purpose is to help you complete your trade at the best rates available.
Advantages of DEXs
Removing the middlemen from the equation brings along with it a lot of benefits. As such, DeFi users continue to flock to these networks in search of higher ROIs, flexibility, and privacy. Today’s DEXs are massive compared to their predecessors, with many rivaling CEXs in terms of daily trading volume.
Privacy
When a trader uses a platform like the META Exchange to complete their actions they are supporting a more democratic marketplace. These networks help to keep users protected by eliminating one of the biggest risks in the market, data theft. Over the last five years, major data thefts have been on the rise with banks and other financial institutions losing billions of people’s information.
DEX users say goodbye to this threat because these networks seldom require any registration. Like most DeFi protocols, you simply need to link your network-approved wallet to begin using the services. This approach is much easier than signing up for a bank account. It also opens the door for the billions of underbanked and unbanked individuals in the world.
More Options
DEXs are known for their endless options. Ever since Uniswap changed the game, DEXs have been more creative about their offerings. Today some DEXs operate like CEXs with order books and other popular features. You also have DeFi options that are ideal for those seeking to generate wealth, such as staking protocols.
Staking
When you stake your tokens on DeFi networks like META 1, you enjoy low-risk returns. Staking is the best option for new traders because there is very little risk of loss of your original asset. When you stake, you are rewarded for providing liquidity to a network smart contract. The more liquidity you provide and the higher your returns. Unlike trading, you know exactly what your returns will be and when you will receive them thanks to the staking calculator feature.
Using a DEX to Trade in 2022
It’s easier than ever to use a DEX in 2022. In the past, you would need to first convert your fiat into cryptocurrencies like Ethereum to join the DeFi market. However, META 1 Coin and other fourth-generation protocols now integrate a direct fiat-to-crypto onramp in their dashboard. This feature makes it easier than ever to join the META Exchange.
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