DEX

A DEX, short for decentralized exchange, is a set of smart contracts that lets you trade tokens directly from your own wallet. There is no account and no deposit into a company's custody. You connect a wallet, approve the swap, and the tokens move on-chain in a single transaction.

Most DEXs on Solana, BNB Chain, Base, and Ethereum use liquidity pools, which are reserves of two tokens that other users have deposited. In the basic constant-product design, an automated market maker sets the price from the ratio of those reserves, so every trade shifts the price. Other designs, such as concentrated liquidity, use different formulas. Some DEXs use order books instead, and a few rely on an operator to match orders while you still keep your funds in your wallet. Anyone can create a pool for any token, which is why new tokens trade on DEXs long before any centralized exchange lists them.

The tradeoff is that nobody screens what gets listed and nobody can reverse a mistake. A pool can exist for a scam token as easily as for a legitimate one, and a swap sent to the wrong contract is gone. Two costs are easy to mix up. Price impact is how far your own order moves the pool price, and it grows when the pool is thin. Slippage is the gap between the price you expected when you signed and the price you actually got, which can also come from other trades landing before yours.

Before buying, check that you are on the real interface, since fake copies of popular DEXs are a standard phishing trick. Confirm the token's contract address from a source you trust instead of searching by name, because anyone can deploy a token with a copied name and ticker. Look at the pool's liquidity and whether it is locked. A lock only means the liquidity cannot be withdrawn for a set period. It does not make the token safe, because the token contract itself can still block sells, charge a heavy tax, or mint new supply. Be careful with token approvals too, since a swap often asks for spending permission that you can revoke later.