Almost all Decentralized developers are anonymous for tax and regulatory reasons. Defi stands for decentralized finance and has many subtypes: exchange, lending, and insurance. Smart contracts mostly regulate a DEX and can allow you to access all dex liquidity under one roof. When developers bring smart contracts online, anyone can inspect the code and predictably manipulate the contract. If the developer does not change the contract, the contract will perform the intended task.
Get full control of your assets
DEX has existed since the introduction of cryptocurrencies. Even today, the most popular cryptocurrency exchanges are decentralized. They are known because they are easy to use, provide customers with great experiences, and exchange tokens from all blockchains. Converting various currencies to cryptocurrencies on these decentralized exchanges is very easy. The high volume of transactions also makes it easy to trade tokens. However, some platforms give maximum control over a user's assets. In addition, when using such platforms, you might face a lot of cyber-attack cases. That is why dex liquidity has been introduced to overcome or solve these problems and give users ownership of their assets.
The entire trading process runs "on the chain on some decentralized exchanges." This is completely transparent. You don't have to rely on a third party to facilitate your transactions. Third parties may charge additional transaction fees for each transaction. This is one of the reasons why DEX transactions are often cheap.
One of the advantages of DEX is security. Their decentralized nature means that entities are not hacked, but other exchange platforms are more susceptible to exploits that can affect users. In addition, users retain control of their cryptographic possessions to retain access to their wallets.
DEX is a collection of crypto wallets that trade with each other. This leads to another major benefit of using this exchange platform. Unlike other platforms, DEX does not necessarily require users to run the processes like KYC or the know Your Customer process.
For DEX, users do have to trust automated protocols. With these protocols, users have complete control over their assets, achieving unprecedented levels of security and eliminating things such as KYC procedures. With such great features, you might consider DEX the most outstanding option for traders. Trading with the DEX requires complex knowledge. Also, liquidity is an issue since it might not support different currency transactions. Therefore, if the user chooses DEX, they will have to stop using other exchange platforms. As mentioned above, other exchange sites might not allow you to have full control of your assets. This is a long-standing problem for crypto traders. Decentralization is at the core of all the benefits of blockchain technology.
Automatic Market Maker (AMM)
AMM is essentially an automatic purchase order that promotes liquidity on the exchange. A decentralized exchange finds buyers and also works with large traders to ensure that the exchange has sufficient liquidity and can sell cryptocurrencies virtually at any time. Liquidity means that there is sufficient supply for the available demand, and with low liquidity, it is difficult to sell cryptocurrencies and the other way round. AMM seeks to solve liquidity problems and allows the user to manage dex liquidity without relying on large traders using smart contracts.