You have a kilogram of pomegranates and you want to exchange them for half a kilogram of grapes. To do this, you can visit the central market, which is a traditional market that has many fruit stores. However, not everyone is allowed to enter this market as you need to be a member to do so. If you are a member, you can ask one of the stores to exchange your pomegranates for grapes. But the store owner may only give you grapes if there are other customers who want to exchange grapes for pomegranates.
On the other hand, there is another market that operates automatically without any human intervention, called the Automated Market Maker. When you input the number of pomegranates you have, you will receive grapes in seconds, whose quantity will depend on the fair price according to the quantities available in this store. No merchant runs the store, and entering this market doesn’t require any membership. No store in this market can know your identity either. You are currently using a Decentralized Exchange (DEX) instead of a Centralized Exchange (CEX). The DEX operates differently from the CEX, as it is governed by smart contracts that automatically execute transactions without human involvement. Additionally, there are no intermediaries or mediators involved, leading to lower transaction fees. As a result of the transparency of the DEX, every transaction is recorded and viewable by anyone. If the shop owner resorts to fraud, manipulation, or exploitation in this market, it can be detected through many means. In our example above, the exchange process between the two goods (Swap) is carried out under a Smart Contract that contains rules to manage all operations. Everyone can review this contract and see the conditions and guarantees before performing the exchange. For instance, you can get half a kilo of grapes for the kilo of pomegranates you have, and after a while, if grapes become low, you can return and receive ten kilos or more of pomegranates. This is the idea of decentralized platforms in brief.
In recent years, centralized exchanges have faced a number of bitter events, such as the collapse of the FTX exchange, the fall of the Terra Luna, and the exposure of many centralized exchanges to hacking. As a result, many cryptocurrency investors have started searching for alternatives. This is where decentralized exchange comes into play. Decentralized exchanges have emerged in the past six years to challenge centralized exchanges. They aim to offer lower transaction fees, allow users to hold their assets directly, and avoid some regulatory and procedural burdens when compared to traditional financial transactions on centralized exchanges that are managed through intermediaries. Transactions on decentralized exchanges are executed directly, which provides complete transparency in the movement of funds and exchange facilitation mechanisms. Moreover, the investor’s funds do not pass through a third-party cryptocurrency wallet during trading, which reduces the risks of systemic centralization in the cryptocurrency trading system.
Currently, there are around 370 decentralized cryptocurrency exchanges according to the Coingecko website. However, the top ten platforms account for more than 75% of the total trading volume. In 2023, the best decentralized platforms are:
According to the Coingecko website, there are currently about 370 decentralized cryptocurrency exchange, but the top ten platforms account for more than 75% of the total trading volume. The best decentralized platforms in 2023, they are:
Uniswap: The most popularCurve: Best for stablecoins1inch: Best in terms of the lowest pricePancakeSwap: Best for Binance Smart ChainDydX: Best for traders looking for more options with more risk
It is worth mentioning that the AMAL liquidity pool has been established on PancakeSwap, which is considered the third biggest decentralized trading platform in terms of trading volume and the first in terms of the number of cryptocurrencies.

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