Decentralized exchange technology will play a key role in accelerating our transition to a financial system where people can transact directly, on a peer-to-peer basis, with no middlemen required. A decentralized exchange is an exchange market that does not rely on a third-party service to hold the customer’s funds.
This system contrasts with the centralized model in which users deposit their funds and the exchange issues an ‘IOU’ that can be freely traded on the platform. When a user asks to withdraw his funds, these are converted back into the cryptocurrency they represent and sent to their owner.
dApps (Decentralized applications) run on a peer-to-peer network of computers instead of a single computer. They are similar to a conventional web application in a way that its front end uses the same technology to represent the page. But the backend uses smart contracts to connect to the blockchain network instead of an API connecting to the database.
dApps are tamperproof and records stored in it are unalterable, protecting the application from hacking or intrusions. Decentralized apps are governed through autonomy and changes made in the applications are decided through consensus of all members in the network. Unlike traditional apps, decentralized applications i.e. dApps do not rely on a single server and therefore, it prevents the risk of central point of failure.
- Don’t have to trust a third party to securely manage your coins and tokens
- Lower trading fees than centralized exchanges
- Atomic swaps will allow DEXs to offer faster and more efficient trading
- Let’s you avoid transaction and withdrawal limits typically imposed by centralized exchanges
- Preserve control of your funds
- No Restricted by Law
- Distributed Servers