How Decentralized Exchanges Are Reshaping the Cryptocurrency Market

DeFi is an important infrastructure and application in the Web3 field, while DEX is the key driving force propelling the entire ecosystem forward. DEX has laid the foundation for the vigorous development of the DeFi field, providing users with a safe and transparent environment for trading assets without trusting third parties.

This article will explore the core role of DEX in the DeFi ecosystem, and how they work together to build a more open, fair and innovative financial world. As DeFi continues to expand, the role of DEX becomes increasingly important. They not only facilitate the free circulation of assets, but also drive a new wave of financial service innovation, providing unprecedented opportunities for individuals and institutions outside the traditional financial system.

1. Introduction to DEX

1. What is DEX?

Decentralized Exchange (DEX) is a platform based on blockchain technology that allows users to directly and securely exchange cryptocurrencies and other digital assets without intermediaries. Unlike traditional centralized exchanges (CEX), DEX does not store user funds, private keys or personal information, but instead executes trades automatically through smart contracts, thereby better managing and controlling the security risks faced in trading.

2. Features of DEX

• Decentralization: DEX operations do not rely on any centrally controlled entity. Trading occurs directly between users, improving the transparency and security of trading.

• User Control of Assets: Users have complete control over their cryptocurrencies and private keys, without needing to store assets on the exchange, reducing the risk of stolen funds.

• Anonymity: Most DEXs do not require extensive identity verification, allowing users to enjoy a higher degree of privacy.

• Global Accessibility: Anyone with an internet connection can access DEXs, without worrying about geographical location or account freezes.

• Innovative Trading Mechanisms: DEXs often adopt innovative mechanisms such as Automated Market Makers (AMM), allowing users to become liquidity providers, participate in market supply and demand, and earn trading fees as rewards.

Although DEXs offer many advantages, they also face some challenges, such as relatively low liquidity, trading speeds that may not match centralized exchanges, and differences in user experience. However, with technological advancements and the maturation of the cryptocurrency market, DEXs are becoming increasingly popular, making important contributions to the development of decentralized finance (DeFi).

3. Classification of DEX

Generally speaking, based on different trading models, DEXs can be divided into three types: first is the orderbook model, where custody and trade matching are completed off-chain to solve issues such as slow on-chain trading speeds, insufficient depth, large slippage, and impermanent loss. Examples using this model include Loopring and 0x; second is the AMM automated market maker model, supporting instant human-machinetrading, where anyone can act as a market maker, greatly increasing trading depth and solving the drawbacks of on-chain trading. This is currently a widely adopted model, such as Uniswap, SushiSwap, Curve, etc.; third is a hybrid of the two models.

Among them, the AMM automated market maker model deserves special introduction. After years of development and evolution, the AMM automated market maker model has proven to be one of the most influential DeFi innovations. If further subdivided, the AMM automated market maker model can also be divided into constant product market maker (CPMM), constant sum market maker (CSMM), constant mean market maker (CMMM), and advanced hybrid constant function market maker (CFMM). We won't go into further detail here, but will focus on discussing its operating mechanism at the macroeconomic model level.

The AMM automated market maker model has fundamentally changed the way users trade crypto assets. Unlike traditional order book trading models, in AMM both trading parties interact with on-chain liquidity asset pools. Liquidity pools allow users to seamlessly switch between on-chain crypto assets in a completely decentralized and non-custodial manner. Liquidity providers earn passive income through trading fees, which are calculated based on their percentage contribution to the asset pool.

Although the AMM automated market maker model was first proposed by Bancor, it was Uniswap that truly brought it to prominence. It is no exaggeration to say that Uniswap gave life to AMM.

2. OKX DEX

Previously we introduced the OKX Web3 wallet. Now let's look at the built-in trading functionality of the wallet. The trading functionality under the Web3 wallet aims to provide users with one-stop multi-chain aggregated trading services. Through smart routing algorithms, it automatically calculates the optimal trading path and trade size splitting to help users obtain the best execution prices.

Simply put, the trading page of the Web3 wallet is a DEX (blockchain-based decentralized exchange). Unlike centralized exchanges (CEX), DEXs do not store user funds and personal data on centralized servers, but instead custody user assets through smart contracts on the underlying public chain, with trade matching and trade settlement processes completely conducted on-chain. It provides liquidity for specific markets through automated algorithm trading, with traders interacting directly with smart contracts. At the same time, the Trading product of the Web3 wallet is also a DEX aggregator, which can automatically calculate the optimal trading path and trade size splitting, aiming to help users automatically calculate all possibilities, thereby providing users with better exchange rates, lower gas fees, and smaller slippage to the greatest extent.

How to Use Web3 Wallet Trading?

Taking the APP as an example:

(1) Enter [Web3 Wallet] - [Trading] page.

(2) On the swap page, select a currency to trigger a quote

Under the "Pay" and "Receive" sections, you can select the currency you want to trade from the dropdown list, enter the amount to trigger a quote, and view trading details.

Alternatively, after selecting the "Pay" currency, you can click "All" in the top right corner to enter the maximum amount of tradable currency with one click to initiate a quote. (Note: When OKT is selected as the "Pay" currency, the system will automatically reserve part of the OKT in the balance as gas fees to ensure smooth trading completion.) In the currency selection dropdown list, you can enter the token name or contract address you want to trade in the search box above to search for the token.

(3) You can also separately set miner fees, slippage limit, and smart routing.

In addition, for unauthorized currencies or those with insufficient authorization allowance, you must first click the "Approve" button to initiate an authorization request. Only after confirming and completing authorization in the wallet can you proceed to the next trade.

(4) After the quote is completed and authorization is done, you can click the "Swap" button to initiate a trade, then confirm the trading information in the secondary popup, click the "Confirm Swap" button and confirm in the wallet to complete the trade. Additionally, if the trading price changes during this process, you must click the "Accept" button in the secondary popup to accept the new quote, then click "Confirm Swap" and confirm in the wallet to complete the trade.

Disclaimer

This article may contain content related to products that are not applicable to your region. This article is intended to provide general information only and does not take responsibility for any factual errors or omissions therein. This article represents only the author's personal views and does not represent the views of OKX. This article is not intended to provide any of the following advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell or hold digital assets; or (iii) financial, accounting, legal or tax advice. Holding digital assets (including stablecoins) involves high risk, may fluctuate significantly, and may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions regarding your specific situation, please consult your legal/tax/investment professional. The information appearing in this article (including market data and statistics, if any) is for general reference only. While we have taken all reasonable precautions in preparing these data and charts, we assume no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less from this article may be used, provided that such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: "This article is copyrighted © 2025 OKX, used with permission." Permitted excerpts must cite the article title and include attribution, such as "Article Title, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.

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1. Introduction to DEX

2. OKX DEX

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