What is OKX DEX
You might have heard about decentralized exchange (DEX) and are wondering what they are, as well as how they are different from centralized exchanges (CEX).
In this article, we will demytify the DEX landscape, what makes OKX DEX the most powerful DEX aggregator in Web3, why it matters to you and how you can get started.
1. Understanding decentralized exchanges (DEXs)
1.1 What's a DEX?
A decentralized exchange (or DEX) is a peer-to-peer marketplace in which tokens are traded directly between crypto traders without any intermediary such a bank or broker. This is made possible through the use of smart contracts and trades are settled directly on blockchain.
1.2 What are the different types of DEXs and how do they work?
There are primarily 3 types of DEXs:
- Order book (off-chain and on-chain) - This model is closest to that of centralized exchanges in which the system (i.e. order book) compiles all orders across the various prices at which traders are willing to buy and sell at and then matches buyers and sellers in order to fulfill the trades.
- Automated market maker (AMM) - AMMs leverage smart contracts to settle trades directly on the blockchain. A key feature of AMMs is the use of "liquidity pools" which are made of funds contributed by investors from the community. In return for locking in their funds, these investors earn a certain amount of interest from trading fees.
- DEX Aggregators - DEX Aggregators provide a one-stop hub that consolidates prices across multiple DEXs and aims to provide users with the best price with minimal slippage. DEX aggregators aim to make it easy for users to compare prices and often layer over other security features and algorithms that help users to optimise their trades.
1.3 Why trade on DEX?
- Self-custody: Users have complete self-custody of their own trades, so any movement of tokens happens directly on the wallet that the user links to their DEX accounts.
- Security: Unlike centralized exchanges that might potentially be hacked, all assets traded on DEXs are stored directly in the user's wallet, thereby providing a greater degree of security in token storage.
- Privacy: Unlike centralized exchanges that require users to pass Know-Your-Customer (KYC) checks, users are not required to submit any personal information when they trade on DEX, thereby allowing them to trade almost anonymously.
- Potentially lower fees: Unlike centralized exchanges that usually charge higher transaction fees for providing value-added service or advanced trading tools, users pay little or even zero platform fees, allowing them to keep more of their profits.
- Diversity of options: Anyone can mint tokens from blockchains and create a liquidity pool for it on DEX, resulting in a myriad of options for users to choose from.
1.4 Downsides to using DEX
- Riskier tokens: Offering a wide range of options and no centralized authority also means that anyone can mint a token. This might give rise to scams such as that of a 'rug pull' in which the creator of a token attempts to attract as many users to purchase the token in the hope of an benefitting from an increase in token price before running away with the money.
- Liquidity: As DEXs are reliant on the community to provide liquidity and each liquidity pool consists of separate token pairings, this can result in a lower level of liquidity available per trading pair.
- On-ramps and off-ramps: Most DEXs do not allow direct fiat-to-crypto exchanges. As such, users are usually inconvenienced as they have to use a separate platform to exchange their local currency for crypto or vice versa.
- Less intuitive user interfaces: One of the biggest obstacles to getting started on using DEX is the more complicated user interface that might be confusing to a new user. Additional research might be required on the users' end to compare prices across different DEXs in the search for the most secure trades that provide the optimal price.
2. What is OKX DEX?
OKX DEX is a DEX aggregator that aims to solve all of the above issues by consolidating the different trading prices and paths across more than 100+ DEXs and recommending the optimal path with the least amount of slippage (i.e. Difference between the bid price and actual executed price of the trade) for users to take. With 100,000+ tokens to choose from across 10+ chains, users are spoilt for choice. But what really makes OKX's DEX unique are:
- Best trading price: OKX DEX consistently offers prices that are better than or equal to that of other DEX aggregators in the industry more than 60% of the time. This significantly reduces the time that customers need to spend on researching and comparing prices across different offers.
- Best-in-class security: OKX's proprietary security technology helps you avoid loss by detecting unfavorable trading prices, counterfeit tokens, rug pulls, high burn rates. OKX DEX is also integrated with Flash Bot, which keeps your transaction private to prevent unnecessarily high maximal extraction value (MEV).
- User-friendly interface: OKX integrates features that make it easy for users to exchange the required gas fees to complete their transactions, create your list of favourite tokens for easy tracking and even enjoy features such as limit orders that are more commonly found on CEX. Furthermore, users can enjoy easy fiat-to-crypto conversions on their OKX CEX accounts and easily transfer these to their OKX Wallet without having to leave the OKX ecosystem, thereby making the trading experience seamless.
- Privacy: Our DEX is separated from CEX, thereby guaranteeing user anonymity and privacy.
- Cross-chain trades: Users can perform trades across more than 10+ blockchains, thereby increasing the variety of trades that users can execute within a single platform.
- Free to use: Absolutely no platform fees, so you get to keep more of your trades.
3. How to use OKX DEX
OKX DEX supports OKX Wallet, Metamask, and many others through Wallet Connect on the web version. You can also download the OKX App to trade anytime, anywhere on mobile. Simply switch to "Wallet" at the toggle on top, and then tab 'Trade'.
THIS BLOG IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO PROVIDE ANY INVESTMENT, TAX, OR LEGAL ADVICE, NOR SHOULD IT BE CONSIDERED AN OFFER TO PURCHASE, SELL, OR HOLD DIGITAL ASSETS. DIGITAL ASSETS, INCLUDING STABLECOINS, INVOLVE A HIGH DEGREE OF RISK, CAN FLUCTUATE GREATLY, AND CAN EVEN BECOME WORTHLESS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING OR HOLDING DIGITAL ASSETS IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PLEASE CONSULT YOUR LEGAL/TAX/INVESTMENT PROFESSIONAL FOR QUESTIONS ABOUT YOUR SPECIFIC CIRCUMSTANCES.