With the proliferation of blockchain-based assets, the need to exchange these assets between counterparties has increased significantly. With the introduction of thousands of new tokens, including the tokenization of traditional assets and commodities, this demand has been amplified.
Whether it is the exchange of tokens for speculative trading motives, or the conversion of its native utility tokens to access the network, the ability to exchange one encrypted asset for another is the foundation of a larger ecosystem.
The fact that decentralized tokens and assets are traded on traditional centralized exchanges (CEX), apart from the inability to uphold the advantages of decentralized projects, CEX also has many risks and limitations. The three main risks of centralized exchanges are lack of security, lack of transparency, and lack of liquidity.
DEX has tried to solve these problems, and in many cases successfully reduced security risks by using blockchain for disintermediation. However, as DEX capabilities become the key infrastructure of the new economy, there is a lot of room for performance improvement and development.
With the continuous development of the ecosystem and the lowering of barriers to entry, the number of DEX platforms has increased significantly in the past few years, leaving room for creativity and innovation. User-centric applications have become critical. Users need low transaction fees, fast and secure exchanges, and cross-chain compatibility, because the future of decentralized finance requires interoperability as an essential feature.
This surge and evolution includes aggregated liquidity pools, smarter transaction routing, and access to a variety of asset-specific automated market making (GDE) algorithms to ensure the best price and profitability for users.