Decentralized exchanges were supposed to be the future of crypto trading. In 2019, however, the conversation around DEXes fell significantly.
Major crypto exchanges such as Coinbase or Binance operate as centralized companies, incorporated and compliant with local regulations. These hubs for crypto buyers and sellers serve as on-ramps to the digital currency, and they charge fees for their services.
Of course, the problem is Bitcoin was created to eliminate middlemen, so these on-ramps are an oddly centralized part of the crypto ecosystem.
A new set of companies called “decentralized exchanges,” or DEXes for short, are aiming to change that. DEXes use smart contracts so that cryptoassets can change hands completely peer-to-peer, with the promise of better security and minimal fees. Typically, the major projects here are built on Ethereum and trade ERC-20 tokens.