What Is DeFi and What Is a Decentralized Exchange (DEX)?

DeFi means financial services run by smart contracts without banks or exchange middlemen; a DEX is a decentralised exchange.

In DeFi you can swap tokens, lend and borrow, and earn yield for providing liquidity. Code on the blockchain does the work, and funds stay in your wallet until you send them to a contract.

DEXes come in two kinds: liquidity-pool based (Uniswap, Raydium), where a formula sets the price, and order-book based (Hyperliquid), which feels like a normal exchange but runs on-chain.

DeFi risks include smart-contract bugs and hacks, and sharp price moves in pools.

See it on In-Crypto

Hyperliquid Aster

More terms

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Frequently asked questions

Why use a DEX over a centralised exchange?

You do not hand funds to a company or go through KYC, and everything is visible on-chain. The downsides are a harder interface and smart-contract risk.

Do DEXes require KYC?

Usually not: connecting your own crypto wallet is enough.