Everyone can see transparently how it works the service, how it will act in any situation and see in real time what happens within it, without manipulations.
Protection and security
Every year hundreds of millions of euros are stolen from centralized exchanges. In 2018 alone, more than € 1000 billion was stolen from centralized exchanges.
In DEX smart contracts can be implemented as a protection against scams and fraud. Thus, when establishing a contract with certain conditions to be fulfilled, the parties involved in the exchange must obey these conditions for the operation to be executed. In case of breach of any or all the conditions, the contract expires and is not executed. Best of all, these contracts, once scheduled, run automatically and decentralized.
Furthermore, DEXs work through a network of computers interconnected with each other, in much the same way as a blockchain network. So they have high protection against hacks or computer attacks that threaten the integrity of user funds.
However, decentralized exchanges (especially second-generation exchanges) can also be robbed, as all funds are held by a smart contract that may contain failures, such as the famous billionaire robbery The DAO.
A high degree of anonymity is another advantage they can offer. This is because a decentralized exchange (DEX) only uses addresses to carry out transactions and exchanges. Without requiring users to supply data and personal information.
Another advantage of decentralized exchanges is their robustness and solidity. The probability of a DEX system crash is almost nil; so users will not have to worry about this problem. This is because DEXs do not operate with a single server, as is the case with centralized exchanges.
Disadvantages or disadvantages of DEX
At first if you don't have the knowledge, the DEX platform may seem confusing and difficult to operate. So it is almost always necessary the guidance or instruction of an expert user to understand them and start operating on them.
A decentralized exchange (DEX) is not used to make exchanges between cryptocurrencies of different blockchains. Given the Ethereum It is the network with the most tokens, the most famous decentralized exchanges are from this network. But for example you cannot exchange Bitcoin for Ethereum, only Ethereum tokens for other Ethereum tokens.
Types of orders
The types of orders that can be placed on a decentralized exchange are very limited, being able to place only Limit and Market type orders.
Since exchange operations take place within the same blockchain in DEX, their process is much slower than in a centralized exchange. So a decentralized exchange cannot manage high frequency.
The most important thing about a trading platform is liquidity, which in turn generates low spreads. A decentralized exchange (DEX), due to its lack of manipulation capacity, usually has little liquidity, in turn generating little traction that turns back to little liquidity and high spreads. Something that drives away any user.