What is a decentralized exchange and how does it work?
An exchange is a place or a market where you buy and sell goods or services. Decentralized means a system whose authority is distributed among several persons (there is no central authority). A decentralized exchange is a marketplace where buyers and sellers interact in the absence of a middleman but the presence and through the aid of an automated algorithm known as a smart contract.
The objectives behind a DEX are to scrap out intermediaries and to allow regular people to do business directly with each another. Users are responsible for their private keys and directly hold all their assets in their wallets at all times.
HOW DOES A DECENTRALIZED EXCHANGE WORK?
Decentralized exchanges are run by a smart contract that executes an order once a condition is met. Users are in the custody of their private and public keys, so they are in full charge of their assets. For a user to buy or sell they interact with the smart contract governing the liquidity pool of that exchange. Every trade incurs a transaction fee. Most importantly DEXs don't exchange fiat for crypto or vice versa instead they majorly trade crypto tokens for other crypto tokens.
HOW TO USE DECENTRALIZED EXCHANGES
All you need is a wallet and an internet connection. Using your email is not called for during the sign-up process. Just download the wallet of the decentralized exchange and get your private keys. Other times you could access the wallet directly from the browser. After that, you are required to either import your existing wallet through a seed phrase or create a new one.
After creating or importing a wallet the user will need to fund it with the native token of the wallet. This native token is what will be used to pay the dex for any transaction made. The Dex charges in that native token and not in fiat currency, so when paying for a crypto token the user bought, they pay in the native token which will be used as transaction fees for any trade the user carries out. For instance, after opening a trust wallet account, it is necessary to fund it with BNB (the native token), which will be used to pay for any transaction you carry out. The ticker symbol reveals what network of BNB it is, whether it is BEP20 or BEP2. it is best to transfer BNB (BEP20) from the Binance app straight into the trust wallet. Users should make sure they cross-check the address they want to send the BNB to confirm it is correct and avoid mistakes
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