DeFi and DEX trading are experiencing a surge in popularity as more users embrace the advantages of decentralized finance. By offering transparency, enhanced security, and financial inclusivity, DeFi and DEXs have captured the attention of individuals seeking greater control over their financial activities.

Advantages of DeFi trading over CeFi trading:

  • Access to new projects and tokens: DEXs provide opportunities to explore early-stage projects and emerging tokens.

  • Transparency: Decentralized exchanges operate on a public blockchain, ensuring transparency for all transactions.

  • Control: Users have direct control over their funds, as trades are executed from their wallets without intermediaries.

  • Regulations: DEXs offer accessibility to users worldwide without location or identity verification restrictions.

  • Pricing: with the roll-out of L2 protocols, DeFi trading is becoming cheaper than CeFi trading.

Challenges of DEX Trading:

  • User Experience: DEXs can be complex for new users, with less user-friendly interfaces and complicated processes.

  • Limited Functionality: DEXs may have fewer features and trading pairs compared to centralized exchanges, limiting trading options.

  • Lower Liquidity and Trading Volume: In terms of liquidity pool size and trading volumes, DEXs still lag behind CEXs.

  • No Due Diligence: DEXs often lack proper mechanisms for filtering out scams and rug pulls, exposing users to invest in fraudulent projects.

  • Limited Advanced Tools: DEXs may lack comprehensive tools for managing limit orders, gas prices, slippage, or implementing automation in DeFi trading strategies.

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