As of now, using a decentralized exchange (DEX) is not the first option for the majority of people, despite fun unicorns and pancakes are as their logos.
2022 continues to see the rise of decentralized finance, as the world inches closer and closer to decentralization.
The key issue with centralized exchanges is that they are governed by a central authority – a company that controls your funds and data just like a traditional bank. Besides, centralized exchanges utilize the order-book model that you would see in traditional stock exchanges, with a list of buy and sell orders.
The exchange acts as a custodian, holding assets as a market maker and finding those willing to sell assets to buyers. Asset custody, asset listing, liquidity, headquarters, director board and centralized trade execution are all qualities of a centralized exchange.
Fortunately, these can all be decentralized and that is what decentralized exchanges set out to do: entirely peer-to-peer trading platform’s governed by software and users. On decentralized exchanges, you merely have to connect your wallet, like MetaMask, and you’re ready to trade directly from it. This makes trading private and quick, and you don’t have to go through the tedious process of setting up a bank account and trading account, which infringes on your privacy with intrusive and insecure Know-Your-Customer (KYC) surveys like your identity verification, home address, income, and much more.