How Does a Decentralized Exchange (DEX) Reduce Counterparty Risk Compared to a CEX? ⎊ Path

How Does a Decentralized Exchange (DEX) Reduce Counterparty Risk Compared to a CEX?

DEXs operate on a blockchain and use smart contracts to execute trades directly between users (peer-to-peer). This eliminates the need for a centralized intermediary to hold user funds.

Since the user maintains control of their private keys and funds at all times (non-custodial), the risk of the exchange being hacked or becoming insolvent and losing user assets is removed. The risk shifts from the intermediary to the smart contract code.

What Is an Automated Market Maker (AMM)?

What Is the Difference between an RFQ Platform and a Centralized Exchange in Terms of Asset Custody?

Define ‘Slippage’ in the Context of DEX Trading.

How Do ‘Decentralized Exchanges’ (DEXs) Differ from ‘Centralized Exchanges’ (CEXs)?

What Is the Main Risk Associated with Using a DEX?

What Is the Difference between a ‘Custodial’ and a ‘Non-Custodial’ Prime Brokerage Model?

What Role Do Decentralized Exchanges (DEXs) Play in Crypto Options Trading?

How Does the Regulatory Environment Differ for Custodial CEXs versus Non-Custodial RFQ Platforms?