🔎 Imagine you want to exchange dollars for euros. You could go to a bank or an exchange office, but you would have to pay a commission and trust a middleman. What if there was a way to exchange currencies directly, without extra costs and controls?

Decentralised exchanges (DEX) offer just such an opportunity. These are online platforms that allow you to trade cryptocurrencies without the involvement of a centralised authority. Instead of a bank or broker, transactions on DEXs are processed using "smart contracts" - automated programmes that run on the blockchain.

❗️ How to Use a DEX?

Using a DEX is quite simple, although it may seem confusing at first glance. You will need:

1️⃣ A cryptocurrency wallet: This is like your digital wallet for storing cryptocurrency. There are various types of wallets, such as MetaMask or Trust Wallet, that can be installed on your phone or computer. 2️⃣ Cryptocurrency: You cannot trade on a DEX if you do not have any cryptocurrency. You can buy it on a centralized exchange (CEX) and then transfer it to your wallet. 3️⃣ Connecting to a DEX: There are many DEXs, each with its own features. Popular options include Uniswap, PancakeSwap, and SushiSwap. You can connect your wallet to the chosen DEX through its website.

💰 Where are Funds Stored on a DEX?

Unlike CEXs, where your funds are stored in the exchange's accounts, on a DEX you always control your assets. They are in your wallet, and the DEX only acts as a platform for exchange. Imagine a huge fair where people trade with each other, but keep their goods with them.

📈 How to Open Positions on a DEX?

Opening a position on a DEX is essentially exchanging one cryptocurrency for another. To do this, you need to choose a pair for exchange, for example, ETH/USDT, and specify the amount of cryptocurrency you want to exchange. The "smart contract" automatically calculates the exchange rate and executes the exchange if you are satisfied with the price.

% Slippage

But what if the price changes during the exchange? This is where "slippage" comes into play – the allowable deviation from the original price. Imagine wanting to buy an asset for 1 dollar, but while you connect your wallet, the price rises to 1.05 dollars. Are you willing to pay more?

• Slippage allows you to set a limit on how much the price can change. If the deviation exceeds your limit, the transaction will not take place. It is important to choose the optimal slippage: too low – the transaction may not go through, too high – you may lose more than you planned.

DEXs offer a new level of freedom and control in the world of finance. You manage your assets yourself, choose who to trade with, and do not pay commissions to intermediaries. However, with this freedom comes responsibility. You must independently monitor the security of your wallet and be careful when making transactions. DEXs are the future of finance, which is already available today.

#DEX #ogcacademy

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