What is a DEX?
Learn the difference between centralized and decentralized exchanges.
Key Takeaways
- A DEX is an exchange that runs on the blockchain without a company in the middle
- DEXs need liquidity providers (that is you) to work
- MaxFi connects to DEXs automatically. You just deposit.
CEX vs DEX
A CEX (Centralized Exchange) is like Coinbase or Binance. A company runs it. They hold your funds. They match buyers and sellers.
A DEX (Decentralized Exchange) is different. It runs on the blockchain. No company holds your funds. Smart contracts handle the trades.
Popular DEXs on Base:
- Uniswap V3: The largest DEX in all of crypto
- Aerodrome: The biggest DEX on Base
- PancakeSwap: A popular multi-chain DEX
MaxFi works with all three.
How DEXs Work
On a CEX, a company matches buyers and sellers. On a DEX, liquidity pools replace the company.
People deposit their tokens into a pool. Traders swap against that pool. The depositors earn a fee on every trade.
That is where you come in. When you deposit into MaxFi, you are providing liquidity to a DEX pool. Every trade in that pool pays you a fee.
Why DEXs Matter
DEXs run 24/7. No downtime. No maintenance windows. No one can freeze your account.
They are also transparent. Every trade is on the blockchain. Anyone can verify what happened.
Billions of dollars trade on DEXs every day. That trading volume creates the fees that MaxFi users earn.
You Do Not Need to Use DEXs Directly
MaxFi handles the DEX interaction for you. You deposit on MaxFi. MaxFi places your liquidity in the best position on the DEX. When a rebalance is needed, MaxFi does it.
You earn the fees. MaxFi does the work.
What You Learned
- A DEX is a blockchain exchange with no company in the middle
- DEXs need liquidity providers like you to function
- MaxFi connects to DEXs automatically so you do not have to