Web3 Academy — Learn Blockchain, Solidity & DeFi

DEXs allow token swaps without an intermediary. Two main models: Order Book DEXs (like dYdX) match buyers and sellers similar to traditional exchanges. AMM DEXs (like Uniswap) use liquidity pools and mathematical formulas to determine prices. AMMs dominate on-chain trading due to their simplicity and composability. Users can become liquidity providers (LPs) by depositing token pairs into pools and earning trading fees. The tradeoff: LPs face impermanent loss when prices diverge.

💡 Key Takeaway

This lesson covers the fundamental concepts. Make sure you understand these before moving to the next chapter.

Decentralized Exchanges