We’ve touched on some of the advantages and drawbacks of DEXs in broad strokes in the previous sections. Let’s delve into them a bit more.
Pros of DEXs
This is a privacy concern for some and an accessibility concern for others. What if you don’t have valid documents on hand? What if the information is somehow leaked? Since DEXs are permissionless, no one checks your identity. All you need is a cryptocurrency wallet.
However, there are some legal requirements when DEXs are partially run by a central authority. In some cases, if the order book is centralized, the host must remain compliant.
No counterparty risk
The primary appeal of decentralized cryptocurrency exchanges is that they don’t hold customers’ funds. As such, even catastrophic breaches like the 2014 Mt. Gox hack won’t put users’ funds at risk or expose any sensitive personal information.
Tokens that aren’t listed on centralized exchanges can still be traded freely on DEXs, provided there’s supply and demand.
Cons of DEXs
Trading volumes and liquidity
DEXs are still relatively niche, so there isn’t always supply or demand for the crypto assets you wish to trade. You may not be able to find the trading pairs you want to use, and if you do, assets might not trade at a fair price.