Decentralized Exchange (DEX) Guide: How to Truly Take Control of Your Crypto Assets

Today, the cryptocurrency space is no longer just about simple buying and selling. The rise of decentralized exchanges (DEXs) signifies a profound transformation regarding “asset ownership and control.” Imagine in traditional finance or centralized exchanges, you must entrust your funds to an intermediary, but in the world of DEXs, your assets are always under your control, and trades are executed peer-to-peer via smart contracts.

Evolutionary History

From the concept to mainstream crypto trading, the market was almost entirely dominated by centralized exchanges. While users traded decentralized crypto assets, the process heavily relied on trusted third parties. Early attempts at decentralized trading often failed due to liquidity shortages and poor user experience.

A true turning point occurred in 2018 with the birth of Uniswap, which introduced the AMM (Automated Market Maker) model. This innovation fundamentally changed how liquidity is provided. It allows any user to become a market maker by providing assets to liquidity pools and earning trading fees. This model greatly lowered the barrier to market creation.

Since then, the DEX ecosystem has experienced explosive growth. From Uniswap and SushiSwap on the Ethereum mainnet to PancakeSwap across multi-chain ecosystems, and Curve focused on stablecoin trading, various types of DEXs have emerged like mushrooms after rain.

Core Mechanisms

Compared to traditional centralized exchanges, the core advantage of DEXs lies in their non-custodial trading model. Users do not need to deposit assets into exchange wallets but trade directly by connecting their wallets (such as MetaMask). Transactions are automatically executed via smart contracts on the blockchain, and assets remain in the user’s wallet until the transfer is confirmed.

Currently, mainstream DEXs mainly adopt two models: AMM-based and order book-based. The AMM model completely discards the order book, with trading prices automatically determined by algorithms such as the constant product formula (x * y = k), based on the ratio of assets in the liquidity pool. Users interact with the contract rather than specific trading counterparts. The order book-based DEX, on the other hand, brings the traditional order book model onto the blockchain. While this approach aligns more with traditional traders’ habits, it often involves high latency and costs due to on-chain order matching, typically requiring layer 2 solutions for optimization.

Main Categories

The world of DEXs is not monolithic. Based on their design goals and operation modes, they can be roughly divided into several major categories, each with its focus, serving different user needs.

General-purpose AMM DEXs are the foundation of the ecosystem. For example, Uniswap supports nearly all Ethereum ERC-20 tokens, with a very simple user interface, making it the starting point for most users to access DEXs.

Asset-specific DEXs offer deep optimization. Curve Finance is a typical example, with algorithms designed specifically for stablecoins and pegged assets, enabling extremely low slippage and trading costs among these assets.

Aggregation DEXs act as “trading optimizers.” Platforms like 1inch and Matcha do not directly maintain liquidity pools but split user trading demands and route intelligently across dozens of liquidity sources across the network to find the best prices.

Derivatives DEXs extend trading into futures, perpetual contracts, and other complex products. Platforms like dYdX offer leverage up to 20x or more, catering to advanced traders.

Current Status

By 2026, the DEX market has become an indispensable pillar of the crypto ecosystem. A significant portion of the total value locked (TVL) in DeFi (Decentralized Finance) resides in various DEX liquidity pools, forming the liquidity backbone of the entire ecosystem.

According to the latest market data, the overall crypto market has recently been consolidating at high levels. For example, Bitcoin’s price repeatedly fluctuates around the $91,000 mark with small 24-hour changes. This reflects a temporary balance of bullish and bearish forces after a rally, with investor sentiment becoming more cautious. Such macro market volatility directly impacts DEX activity. When market sentiment turns bearish, perpetual contract funding rates on both centralized and decentralized exchanges may turn negative simultaneously.

Meanwhile, the core assets of decentralized exchanges also show independent price movements. Take Uniswap’s governance token UNI as an example: as of January 9, 2026, its price is about $5.96, with a market cap of $3.94 billion. Its 24-hour trading volume remains around $152 million, with moderate market participation and ample liquidity.

Gate’s platform token GT has also performed well recently, briefly surpassing $18.65, setting a new high, indicating strong growth momentum in the platform’s ecosystem. This indirectly confirms that integrated trading platforms combining the advantages of CEX and DEX are gaining market recognition.

How to Combine the Strengths of CEX and DEX?

In today’s crypto world, CEXs and DEXs are no longer in a “choose one” opposition. Mature investors are learning to blend both based on their needs to achieve an optimal balance of security, efficiency, and opportunity. For large spot trades of mainstream assets or fiat on/off ramps, CEXs remain the preferred choice due to their depth and convenience. For exploring emerging assets, long-term holding with full control of private keys, or participating in DeFi activities like liquidity mining, DEXs are irreplaceable tools.

A typical strategy is: buy mainstream assets with fiat on a CEX, then transfer them to a personal wallet, and use DEXs to swap for niche or emerging tokens, depositing into liquidity pools to earn yields. Leading trading platforms like Gate are actively building bridges between these two worlds. Users can enjoy the liquidity and speed of CEXs while seamlessly and securely accessing the mainstream DEX ecosystem for broader asset exploration.

On the Uniswap platform, over $1 billion worth of assets flow through smart contracts daily. Behind this are countless liquidity pools working tirelessly, forming a 24/7, global, open financial market foundation for everyone.