🔄 DEX – Decentralized Exchange
📋 Table of Contents
🔄 What is the DEX?
DEX is short for Decentralized Exchange and describes the feature on the DeFiChain that enables the trading of dTokens.
Unlike a central exchange (CEX), there is no orderbook managed by a central entity. Instead, trades are handled via trading pools. Such a pool is filled with two types of assets – the ratio between the amounts of those assets in the pool determines the price. The exchange rate is calculated from this ratio.
💧 Liquidity Mining
You can participate in trading pools by providing liquidity. To do so, you need to own both assets and add them to the pool at equal value.
Example: Add dTSLA and DUSD, both worth $100 each.
Once added, the share of the pool you participate in is represented by a pool token in your wallet. Block by block you will receive:
- 🏆 Rewards in DFI
- 💸 A share of exchange fees (commission in the asset that was swapped)
⚠️ A risk to consider when providing liquidity is the Impermanent Loss. Make sure you understand this concept before participating.