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Definition: decentralized exchange

A peer-to-peer platform for cryptocurrencies. A decentralized exchange (DeX) differs from a centralized exchange (CeX) such as Coinbase and Binance that maintains all access to the coins and functions like a Vanguard or Fidelty for crypto.

A DeX, such as Uniswap and SushiSwap, enables people to exchange one crypto token for another using an "automated market maker" (AMM) programmed in a smart contract (see AMM). The exchange rate is determined by a formula (algorithm).

A decentralized exchange requires that users employ their own wallets and store their secret crypto keys in a safe place. The wallet interacts with the Dex via a programming interface (API) that is not standard across all platforms.

Liquidity Mining and Liquidity Pools
Automatic market makers (AMMs) use "liquidity pools" to provide the tokens people want to trade. Anyone can be a "liquidity miner" and deposit funds in the pool to earn fees. See liquidity pool, yield farming and crypto exchange.