What is DEX and how it works

Decentralized Exchange (DEX) is a trading platform that operates on the blockchain and does not have a centralized fund management structure. DEX allows users to exchange cryptocurrency (more precisely, simultaneously buy new and sell old in the desired equivalent) without the intermediation of a central exchange, the need to register, and deposit funds.

The operation of DEX is based on the use of smart contracts — algorithms that automatically execute transaction conditions when certain conditions are met. These contracts are stored on the blockchain and ensure the security and transparency of transactions.

To use DEX, the user must have a wallet on the same blockchain on which the exchange operates. In the case of STON.fi, this is TON Blockchain. With a wallet and tokens on it, any user can create an order to exchange supported cryptocurrency. Orders are sent to the liquidity pool and executed automatically without any action on the part of the user — you choose the token you want to exchange and the token you want to receive, and the transaction is completed! Unlike centralized exchanges (CEX), on DEX, you do not have to wait for conditions under which it can be executed (on CEX, the seller's and buyer's offers must "match") — on DEX, the transaction is executed immediately, as the exchange is actually carried out with liquidity pools, which we will discuss in the following articles.

DEX also provides various services for getting additional income from crypto assets. On STON.fi, you can provide liquidity to any trading pairs, farm, and stake. More details about these operations will be provided in this guide when we delve into the basics.