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DEX
A DEX (decentralized exchange) is an app that lets you swap one token for another directly from your own wallet, with smart contracts matching and settling the trade. No company holds your funds before or after the swap.
What it means for you. You keep custody, but you also carry every check yourself: anyone can create a token with a familiar name, so confirm the contract address before swapping. Swaps cost a network fee even when they fail, prices can move against you while the trade is pending, and a completed swap cannot be reversed.
Sources: ethereum.org: Get ETH (centralized and decentralized exchanges), ECB Macroprudential Bulletin: Decentralised finance, Uniswap docs: Swaps · checked 4 October 2026
Automated market maker
An automated market maker (AMM) is a smart contract that sets prices by formula instead of matching buyers with sellers. Traders swap against a pool of two tokens, and the price moves with the ratio of the tokens left in the pool.
What it means for you. Because the price is set by the pool's balances, a large trade against a small pool gets a noticeably worse rate than the quoted price. Check the price impact shown before you confirm a swap, and compare it with the size of your trade.
Sources: Uniswap docs: How Uniswap works, BIS Quarterly Review: DeFi risks and the decentralisation illusion, Uniswap docs: Understanding returns (v2) · checked 4 October 2026