Question 1

What is a DEX?

Accepted Answer

A DEX, or decentralized exchange, is a marketplace where you trade cryptocurrencies directly from your own wallet. There's no company holding your money in the middle — trades are settled automatically by smart contracts running on a blockchain.

Question 2

How is a DEX different from a centralized exchange (CEX)?

Accepted Answer

On a centralized exchange like Coinbase or Binance, you deposit your coins and the company holds them for you. On a DEX, your coins stay in your own wallet until the moment a trade settles. That means more control and privacy, but also more personal responsibility.

Question 3

What does 'decentralized' actually mean here?

Accepted Answer

It means no single company runs the order matching or holds customer funds. Instead, open-source smart contracts on a public blockchain do the work, and anyone can use or inspect them. Control is spread out rather than sitting with one operator.

Question 4

What is 'self-custody' or a 'non-custodial' exchange?

Accepted Answer

Self-custody means you alone hold the keys to your funds — the exchange never takes possession of them. 'Non-custodial' is the same idea: the platform can't freeze, lend out, or lose your coins because it never holds them.

Question 5

Do I need an account to use a DEX?

Accepted Answer

No. There's no sign-up, email, or password. You simply connect a crypto wallet and you're ready to trade. Your wallet is effectively your account.

Question 6

Is using a DEX legal?

Accepted Answer

Using a DEX is legal in most countries, but rules vary and are still evolving. You remain responsible for following your local laws, including any tax obligations on your trades. When in doubt, check the regulations where you live.

Question 7

What is a smart contract?

Accepted Answer

A smart contract is a small program stored on a blockchain that runs exactly as written. On a DEX, smart contracts hold the liquidity and execute your trades automatically, without a human approving each one.

Question 8

What's the difference between spot and derivatives on a DEX?

Accepted Answer

Spot trading means buying or selling the actual token — you own it afterwards. Derivatives (like perpetuals) are contracts that track a token's price so you can bet on it going up or down, often with leverage, without owning the token itself.

Question 9

What is an AMM (automated market maker)?

Accepted Answer

An AMM is the engine behind most spot DEXes. Instead of matching buyers with sellers, it uses pooled funds and a formula to set prices automatically. You trade against the pool, and the price adjusts based on supply and demand.

Question 10

What is a liquidity pool?

Accepted Answer

A liquidity pool is a shared pot of two or more tokens that people deposit so others can trade against it. The pool is what lets you swap instantly, and the people who supply it (liquidity providers) earn a share of the trading fees.

Question 11

What do I need to start using a DEX?

Accepted Answer

Three things: a crypto wallet, some crypto in it (including a little of the blockchain's native coin for fees), and the DEX's website. Once your wallet is connected, you can trade.

Question 12

What is a crypto wallet?

Accepted Answer

A wallet is an app or browser extension that stores your keys and lets you approve transactions. Popular examples include MetaMask, Phantom, and Rabby. The wallet doesn't hold your coins on a server — it holds the keys that prove the coins are yours.

Question 13

What is a seed phrase and why does it matter?

Accepted Answer

A seed phrase is a list of 12 or 24 words that can restore your wallet and all its funds. Anyone who has it controls your money, so write it down offline and never share it or type it into a website. Losing it can mean losing access forever.

Question 14

How do I connect my wallet to a DEX?

Accepted Answer

Click 'Connect Wallet' on the DEX, pick your wallet, and approve the connection in the pop-up. Connecting is free and just lets the site see your address — it can't move funds without you signing each transaction.

Question 15

Why do I need the network's native coin (like ETH or SOL)?

Accepted Answer

Every action on a blockchain costs a small network fee, called gas, paid in that chain's native coin. Even to swap other tokens, you need a little ETH (on Ethereum), SOL (on Solana), and so on to cover those fees.

Question 16

How do I get crypto into my wallet in the first place?

Accepted Answer

Most people buy crypto on a centralized exchange or via an on-ramp service, then withdraw it to their self-custody wallet address. Some wallets also have a built-in 'buy' button that uses a card or bank transfer.

Question 17

What is 'approving' a token, and why does it cost a fee?

Accepted Answer

Before a DEX can swap a token for the first time, you grant its contract permission to use that specific token — this is an 'approval'. It's a one-time on-chain transaction per token, so it carries a small gas fee.

Question 18

Can I use a DEX on my phone?

Accepted Answer

Yes. Most DEXes work in a mobile browser, and wallet apps like MetaMask and Phantom include a built-in browser for exactly this. The experience is very similar to desktop.

Question 19

Is it safe to connect my wallet to a website?

Accepted Answer

Connecting alone is low-risk — it only shares your public address. The risk comes from what you sign afterwards, so only connect to sites you trust and read each transaction request before approving it.

Question 20

How do I make my first swap?

Accepted Answer

Pick the token you have and the token you want, enter an amount, and the DEX shows you the expected result. Review the rate and fees, click swap, then approve the transaction in your wallet. It usually settles in seconds to a minute.

Question 21

What is slippage?

Accepted Answer

Slippage is the difference between the price you expect and the price you actually get, because the market can move between your click and the trade settling. DEXes let you set a slippage tolerance to protect against getting a much worse price.

Question 22

What slippage setting should a beginner use?

Accepted Answer

For large, liquid tokens, 0.1%–0.5% is usually fine. For smaller or newer tokens you may need more, but a very high tolerance can let you get a bad price — so raise it only as much as needed.

Question 23

What is price impact?

Accepted Answer

Price impact is how much your own trade moves the price, which grows when your order is large relative to the pool. A small swap barely moves it; a big swap in a thin pool can cost you noticeably more.

Question 24

What is a DEX aggregator?

Accepted Answer

An aggregator scans many DEXes at once and routes your trade through whichever gives the best overall price, sometimes splitting it across several pools. It saves you from checking each exchange yourself.

Question 25

Why did my swap fail?

Accepted Answer

Common reasons are slippage set too low (the price moved past your limit), not enough native coin for gas, or sudden low liquidity. A failed transaction can still cost a little gas because the network did work attempting it.

Question 26

What is a limit order on a DEX?

Accepted Answer

A limit order lets you set a target price and have the trade execute only when the market reaches it, instead of swapping immediately at the current price. Not every DEX supports them, but many order-book and newer AMM DEXes do.

Question 27

Can I cancel a trade after I submit it?

Accepted Answer

Once a transaction is confirmed on-chain it can't be reversed. While it's still pending you can sometimes cancel or speed it up from your wallet by replacing it, but a settled swap is final.

Question 28

How long does a swap take?

Accepted Answer

Usually a few seconds to a minute, depending on the blockchain and how busy it is. Fast chains like Solana settle almost instantly; Ethereum can take longer when the network is congested.

Question 29

What are perpetuals (perps)?

Accepted Answer

Perpetuals are contracts that track a token's price and let you bet on it rising or falling without owning the token. Unlike traditional futures, they have no expiry date, so a position can stay open as long as you keep it funded.

Question 30

What is leverage?

Accepted Answer

Leverage lets you open a position larger than your deposit — 10× leverage means $100 controls a $1,000 position. It multiplies both gains and losses, so a small price move against you can wipe out your deposit quickly.

Question 31

Should beginners use leverage?

Accepted Answer

Generally no, or only very small amounts. Leverage is the fastest way to lose money in crypto, and high multiples like 50× or 100× can liquidate you on a tiny move. If you're new, start with spot trading.

Question 32

What is liquidation?

Accepted Answer

Liquidation is when your leveraged position is automatically closed because the price moved too far against you and your deposit can no longer cover the loss. You lose the funds (margin) backing that position.

Question 33

What is a funding rate?

Accepted Answer

The funding rate is a small periodic payment exchanged between long and short traders that keeps a perpetual's price close to the real market price. Depending on which side is crowded, you either pay or receive it.

Question 34

What is open interest?

Accepted Answer

Open interest is the total value of all perpetual positions currently open on an exchange. High open interest signals an active, liquid derivatives market with lots of participants.

Question 35

What is margin?

Accepted Answer

Margin is the money you put up to back a leveraged position. 'Cross margin' shares your whole balance across positions, while 'isolated margin' limits risk to the amount assigned to one position.

Question 36

Can I lose more than I deposit on a perp DEX?

Accepted Answer

On most DEXes, no — you can lose the margin backing a position but not more, because it liquidates first. Still, you can lose 100% of that margin very fast, so treat leverage with caution.

Question 37

What fees do I pay on a DEX?

Accepted Answer

Usually two kinds: a network 'gas' fee paid to the blockchain, and a trading fee paid to the DEX and its liquidity providers. On perps you may also pay or receive funding. Aggregators may add a tiny routing fee.

Question 38

What is a gas fee?

Accepted Answer

Gas is the fee that compensates the blockchain for processing your transaction. It varies with network congestion and is paid in the chain's native coin, separate from the DEX's own trading fee.

Question 39

What's the difference between maker and taker fees?

Accepted Answer

A 'maker' adds an order to the book and often pays a lower fee (or even gets a rebate), while a 'taker' removes an existing order and pays a bit more. Simple instant swaps are usually taker-style.

Question 40

Why are fees so different between DEXes?

Accepted Answer

Fees depend on the blockchain (Ethereum gas costs more than Solana), the DEX's design, and how it rewards liquidity providers. Order-book perp DEXes tend to be cheaper per trade than basic AMMs.

Question 41

How can I reduce my trading costs?

Accepted Answer

Trade on cheaper chains or layer-2 networks, use an aggregator for the best rate, avoid tiny trades where gas dominates, and stick to liquid pools to minimize slippage and price impact.

Question 42

Are the fees shown before I confirm a trade?

Accepted Answer

Yes. A good DEX shows the expected rate, the trading fee, and an estimate of gas before you sign. Always review these in the wallet pop-up, since that's the final, binding step.

Question 43

What are the main risks of using a DEX?

Accepted Answer

The biggest are user mistakes (sending to a wrong address or approving a scam), smart-contract bugs, scam tokens, and losing your seed phrase. Market and leverage risk are separate but very real too.

Question 44

Are DEXes safe?

Accepted Answer

Well-established DEXes with audits and years of history are generally robust, but no platform is risk-free. Because you hold your own funds, your personal security habits matter as much as the platform's code.

Question 45

What is a smart-contract audit?

Accepted Answer

An audit is a review of a project's code by security experts to find vulnerabilities before attackers do. Multiple audits from reputable firms are a good sign, though they reduce risk rather than eliminate it.

Question 46

What is a rug pull?

Accepted Answer

A rug pull is a scam where a token's creators drain the liquidity or dump their holdings, leaving buyers with something worthless. They're most common with brand-new, anonymous tokens promising huge returns.

Question 47

How do I avoid scam tokens?

Accepted Answer

Verify the token's official contract address from a trusted source rather than searching by name, be wary of tokens you can buy but not sell, and ignore unsolicited 'free' airdrops that appear in your wallet.

Question 48

What is a token approval, and why can it be risky?

Accepted Answer

An approval lets a contract spend a token on your behalf. Malicious contracts can request unlimited approvals and then drain that token, so only approve sites you trust and revoke old approvals periodically.

Question 49

How do I revoke token approvals?

Accepted Answer

Tools like a wallet's built-in permissions page or a reputable revoke service let you see and cancel approvals you've granted. Reviewing them now and then is good hygiene, especially after using new sites.

Question 50

What is wallet 'draining' and how do I prevent it?

Accepted Answer

Drainers trick you into signing a malicious transaction that hands over your tokens. Prevent it by reading every signature request, avoiding links from DMs or ads, and bookmarking official DEX URLs.

Question 51

What's a hardware wallet and do I need one?

Accepted Answer

A hardware wallet is a physical device that keeps your keys offline and signs transactions without exposing them to your computer. For larger amounts it's one of the best ways to stay safe.

Question 52

If a DEX gets hacked, are my funds safe?

Accepted Answer

It depends. Since you hold your own coins, a front-end or company hack may not touch them, but a smart-contract exploit of a pool you're in can cause losses. Diversifying and using audited protocols lowers the risk.

Question 53

What should I do if I think I've been scammed?

Accepted Answer

Act fast: move any remaining funds to a fresh wallet, revoke approvals you granted to the scam, and stop interacting with the site. Unfortunately, on-chain transactions can't be reversed, so prevention is key.

Question 54

What is TVL (Total Value Locked)?

Accepted Answer

TVL is the total value of all assets deposited in a DEX's pools and contracts. Higher TVL usually means deeper liquidity and a more established platform, though it can rise and fall with prices and incentives.

Question 55

What does trading volume tell me?

Accepted Answer

Volume is how much value has been traded over a period, like 24 hours. High volume signals an active market where it's easier to buy or sell without moving the price much.

Question 56

Why does liquidity matter to me as a trader?

Accepted Answer

Deeper liquidity means tighter prices and less slippage, so you get closer to the quoted rate. In a thin market, even a modest trade can cost you more than expected.

Question 57

What does it mean to 'provide liquidity'?

Accepted Answer

You deposit a pair of tokens into a pool so others can trade against them, and in return you earn a share of the trading fees. It's a way to earn yield, but it carries its own risks like impermanent loss.

Question 58

What is impermanent loss?

Accepted Answer

Impermanent loss is the gap between simply holding two tokens and depositing them in a pool when their prices diverge. If the ratio shifts a lot, you can end up with less value than if you'd just held — the fees you earn aim to offset this.

Question 59

Is high TVL always better?

Accepted Answer

Usually it's a good sign, but not on its own. Some TVL is propped up by temporary reward programs, so look at it alongside steady volume and how long the platform has operated.

Question 60

What is a governance token?

Accepted Answer

A governance token lets holders vote on a protocol's decisions, like fee changes or new features. Many DEXes have one, and it can also share in fees or be used for staking rewards.

Question 61

What is an airdrop?

Accepted Answer

An airdrop is when a project distributes free tokens to users, often to reward early adopters. Some DEXes run 'points' programs hinting that active users may receive a future airdrop.

Question 62

What are points programs?

Accepted Answer

Points are a way for newer DEXes to reward activity before they launch a token. Points have no guaranteed value, but they sometimes convert into an airdrop, which is why traders chase them.

Question 63

Are airdrops free money?

Accepted Answer

Not exactly. Earning them takes real activity, gas, and risk, and some 'airdrops' that appear unprompted in your wallet are scams. Treat genuine ones as a possible bonus, not a sure thing.

Question 64

What does 'staking' mean on a DEX?

Accepted Answer

Staking usually means locking a DEX's token to earn rewards or a share of fees, and sometimes to gain voting power. Terms vary, so check the lock-up period and where the yield comes from.

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