The Decentralized exchange is becoming the backbone of the cryptocurrency system. Decentralized exchange works on smart contracts, Where buyers & sellers can swap their cryptos without the need for central authorities. The DEX platforms provide users to keep control of their private keys. The different types of DEX are mentioned below.
AMM (Automated Market maker)
ON Chain Order Books
OFF Chain Order Books
DEX Aggregators
Let’s see the Different types of DEX in detail.
AMM ( Automated Market Maker )
Nowadays the majority of popular DEXs fall into the automated market maker category. An automated market maker developed from smart contract technology, that processes orders that are fulfilled and tracks the price of cryptocurrencies.
The AMMs don’t have an order book, AMM generally doesn’t support more complex order types. But, it allows users to contribute their assets to liquidity pools, and from these pools, users can earn share fees generated by source liquidity. AMM allows users to create a market on a blockchain.
This is the same as other DEX models, the transaction must chain settle any trade. Some DEXs opposed to AMMs tend to be relatively user-friendly and integrated with a cryptocurrency wallet.
On-Chain Order Books
In the decentralized exchange, the ON-chain process orders modifying and canceling orders. This is one of the most decentralized and transparent procedures because it Doesn’t need any third-party verification, so this is the most trusted one.
By placing all levels of an order on the blockchain, DEXs have each node on the network perform the time-consuming process of having miners store the order permanently and make payments.
Off-Chain Order Book
The off-chain order book is, in some ways still decentralized, but this order book is more centralized than the prior one. Instead of posting each order on the blockchain, they are stored elsewhere.
DEX Aggregators
Dex aggregators are comparable to a decentralized exchange search engine, as they are decentralized exchanges, They are integrated into decentralized exchanges to eliminate the need for manual work to find the best price for a token.
Final Words
I hope you got a clear idea about different types of DEXs, and if you have an idea about launching your own cryptocurrency Exchange platform, the best choice for you is choosing the Decentralized Exchange platform, because they offer more advantages for your crypto business.
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