The DEX trading volume suggests that crypto users are very bullish on decentralization.

A decentralized exchange (DEX) is a platform that facilitates peer-to-peer (P2P) cryptocurrency transactions. DEXs are central to the broader vision of decentralized finance, where users are able to buy and sell tokens without involving third-party centralized institutions such as banks. DEXs are able to operate free from centralized institutions by leveraging liquidity provided by individuals and groups.

The DEX market has grown from relative obscurity to a sector that sees billions of dollars in daily trading volume across several networks, including Ethereum, Solana, and BNB Chain. Monthly trading volume across all DEXs has rarely dropped below $60 billion since 2021 and at times exceeded $500 billion, according to DeFiLlama.

While centralized exchanges such as Binance and Coinbase have established their brands worldwide, many crypto trading enthusiasts prefer to stick to decentralized alternatives. They believe that Satoshi's whitepaper instructed the industry to create a true P2P financial system, and the only way to achieve this is through DEXs.

DEX volume on the Solana exploded in early 2025. Source: DeFiLlama

How Does a DEX Work in 2025?

At their core, DEXs are essentially just smart contracts. These self-executing lines of code follow predetermined rules that are implemented automatically when certain conditions are met. A simplified example of this would be a trader sending ETH in return for ARB on a DEX. The smart contract automatically executes this swap based on the current price and available liquidity.

These smart contracts establish the prices of various cryptocurrencies against each other algorithmically, using what are known as "liquidity pools." These pools hold reserves of both tokens in a trading pair, such as ETH and ARB. The price of each token within the pool is determined by the ratio of the two tokens. If more ETH is swapped for ARB, the price of ARB increases relative to ETH, and vice versa.

Liquidity pools are central to how DEXs operate. They provide the necessary reserves of tokens for traders to buy and sell, enabling decentralized trading. Individuals and other entities provide liquidity by depositing an equal value of both tokens into the pool, earning a share of the trading fees in return. This is different from centralized exchanges, which rely on a traditional order book system managed by the exchange itself.

DEX vs. CEX: Decentralization, Self-Custody, and Privacy

CEX trading volume remains higher than DEXs despite some of the clear downsides associated with using a centralized entity for cryptocurrency trading.

A DEX is a platform that facilitates the direct exchange of cryptocurrencies between users, without the need for a central authority. This contrasts with CEXs, which act as intermediaries, holding users' funds and matching buy and sell orders.

Self-custody is a crucial distinction between DEXs and CEXs. On a DEX, users maintain control of their private keys, which are essential for accessing and managing their cryptocurrency. This gives users full ownership and reduces the risk of losing funds due to exchange hacks or insolvency. CEXs, on the other hand, require users to deposit their funds, meaning the exchange holds the private keys.

Privacy also differs significantly. DEXs often allow for greater user anonymity, as they typically don't require the extensive Know Your Customer (KYC) verification processes mandated by CEXs. This can provide users with more privacy in their transactions.

The Benefits of Using a DEX over a CEX

The benefits of using a DEX over a CEX range from security advantages to potential trading upsides. Due to the centralized nature of CEXs, they simply can't offer the same free-market style trading experience as a DEX.

• No KYC (Privacy): DEXs often allow trading with minimal or no Know Your Customer (KYC) requirements, providing greater user privacy. This contrasts with CEXs, which typically mandate extensive personal information verification, raising concerns about data security and surveillance.

• Finding New Tokens (Early Access): Recently launched tokens with smaller market capitalizations can often be found on DEXs before they migrate to larger, centralized exchanges. This early access provides the opportunity for traders to potentially capitalize on price appreciation before the token becomes widely known.

• Self-Custody (Security): DEXs empower users with self-custody of their private keys, meaning they have complete control over their funds. This significantly reduces the risk of exchange hacks or breaches, as illustrated by the ByBit hack that resulted in over $1 billion in stolen assets. With DEXs, the responsibility for security lies with the user, but the potential for loss due to exchange failures is eliminated.

• Liquidity Provision (Participation): DEXs utilize Automated Market Makers (AMMs) that rely on liquidity pools. Anyone can participate in these pools by providing an equal value of two tokens, earning a share of the trading fees. This allows users to actively contribute to the protocol's functionality and generate returns, unlike CEXs, where liquidity is typically provided by the exchange itself or market makers.

  
  

Possible Disadvantages of Using a DEX

While most crypto traders agree that the advantages of DEXs make them superior to CEXs, this doesn't mean that they don't have any downsides. When interacting with a DEX, it's important to remember that it's an autonomous protocol based on smart contracts, with no centralized authority, which means no customer service, minimal regulation, and technically complex features.

Here are some of the potential disadvantages of using a DEX:

• Risky Tokens: DEXs often list a wide variety of tokens, including those that are not vetted as thoroughly as on CEXs. This means there's a higher risk of encountering scam tokens or projects with little to no real-world utility.

• Smart Contracts are Fallible: DEXs rely on smart contracts, and while they offer automation and transparency, they are also vulnerable to bugs and exploits. A flaw in the smart contract code can lead to the loss of funds, and there's no central authority to appeal to for recourse.

• No Customer Service: Unlike CEXs, DEXs generally lack customer support. If you encounter issues with a transaction or have questions about the platform, you're largely on your own to troubleshoot and find solutions.

  
  

Despite these disadvantages, it appears that the market is increasingly shifting towards using DEXs. This could be due to the increasingly high-profile security incidents involving CEXs. A data point that illustrates the growth of DEXs is the monthly trading volume experienced by Solana-based DEXs earlier in 2025, which saw a surge to $250 billion.

The R0AR DEX: The Future of Crypto Trading is Decentralized

The R0AR DEX is built into the project's broader DeFi ecosystem, which includes the native $1R0R token, the Executive R0AR Society (ERS) NFT collection, yield farming tools, and the R0AR Portal. 

The team and community firmly believe that the trend towards decentralization in crypto trading will continue, but the threat of centralization can only be overcome if a user-friendly DEX that offers security, self-custody, and the capacity to onboard new users is created. 

The R0AR xCHANGE aims to be this exchange, with simple on and off-ramps, a native wallet for security, and a supporting community that helps onboard new users into the world of decentralized finance safely.