AskFast

faithfulness_score: Hallucinations (17/17): [1] Decentralized exchanges (DEX) are cryptocurrency trading platforms that operate without a central authority or intermediary | [2] Instead of relying on a company that holds users’ funds and matches orders, a DEX uses smart contracts—self‑executing code on a blockchain—to facilitate peer‑to‑peer trades directly from users’ wallets | [3] **Key characteristics of DEXs** → | Feature -- **Permissionless** | Description -- Anyone with a compatible wallet can trade without registration or KYC. | | [4] **Key characteristics of DEXs** → | Feature -- **Non‑custodial** | Description -- Users retain full control of their private keys and assets; the protocol never holds funds. | | [5] **Key characteristics of DEXs** → | Feature -- **On‑chain execution** | Description -- Trades are settled on the blockchain, providing transparency and immutability. | | [6] **Key characteristics of DEXs** → | Feature -- **Liquidity models** | Description -- • **Order‑book DEXs** (e.g., dYdX) mimic traditional exchanges.<br>• **Automated Market Makers (AMMs)** (e.g., Uniswap, SushiSwap) use liquidity pools and pricing formulas. | | [7] **Key characteristics of DEXs** → | Feature -- **Censorship‑resistant** | Description -- No single entity can block or reverse transactions. | | [8] **Key characteristics of DEXs** → | Feature -- **Composability** | Description -- DEX smart contracts can be combined with other DeFi protocols (yield farms, lending, etc.). | | [9] **Key characteristics of DEXs** → | Feature -- **Reduced counter‑party risk** | Description -- Since trades are executed by code, there’s no reliance on a central party’s solvency. | | [10] **Key characteristics of DEXs** → **Advantages** → Greater privacy and control over assets | [11] **Key characteristics of DEXs** → **Advantages** → Lower barriers to entry for global users | [12] **Key characteristics of DEXs** → **Advantages** → Innovation through composable DeFi building blocks | [13] **Key characteristics of DEXs** → **Challenges** → Typically higher transaction fees (especially on congested chains) | [14] **Key characteristics of DEXs** → **Challenges** → Slower trade execution compared to centralized exchanges | [15] **Key characteristics of DEXs** → **Challenges** → Limited customer support and dispute resolution | [16] **Key characteristics of DEXs** → **Challenges** → Smart‑contract bugs can lead to loss of funds | [17] **Key characteristics of DEXs** → **Challenges** → Overall, DEXs are a core component of the decentralized finance (DeFi) ecosystem, enabling open, trustless trading of tokens directly on blockchain networks