Decentralized Exchange

A form of market making done via a smart-contracts. In this setup the order-book is based on peer-to-peer transactions instead of through a central party like a crypto exchange. This contrasts with AMM (automated market makers) who don't have an order book and instead use liquidity pools.

Decentralized exchanges lack the ability to withdraw currencies like dollar and Euros because they have no access to the banking system to issue payments.

See also crypto exchange, bucket shop, mixer and money laundering.

References

1. Allen, Hilary J. 2022. ‘DeFi: Shadow Banking 2.0?’ William & Mary Law Review, Forthcoming.
2. Walch, Angela. 2019. ‘Deconstructing ‘Decentralization’: Exploring the Core Claim of Crypto Systems’. C. Brummer (Ed.), Crypto Assets: Legal and Monetary Perspectives, 1–36. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3326244.
3. Anker-Sørensen, Linn, and Dirk A Zetzsche. 2021. ‘From Centralized to Decentralized Finance: The Issue Of’. Available at SSRN 3978815. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3978815.
4. Aramonte, Sirio, Wenqian Huang, and Andreas Schrimpf. 2021. ‘DeFi Risks and the Decentralisation Illusion’, 16.
5. Barbereau, Tom, Reilly Smethurst, Orestis Papageorgiou, Johannes Sedlmeir, and Gilbert Fridgen. 2022. ‘Decentralised Finance’s Unregulated Governance: Minority Rule in the Digital Wild West’. Available at SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4001891.
6. Soatok. 2021. ‘Against Web3 and Faux-Decentralization’. Dhole Moments. 19 October 2021. https://soatok.blog/2021/10/19/against-web3-and-faux-decentralization/.