What is a DEX?

What is a DEX?

Why not just use that big exchange they named the sports arena after?

DEX stands for decentralized exchange. ShadeSwap, Osmosis, and Uniswap are DEXs. A decentralized exchange is governed by code (specifically smart contracts) that are programmed into and built on top of a particular blockchain. These smart contracts are, in-part, a mathematical technology that governs the rules of what happens on the exchange.

What about the “decentralized” part of the exchange? What does that mean?

  • Ownership is decentralized. The exchange belongs to the community surrounding it. With ShadeSwap, everyone who owns SHD has a voice. Holders can deliberate ideas with the community and participate in decision-making (governance).
  • The code and contracts that govern the rules of the exchange aren’t hidden. (At least not in best-practice). They are open-source and can be viewed and questioned by anyone who can read the code.
  • When you use a DEX, you are trusting math that someone put on a blockchain. This is what the crypto world calls “trustless”. Math isn’t greedy. Smart contracts don’t have a corruptible soul.

A CEX (centralized exchange) does not operate on these principles. Examples of centralized exchanges include FTX, Coinbase, and Kraken. These are governed by people. And history has proved that the desire for power and wealth can bend a human being and cause them to operate differently.

For users, this uncomfortable human dynamic is heightened by the fact that when your crypto is on a CEX, it is not in your custody. There are countless stories of users losing funds - sometimes everything - when a CEX freezes withdrawals, folds, or the founder absconds with funds.

What will you do with your crypto? Will you self-custody your digital assets in smart contracts on a decentralized protocol where you are part-owner? Or will you trust a centralized entity to hold your crypto and do what is best for you?

Both approaches have their risks. The choice is up to you.


Shade Protocol is an ambitious array of application-layer products focused on a simple end user experience that involves the incorporation of privacy by default. These interconnected privacy-preserving DeFi products built on Secret Network will change DeFi as we know it — empowering the next generation of value creation and exchange. Shade Protocol is launching Silk: a privacy-preserving over-collateralized stablecoin pegged to a basket of global currencies and commodities, built on Secret Network.

Without privacy, DeFi is incomplete. Traditional financial markets offer a degree of privacy for users, and as a result offer up greater protections in some capacity than existing DeFi markets. Shade Protocol will be the world’s first truly cohesive decentralized and privacy-preserving financial applications — ushering in a golden era for Web3. Shade Protocol will always push for privacy by default, privacy as an expectation, and privacy as the key to unlocking the full value of a decentralized future.

But we can’t do this without community. We need you to join our community and help make Silk and Shade Protocol a reality.

Join The Shade Protocol Community

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Information provided in this post is for general informational purposes only and does not constitute formal investment advice. Please read the full disclaimer at shadeprotocol.io/disclaimer before relying on any information herein.