# Decentralized Exchanges ⎊ Area ⎊ Resource 42

---

## What is the Architecture of Decentralized Exchanges?

Decentralized exchanges (DEXs) operate on a peer-to-peer model, utilizing smart contracts on a blockchain to facilitate trades without a central intermediary. Unlike centralized exchanges, DEXs do not rely on a traditional order book; instead, many employ automated market maker (AMM) protocols. This architecture allows for permissionless access and transparent transaction settlement directly on the ledger.

## What is the Custody of Decentralized Exchanges?

A defining characteristic of decentralized exchanges is their non-custodial nature, where users retain full control over their private keys and assets throughout the trading process. This eliminates the counterparty risk associated with centralized platforms holding user funds. The self-custody model enhances security by removing a single point of failure for asset management.

## What is the Mechanism of Decentralized Exchanges?

Trading on a DEX involves interacting with liquidity pools rather than matching buyers and sellers directly. Liquidity providers supply assets to these pools, earning fees from transactions. The price discovery mechanism on AMM-based DEXs is determined by a mathematical formula that adjusts the asset ratio within the pool based on trade size.


---

## [Latency-Risk Trade-off](https://term.greeks.live/term/latency-risk-trade-off/)

## [Transaction Finality Delay](https://term.greeks.live/term/transaction-finality-delay/)

## [Order Book Curvature](https://term.greeks.live/term/order-book-curvature/)

## [Order Book Signatures](https://term.greeks.live/term/order-book-signatures/)

## [Real-Time Collateralization](https://term.greeks.live/term/real-time-collateralization/)

## [Off-Chain Computation Oracles](https://term.greeks.live/term/off-chain-computation-oracles/)

## [Order Book Data Ingestion](https://term.greeks.live/term/order-book-data-ingestion/)

## [Zero-Knowledge Integration](https://term.greeks.live/term/zero-knowledge-integration/)

## [Delta Adjustment](https://term.greeks.live/term/delta-adjustment/)

## [Real Time Solvency Proof](https://term.greeks.live/term/real-time-solvency-proof/)

## [Real-Time Finality](https://term.greeks.live/term/real-time-finality/)

## [Portfolio Gamma Exposure](https://term.greeks.live/term/portfolio-gamma-exposure/)

## [Order Book Behavior Patterns](https://term.greeks.live/term/order-book-behavior-patterns/)

## [Hybrid Clearing Architecture](https://term.greeks.live/term/hybrid-clearing-architecture/)

## [Cross-Chain Delta Management](https://term.greeks.live/term/cross-chain-delta-management/)

## [Order Book Slippage Model](https://term.greeks.live/term/order-book-slippage-model/)

## [Succinct State Proofs](https://term.greeks.live/term/succinct-state-proofs/)

## [Non-Linear Execution Price](https://term.greeks.live/term/non-linear-execution-price/)

## [Order Book Depth Dynamics](https://term.greeks.live/term/order-book-depth-dynamics/)

## [Mechanism Design Game Theory](https://term.greeks.live/term/mechanism-design-game-theory/)

## [Order Book Imbalance Metric](https://term.greeks.live/term/order-book-imbalance-metric/)

## [Non-Linear Price Impact](https://term.greeks.live/term/non-linear-price-impact/)

## [Order Book Depth Effects](https://term.greeks.live/term/order-book-depth-effects/)

## [Off Chain Proof Generation](https://term.greeks.live/term/off-chain-proof-generation/)

## [Zero-Knowledge KYC](https://term.greeks.live/term/zero-knowledge-kyc/)

## [Zero-Knowledge Validation](https://term.greeks.live/term/zero-knowledge-validation/)

## [Order Book Finality](https://term.greeks.live/term/order-book-finality/)

## [Zero-Knowledge Succinct Non-Interactive Arguments](https://term.greeks.live/term/zero-knowledge-succinct-non-interactive-arguments/)

## [Private Financial Systems](https://term.greeks.live/term/private-financial-systems/)

## [Option Position Delta](https://term.greeks.live/term/option-position-delta/)

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```


---

**Original URL:** https://term.greeks.live/area/decentralized-exchanges/resource/42/
