Decentralized Trading

Definition ∞ Decentralized trading involves the exchange of assets without the need for a central intermediary or authority. Transactions are executed directly between parties, often facilitated by smart contracts on a blockchain. This method aims to provide greater user control over assets and reduce counterparty risk.
Context ∞ Decentralized trading platforms, commonly known as DEXs, are currently a focal point for innovation in digital asset markets. Debates persist regarding their scalability, user experience compared to centralized exchanges, and the regulatory frameworks that may apply to their operation. Developments to watch include improvements in automated market maker (AMM) algorithms, cross-chain interoperability for DEXs, and enhanced liquidity provision mechanisms.