On-Chain Foreign Exchange

Definition ∞ On-chain foreign exchange refers to the direct exchange of different digital assets or cryptocurrencies conducted entirely on a blockchain network. This process utilizes smart contracts to facilitate atomic swaps or decentralized exchanges, removing the need for traditional intermediaries. It enables peer-to-peer currency conversions with transparent and verifiable execution.
Context ∞ On-chain foreign exchange represents a significant advancement in decentralized finance, offering users greater control and transparency over their currency conversions. The current situation involves increasing development of sophisticated decentralized exchange protocols and liquidity pools to support a wider array of asset pairs. A key debate surrounds the regulatory classification and oversight of these decentralized trading venues.