What
DEX (Decentralized exchange) or decentralized exchange, in this type of exchange, all transactions take place automatically and directly between users (peer-to-peer network) according to an automated process that Don't depend on 3rd party or middleman to keep your funds. In other words, users have complete control over funds and transactions without the need for an intermediary to avoid security risks, hackers or fraud. In a decentralized exchange (DEX), it is very difficult to control the source of money or tax it. The exchange has a system that works by generating proxy tokens (crypto assets representing a currency or cryptocurrency, or generating assets (representing shares in a company), or through an escrow system hierarchical multi-organization
Keywords:
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Automatic and direct trading
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Does not depend on 3rd party (intermediaries)
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Avoid risks (security, hacks, scams)
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Escrow is the Investor depositing an amount of money or securities that are accepted escrow to secure the obligation to pay for derivative transactions.
Why
Confidentiality and safety Depositing funds into the DEX will facilitate trading on the centralized exchange. The number of orders or custody at the exchange will be under the authority of an intermediary trading service i.e. a centralized exchange The security system of DEX is more secure because it does not have a specific fulcrum to create opportunities for hackers to attack. Therefore, it is completely impossible to be attacked by hackers and the floor collapse is very unlikely.
Clearness, Authenticity CEX: the exchange has the ability to manipulate and use users' assets, have the ability to create fake coins, adjust market trends (manipulate) for profit DEX: cannot be manipulated due to blockchain usage (transparent, noneditable)
Controls Transactions are made directly between 2 peers, without intermediaries => managed and controlled directly by users
Anonymity Allow anonymous, no authentication (KYC)
Fast transaction No need to place buy/sell orders and wait for order matching, use smart-contracts
Reference
https://academy.binance.com/en/articles/what-is-a-decentralized-exchange-dex
