tl;dr
- CEXs used to be easier, but today most require full KYC, adding friction, delays, and privacy concerns
- DEXs now offer broader asset access, including long-tail tokens rarely listed on CEXs
- Popular DEXs differ by chain; liquidity leaders usually offer the best execution
- Aggregators like Jupiter or 1inch find optimal prices across multiple DEXs
Why Trade on a DEX?
While CEXs used to be far more convenient, in today’s Web3 landscape, that’s no longer necessarily true.
Nearly every centralized exchange now requires full KYC, even for small traders, adding friction, delays, and privacy concerns. At the same time, DEXs have become significantly more advanced. They offer a wider range of tradable assets, including long-tail tokens that rarely appear on CEXs. Additionally, some DEXs now support features once exclusive to centralized venues, such as perpetual trading and advanced order types.
DEXs also tend to charge lower fees, especially when avoiding the withdrawal and deposit costs associated with CEXs. Combined with self-custody, global accessibility, and improved UX, DEXs are becoming an increasingly attractive option for traders.
Step 1: Setting Up Your Wallet for Security
Using popular, trusted non-custodial wallets is essential for keeping your funds safe. Avoid unfamiliar wallets at all costs!
Security starts before you make a single trade. For long-term storage, hardware wallets like Ledger offer the highest protection by keeping your keys offline. It’s also smart to separate your assets: use a “vault” wallet for holding funds and a dedicated “trading” wallet on MetaMask or Phantom for day-to-day activity.
This way, even if your hot wallet is exposed, your main holdings remain secure. Proper wallet setup is the foundation of crypto safety.
Step 2: Choosing the Right DEX or Aggregator
Different DEXs are popular on different chains, and it’s usually best to trade on the leading DEX of that ecosystem to avoid liquidity issues or unnecessary slippage.
Platforms like Uniswap, Orca, or Trader Joe excel within their respective networks.
If you want the best price across multiple venues, a DEX aggregator such as Jupiter or 1inch can scan all available liquidity and route your swap through the most efficient path. Aggregators are especially useful for larger trades or cross-chain swaps where pricing can vary widely.
Choosing the right venue ensures better execution and fewer surprises.
Step 3: Verifying the Token (Don't Get Rugged)
Verifying the token's authenticity is essential to avoid rug pulls, as scammers occasionally create fake tokens mimicking real projects to trap buyers.
Always copy the contract address (CA) directly from trusted sites like CoinGecko or CoinMarketCap and not from Telegram chats or unverified sources. Cross-check the CA on block explorers (e.g., Etherscan for ETH, Solscan for Solana). Use honeypot detectors like Token Sniffer, Solsniffer, or DetectHoneypot to simulate buys/sells and flag traps.
Watch out for "red flags" like unlocked liquidity, anonymous development teams, or excessive owner control. Protecting your funds is paramount!
Step 4: Configuring the Trade (Effectiveness)
Optimizing trade settings is key to executing efficiently, minimizing costs, and avoiding losses from failed or exploited transactions.
Understanding Slippage Tolerance
Slippage occurs when the executed price differs from the expected quote due to market volatility or low liquidity.
On DEXs, high slippage tolerance ensures trades go through but exposes you to sandwich attacks. This means MEV bots can front-run your trade to worsen the price, then back-run to profit.
Set low tolerance (0.5–1% for liquid pairs; higher for volatile/low-liquidity tokens) to limit exploitation.
Managing Gas Fees
Ethereum gas fees spike during network congestion (e.g., peak US/EU hours). Time trades for off-peak periods (late nights UTC or weekends) using trackers like Etherscan. On Solana, fees remain negligible (~$0.00025) even under load.
Step 5: Confirming the Transaction Safely
Before signing any transaction, always scrutinize the wallet pop-up. Verify the domain in your browser bar matches the official DEX URL exactly (e.g., uniswap.org, not uniiswap.org) to avoid near-identical phishing sites.
Always review all transaction specifics before confirmation, including token quantities, granted approvals, and the destination address. Be aware that unlimited token approvals are a common vector in wallet signature phishing attacks.
Last but not least, resist the urge to blindly click "Confirm." Take a moment to verify the website's URL and scrutinize the contract interactions. Adopting this final, careful habit is the most effective defense against unauthorized wallet draining.
Post-Trade Hygiene: Revoking Permissions
The most overlooked yet critical step is revoking token approvals.
When you "Approve" a token on a DEX, you often grant the contract unlimited (infinite) spend allowance. This can be a major risk if the contract is ever compromised or malicious.
Scammers exploit lingering approvals to drain wallets later. Practice good crypto wallet hygiene by regularly revoking unnecessary permissions. Use free tools like Revoke.cash (simple interface) or directly on Etherscan (Token Approvals tab). Connect your wallet, scan for approvals, and revoke high-risk or unused ones.
Make this a habit after every trade!
Common DEX Scams to Watch Out For
DEX trading attracts scammers, so stay alert to these common traps!
Fake Airdrops
"Claim your free tokens" messages flood Discord, X, or Telegram. Clicking links connects to malicious sites that prompt wallet signatures, draining funds instantly. Legitimate airdrops never require upfront connections.
Wallet Drainers
Phishing links shared in chats or DMs lead to fake sites mimicking Uniswap/Raydium. Signing "approvals" or "claims" grants unlimited access, emptying your wallet. Always verify URLs manually.
Impersonation Sites
Scammers buy Google Ads for "Uniswap" or "Jupiter," redirecting to spoofed domains (e.g., uniswаp.org with Cyrillic letters). These crypto phishing scams look identical but steal signatures.Never rush clicks, verify every URL, and revoke approvals regularly.
