decentralized exchanges and dex

In this section, we will discuss decentralized exchanges (DEXs) and some of their features. XRP was the first blockchain to have a decentralized exchange built into it. A DEX allows anyone to buy, sell, and trade various assets directly, without needing intermediaries like banks. It is designed to enable highly efficient currency exchanges or facilitate unique forms of value transfer. For example, if someone creates an NFT (non-fungible token) representing a piece of art and sets its price in a specific currency, a buyer might want to purchase it using a different currency or even a different form of value, such as gold. XRP automatically scans the decentralized exchange to find the best way for both buyer and seller to complete this trade via a framework called "deck" (which is a comprehensive platform for presenting startup business strategies).

Two innovative methods that facilitate these transactions on a DEX are bridging and routing.  
Bridging uses XRP as an intermediary asset to efficiently complete transactions between two non-XRP tokens at minimal cost. This is particularly useful when one of the tokens lacks sufficient liquidity to trade at competitive rates. Routing involves transferring transactions from one currency or value to another by combining the optimal path with the best liquidity across major trading pairs. Returning to our art example: if a buyer wants to purchase an NFT with gold, but the seller prefers to be paid in dollars, the DEX automatically finds the most cost-effective route—perhaps first exchanging gold for XRP, then XRP for dollars.

When it comes to currency trading, a DEX allows users to set maximum prices, bids, and asks. A seller can specify an amount of a digital asset they want to sell and indicate the minimum price they’re willing to accept, while a buyer can place an order to purchase the asset at a specified price or lower. Since there is no central party controlling the trades, all participants are offered fair and equal opportunities to buy and sell at a common rate. Moreover, by using DEXs, users benefit from XRP’s internal advantages—trades are extremely fast and cost-effective. Transactions can be completed within three or four seconds at a cost of just a few cents.