Skip to content
Last updated 2026-11-05

What Is DEX?

A DEX, or decentralized exchange, swaps one token for another from your own wallet. This page explains how a swap settles, why the price shifts as you trade, and what you are trusting when you press the button.

Who this is for

Anyone about to swap a token in a wallet, and anyone comparing that experience with an exchange account that has an order book.

What it is

A DEX is a set of contracts holding pools of tokens and quoting prices from the ratio between them. You send token A into a pool and receive token B, minus a fee that stays with the pool's liquidity providers. The whole trade is one transaction and settles on chain.

There is no order book and no buyer waiting on the other side. The pool is the counterparty, and its price is a formula over its balances. That is why a swap can fill at a worse rate than the preview showed a moment earlier.

A swap on Bitgold looks like this: your wallet builds a call to a router contract, you approve the spend if that token is new to the router, and the router moves your tokens through the pool. Set the minimum output too high and the transaction reverts, and you pay gas for the attempt. What Is the Gas Fee? explains what that charge covers.

Why it matters

A DEX is not a company you can call. If a swap returns less than you expected, there is no queue, no chargeback, and no representative to escalate to. The only controls you had were the parameters you set before signing and the wallet that signed them, which is why What Is a Decentralized Wallet? is the relevant mental model.

Slippage is the gap between the quoted and the executed price, and it widens as your trade grows relative to the depth of the pool. A loose tolerance fills at a bad price; a tight one reverts. Ordering matters too, because a large swap is visible before it settles, and a bot can trade ahead of it.

Approvals outlive trades. A router you approved last month can still move that token today, and holding none of the token does not cancel the permission. Review standing approvals instead of adding a new one per trade.

Common misunderstandings

  • "A DEX holds my funds while I trade." It holds pool balances. Your tokens leave your address only inside the transaction you sign.
  • "The quoted price is the price I get." A quote is an estimate from current pool balances. Execution happens later, in a block.
  • "Slippage is a fee the DEX keeps." It is the price impact of your own trade against the pool. The pool fee is a separate, smaller charge.
  • "A failed swap costs nothing." A revert still consumes gas, so a mistake costs BTG even when no tokens move.

Key takeaways

  • A DEX matches your trade against a pool contract, not against an order book.
  • The price you get depends on pool depth, so trade size and slippage tolerance decide the result.
  • Once a swap settles, there is no support desk, reversal, or chargeback.
  • Approvals you grant stay in force after the trade, so review them.

Next steps