Explanation
You keep control of your keys but carry the risk of wrong addresses, malicious contracts and high network fees. There is no support desk.
Trading without an intermediary
On a decentralised exchange you trade straight from your own wallet with a smart contract. There is no account, no deposit and no custodian: the transaction swaps the assets in one movement. That gives control and access to coins listed nowhere else, but shifts all responsibility onto you.
The risks in a row
Four risks are structural: a bug or backdoor in the contract, a fake token with the same name as the real one, an approval granting a contract unlimited access to your balance, and front-running by bots. Always verify the contract address via a second, independent source and revoke old approvals periodically.
European rules
Fully decentralised protocols largely fall outside MiCA, because no company offers the service. As soon as a business behind the interface collects fees, the licensing question becomes sharper. For you as a user this mainly means: no complaints desk, no supervisor to fall back on.
Key takeaways
- Verify the contract address via two sources.
- Limit approvals and revoke them periodically.
- No complaints desk, no recovery from mistakes.
Frequently asked questions
+Is a DEX safer than an exchange?
Different, not safer. You avoid counterparty risk but take on contract and user risk. Most DEX losses come from approvals and fake tokens, not hacks.