DEX vs AMM: What’s the Difference and Why It Matters for Crypto Traders

When you trade crypto without a middleman, you’re using a decentralized exchange, a platform that lets users swap tokens directly from their wallets without relying on a central company to hold their funds. Also known as a DEX, it’s the backbone of DeFi—but not all DEXs work the same way. Most rely on something called an automated market maker, a smart contract system that sets prices using math instead of buy and sell orders from other users. Also known as an AMM, this is what makes trading possible without order books.

The key difference? A DEX is the whole platform—you access it through a website or app. An AMM is the engine inside it. Think of it like a car: the DEX is the vehicle, the AMM is the engine. Not every DEX uses an AMM, but nearly all popular ones do. Platforms like PancakeSwap, Uniswap, and Solarbeam all run on AMM models. They use pools of tokens locked in smart contracts to let you trade. When you swap ETH for USDC, you’re not buying from another person—you’re trading against a pool of funds. The price changes based on how much of each token is in the pool. This system works great for liquidity, but it also creates risks like impermanent loss and slippage on low-volume tokens.

Some DEXs still use older models, like order books, but they’re rare. Most new projects stick with AMMs because they’re cheaper to build and work better with low-liquidity tokens. That’s why you see so many tiny tokens trading on DEXs like MilkshakeSwap or RadioShack Swap—they’re built on AMMs that don’t need big trading volumes to function. But that also means you’re often trading against pools with almost no depth. One big sell can crash the price. That’s why checking liquidity before trading matters more than ever.

Knowing this helps you pick safer platforms. If a DEX has under $100K in liquidity, it’s risky—even if the token looks cheap. If it’s built on a major chain like Ethereum or Arbitrum with a well-audited AMM, it’s more trustworthy. You’ll see this in posts about SundaeSwap on Cardano or LFJ V2.2 on Avalanche—both are DEXs using AMMs, but one has deep liquidity, the other doesn’t. The same goes for Thruster v3 on Blast: it’s a niche DEX, but its AMM is designed for early traders who know the risks.

And it’s not just about trading. AMMs power lending, staking, and yield farming too. Platforms like Aave and Compound use similar math to set interest rates. Even airdrops like the Impossible Finance x CoinMarketCap one rely on AMM pools to distribute tokens fairly. So when you hear "DEX," think of it as the front door. The AMM is the room inside where the real action happens.

Below, you’ll find real reviews of DEXs that use AMMs—some working well, others barely alive. You’ll see which ones are worth your time, which are traps, and why the difference between a solid AMM and a broken one can cost you thousands.