The essentials
Decentralized exchanges allow swaps through contracts rather than a centralized matching service. Automated market makers quote prices from liquidity pools, while some protocols use on-chain order books.
What to consider
Liquidity providers earn fees but face inventory risk, contract exploits and impermanent loss. A high quoted yield may reflect token incentives rather than durable revenue.
Put it into practice
Review contract addresses, audits and approval limits. Set a reasonable slippage tolerance and avoid signing transactions you cannot explain.