Decentralized crypto exchanges (DEXs) are blockchain-based apps that coordinate large-scale trading of crypto assets between many users. They do that entirely through automated algorithms, instead of the conventional approach of acting as financial intermediary between buyers and sellers. The algorithms that DEXs use are examples of smart contracts.

The idea behind a DEX is “disintermediation,” which means removing middlemen to allow regular people to do business directly with each another. A DEX doesn’t offer custody of users’ crypto assets. Instead, users directly hold all their assets in their own wallets at all times.

Typically, DEXs do away with conventional exchange order books – where buyers and sellers are matched based on order prices and volume – in favor of “liquidity pols.” These are pots of crypto assets sitting under the surface of the exchange, waiting to clear any buy or sell orders that appear. The assets in the pool are sourced from investors, who deposit them in order to earn a yield from transaction fees charged to users of the pool.

DEXs are the cornerstone of decentralized finance (DeFi) and serve as a key “money LEGO” upon which more sophisticated financial products can be built as a result of permissionless composability.

A liquidity locker allows the developer to store LP tokens in a smart contract, revoking his permission to move these LP from a start date (or, more accurately, a start block) to an end date (end block).