What is a decentralised exchange?¶

A decentralised exchange is a blockchain-based service or protocol that allows users to swap digital assets without placing every trade through a conventional custodial exchange account.

Avoid the dangerous assumption¶

The dangerous assumption is that decentralised means anonymous, unregulated, provider-free or impossible to investigate.

Trades are commonly executed through smart contracts using a wallet controlled by the user or another party.

The blockchain may record the wallet addresses, contract interactions, token movements, fees and timestamps.

There may be no conventional customer account or know-your-customer record for the trade itself. The website or interface may still create browser, domain or access evidence.

However, the wallet may still be linked to an exchange, device, website account, domain, interface provider or earlier funding source.

Some decentralised exchanges rely on liquidity pools rather than matching one customer directly with another.

The apparent counterparty may therefore be a smart contract.

Preserve the network, wallet address, transaction hash, exchange or protocol name, smart-contract addresses, token contracts, amounts and fees.

Do not rely only on the trading interface’s displayed transaction summary.

The on-chain record may contain several movements and contract calls.

A decentralised exchange interaction does not identify the human user or prove criminal intent.

Attribution still depends on provider, device, key, communication and contextual evidence.

Complex contract activity may require specialist analysis.

When reporting, distinguish the wallet, protocol, smart contract, assets and person proven to control the transaction.

Operational takeaway¶

Use the blockchain to reconstruct decentralised-exchange activity and attribute the controlling wallet through separate device, provider, key and contextual evidence.