Risk involved using DEXs

1. Smart Contract Vulnerabilities: Smart contracts are self-executing contracts with the terms of the agreement directly written into code. DEXs rely on smart contracts to facilitate trades. However, these contracts can have vulnerabilities or bugs that could be exploited by hackers, leading to the loss of funds.

2. Fees: While DEXs generally have lower fees compared to centralized exchanges, users still need to be mindful of transaction fees. These fees can vary depending on network congestion and the type of transaction. It's essential to consider these fees when trading on DEXs to avoid unexpected costs.

3. Slippage: Slippage refers to the difference between the expected price of a trade and the price at which the trade is executed. In highly volatile markets or during periods of high trading volume, slippage can occur, resulting in traders receiving a less favorable price than expected. This can lead to losses for traders.

4. MEV Bots & Sandwich Attacks: Miner Extractable Value (MEV) refers to the potential profits that miners can extract from reordering and including transactions in a block. MEV bots are automated tools used by miners to front-run transactions on the blockchain, exploiting price discrepancies for their own gain. Sandwich attacks involve placing one's own trades between two legitimate trades to manipulate prices and cause losses for traders.

5. Rug Pull Attacks: Rug pull attacks occur when the creators of a decentralized project suddenly abandon the project or drain its funds, leaving investors with worthless or significantly devalued assets. These attacks often target projects with low liquidity or those lacking proper auditing and transparency.

6. Vampire Tokens: Vampire attacks involve a new decentralized protocol draining liquidity from an existing one by offering incentives to users to migrate their funds. This can result in significant losses for users of the original protocol as liquidity is siphoned away.

Token-Specific Risks:

• Token Tax: Some tokens may have additional fees or taxes associated with their use or transfer. It's important to research and understand any token-specific taxes to avoid unexpected costs.

• Token Name Identifier Confusion: Tokens on DEXs can have similar or identical names, leading to confusion among users. It's crucial to verify the token's contract address and other details before trading to ensure you're interacting with the correct token.