Decentralized crypto exchanges ( DEX ) are the backbone of decentralized finance (DeFi). These are services that allow you to exchange one token for another anonymously, without KYC, an authoritarian view, and the restrictions of centralized exchanges and regulators. There are hundreds of them ( 144 in CMC), in various blockchains, new ones appear every day, including fraudulent ones.
Many DEX exchanges have their own token, for blocking which in exchange smart contracts they pay rewards to owners. This process is called staking . In this way, exchanges encourage token holders and receive liquidity. The total amount of daily rewards is limited, so the more funds in a particular pool, the lower the reward for each of the participants. The annual percentage ( APY ) is floating and varies greatly depending on the tokenomics of the projects: from a modest 20% per annum to 1000% at the very beginning of staking.
The main risk of losing funds when staking, even in a stable project, is the fall in the value of the token , which will block the rewards from staking. This may be due to token inflation or due to the market cycle. Therefore, you should be smart about when to buy a token. If the market is at the peak of the cycle, then in the event of a collapse, the price of the token will drop a lot and at the moment you will be in the red. As always, it is better to buy tokens for staking on market corrections, but if you are not worried about exchange rate fluctuations in the moment, then you can also take on a growing market (I described crypto buying strategies here ). Rewards in the long run will cover losses from rate fluctuations, unless, of course, you have chosen a one-day exchange.
An important point is the likelihood of the exchange being hacked by attackers. The longer and more stable the project is, the less likely it is to be hacked. Code audits, even from well-known companies like Certik, are not a guarantee of security, so you should always take this possibility into account and diversify your contributions to several similar projects.