[Animats]

A distributed exchange is a matching service. The trade execution is distributed. But somebody has to maintain the order book and means for distributing and displaying it. When there's a match, something tells two smart contracts to talk to each other and go. The blockchain itself is not a matching engine.

[chrisco255]

Decentralized exchanges do not typically run on an order book model. Instead liquidity providers allocate capital in specific price ranges that follow a determininistic price curve ratio and a simple formula is used to rebalance as traders swap between token pairs.

See:

https://medium.com/coinmonks/uniswap-v3-explained-57e0cdf867...

[hanniabu]

To add to this, there are order book exchanges though, such as Matcha.xyz

[akritrime]

There are two things. First, a distributed exchange can be built around an AMM, so match making is essentially lazy because you are selling into and buying from an automated liquidity pool, instead of depending on market makers and matching orders. Second, there are order book based protocols that implement order matching as a decentralized consensus mechanism. So the blockchain itself can be a matching engine, provided that's what it's execution environment is built to do.

Underlying all the buzzwords, blockchains are about distributed communications with economic incentives attached to them and a more complex leader election mechanism. So there can be many things that can have the term blockchain slapped on them with a bit of tweaking.