# Exchanging stablecoins: exchange vs. Fee AMM

Tempo features an enshrined decentralized exchange (DEX) designed specifically for trading between stablecoins of the same underlying asset (e.g., USDG to USDT). The exchange provides optimal pricing for cross-stablecoin payments while minimizing chain load from excessive market activity.

The exchange operates as a singleton precompiled contract at address `0xdec0000000000000000000000000000000000000`. It maintains an orderbook with separate queues for each price tick, using price-time priority for order matching.

:::info
**Exchange vs. Fee AMM** — these are two different systems. The Exchange is the user-facing market: you (or your app) trade stablecoins at market prices via swaps and orders against an orderbook. The [Fee AMM](https://tempo.xyz/developers/docs/protocol/fees/fee-amm) is protocol fee-conversion liquidity: it converts users' transaction-fee payments into validators' preferred tokens at a fixed price through protocol-driven swaps, and is not a trading venue. See [Exchange vs. Fee AMM](#exchange-vs-fee-amm) below.
:::

Trading pairs are determined by each token's quote token. All TIP-20 tokens specify a quote token for trading on the exchange. See [Quote Tokens](https://tempo.xyz/developers/docs/protocol/exchange/quote-tokens) for more information on quote token selection and the optional [pathUSD](https://tempo.xyz/developers/docs/protocol/exchange/quote-tokens#pathusd) stablecoin. See the [Stablecoin DEX Specification](https://tempo.xyz/developers/docs/protocol/exchange/spec) for detailed information on the exchange structure.

The exchange supports three types of orders, each with different execution behavior:

| Order Type | Description |
|------------|-------------|
| [**Limit Orders**](https://tempo.xyz/developers/docs/protocol/exchange/providing-liquidity#limit-orders) | Place orders at specific price levels that wait in the book until matched or cancelled. Orders are added to the book immediately when placed. |
| [**Flip Orders**](https://tempo.xyz/developers/docs/protocol/exchange/providing-liquidity#flip-orders) | Special orders that automatically reverse to the opposite side when completely filled, acting like a perpetual liquidity pool. When a flip order is fully filled, the same `orderId` is rewritten on the opposite side and emits `OrderFlipped`. |
| [**Market Orders**](https://tempo.xyz/developers/docs/protocol/exchange/executing-swaps#swap-functions) | Execute immediately against the best available orders in the book (via swap functions). Swaps and cancellations execute immediately within the transaction. |

For the complete execution mechanics, see the [Stablecoin DEX Specification](https://tempo.xyz/developers/docs/protocol/exchange/spec).

## Exchange vs. Fee AMM

Tempo has two stablecoin-swapping systems that are easy to confuse. They serve different purposes:

| | Exchange (DEX) | [Fee AMM](https://tempo.xyz/developers/docs/protocol/fees/fee-amm) |
|---|---|---|
| **Purpose** | User-facing stablecoin trading | Converting transaction fees into validators' preferred tokens |
| **Who initiates swaps** | Users and apps | The protocol, automatically (plus arbitrageurs rebalancing) |
| **Pricing** | Market-driven orderbook (price-time priority) | Fixed conversion price |
| **Liquidity** | Limit and flip orders resting in the orderbook | LP deposits into per-pair fee pools |
| **Contract** | Stablecoin DEX precompile (`0xdec0…0000`) | `FeeManager` precompile (`0xfeec…0000`) |
| **Use it for** | Swaps, prices, orderbook depth, fills | Letting users pay fees in any stablecoin |

If you want to **trade** stablecoins or read market data (pairs, swaps, orders, prices), use the Exchange. If you want to **enable fee payments** in your stablecoin or provide fee-conversion liquidity, see the [Fee AMM](https://tempo.xyz/developers/docs/protocol/fees/fee-amm).

To get started with the exchange, explore these guides:

* [Executing Swaps](https://tempo.xyz/developers/docs/protocol/exchange/executing-swaps) — Quote prices and swap between stablecoins
* [Providing Liquidity](https://tempo.xyz/developers/docs/protocol/exchange/providing-liquidity) — Place orders and flip orders to earn spreads
* [DEX Balance](https://tempo.xyz/developers/docs/protocol/exchange/exchange-balance) — Manage token balances on the DEX to save gas costs

:::info
For a more complete technical specification including design decisions and details of execution semantics, see the [Stablecoin DEX Specification](https://tempo.xyz/developers/docs/protocol/exchange/spec).
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