Advantages of CEX and DEX exchanges

Cryptocurrency exchanges have gained popularity in wide circles since 2017, when bitcoin went into serious growth and reached 20 thousand for one BTC. Initially, bitcoin was traded on centralized exchanges. However, over time, the popularity of cryptocurrencies created the prerequisites for the emergence of a new type of trading platform.

CoinMarketCap currently lists 305 centralized (CEX) and decentralized (DEX) exchanges. Despite the dominance of centralized platforms, decentralized ones are becoming more popular every year and are in strong competition.

Let's find out what advantages centralized and decentralized exchanges have that make them unique and in demand.

About centralized exchanges

CEXs (centralized exchanges) are managed and administered by the founders of the exchange. At the same time, the company that manages the platform is an intermediary between users when making transactions.

The principle of operation of centralized exchanges is simple. The user goes through identification (KYC verification) to be able to work on the exchange and makes a deposit in fiat or digital currency. The money goes into a custodial wallet controlled by the exchange. Therefore, users do not have access to private keys.

Popular centralized exchanges

The most popular centralized exchanges in 2022 take the leading places in the TOP platforms for trading digital assets. In the top five:

  • FTX. Crypto derivatives exchange where you can trade options, derivatives, tokens. Including leverage. There are 325 coins in the listing. 10 currencies supported. At the time of writing, the 24-hour turnover of funds amounted to $1.6 billion.
  • Okx. One of the most secure platforms providing classic digital asset trading. There are 358 coins in the listing. At the time of writing, the 24-hour turnover of funds amounted to $3.44 billion.
  • KuCoin. The best altcoin exchange. There are 652 coins in the listing. 48 currencies are supported. At the time of writing, the 24-hour turnover of funds amounted to $2.36 billion.

Benefits of Centralized Exchanges

Trading volumes on the CEX are impressive despite being contrary to the spirit of blockchain decentralization. Many users agree to undergo KYC verification in order to gain access to exchanges and start trading. And all thanks to the numerous advantages of these platforms.

Liquidity

Large amounts of funds concentrated on exchanges allow you to make exchange transactions for any amount almost instantly. This makes it possible to deposit and withdraw funds quickly. Therefore, liquidity is synonymous with high-speed transactions.

Crypto license

Top cryptocurrency exchanges strive to work within the legal framework of those countries where they have their offices. This provides a greater influx of users who are confident in the stability and reliability of the platform, and avoid attacks from regulators.

Ease of use

A user-friendly interface, many analytics tools, additional services make trading easier and more convenient. Users of decentralized exchanges spend even a few seconds on large transactions.

Ability to work with fiat

Account replenishment and withdrawal of funds to credit and deposit cards, as well as bank accounts.

 

 

About decentralized exchanges

DEXs (decentralized exchanges) do not have a central authority and, accordingly, offer a direct (peer-to-peer) exchange of cryptocurrencies between users. Assets are not stored on the exchange, and all transactions are carried out using smart contracts in a completely transparent manner.

Popular decentralized exchanges

To date, users are in demand such decentralized platforms:

  • Uniswap (V3). Platform for the exchange of ERC20 tokens on the Ethereum network. Launched in 2021. Occupies 0.0019% of the market. At the time of writing, the 24-hour turnover of funds amounted to $1.24 billion.
  • Pancake Swap (V2). A platform for exchanging BEP20 tokens on the Binance Smart Chain network. Occupies 0.0012% of the market. At the time of writing, the 24-hour turnover of funds amounted to $880.29 million.
  • Uniswap (V2). Exchange for automatic trading of ERC20 tokens on the Ethereum network. Works since 2018. Occupies 0.0003% of the market. At the time of writing, the 24-hour turnover of funds amounted to $251.61 million.

Benefits of decentralized exchanges

Despite the smaller trading volumes, decentralized exchanges have a lot of adherents. They value working with automated market makers for a number of benefits.

Anonymity

Working with DEX allows you to do without KYC. When registering, you do not need to enter personal information. This makes all transactions as anonymous as possible.

Only the owner has control over the funds

Work with the exchange is carried out from wallets that are controlled by the user himself. This means that only he has access to them and controls the movement of funds.

Low fees

The absence of intermediaries makes transactions cheaper. Especially if the exchange of assets in the Ethereum blockchain is carried out through scaling solutions like the Polygon Network. For example, exchanging $100,000 on this network will only cost a couple of dollars.

Large selection of tokens

Listing of new tokens is much faster and easier on the DEX. Therefore, even little popular or new altcoins can be traded.

Which exchange to choose?

Of course, the answer to this question should be done by each user independently. The fact is that platforms have both advantages and disadvantages. In any case, the presence of two different types of crypto platforms expands the functionality for investors and increases the adoption of cryptocurrencies.

CoinShark is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. This article is for informational purposes, prepared on the basis of materials and information from open sources . Cryptocurrency is a high-risk asset, investing in it can lead to losses. Readers should do their own research before taking any action.

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