Centralised Exchanges VS Decentralised Exchanges
Find out the differences between CEX and DEX!
Summary
A centralised exchange let's traders buy an sell crypto and acts as a middle men to protect their funds. In return of their services, they charge certain fees.
They are an easy way to experiment with crypto and understand how trading works
This is why it is being used by wide variety of users
What is a CEX
A centralised exchange (CEX) is an organisation that allows crypto traders to buy and sell crypto assets on a large scale. In essence, they are a marketplace that works similar to stock exchanges by functioning as an intermediary between buyers and sellers and a trusted custodian for storing and protecting traders’ funds. CEX users trust the institutions to process their transactions, similar to a bank where the financial institution stores the money on behalf of their clients.
One of the first CEX is Binance which was founded in 2017. According to Coingecko, it sees a daily volume of $11,163,054,530.
Centralised exchanges are more liquid than decentralised exchanges because they allow multiple users to buy and sell the same asset, allowing them to react to market trends. This makes CEX faster than DEX as they do not go through the time-consuming processes of matching orders.
How do they work?
A CEX receives orders from its users, and they match buy and sell orders that have the same price. In some cases, they may also operate as market makers by providing liquidity to the tokens supported by their platforms in order to improve execution speeds.
How to get started?
Get started on using Scallop Exchange with this guide:
Summary
Centralised Exchanges on the other hand, allows buyers and sellers trade within a third party platform and provide many benefits such as security and ease.
DEX and CEX have critical differences and they both offer solutions to different problems crypto asset owners may have.
What is a CEX?
A centralised exchange (CEX) is an organisation that allows crypto traders to buy and sell crypto assets on a large scale. In essence, they are a marketplace that works similar to stock exchanges by functioning as an intermediary between buyers and sellers and a trusted custodian for storing and protecting traders’ funds. CEX users trust the institutions to process their transactions, similar to a bank where the financial institution stores the money on behalf of their clients.
One of the first CEX is Binance which was founded in 2017. According to Coingecko, it sees a daily volume of $11,163,054,530.
Centralised exchanges are more liquid than decentralised exchanges because they allow multiple users to buy and sell the same asset, allowing them to react to market trends. This makes CEX faster than DEX as they do not go through the time-consuming processes of matching orders.
How do they work?
A CEX receives orders from its users, and they match buy and sell orders that have the same price. In some cases, they may also operate as market makers by providing liquidity to the tokens supported by their platforms in order to improve execution speeds.
How to get started?
Get started on using Scallop Exchange with this guide:
What is a DEX
A decentralised exchange (better known as a DEX) is a peer-to-peer marketplace where transactions occur directly between crypto traders.
Popular decentralised exchanges have been built on top of leading smart contract enabled blockchains. They are built on top of layer-one protocols, meaning that they are built directly on the blockchain. This includes Ethereum and BSC.
Traditionally, the largest DEX is Uniswap, which was created on the Ethereum blockchain in 2018. According to coingecko, it often sees daily volumes upward of $2 billion. It is amonst one of the largest decentralised organisations around.
How do they work
How to get started
Then, simply connect that wallet to a DEX. Popular ones include:
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