How Do Centralized Exchanges (CEX) and Decentralized Exchanges (DEX) Typically Compare in Terms of Bid-Offer Spreads?

CEXs typically use an order book model with professional market makers, leading to generally tighter bid-offer spreads for highly traded assets. DEXs, often using Automated Market Makers (AMMs), rely on liquidity pools.

While AMMs can provide continuous liquidity, their "spread" (often represented by a trading fee and impermanent loss risk) can be wider or more volatile than CEXs, especially for less common token pairs.