How Do Centralized Exchanges Differ from Decentralized Exchanges in Terms of Security Risks? ⎊ Path

How Do Centralized Exchanges Differ from Decentralized Exchanges in Terms of Security Risks?

Centralized Exchanges (CEXs) hold user funds in custodial wallets, making them a single, high-value target for hackers (the 'honeypot' risk). Decentralized Exchanges (DEXs) operate via smart contracts and users retain control of their private keys, mitigating the honeypot risk.

However, DEXs are vulnerable to smart contract exploits, front-running, and impermanent loss, which are different security and financial risks than those faced by CEXs.

How Does the Regulatory Environment Differ for Custodial CEXs versus Non-Custodial RFQ Platforms?

How Can Decentralized Exchanges (DEXs) Impact Altcoin Liquidity Compared to Centralized Exchanges (CEXs)?

How Do Options Contracts on a CEX Compare to Perpetual Swaps on a DEX in Terms of Counterparty Risk?

What Is the Primary Difference between a Centralized and a Decentralized Cryptocurrency Exchange?

What Is a ‘Honeypot’ Risk in the Context of CEX Security?

How Do Decentralized Exchanges (DEXs) Handle Bid-Offer Spreads Differently than Centralized Exchanges (CEXs)?

What Are the Key Differences in Front-Running Prevention between CEXs and DEXs?

How Does a ‘Honeypot’ Scam Differ from a ‘Rug Pull’?

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Exchanges

Platform ⎊ Exchanges serve as the primary platforms for trading cryptocurrencies, options, and financial derivatives.