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How Do Decentralized Exchanges (DEXs) Change the Dynamics of Crypto Arbitrage Compared to Centralized Exchanges (CEXs)?

DEXs create new arbitrage routes via algorithmic pricing but add on-chain execution risks not found on CEXs.
Greeks.Live23.11.25

How Do Decentralized Exchanges (DEXs) Change the Dynamics of Crypto Arbitrage Compared to Centralized Exchanges (CEXs)?

DEXs introduce unique arbitrage dynamics due to their automated market maker (AMM) models, which determine prices algorithmically based on the ratio of assets in a liquidity pool. This can create arbitrage opportunities within a single DEX (e.g. between two different pools) or between a DEX and a CEX.

DEX arbitrage is permissionless but subject to on-chain risks like network congestion and high transaction fees, which can affect profitability. Unlike CEXs, there is no central order book, and trades are executed directly on the blockchain.

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