# How Does a Centralized Exchange (CEX) Minimize Slippage Compared to a DEX? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

---

## How Does a Centralized Exchange (CEX) Minimize Slippage Compared to a DEX?

CEXs use traditional order books with deep liquidity provided by professional market makers who are incentivized by lower fees and high volume. This depth means large orders can be filled with minimal price impact.

DEXs, especially AMMs, rely on liquidity pools that can be shallow, leading to higher slippage for large orders.

- [How Do Decentralized Exchanges (DEXs) Change the Dynamics of Crypto Arbitrage Compared to Centralized Exchanges (CEXs)?](https://learn.greeks.live/path/how-do-decentralized-exchanges-dexs-change-the-dynamics-of-crypto-arbitrage-compared-to-centralized-exchanges-cexs/)

- [Why Do CEXs Generally Offer Higher Liquidity than DEXs?](https://learn.greeks.live/path/why-do-cexs-generally-offer-higher-liquidity-than-dexs/)

- [How Do Centralized Exchanges (CEX) and Decentralized Exchanges (DEX) Differ in Managing Margin Shortfalls?](https://learn.greeks.live/path/how-do-centralized-exchanges-cex-and-decentralized-exchanges-dex-differ-in-managing-margin-shortfalls/)

- [What Is the Primary Difference in Front-Running Prevention between a CEX and a DEX?](https://learn.greeks.live/path/what-is-the-primary-difference-in-front-running-prevention-between-a-cex-and-a-dex/)

- [How Does a Decentralized Exchange (DEX) Handle Slippage Compared to a Centralized Exchange (CEX)?](https://learn.greeks.live/path/how-does-a-decentralized-exchange-dex-handle-slippage-compared-to-a-centralized-exchange-cex/)

- [How Does the ‘Order Book Depth’ Visualize the Liquidity Difference That Causes the Spread Disparity between the Two Asset Classes?](https://learn.greeks.live/path/how-does-the-order-book-depth-visualize-the-liquidity-difference-that-causes-the-spread-disparity-between-the-two-asset-classes/)

- [How Do Centralized Exchanges (CEX) Differ from DEXs?](https://learn.greeks.live/path/how-do-centralized-exchanges-cex-differ-from-dexs/)

- [Why Do Centralized Exchanges (CEX) Often Have Tighter Spreads for Altcoins than Decentralized Exchanges (DEX)?](https://learn.greeks.live/path/why-do-centralized-exchanges-cex-often-have-tighter-spreads-for-altcoins-than-decentralized-exchanges-dex/)

## Glossar

### [Centralized Exchange](https://learn.greeks.live/area/centralized-exchange/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Custody ⎊ Centralized Exchanges function as custodians for digital assets, managing private key infrastructure and providing a regulated framework for asset holding, a critical component for institutional adoption within cryptocurrency markets.

### [Minimize Slippage](https://learn.greeks.live/area/minimize-slippage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Definition ⎊ Slippage refers to the difference between the expected price of a trade and the actual price at which the order is executed.

### [Professional Market Makers](https://learn.greeks.live/area/professional-market-makers/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Role ⎊ Professional market makers are institutional entities that provide liquidity to financial markets by simultaneously quoting both buy and sell prices for assets.

### [Liquidity Pools](https://learn.greeks.live/area/liquidity-pools/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Mechanism ⎊ Liquidity pools represent a fundamental shift in market microstructure, functioning as decentralized exchange (DEX) components that facilitate trading via automated market makers (AMMs).

### [Traditional Order Books](https://learn.greeks.live/area/traditional-order-books/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Mechanism ⎊ Traditional order books represent a deterministic system for price discovery and trade execution, fundamentally relying on the aggregation of discrete buy and sell orders submitted by market participants.

## Discover More

### [Are There AMM Formulas Other than X Y = K Designed to Minimize Impermanent Loss?](https://learn.greeks.live/path/are-there-amm-formulas-other-than-x-y-k-designed-to-minimize-impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Are There AMM Formulas Other than X Y = K Designed to Minimize Impermanent Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Cryptocurrency-Derivative-Mechanism-Disassembly-Revealing-Atomic-Swap-Settlement-Infrastructure.webp)

Yes, stable-swap formulas minimize IL for pegged assets, and concentrated liquidity offers efficiency with range-bound risk.

### [How Does Decentralized Finance (DeFi) Introduce New Security Risks Compared to Centralized Exchanges?](https://learn.greeks.live/path/how-does-decentralized-finance-defi-introduce-new-security-risks-compared-to-centralized-exchanges/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Decentralized Finance (DeFi) Introduce New Security Risks Compared to Centralized Exchanges?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Construct-Modeling-Complex-Volatility-Surface-Through-Spherical-Asset-Core.webp)

DeFi risks stem from smart contract bugs that can be exploited by hackers and the lack of a central authority for recourse.

### [How Do 'Limit Orders' Mitigate Slippage Risk Compared to 'Market Orders'?](https://learn.greeks.live/path/how-do-limit-orders-mitigate-slippage-risk-compared-to-market-orders/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do 'Limit Orders' Mitigate Slippage Risk Compared to 'Market Orders'?](https://learn.greeks.live/wp-content/uploads/2025/10/Modular-Derivative-Contract-Unwinding-Revealing-Stratified-Liquidity-Pool-Segregation-Mechanisms.webp)

Limit orders specify an execution price ceiling/floor, preventing negative slippage, while market orders execute immediately at the current best price.

### [Can a Centralized Exchange (CEX) Environment Be Exploited by a Sandwich Attack?](https://learn.greeks.live/path/can-a-centralized-exchange-cex-environment-be-exploited-by-a-sandwich-attack/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Centralized Exchange (CEX) Environment Be Exploited by a Sandwich Attack?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Spout-Mechanism-on-a-Specialized-Digital-Asset-Custody-Unit-with-Liquidity-Provision-Nozzle.webp)

No, a true sandwich attack is impossible on a CEX due to the lack of a public mempool and the use of a private, deterministic matching engine.

### [Why Are Decentralized Exchange (DEX) Options Often More Susceptible to Slippage than Centralized Exchange (CEX) Options?](https://learn.greeks.live/path/why-are-decentralized-exchange-dex-options-often-more-susceptible-to-slippage-than-centralized-exchange-cex-options/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Are Decentralized Exchange (DEX) Options Often More Susceptible to Slippage than Centralized Exchange (CEX) Options?](https://learn.greeks.live/wp-content/uploads/2025/10/Conceptualizing-Decentralized-Finance-Protocol-Governance-Through-Spherical-Derivative-Structures.webp)

DEX options have higher slippage due to lower liquidity, fragmented order books, and AMM pricing curves.

### [Is Slippage More Common on a CEX or a DEX? Why?](https://learn.greeks.live/path/is-slippage-more-common-on-a-cex-or-a-dex-why/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Is Slippage More Common on a CEX or a DEX? Why?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetrical-Exposure-Quantification-in-Decentralized-Finance-Derivative-Pricing-Mechanism.webp)

More common on a DEX due to lower liquidity and reliance on algorithmic pricing rather than a deep order book.

### [How Do DEX Aggregators Help Minimize Slippage?](https://learn.greeks.live/path/how-do-dex-aggregators-help-minimize-slippage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do DEX Aggregators Help Minimize Slippage?](https://learn.greeks.live/wp-content/uploads/2025/10/Mint-Green-Hued-Semi-Dome-Obscuring-Fluctuating-Marble-Patterned-Bifurcated-Asset-Allocation-Surface.webp)

DEX aggregators split your trade across many DEXs to find the best prices and reduce the price impact (slippage) of your trade.

### [What Is the Difference between a 'Centralized Exchange' (CEX) and a DEX?](https://learn.greeks.live/path/what-is-the-difference-between-a-centralized-exchange-cex-and-a-dex/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between a 'Centralized Exchange' (CEX) and a DEX?](https://learn.greeks.live/wp-content/uploads/2025/10/Exposed-Actuator-Mechanism-Articulating-Beneath-High-Frequency-Automated-Option-Pricing-Surfaces.webp)

CEX is custodial and centralized; DEX is non-custodial and decentralized, using smart contracts.

### [How Does JIT Liquidity Specifically Minimize the Risk of Impermanent Loss for the LP?](https://learn.greeks.live/path/how-does-jit-liquidity-specifically-minimize-the-risk-of-impermanent-loss-for-the-lp/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does JIT Liquidity Specifically Minimize the Risk of Impermanent Loss for the LP?](https://learn.greeks.live/wp-content/uploads/2025/10/Deconstructed-Crossover-Mechanism-Illustrating-Intertwined-Digital-Asset-Hedging-Structures.webp)

The LP is only exposed to the price change for a minimal duration, eliminating the long-term risk of Impermanent Loss.

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