How Does a Decentralized Exchange (DEX) Differ from a Centralized Exchange (CEX)?
A Centralized Exchange (CEX) is operated by a single company that holds user funds in custody, acting as an intermediary. A Decentralized Exchange (DEX) allows users to trade directly from their own wallets using smart contracts, eliminating the need for an intermediary and giving users self-custody of their funds.
DEXs typically offer less regulatory oversight but greater censorship resistance than CEXs.
Glossar
Regulatory Oversight
Jurisdiction ⎊ Regulatory oversight within cryptocurrency, options trading, and financial derivatives is fundamentally defined by jurisdictional boundaries, impacting enforcement and cross-border transactions.
Price Discovery
Revelation ⎊ Price discovery within cryptocurrency markets, particularly for derivatives, represents a dynamic process where consensus on an asset’s intrinsic value emerges through continuous trading and order flow interaction.
Censorship Resistance
Immutability ⎊ The core of this property is the cryptographic linking of data structures, making retroactive alteration of validated transactions computationally infeasible.
Decentralized Exchange (DEX)
Platform ⎊ A Decentralized Exchange (DEX) is a cryptocurrency trading platform that operates without a central intermediary, allowing users to trade digital assets directly from their non-custodial wallets.
Centralized Exchange
Intermediary ⎊ This refers to a regulated or semi-regulated entity that acts as a trusted third party, facilitating the custody of client assets and the matching of buy and sell orders for cryptocurrency and associated derivatives on a centralized order book.