Skip to main content
Learn

How Does a Decentralized Exchange (DEX) Differ from a Centralized Exchange (CEX) in Terms of Liquidity Provision?

CEX uses an order book; DEX uses liquidity pools funded by users (LPs) via an AMM, which is the target of a rug pull.
Greeks.Live17.11.25

How Does a Decentralized Exchange (DEX) Differ from a Centralized Exchange (CEX) in Terms of Liquidity Provision?

A CEX uses an order book model where liquidity is provided by buyers and sellers placing limit orders. A DEX, typically using an Automated Market Maker (AMM) model, relies on liquidity pools funded by users (Liquidity Providers or LPs).

LPs deposit assets into a smart contract to facilitate trading. This pool-based system is what a rug pull exploits, as the capital is locked in a contract, not held by a central authority.

How Does a “Rug Pull” Differ from a “Pump and Dump” in the Crypto Space?
How Does an AMM Differ from a Centralized Exchange (CEX)?
How Does the ‘Fee Structure’ Differ between a Centralized Exchange (CEX) and a Decentralized Exchange (DEX) AMM?
What Is an ‘Exit Scam’ and How Does It Differ from a Rug Pull?

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.