What Is the Key Difference between a CEX and a DEX Order Book Model?
A CEX uses a traditional, centralized limit order book (CLOB) model where all buy and sell orders are matched by a central server. A DEX, particularly an AMM-based one, uses a liquidity pool model where assets are swapped against the pool based on a mathematical formula.
The CEX model provides greater control and speed but requires trust, while the DEX model is trustless but can suffer from high slippage in low-liquidity pairs.
Glossar
DEX Order Book
Depth ⎊ The DEX order book, within cryptocurrency derivatives and options trading contexts, fundamentally represents the aggregate of outstanding buy and sell orders for a specific asset or derivative contract.
Asset Custody
Safeguarding ⎊ Asset custody, within cryptocurrency, options, and derivatives, represents the secure maintenance and administration of client assets, functioning as a critical component of market infrastructure.
Limit Order Book
Depth ⎊ : The structure of the book provides a granular view of available liquidity at discrete price levels for options and futures contracts.
Liquidity Pool Model
Architecture ⎊ This model fundamentally relies on smart contracts to manage reserves and determine asset exchange rates algorithmically, replacing traditional order books.