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Which Type of Exchange (Centralized Vs. Decentralized) Is Generally Associated with Higher Counterparty Risk?

Centralized Exchanges (CEXs) have higher counterparty risk due to reliance on a central intermediary's solvency; DEXs use smart contracts.
Greeks.Live14.11.25

Which Type of Exchange (Centralized Vs. Decentralized) Is Generally Associated with Higher Counterparty Risk?

Centralized Exchanges (CEXs) are generally associated with higher counterparty risk because trades rely on the exchange's solvency and operational integrity to guarantee the trade. Decentralized Exchanges (DEXs) typically have lower counterparty risk as trades are settled via smart contracts on-chain, eliminating the need for a central intermediary's credit.

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