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Why Do Centralized Exchanges (CEX) Often Have Tighter Spreads for Altcoins than Decentralized Exchanges (DEX)?

CEXs use HFT-driven order books with intense competition; DEXs use AMMs with gas fees and slippage, resulting in wider effective spreads.
Greeks.Live10.11.25

Why Do Centralized Exchanges (CEX) Often Have Tighter Spreads for Altcoins than Decentralized Exchanges (DEX)?

CEXs use a traditional, high-speed, off-chain order book model that attracts professional, competitive market makers who actively quote tight spreads to capture flow. DEXs, however, primarily use Automated Market Makers (AMM) and liquidity pools.

DEX transactions incur variable, on-chain gas fees and are prone to higher slippage due to the AMM formula, making the effective cost and spread generally wider than on a CEX.

How Do Decentralized Exchanges (DEXs) Handle the Clearing Function without a CCP?
How Do Centralized Exchanges (CEXs) Manage Slippage Differently than AMMs?
How Do Hybrid Models Attempt to Combine the Efficiency of CEXs and the Decentralization of DEXs?
How Do Decentralized Exchanges (DEXs) Handle Bid-Offer Spreads Differently than Centralized Exchanges (CEXs)?

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