Why Do CEXs Generally Offer Higher Liquidity than DEXs?
CEXs typically offer higher liquidity because they aggregate orders from a massive, global user base and employ professional market makers who commit substantial capital to their order books. This centralized aggregation of capital results in deeper order books and tighter bid-ask spreads.
DEXs rely on decentralized liquidity providers, which can be more fragmented and less capital-intensive, especially for newer or smaller asset pairs.
Glossar
Cexs
Architecture ⎊ Cexs, within the cryptocurrency derivatives landscape, represent centralized exchange functionalities extended to encompass options and perpetual swap contract trading, functioning as intermediaries for order matching and contract fulfillment.
AMM
Architecture ⎊ Automated Market Makers (AMMs) represent a paradigm shift in decentralized exchange (DEX) design, moving away from traditional order book models to a constant function market mechanism.
Deeper Order Books
Provision ⎊ Deeper order books represent a market condition where there is a substantial volume of buy and sell orders at various price levels away from the current market price.
Professional Market Makers
Role ⎊ Professional market makers are institutional entities that provide liquidity to financial markets by simultaneously quoting both buy and sell prices for assets.
Global User Base
Reach ⎊ The global user base within cryptocurrency, options trading, and financial derivatives represents the aggregate of individuals and institutions participating in these markets, fundamentally influencing liquidity and price discovery.
Market Makers
Function ⎊ Market Makers in cryptocurrency, options, and derivatives markets actively provide liquidity by simultaneously offering to buy and sell assets, narrowing bid-ask spreads and facilitating efficient price discovery.