Most people should be like me when they first joined the blockchain. They started our cryptocurrency journey from some common large exchanges, such as Binance or OKX, or a local exchange. However, choosing A suitable trading platform is crucial in the trading process, which not only affects the efficiency and liquidity of trading, but also determines the security of assets. There are two main options for common exchanges: centralized exchanges (CEX) and decentralized exchanges (DEX). There are significant differences between the two in various aspects, so this article will help you understand their advantages and disadvantages. Helps you make more informed decisions.
What is the Cryptocurrency Centralized Exchange CEX?
A centralized exchange (CEX) is a trading platform managed by a company or institution. Users need to store assets on the platform and rely on the platform to match transactions. CEX platforms like Binance and OKX , which are giants, usually offer a variety of trading options, including spot, futures, leverage and lending. These platforms operate similarly to traditional stock exchanges, attracting a large number of investors by providing efficient trading interfaces and tools.
Advantages of CEX
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High Liquidity: CEX platforms tend to have large capital pools, meaning they can support large-scale trading activity. For those investors who make large or frequent trades, CEX offers higher liquidity, the ability to quickly match orders and ensure minimal slippage. This is also the reason why most institutional investors choose the CEX platform.
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Diversification of trading tools: CEX provides not only simple spot transactions, but also a rich range of financial products such as futures contracts, leveraged transactions, and loans. These additional trading tools allow users to apply more complex strategies to manage risk or increase returns. For example, futures trading allows users to expand investment returns through leverage operations, while lending features allow users to obtain liquidity without selling assets.
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Fiat currency support and fast transactions: For new cryptocurrency investors, the fiat currency deposit function is very important. Most CEX platforms allow users to purchase cryptocurrencies directly using fiat currencies, which greatly simplifies entry into the crypto market. In addition, the CEX platform’s order matching engine enables millisecond-level transaction speeds, which is crucial for high-frequency traders.
CEX Challenges
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Security risks: Although most CEX platforms have invested a lot of resources to ensure security, such as two-factor authentication, cold wallet storage, etc., these platforms still face the risk of being attacked by hackers. There have been many major CEX hacking incidents in history, resulting in the theft of billions of dollars in cryptocurrency. When users store funds on CEX, they need to trust the platform to properly protect their assets.
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Trust issue: The CEX platform requires users to hand over their assets to the platform for safekeeping, which means that users must maintain a high degree of trust in the platform. Once there is a problem with the platform or bankruptcy occurs due to poor fund management, users’ assets may not be retrieved. In addition, some platforms may freeze users’ funds due to policy changes or regional supervision, which is particularly common in some regions.
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Regulatory challenges: CEX platforms are often heavily regulated, especially when it comes to fiat currency trading. This may result in users from certain countries being banned from using certain CEX platforms, or having to go through a cumbersome KYC (Know Your Customer) process for verification. For privacy-conscious investors, this is a major challenge for CEXs.
When using CEX, you should choose a platform with a good reputation and strict security measures. It’s also crucial to enable two-factor verification and other security features to protect your funds. Pay close attention to the regulatory status of the platform to ensure that you do not lose access to your assets due to policy changes.
What is DEX, a cryptocurrency decentralized exchange?
Decentralized exchanges (DEX) are trading platforms that rely on smart contracts to manage user assets without the need for middlemen, which gives DEX significant advantages in terms of privacy and asset control. The transactions on the DEX platform completely rely on blockchain technology. Users conduct peer-to-peer transactions through smart contracts without trusting a third party. Such an architecture not only improves asset security, but also greatly protects user privacy.
DEX example PixelSwap :
PixelSwap is an innovative DEX platform on the TON blockchain, which uses many innovative features to optimize the trading experience. PixelSwap supports weight pools and Liquidity Guided Pools (LBP). These features allow users to dynamically adjust liquidity according to needs and reduce the risk of transaction slippage. PixelSwap also includes the advantages of most DEXs, such as:
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Complete decentralization and de-permission: PixelSwap allows any Jetton asset to be freely listed on the platform without platform permission, which makes the market more open and truly decentralized. Users do not need to wait for approval or be subject to restrictions, and can freely create and participate in market transactions.
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Intelligent routing and atomic swap: PixelSwap’s intelligent routing system can automatically find the best transaction path, which ensures that users complete transactions at the best price. At the same time, the atomic swap function ensures the security of transactions. Even when the blockchain is congested, transactions will not be interrupted due to failure.
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Flexible liquidity management: PixelSwap’s weight pool allows users to customize asset allocation according to needs, which plays an important role in reducing slippage and improving capital utilization efficiency. In addition, users can also participate in liquidity mining through the PixelSwap platform, thereby further increasing profits.
Advantages of DEX
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Asset autonomy: The biggest advantage of DEX is that users always have control over their own assets, which is different from the CEX platform. On DEX, users’ assets never leave their wallets, and transactions are completed through smart contracts, which ensures the security of assets. This is very important for investors who are worried about the platform going bankrupt or their assets being frozen.
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Strong privacy: Since DEX does not require KYC verification, users do not need to submit any personal information during the transaction process, which means that their privacy is protected to the greatest extent. This is a big advantage of DEXs for investors who wish to remain anonymous.
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Global unrestricted trading: DEX does not need to be restricted by regional laws and regulations. In theory, anyone can access and use DEX to trade from any corner of the world. This makes DEX ideal for investors looking to trade in cross-border markets.
Challenges of DEX
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Lower liquidity: Due to the lack of centralized management, DEX’s liquidity tends to be lower, especially for some smaller trading pairs. Lack of liquidity can lead to increased slippage, which is a challenge for large transactions. .
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Slow transaction speed: The transaction speed of DEX is affected by the blockchain network. Especially if the blockchain is congested, transaction confirmation time may increase significantly, which may become a problem when transaction speed is critical. Disadvantages.
Therefore, compared to CEX, DEX has a higher degree of freedom. However, liquidity has always been a common problem with DEX. Therefore, when you want to choose DEX for trading, the most important thing is to confirm whether the liquidity of the DEX is sufficient. Otherwise, slippage is likely to occur and cause losses.
How to choose between the two exchanges? CEX and DEX detailed comparison
I believe you may be confused after reading this. Both sides have their own advantages and disadvantages, so how should I choose? The following is a common comparison between the two. You can choose the one with more advantages according to your needs to meet your trading needs!
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Liquidity:
The CEX platform has extremely high liquidity, especially large platforms like Binance and OKX. The single-day trading volume can reach billions of dollars, which means that users will almost never encounter slippage problems when making transactions, which is particularly suitable for Conduct high-volume or high-frequency transactions. The liquidity of DEX is relatively low because it relies on Liquidity Providers to inject funds on their own. When the fund pool is small, market fluctuations may cause large slippages, which may be detrimental when conducting large-amount transactions. Influence. -
Transaction speed:
CEX’s transaction speed is very fast, usually completing transactions in milliseconds, because they rely on efficient servers to process orders without waiting for blockchain confirmation. This is especially important for investors who want to close deals as quickly as possible. The DEX platform relies on the blockchain network for transaction verification, so the transaction speed is limited by the performance of the blockchain. Especially when the blockchain is congested, transactions may be delayed. -
Security:
CEX relies on the platform’s own security measures to protect user assets, such as two-factor authentication, cold wallet storage, etc., but this also means that user funds are concentrated on the platform and become the target of hacker attacks. There have been many major hacking attacks in history, resulting in a large number of user assets being stolen. In contrast, DEXs allow users to always be in control of their assets because transactions are conducted entirely through smart contracts, eliminating the need to trust a third party to hold assets, making them more difficult to hack. -
Privacy:
On CEX, trading with legal currency usually requires KYC verification, which means users need to submit personally identifiable information, which is a challenge for some privacy-conscious investors. DEX usually does not require KYC verification, and users can conduct transactions through wallet addresses, which provides higher privacy protection. -
Usage experience:
CEX platforms usually have simple and easy-to-use interfaces that even novices can easily get started with. Additionally, these platforms offer comprehensive customer support and multilingual services. The operation of DEX is relatively complicated, especially for those users who are not familiar with blockchain technology. Using DEX for transactions may require a high technical threshold.
Ton Chain’s recent DEX update progress
There are more than one DEX on Ton, and each one is continuously optimizing its own projects. Take the three common DEXs as an example:
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PixelSwap : Launched new features based on weight pools and Liquidity Boot Pools (LBP), allowing users to flexibly manage capital allocation and supporting atomic swap functionality across Jetton assets. These features increase capital utilization efficiency and reduce slippage in trading.
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STON.fi : Launched more cross-chain transaction functions and realized cross-chain operations with almost zero transaction fees, providing users with a more convenient transaction experience.
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DeDust : also saw significant growth in 2024, with the number of addresses increasing by 14.9%. The platform launched a new liquidity mining feature, attracting more users to participate and further expanding the size of its capital pool.
Keep paying attention to the DEX project on Ton. If Ton Chain becomes more and more popular in the future, more currencies will appear. At this time, dex will usually be the first place to go online. If you want to seize the opportunity, you cannot miss any opportunity. DEX now!
Choose the ideal exchange based on your needs and let’s travel through the world of Web3 together
After in-depth research, I believe that CEX and DEX each have their own advantages. CEX is the first choice for investors who need fast, highly liquid transactions, and it provides a rich set of financial tools and a better user experience. However, DEX’s decentralized architecture, privacy protection, and asset autonomy make it more attractive in certain scenarios.
For me, DEX is definitely the better choice when I want to trade with higher security and privacy protection. When the demand for fast transactions and diversified financial instruments is high, CEX is a more suitable trading platform. With the continued development of DEX platforms on the TON chain such as PixelSwap and STON.fi , users will be able to obtain more trading options and more flexible capital management methods in the future. No matter which platform you choose, the key is to make the most appropriate choice based on your needs.
Read more:
About LayerPixel - Our Vision & Mission: About LayerPixel - Our Vision & Mission
Exploring the entrance to Ton Chain: Understanding cryptocurrency wallets in one article: Exploring the entrance to Ton Chain: Understanding cryptocurrency wallets in one article
A Letter to Telegram Mini Games Developers | LayerPixel’s Collaboration with Bot Gameyard: A Letter to Telegram Mini Games Developers | LayerPixel’s Collaboration with Bot Gameyard | by LayerPixel | Medium
Join PixelDAO Telegram to communicate about Ton ecological projects!
About LayerPixel:
LayerPixel is an all-in-one DeFi protocol designed specifically for the TON blockchain and seamlessly integrated with Telegram Mini Apps. Leveraging a modular architecture, LayerPixel overcomes the asynchronous limitations of TON while harnessing its sharding benefits.
At the core of the LayerPixel ecosystem are several innovative components:
- PixelWallet - An SMC wallet with Account Abstraction (AA) features, enabling users to interact with dApps and the LayerPixel ecosystem with ease.
- PixelSwap - The first modular DEX on TON, supporting advanced trading models like weighted pools and LBP.
- Pixacle - A decentralized oracle solution delivering fast and accurate price data to dApps and smart contracts.
LayerPixel’s future plans include becoming a cross-chain solution to power DeFi experiences across all Telegram Mini Apps. By providing an all-in-one platform, LayerPixel aims to make blockchain-powered finance accessible to everyone within the TON ecosystem.
Official Links
LayerPixel: Homepage | Twitter | Channel | Community | Medium | Bot |
PixelSwap: Homepage | Twitter | Channel | SWAP | Pool
PixelDAO: Twitter | Forum | Chat Group