A centralized exchange, or CEX, is an exchange managed by a third party such as a bank or financial institution. A CEX uses order books to match buyers with sellers willing to trade fiat-to-crypto, crypto-to-fiat, or crypto-to-crypto, at a certain price.
Meanwhile, a decentralized exchange, or DEX, is used for peer-to-peer trading without a third party to manage and provide funds. DEXs do not hold custody of user assets. Instead, trades are settled through smart contracts called automatic market makers. Unlike CEXs, DEXs give users complete control over their crypto while transacting through the platform.
Here are some other differences between the two:
In general, centralized exchanges have more user-friendly interfaces than decentralized exchanges. They also typically offer a more comprehensive range of tools, features, and staking options, as well as more integrations with other apps and payment gateways. The user interface of DEXs can be quite complex and require more technical knowledge to understand. They can be more intimidating for beginners, who will find CEXs easier to navigate.
Because CEXs hold funds in a centralized system, they are generally more prone to hacking attacks than DEXs. On the other hand, CEXs are usually subject to more regulation than DEXs, which adds to their level of security.
Since they’re backed by huge financial institutions and are usually used by more buyers and sellers, CEXs typically have higher liquidity and offer more trading pairs than DEXs. Trades taking place on DEXs are also more prone to slippage, or sudden token price changes while executing a trade because of low liquidity.
To enhance the user experience, several DEXs are attempting to address these issues. An example of a decentralized crypto and derivatives exchange offering a good user interface, security, and liquidity is KTX.Finance.
KTX users can enjoy low trading fees, high liquidity, minimal spread, instant staking and unstaking, and up to 100x leverage. Designed for easy integration with any DeFi protocol, it allows users to earn yield regardless of market conditions.
KTX offers advanced risk management tools, transparent risk indicators, easy leverage trading adjustment, and exciting rewards. It lets users conduct spot swaps within the KLP pool without experiencing slippage.
By prioritizing the user experience, KTX.Finance and similar DEXs not only enhance the trading experience for seasoned traders but also lower the entry barrier for new users. Overall, they help make crypto trading simpler and more profitable for everyone.
