On decentralized exchanges, you merely have to connect your wallet, like MetaMask, and you’re ready to trade directly from it. Asset custody, asset listing, liquidity, headquarters, director board and centralized trade execution are all qualities of a centralized exchange.įortunately, these can all be decentralized and that is what decentralized exchanges set out to do: entirely peer-to-peer trading platform's governed by software and users. The exchange acts as a custodian, holding assets as a market maker and finding those willing to sell assets to buyers. Traditional order-book model used by the exchange Kucoin. Besides, centralized exchanges utilize the order-book model that you would see in traditional stock exchanges, with a list of buy and sell orders. The key issue with centralized exchanges is that they are governed by a central authority - a company that controls your funds and data just like a traditional bank. Still, 2022 continues to see the rise of decentralized finance, as the world inches closer and closer to decentralization.
As of now, using a decentralized exchange (DEX) is not the first option for the majority of people, despite fun unicorns and pancakes are as their logos. If you’ve been trading for crypto, you’ve probably been using centralized exchanges like Binance or Bitfinex.
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