A company-run crypto exchange that holds customer funds and matches orders on a traditional order book.
Centralized exchanges (Coinbase, Binance, Kraken) offer deep liquidity, fiat on-ramps, perpetual-futures, and customer support. They require kyc and hold your assets, which means their failure is your loss, as FTX demonstrated in 2022.
The trade-off with a dex is convenience and liquidity versus custody and counterparty risk.
Example: a trader keeps trading capital on a CEX for tight spreads and moves long-term holdings to a self-custody wallet to remove exchange risk.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
Educational only, not advice. Spotted an error? Post in Site Feedback.