Listing With a CEX vs. DEX
If you’re running an ICO or STO, listing with an exchange is an essential step towards reaching your funding goal. Skip this step and it will be incredibly complicated for you to collect the funding you need. Listing with an exchange lends your project some validity. But there are two main types of exchanges you might want to choose between, centralized and decentralized. Let’s go over some of the key differences between the two.
Intermediaries
Centralized — The main factor of using a centralized exchange is that users have to trust a third party with their money in order to get your token. Now if a large number of users interested in your token already use a certain centralized exchange, then that works in your favor. But if not, choosing a centralized exchange can put users money at risk because private keys are not kept with users, but with the exchange itself. This makes accounts vulnerable to attacks and hackings. You also pay that middleman fee. In order to trade, you pay a trading fee.
Decentralized — The difference here is decentralized exchanges are, inherently, without an intermediary. Users trade money directly, so the exchange does not store their money anywhere, turning away the eyes of hackers because they can’t hack the exchange and get a large sum of crypto like with centralized exchanges. And because there’s no intermediary, you don’t pay a trading fee.
Liquidity
Centralized — Centralized exchanges usually allow users to deposit, withdraw, and exchange fiat currencies. You can exchange crypto for fiat and vice-versa. This allows for a high level of liquidity and many exchange options for users. Because of this high variety of options, trading crypto or fiat is easy, and fast. Finding a trade can happen relatively fast, especially on those exchanges with a high trading volume.
Decentralized — Unlike centralized exchanges, decentralized exchanges are crypto-to-crypto. This means that if you want to exchange for fiat currency, you usually can’t do it on a decentralized exchange. Also, most decentralized exchanges have a relatively low trading volume and low user count, and because of this finding, a trade might be hard, especially if you’re trading crypto that is not as in-demand or widely used.
Security
Centralized — Not being based on the blockchain, centralized exchanges are prone to hacks, and they have happened. Basically, you don’t own your crypto. The exchange credits it to your account and then holds the private key. Sometimes hackers make away with millions of dollars worth of crypto because they get ahold of people’s private keys. You also need to verify your identity with most centralized exchanges, leaving you vulnerable to identity theft.
Decentralized — based on the blockchain, decentralized exchanges are very unlikely to ever be targeted for a hacking attack. You, and you alone, own your crypto. Also, you don’t have to prove your identity, meaning you don’t have to give up any personal documents.
The major differences between centralized and decentralized exchanges boil down to intermediaries, liquidity, and security. DEX are more secure with low-to-no trading fees, but you can spend a decent amount of time waiting for a trade, or may never find one. CEX are a lot less secure and you pay trading fees, but you have a huge range of options to choose from, your wait time is low, and you can even exchange fiat, whereas you can’t on DEX. So it all boils down to personal preference of what you need for your ICO or STO.
If you need more help choosing the perfect exchange for your coin or token, don’t hesitate to contact AssetRush! It’s our job to help you make these kinds of decisions in order to rocket your coin or token to its funding goal! You can contact AssetRush through our website. Also, don’t forget to follow our Twitter for updates about the ICO and STO world.
