Truly Crypto 101
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Truly Crypto 101

Crypto Exchanges from CEX to DEX

Hello lovely readers, I am Truly and I am your new teacher. I know I am cute, but also tough, so let’s behave.

Truly Class 1 by TrueUSD.

Overview:

Cryptocurrency trading has been thriving thanks to a growing number of adopters and promising projects. The latest statistics from CoinMarketCap show that the global crypto asset market cap has already reached $1,962,559,674,194, contributed by 457 exchanges with over 17,000 cryptocurrencies.

Data By CoinMarketCap.

As the major channel for cryptocurrency trading, crypto exchanges further facilitate the engagement of the crypto market, and in turn attract more investors into the niche of cryptocurrency trading platforms. They also function as a significant component of the crypto market, playing the irreplaceable role of connecting the primary and secondary markets of blockchain investment and bridging the gap between projects and regular investors.

As crypto exchanges evolve, changes have happened to these platforms where cryptos go into circulation with their value discovered. From the boom of centralized exchanges (CEXs) to the increasing popularity of decentralized exchanges (DEXs) today, time has shed light on the strengths and weaknesses of the two distinct types of exchanges. Next, Truly will walk you through what CEXs and DEXs are and what makes them favorable.

What are CEXs?

A CEX is a platform that incorporates the functionality of traditional exchanges, securities companies, and investment banks. Represented by Binance, Huobi, and Coinbase, CEXs boast a tremendous user base and trading volume, providing traders with sufficient market depth and asset liquidity. The services are primarily based on the trading platform itself, including the account system, KYC, depositing, asset settlement, and token swap.

Can CEXs and DEXs coexist?

The answer is yes. As two pivotal players in the development of crypto exchanges, CEXs and DEXs complement each other, creating synergy to turbocharge this ecosystem. While CEXs allow buyers and traders to hold assets for trading and monitoring transactions to ensure security, DEXs, the largest among DeFi projects, support shielded transactions, stay free from third-party project interference, and enable most investors to control their private keys, thus boosting the credibility of trading. And that’s why seasoned cryptocurrency holders store their assets on DEXs to stay away from the risk of being hacked, as such exchanges have no control over their funds.

According to the latest statistics of Nomics, the top 20 crypto exchanges are as follows.

Data Table by Nomics.com

Centralized exchanges still dominate the leader board. Though centralized exchanges account for the lion’s share of the market, DEXs are catching up quickly as a growing number of DeFi projects like Compound and Aave introduce more liquidity and drive forward the DeFi ecosystem.

Now, a quick promotion, a TUSD staking campaign from stable coin TrueUSD and OKX offering up to 30% APY is in full swing. As the first major event since OKX’s brand upgrade, it has attracted many TUSD holders since its launch. Other TUSD’s earlier campaigns, like the liquidity incentive held with PancakeSwap and the Golden Shovel with Heco, where users provide liquidity to the LP pools, all offer users high returns. In this sense, the value that exchanges bring to their users, regardless of its nature, through different types of campaigns is another decisive factor for users.

Overall, DEXs have clear edges over CEXs in security for they significantly reduce human-inflicted risks. However, DEXs are severely curbed by the performance of underlying public chains, leading to a less satisfying user experience than CEX. As DeFi projects are increasingly active, however, various decentralized exchanges are seeking constant breakthroughs, trying to carve out bigger market shares.

Certainly, DEXs and CEXs compete in technology, and more crucially, in the business model and the underlying performance. Existing crypto exchanges shall remain committed to improving their core competency and provide all-around, quality, and secure services so as to win a spot among crypto exchanges. Crypto exchanges are set to unleash more potential. Let’s stay tuned!

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A space for those who want to start an adventure in the Blockchain world. Truly, TrueUSD lovely mascot is ready to share her knowledge with professionals and newcomers.

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