DEX vs CEX: Choosing the Best Solution for Your Crypto Exchange

Maciej Zieliński

08 Nov 2021
DEX vs CEX: Choosing the Best Solution for Your Crypto Exchange

What are the differences between DEX and CEX? Which one suits your needs and business assumptions best? Read this article before you make that crucial decision.

In the article you learn about:

  • Different types of crypto exchanges
  • What is a centralized exchange?
  • Pros and cons of centralized exchanges
  • How does decentralized exchange work?
  • Liquidity pools and Automatic Market Maker
  • Pros and cons of decentralized exchanges

Crypto Exchanges

The cryptocurrency exchange is an indispensable part of cryptocurrency trading, which may be considered as one of the most important financial trends of this century. Hence more and more investors are becoming interested in launching their own exchange. The fundamental decision that has to be made at the begging is choosing the model of crypto trading that will meet our requirements. 

In this article, we'll take a closer look at centralized and decentralized exchanges, which will hopefully enable you to examine which of them is right for your project in the crypto space.

Centralized Exchange
Centralized Exchange

Centralized Exchange

Most big cryptocurrency exchanges you know are probably centralized. Coinbase, Binance, BKEX, or Upbit - you are familiar with them. Thanks to higher liquidity and lower transaction fees they remained the first choice of crypto traders for a long time.

Times have changed and players such as decentralized exchange Uniswap or Sushi Swap have gained significant importance in the crypto market. Yet, in many cases, centralized exchanges still remain the most suitable solution. What's their backbone?

Centralization of an exchange

Centralization of the exchange essentially means that each trade there takes place with a centralized intermediary. The centralized exchange has its order book, where every order is recorded and validated. All the data is stored and exchanged between exchange servers. Additionally, transactions and user information go through a centralized security process.

To access the exchange, users have to sign up by providing their bank details and personal data. This is the part of KYC and AML practices, which aim to prevent money laundering and have to be followed by every centralized exchange. 

Buying cryptocurrencies on a centralized exchange

Trading on centralized exchanges generally seems simple. You just need to choose coins and confirm the transaction. The exchange will show the funds you acquired in your account. Then you can trade them for other digital assets. The price of each coin on the site is based on an order book.

However, users don't really hold their funds. The exchange works here as a custodian of the customer’s funds. Furthermore, trades don't occur on the blockchain. Instead, they take place only within the exchange's database.

Centralized exchange - pros and cons
Centralized exchange - pros and cons

Pros of Centralized Exchanges


Generally, centralized exchanges have a more user-friendly platform. They give users easy and uncomplicated access to crypto trading. This is especially relevant for crypto newcomers.

High liquidity

Since the whole process doesn't take place on a blockchain, the network nodes don't have to be updated in real-time, hence trading speed is usually much higher than on DEX.

Lower transaction fees

The trading fee on CEX is fixed, and they tend to be lower than on decentralized exchanges for the same reason as stated above.

Trading with fiats

Unlike DEXs, centralized exchanges allow users to buy crypto for fiat currencies.

Cons of Centralized Exchanges

More legal regulations

Centralized exchanges are limited by strict government requirements. For example, high standards of the identity verification process have to be respected.

Centralized entity

From a technical point, when you deposit funds on a centralized exchange, you lose control over it. The exchange puts your funds into integrated wallets controlled by it.

Additionally, CEXs extract users' private keys. They will no longer be your keys. Therefore, if you want to withdraw your money, the exchange has to sign the transaction on your behalf.

This is an important reason why many traders migrate to decentralized exchanges.

Risk of leaking private user data

Due to KYC procedures, crypto users provide extensive data. As such information is fragile, a security dilemma is present even before one starts trading. This may lead to the lack of users’ trust, especially when we talk about smaller, less-known exchanges.

Decentralized Exchange
Decentralized Exchange

Decentralized Exchange

In many ways, decentralized exchanges are similar to centralized ones. However, the differences are more than substantial. In decentralized exchanges, trade essential relies on a blockchain (most often Ethereum or the Binance Smart Chain). Trading between users is conducted using smart contracts - orders are executed on-chain. As a result, the exchange doesn't take control of users' assets during the entire process.

Cross-chain exchanges are a very promising novelty on the DEX market. Yet, most of them operate only on one blockchain - most often Ethereum or the Binance Smart Chain.

How can a decentralized exchange handle trading?

How DEX handles trading
How DEX handles trading

On-chain order book

There are decentralized exchanges where every transaction is written into a blockchain. This means that every order, as well as cancellation or alteration, is handled on-chain.

Without a doubt, this is the purest approach to decentralization. There is absolutely no third party involved at any stage of trading. Everything is extremely transparent. Unfortunately, there are vital downsides as well.

The on-chain order book is far less practical than the other two options. Firstly, because every node on the blockchain records the order, placing it requires paying a fee. Furthermore, users have to wait until the miner adds necessary data to the chain. This translates to high costs and poor liquidity.

Off-chain order book

Off-chain order books are a bit more centralized than their counterparts. But they are also far more practical. In this model, orders are hosted elsewhere and only the final transaction is settled on the blockchain. Moreover, you can still benefit from non-custodial storage.

As orders aren't stored on-chain, this approach is faster and less costly. Furthermore, it helps a better liquidity of trades to be achieved. However, it can encounter some of the security issues typical for CEXs.

Trading pairs 

Let’s use the example of Ether and Bitcoin to describe how trading pairs work in the order book model on DEX

If users want to trade their ETH for BTC, they need to find another trader willing to sell BTC for ETH. Furthermore, they need to agree on the same price. 

While in the case of popular cryptocurrencies and tokens, finding a trading pair shouldn’t be a problem, things get a bit more complicated when we want to trade more alternative assets. 

The vital difference between order books and automatic market makers is that the second one doesn’t require the existence of trading pairs to facilitate trade.

Automatic Market Maker AMM

Automated Market Maker (AMM) is a decentralized exchange protocol that relies on smart contracts to set the price of tokens and provide liquidity. In an automated market makers' model, assets are priced according to a pricing algorithm and mathematical formula instead of the order book used by traditional exchanges.

Essentially, they are autonomous trading machines that replace traditional order books with liquidity pools run by algorithms. According to many, it was the development of AMM that enabled the mass adoption of decentralized exchanges.

Dentralized exchange - pros and cons
Dentralized exchange - pros and cons

Pros of Decentralized Exchanges


Most of the DEXs don’t have to follow KYC and AML requirements, because they don’t intermediate in transactions between parties. That’s why it’s often more convenient to build your own DEX than CEX. 

No third parties involved

The basic idea behind decentralized trading is removing third-party providers. All transactions take place in a peer-to-peer or peer-to-contract model. 

Full control of your assets

A decentralized exchange doesn't hold the user's assets or private keys. Therefore funds are under the user's control at every stage of trading.

More diversified crypto assets

On the DEX platform, trades of tokens that aren’t listed on CEXs are possible.

Cons of Decentralized Exchanges

Trading volume

The volume traded on CEXs is still much higher than that on DEXs. Liquidity is lower as well.

Higher fees

This is not an absolute standard, but when it comes to trading fees CEXs often offer better prices.


A decentralized exchange is less user-friendly than a traditional one.


Developing DEX vs CEX

Crypto space develops at a tremendous speed, continuously bringing new possibilities. The number of people interested in crypto investments increases every day; hence the popularity of both decentralized and centralized exchanges has recently grown significantly. You need to bear this in mind when deciding to launch your crypto exchange.

Launching a crypto exchange requires not only experience of blockchain developers’ fluently using blockchain protocols but also a solid and well-planned business strategy. That's why choosing a technology partner with previous experience with both blockchain development and business consulting in the crypto field might be the optimal solution.

Do you want to gain more first-hand knowledge regarding building crypto exchanges? Don't hesitate to ask our professionals who will be happy to answer your questions.

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What is Account Abstraction?


10 Nov 2023
What is Account Abstraction?

Account abstraction is a new way of thinking about how users interact with blockchains. Instead of using traditional externally owned accounts (EOAs), account abstraction allows users to create and manage their accounts using smart contracts. This has a number of potential benefits, including improved security, enhanced privacy, and increased flexibility.

What is account abstraction?

Account abstraction is a concept that, at its core, aims to simplify the user's interaction with blockchain networks. It is a transformative approach that seeks to mask the technicalities of blockchain operations from end-users. It is making transactions as straightforward as sending an email. Account Abstr. allows users to interact with the blockchain without worrying about the underlying technical details.

How does account abstraction differ from the traditional model?

In the traditional account model, each user has an EOA. EOAs are controlled by private keys, which must be kept secret in order to protect the user's funds. Acc. abstraction allows users to create and manage their accounts using smart contracts.

Historical Context

The journey towards acc. abstraction began with the first generation of blockchain technologies, characterized by their "one-size-fits-all" approach to account management. Bitcoin, for instance, introduced the concept of accounts and transactions in a form that was accessible to tech-savvy individuals but remained perplexing to the layperson. Ethereum expanded on this by introducing smart contracts, which opened the door to programmable transactions but did not alter the fundamental account structure. The idea of acc. abstraction has been discussed in the Ethereum community for several years as a part of various Ethereum Improvement Proposals (EIPs), particularly as a feature to be potentially implemented in Ethereum 2.0. It is a direct response to the need for a more versatile and user-centric design that can cater to a broader audience and spur the widespread adoption of blockchain technology.

The Technicalities of Account Abstraction

Account abstraction is not merely a theoretical construct but a technical innovation with specific mechanisms underpinning its operation. In essence, it alters the way transactions are initiated and executed within a blockchain network.

How Account Abstraction Works

Under traditional blockchain models, initiating a transaction involves an externally owned account (EOA) signing a transaction with a private key. This transaction is then broadcast to the network for validation and inclusion in the blockchain. Account abstraction, however, replaces this process with a more flexible one. Here, every account is a smart contract, and transactions are messages sent through these contracts. These smart contracts can encode complex rules for transaction validation, beyond what EOAs can do, such as multi-signature requirements or conditional transactions based on certain triggers.

The technical crux of account abstraction lies in the smart contract’s ability to define its own conditions for transaction execution. This means that user accounts can have unique security protocols or automated operations without the user needing to understand the underlying smart contract code.

Hey! Are you interested in the latest technologies in the blockchain area? be sure to read the article 'Top Zero-Knowledge Proof Projects to watch in 2023'

The Benefits of Account Abstraction

The implications of account abstraction are profound, offering a range of benefits that can enhance the blockchain experience for users and developers alike.

Improved User Experience

One of the most significant advantages of account abstraction is the improvement it brings to user experience. By abstracting away the complexities of key management and transaction rules, it presents a more intuitive interface for users.

Enhanced Security Features

Account abstraction also allows for the implementation of advanced security measures. Since each account can define its own logic, users can tailor their security settings to their specific needs. For instance, one might set up an account that requires additional verification for transactions exceeding a certain value or restricts withdrawals to certain addresses.

Future Implications

The future implications of account abstraction are vast. As the technology matures, it could become a standard feature of blockchain networks, potentially making the current distinction between user accounts and smart contracts obsolete. This could lead to a new wave of blockchain applications that are both powerful and accessible, bringing us closer to the vision of blockchain technology as a seamless part of everyday life.

Challenges and Considerations

Technical Limitations

One of the primary technical challenges of Acc. abstraction lies in its integration with existing blockchain protocols. Current networks are optimized for the EOA model, and introducing a new account structure necessitates significant changes to the core protocol. This includes modifications to the way transactions are propagated in the network, how gas fees are calculated, and how the state of the blockchain is managed. Ensuring that these changes do not compromise the network's performance or security requires careful planning and extensive testing.

Compatibility with Current Systems

Another consideration is the compatibility of account abstr. with the vast ecosystem of existing blockchain applications and services. Wallets, exchanges, and other services have been built around the traditional account model. Transitioning to an acc. abstraction model will require these services to update their infrastructure, which may be a complex and resource-intensive process. Furthermore, there is a need for standardization across the industry to ensure that different implementations of account abstr. can work seamlessly together.


Acc. abstraction represents a significant leap forward in the quest for a more user-friendly blockchain experience. By streamlining the transaction process and offering enhanced security features, acc abstraction has the potential to make blockchain technology more accessible to a broader audience. However, the path to widespread adoption is not without its obstacles. Technical challenges and compatibility issues must be carefully navigated to integrate it into the existing blockchain landscape.

Key Takeaways

How to Add Gnosis Chain to MetaMask: A Simple Tutorial


03 Nov 2023
How to Add Gnosis Chain to MetaMask: A Simple Tutorial

As the cryptocurrency ecosystem expands, there is an increasing need for various blockchains with distinct capabilities. Gnosis Chain enters the scene, offering a selection of unique characteristics. By integrating Gnosis Chain with MetaMask, users can access a more comprehensive array of decentralized services. We will walk you through the steps to add Gnosis Chain to your MetaMask wallet in this tutorial.


Setting up MetaMask

Before exploring the integration of Gnosis Chain, it is crucial to have MetaMask installed and operational:

  • Download and Install: If you have not done so already, visit the official website to download and install the MetaMask browser extension.
  • Setup Account: After completing the installation, create your account and make sure to remember the provided seed phrase. This phrase serves as your primary means for account recovery, so keep it secure.
  • Secure Your Account: Protecting your MetaMask account is of utmost importance. Use a robust password and never disclose your seed phrase to anyone.

Gnosis Chain

It is always helpful to have a basic understanding before incorporating any new blockchain into your wallet:

  • Gnosis Chain Overview: Gnosis Chain, a rising star in the blockchain world, brings a range of decentralized solutions to the table, such as prediction markets and decentralized trading platforms.
  • Benefits & Features: Among Gnosis Chain's main selling points are its accelerated transaction speeds and potentially lower fees when compared to congested networks.

Tutorial: How to Add Gnosis Chain to MetaMask

In the top right-hand corner of your browser, you'll find the wallet. If pinned, click on the MetaMask fox icon; if not, click the three dots in the top-right corner. The following screen will appear:

An option to expand the wallet to a new browser page is available by clicking "Expand view:"

This action will launch MetaMask in a new tab:

By clicking on the ‘Ethereum mainnet’ in the top left corner, you can add another network. Click ‘Add Network’

Choose option ‘Add a network manually’

Then, input the information below:

Network Name: Gnosis Chain formerly xDai


ChainID: 100

Symbol: XDAI

Block Explorer URL:

After saving the settings, Gnosis Chain will be added to your network.

The Benefits of Adding Gnosis Chain to MetaMask

With multiple blockchains becoming more common, integrating Gnosis Chain with MetaMask offers numerous advantages:

Expanded Capabilities: Accessing Gnosis Chain through MetaMask opens up a collection of exclusive applications and features inherent to this particular blockchain, which may include unique dapps or cutting-edge financial products.

Diversification: The crypto domain is extensive and constantly growing. By incorporating various chains like Gnosis into MetaMask, you broaden your potential investment opportunities and decentralized application experiences, ensuring no opportunities are missed.

Speed & Cost-Effectiveness: Network congestion and high gas fees on established platforms like Ethereum can discourage many users. Gnosis Chain's architecture has the potential to provide relief through quicker transaction times and more affordable fees.

In summary, as the possibilities within the crypto sphere continue to evolve, tools like MetaMask grant users access to this expanding world. By adding chains like Gnosis, users can stay ahead in this decentralized revolution.


By bridging platforms like Gnosis Chain with accessible tools like MetaMask, individuals not only amplify their engagement with decentralized applications but also fortify their position in this expansive realm. The integration of Gnosis Chain to MetaMask epitomizes the evolution of the crypto landscape – a testament to its ever-growing diversity and potential. As we continue to delve deeper into the decentralized future, tools and integrations like these will undoubtedly play a pivotal role in shaping our digital experiences and opportunities. Whether you're seeking more efficient transactions, diverse dapp interactions, or simply a broader understanding of the crypto ecosystem, this guide's steps open doors to a new horizon.