DEXTAPE GUIDES
Centralized and decentralized exchanges compared
Compare custody, execution, and responsibility before comparing fees.
What you’ll learn · Beginner
- The custody question
- Different execution models
- Costs beyond the headline fee
The custody question
A centralized exchange generally controls the assets held in a trading account. A decentralized exchange typically interacts with a user-controlled wallet through smart contracts. Neither model removes all intermediaries or all risk.
Different execution models
Order books match bids and offers. Automated market makers quote against liquidity pools. The distinction affects spreads, price impact, and how liquidity providers are compensated.
Costs beyond the headline fee
Network fees, withdrawal charges, spread, and slippage all contribute to the final cost. The cheapest advertised trading fee does not necessarily produce the best execution for a particular trade.
Failure modes
Exchange insolvency and account restrictions differ from contract exploits and malicious approvals. Select a workflow only after understanding what can go wrong and what recovery options exist.
Sources
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