"Centralized exchanges benefit from unified order books, where all global buy and sell interest is concentrated in one engine, allowing for razor-thin spreads and minimal slippage."
"The rise of Layer 2 scaling solutions has inadvertently sharded liquidity, making it difficult for any single DEX to rival the depth of a major CEX."
"At the costs of a fraction of the execution speed you get a fundamental right in return: custodianship of your funds."
"Unlike centralized giants that maintain deep insurance funds, on-chain protocols can fall victim to liquidation cascades, as illustrated by the $19.35 billion in liquidations triggered by a market shock."
Centralized exchanges (CEXs) provide unified order books, resulting in thin spreads and minimal slippage. In contrast, decentralized exchanges (DEXs) suffer from fragmented liquidity due to Layer 2 scaling solutions. This fragmentation makes it challenging for DEXs to match the liquidity depth of CEXs. Despite slower execution speeds, DEXs offer users control over their assets. However, decentralized protocols can be vulnerable during market volatility, as seen in October 2025 when $19.35 billion in liquidations occurred within a day, highlighting the risks associated with on-chain protocols.
Read at news.bitcoin.com
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