CEX, DEX or instant swap: an account, a wallet and a pool, or one order between your wallets
A centralized exchange (CEX) holds your funds in an account while you trade against an order book. A decentralized exchange (DEX) swaps from your own wallet against an on-chain pool. An instant swap service sits in between: you send from your wallet and receive in your wallet in one order, and services like SimpleSwap route that order across CEX and DEX liquidity.
An application that lets you swap tokens with other users directly on the network (ethereum.org). Most DEXs use an automated market maker: you trade against a liquidity pool, not against another user's posted order.
What is the difference between a centralized and a decentralized exchange?
Centralized exchange (CEX)
- You open an account and deposit funds.
- The exchange holds them while you trade.
- An order book matches buyers and sellers by price.
- You withdraw to your wallet afterwards.
Decentralized exchange (DEX)
- You connect your own wallet; it acts as your login.
- The swap runs on-chain against a liquidity pool.
- You pay the network fee for the transaction.
- Most DEXs swap only tokens on the chain they run on.
Instant swap service
- No account for most crypto-to-crypto swaps on SimpleSwap and ChangeNOW.
- You send from your wallet and receive in your wallet.
- Pairs across different chains in one order.
- One order ID from deposit to delivery.
Order book or liquidity pool: how is the price set?
Most traditional markets use a central limit order book, where buyers' and sellers' orders are organized by price and filled as demand shifts. Centralized exchanges work this way.
An automated market maker replaces the order book with smart contracts.
Anyone can become a liquidity provider by depositing a pair of tokens into a pool, and the pool's pricing algorithm sets the rate.
Arbitrage traders keep pool prices in line with the wider market (Kraken Learn).
- Your keyson a DEX: each user connects their own wallet and keeps control of the private keyskraken.com
- Same chainmost DEXs run on one chain and swap only tokens on itcoinmarketcap.com
- 20+CEX and DEX providers SimpleSwap compares for each order
- 15+CEX and DEX sources named in ChangeNOW's asset-listing materials
Which model fits which job?
A DEX is always cheaper.
DEX trades settle on the blockchain, so they can be slower and may cost high gas fees when the chain is busy (CoinMarketCap Academy).
A CEX is just a faster DEX.
On a CEX you deposit assets first and trust the exchange to look after them (ethereum.org). Custody is the real difference.
A DEX can swap anything to anything.
Most DEXs run on one blockchain and support only tokens on that chain (CoinMarketCap Academy). A BTC to SOL swap needs a bridge or a cross-chain service.
What is a DEX aggregator?
A DEX aggregator compares prices across many decentralized exchanges at once and routes the order along the best path.
It can split one order across several pools so that no single pool absorbs the full size, which reduces price impact.
Splitting is not always better: routing weighs pool depth, fee tiers and the extra gas of each venue (1inch).
Instant swap aggregators apply the same idea across both kinds of venue:
- SimpleSwap compares quotes from 20+ centralized and decentralized providers for each order and routes it through whichever can execute at that moment. A pair that is thin on one venue can be filled from another.
- ChangeNOW is a direct instant exchange; its asset-listing materials name 15+ CEX and DEX sources.
Routing on both services in detail. Other aggregators are in the aggregator list.
How an order moves on an instant swap service
- Quote
The service checks its liquidity sources and shows one estimate.
- Deposit
You send from your own wallet. No account balance to fund.
- Execution
The order is filled on whichever venue the service routes it to.
- Delivery
The result goes to the receiving address you gave.
Questions
What is the difference between a centralized and a decentralized exchange?
A centralized exchange is custodial: you deposit funds and it matches orders in an order book.
A decentralized exchange is non-custodial: you connect your own wallet and swap against an on-chain liquidity pool.
How does an automated market maker (AMM) work?
Smart contracts hold pools of two tokens. You swap against the pool, and the pool's pricing algorithm sets the rate. Arbitrage traders keep pool prices close to the wider market.
Do I need a wallet to use a DEX?
Yes. On a DEX your wallet acts as your login, and you keep control of your private keys.
What is a DEX aggregator?
A service that compares swap prices across many decentralized exchanges and routes, or splits, your order along the best path.
Is an instant swap service a CEX or a DEX?
Neither. You don't hold a balance as on a CEX, and you don't swap against a single pool as on a DEX.
SimpleSwap routes each order across 20+ CEX and DEX providers and delivers to your wallet.